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Cases on Valid Termination Based on Fraud,

Dishonesty & Acts Against the Property of the

Submitted to:

Atty. Josephus B. Jimenez

Submitted by:

Shane E. Borres

1. P.J. LHUILLIER, INC. VS. VELAYO, G.R. NO. 198620 (NOVEMBER 12, 2014)
On June 13, 2003, PJ (CEBU) LHUILLIER, INC. hired FLORDELIZ M. ABATAYO as Accounting Clerk at the LH-4, Cagayan de Oro City Branch.
On February 9, 2008 appellant was served with a Show Cause Memo by MARIO RAMON LUDEA, Area Operations Manager of PJ Lhuillier,
ordering her to explain within 48 hours why no disciplinary action should be taken against her for dishonesty, misappropriation, theft or
embezzlement of company funds in violation of Item 11, Rule V of the Company Code of Conduct. The charges against the appellant were based on
the Audit Findings conducted on October 29, 2007, where the overage amount of P540.00 was not reported immediately to the supervisor, not
recorded at the end of that day.
On February 11, 2008, complainant submitted her reply and admitted that she was not able to report the overage to the supervisor since the
latter was on leave on that day and that she was still tracing the overage; and that the omission or failure to report immediately the overage was just
a simple mistake without intent to defraud her employer. On March 10, 2008, PJ LHUILLIER terminated her employment as per Notice of Termination
on grounds of serious misconduct and breach of trust.
Labor Arbiter: Valid dismissal.
NLRC: Illegal dismissal.
CA: Illegal dismissal.
Was there an illegal dismissal?
Yes. The respondents misconduct must be viewed in light of the strictly fiduciary nature of her position.
There are two classes of corporate positions of trust: on the one hand are the managerial employees whose primary duty consists of the
management of the establishment in which they are employed or of a department or a subdivision thereof, and other officers or members of the
managerial staff; on the other hand are the fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the
normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely
charged with the care and custody of the employers money or property, and are thus classified as occupying positions of trust and confidence.
The series of willful misconduct committed by the respondent in mishandling the unaccounted cash receipt exposes her as unworthy of the
utmost trust inherent in her position as branch cashier and vault custodian and bookkeeper. A cashiers inability to safeguard and account for missing
cash is sufficient cause to dismiss her.


G.R. NO. 164016 (MARCH 15, 2010)
Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products. Respondent Nenita Capor was an employee of Reno Foods
until her dismissal on October 27, 1998. On October 19, 1998, the guard on duty found six Reno canned goods wrapped in nylon leggings inside
Capors fabric clutch bag. The only other contents of the bag were money bills and a small plastic medicine container.
Petitioners accorded Capor several opportunities to explain her side, often with the assistance of the union officers of Nagkakaisang Lakas ng
Manggagawa (NLM) Katipunan. In fact, after petitioners sent a Notice of Termination to Capor, she was given yet another opportunity for
reconsideration through a labor-management grievance conference held on November 17, 1999. Unfortunately, petitioners did not find reason to
change its earlier decision to terminate Capors employment with the company.
Labor Arbiter: Valid dismissal.
NLRC: Valid dismissal.
CA: Valid dismissal.
Was there a valid dismissal? If yes, is the employee dismissed for theft of company property entitled to separation pay?
Yes. We find no justification for the award of separation pay to Capor. This award is a deviation from established law and jurisprudence. The law
is clear. Separation pay is only warranted when the cause for termination is not attributable to the employees fault, such as those provided in
Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an
employee is dismissed for just cause, such as serious misconduct.
Certainly, a dishonest employee cannot be rewarded with separation pay or any financial benefit after his culpability is established in two
decisions by competent labor tribunals, which decisions appear to be well-supported by evidence. To hold otherwise, even in the name of
compassion, would be to send a wrong signal not only that crime pays but also that one can enrich himself at the expense of another in the name of
social justice. And courts as well as quasi-judicial entities will be overrun by petitioners mouthing dubious pleas for misplaced social justice. Indeed,
before there can be an occasion for compassion and mercy, there must first be justice for all. Otherwise, employees will be encouraged to steal and
misappropriate in the expectation that eventually, in the name of social justice and compassion, they will not be penalized but instead financially
rewarded. Verily, a contrary holding will merely encourage lawlessness, dishonesty, and duplicity. These are not the values that society cherishes;
these are the habits that it abhors.


Petitioner Helen Valenzuela (Helen) was a production associate in respondent Keihin Philippines Corporation (Keihin), a company engaged in the production of
intake manifold and throttle body used in motor vehicles manufactured by Honda.
It is a standard operating procedure of Keihin to subject all its employees to reasonable search before they leave the company premises. On September 5, 2003,
when the lady guard on duty inspected Helens bag, she found the packing tape inside her bag. The guard confiscated it and submitted an incident report same
The following day, or on September 6, 2003, respondent company issued a show cause notice to Helen accusing her of violating F.2 of the companys Code of
Conduct, which says, any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associates property.
Penalty: D (dismissal). Paul Cupon, Helens supervisor, called her to his office and directed her to explain in writing why no disciplinary action should be taken
against her.
Helen, in her explanation, admitted the offense and even manifested that she would accept whatever penalty would be imposed upon her. She, however, did
not reckon that respondent company would terminate her services for her admitted offense. On September 26, 2003, Helen was terminated.

Labor Arbiter: Valid dismissal.

NLRC: Valid dismissal.
CA: Valid dismissal.
Was Helen was validly dismissed?
Yes. In the case at bar, Helen took the packing tape with the thought that she could use it for her own personal purposes. When Helen was asked to explain
in writing why she took the tape, she stated, Kumuha po ako ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay. In
other words, by her own admission, there was intent on her part to benefit herself when she attempted to bring home the packing tape in question.
It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent companys property and personal
belongings of other employees. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive inspection
procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the
companys Code of Conduct. Despite these reminders, Helen took the packing tape and was caught during the routine inspection. All these circumstances point to
the conclusion that it was not just an error of judgment on the part of Helen, but a deliberate act of theft of company property.


(APRIL 11, 2011)
Quirico Lopez was hired by respondent Alturas Group of Companies in 1997 as truck driver.
On November 2007, he was dismissed after he was allegedly caught by respondents security guard in the act of attempting to smuggle out of
the company premises 60 kilos of scrap iron worth P840 aboard respondents Isuzu cargo van with. When questioned, petitioner allegedly admitted to
the security guard that he was taking out the scrap iron consisting of lift springs out of which he would make axes.
On December 14, 2007, Lopez was terminated on the grounds of loss of trust and confidence, and of violation of company rules and regulations.
Labor Arbiter: Valid dismissal.
NLRC: Illegal dismissal.
CA: Valid dismissal.
Was Lopez validly dismissed?
Yes. Loss of trust and confidence as a ground for dismissal of employees covers employees occupying a position of trust who are proven to have
breached the trust and confidence reposed on them.
The dismissal of an employee for lack of trust and confidence must be based on substantial evidence and not on the employers whims or
caprices or suspicions; otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately
used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In
addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of
responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters such as the
handling or care and protection of the property and assets of the employer.
Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent companys goods and property, and
consequently with its handling and protection, hence, even if he did not occupy a managerial position, he can be said to be holding a position of
responsibility. As to his act principal ground for his dismissal his attempt to smuggle out the scrap iron belonging to respondent company, the same is
undoubtedly work-related.


An alleged Certified Public Accountant (CPA) has been working as a chief accountant in a credit corporation for three years. It
was only after this time that the credit corporation found out that she was not a CPA and misrepresented herself as one in her
application and personal data sheet. She was also supposedly helping pirate employees of the credit corporation for a rival
corporation. After confronting her, the credit corporation deemed it best to let her go that same day. When she tried to collect her
belongings the very next day, she was no longer allowed to enter the premises.
Labor Arbiter: Illegal dismissal.
NLRC: Valid dismissal.
CA: Illegal dismissal.
Was Mendoza validly dismissed?
Yes. The Supreme Court overturned the CAs decision. It further ruled that there was no illegal dismissal despite the companys
failure to follow the two-notice rule. Article 282 of the Labor Code provides that an employer may terminate an employment for fraud
or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.
The Court made a distinction between managerial and rank and file employees when it comes to the termination of employees
based on breach of trust. For managerial employees, the mere existence that there is basis to believe that such employee has
breached the trust of the employer would suffice his dismissal. For rank and file employees, proof of involvement in the alleged
events in question is necessary. The accountant, being a managerial employee, was validly terminated for loss of confidence. In
securing this position, she fraudulently misrepresented her personal qualifications by stating in her Personal Information Sheet that
she was a CPA. This deceitful action alone was sufficient basis for respondents loss of confidence in her as a managerial employee.
The failure to comply with procedural due process does not render a dismissal for valid cause illegal. Instead, the employees
remedy is to be granted damages.


208321 (JULY 30, 2014)
On March 16, 2004, respondent Nowella Reyes was appointed as WUP's University Treasurer on probationary basis. A little over a year
after, she was appointed as full time University Treasurer. On April 27, 2009, a new WUP Board of Trustees was constituted. Among its first
acts was to engage the services of external auditor to investigate circulating rumors on alleged anomalies in the contracts entered into by
petitioner and in its finances.
Discovered following an audit were irregularities in the handling of petitioners finances, mainly, the encashment by its Treasury
Department of checks issued to WUP personnel, a practice purportedly in violation of the imprest system of cash management, and the
encashment of various crossed checks payable to the University Treasurer by China Bank despite managements intention to merely have
the funds covered thereby transferred from one of petitioners bank accounts to another.
On June 18, 2009, respondent submitted her Explanation. Following which, WUPs Human Resources Development Office conducted an
investigation. Finding respondents Explanation unsatisfactory, the HRDO, on July 2, 2009, submitted an Investigation Report to the
University President containing its findings and recommending respondents dismissal as University Treasurer.
Labor Arbiter: Illegal dismissal.
NLRC: Valid dismissal.
CA: Illegal dismissal.
Was Reyes validly dismissed?
Yes. An employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests of the employer. A company
has the right to dismiss its employees if only as a measure of self-protection. This is all the more true in the case of supervisors or
personnel occupying positions of responsibility. In this case, let it be remembered that respondent was not an ordinary rank-and-file
employee as she was no less the Treasurer who was in charge of the coffers of the University. It would be oppressive to require petitioner to
retain in their management an officer who has admitted to knowingly and intentionally committing acts which jeopardized its finances and
who was untrustworthy in the handling and custody of University funds


NO. 149433 (JUNE 22, 2011)
One of the benefits enjoyed by the employees of petitioner company was the reimbursement of meal and transportation expenses
incurred while rendering overtime work. The maximum amount allowed to be reimbursed was one hundred fifty (P150.00) pesos. It was in
connection with this company policy that respondent Gacayan, then a Senior Financial Accountant, was made to explain the alleged
alterations in three (3) receipts which she submitted to support her claim for reimbursement of meal expenses.
Petitioner company sent respondent Gacayan several memoranda requiring her to explain why her claims for reimbursement should
not be considered fraudulent. Consequently, respondent Gacayan submitted her explanation denying any personal knowledge in the
commission of the alterations on the subject receipts.
On April 4, 1995, Gacayan was dismissed for fraudulently submitting tampered and/or altered receipts in support of her petty cash
reimbursements in gross violation of the companys rules and regulations.
Labor Arbiter: Valid dismissal.
CA: Illegal dismissal.
Was Gacayan validly dismissed?
Yes. In the instant case, respondent Gacayan was the Senior Financial Accountant of petitioner company. While respondent Gacayan
denies that she is handling or has custody of petitioners funds, a re-examination of the records of this case reveals that she indeed
handled delicate and confidential matters in the financial analyses and evaluations of the action plans and strategies of petitioner
company. Respondent Gacayan was also privy to the strategic and operational decision-making of petitioner company, a sensitive and
delicate position requiring the latters utmost trust and confidence. As such, she should be considered as holding a position of
responsibility or of trust and confidence.
In fine, petitioner company had sufficiently discharged its burden of proving that the dismissal of respondent Gacayan was for just
cause, that it was made within the parameters of the law, and that respondent was afforded due process pursuant to the basic tenets of
equity, justice and fair play.

8. BPI VS. PIO ROQUE S. COQUIA, JR., GR 167518 (MARCH 23, 2011)
Respondent Coquias stint with petitioner BPI lasted for 26 years commencing in 1972 when he was assigned as bookkeeper and was
thereafter promoted to various positions in different BPI branches, such as examiner in 1975, senior examiner in 1977, assistant auditor in
1981, assistant manager in 1984, senior assistant manager in 1987, manager in 1989 and as senior manager in Dagupan Branch from
1992 to 1998.
Respondent Coquia alleged that on June 3, 1998, he was instructed to take a vacation leave starting June 4, 1998 on account of an
internal audit to be conducted in BPI Dagupan Branch. Two days after he returned to work on June 15, 1998, he was asked to continue his
leave of absence until the auditors shall have concluded their examination. In a notice dated July 16, 1998, he was placed under
preventive suspension for 30 days due to further investigation of the various irregularities found to have been committed by him,
On August 18, 1998, respondent Coquia received a show cause memo dated August 17, 1998 directing him to explain in writing why
no disciplinary action should be taken against him. On November 23, 1998, a Notice of Termination dated November 18, 1998 was served
on respondent Coquia.
Labor Arbiter: Illegal dismissal.
NLRC: Valid dismissal.
CA: Valid dismissal.
Was the dismissal of Coquia valid?
Yes. It was declared that the bank acted correctly in terminating the employment of a senior manager for multiple reasons like, among
others, alleged conflict interest, having been supposedly involved in lending activities himself, competing with the bank; for having
allegedly incurred unjustified expenses, for supposed irregular encashments of checks, and for daylight borrowings from the banks
tellers. These are unsound banking practice in transgression of Central Bank rules and regulations. Initially, the Arbiter decided in favor of
the manager and ordered payment of a total award of more than P2 million in backwages and damages. But that was reversed by the
higher court and reduced to a separation pay of only of P1.5 M, owing to his long service from 1972 to 1998.


(JANUARY 16, 2012)
The petitioner had worked with Meralco from February 1989 until his dismissal from employment on February 5, 2004. At the time of said dismissal, he
was assigned at the Meralco Malabon Branch Office as a Branch Field Representative tasked, among other things, to conduct surveys on service applications,
test electric meters, investigate consumer-applicants' records of Violations of Contract (VOC) and perform such other duties and functions as may be
required by his superior.
On October 4, 2003, Meralco's Inspection Office issued a memorandum addressed to Meralco's Investigation-Legal Office, informing it of an illegal
service connection at the petitioner's residence, particularly at No. 17 Earth Street, Meralco Village 8, Batia, Bocaue, Bulacan. The Inspection Office claimed
discovering shunting wires installed on the meter base registered under petitioner Yabut's name. These wires allegedly allowed power transmission to the
petitioner's residence despite the fact that Meralco had earlier disconnected his electrical service due to his failure to pay his electric bills.
Labor Arbiter: Illegal dismissal.
NLRC: Illegal dismissal.
CA: Valid Dismissal.
Was Yabuts dismissal valid?
Yes. The dismissal of the petitioner was founded on just causes under Article 282 of the Labor Code of the Philippines.
The requirement for a just cause was satisfied in this case. The dismissal is also justified as the act imputed upon the petitioner qualifies as fraud or
willful breach by the employee of the trust reposed in him by his employer or duly authorized representative under Article 282 (c) of the Labor Code. While
the petitioner contests this ground by denying that his position is one of trust and confidence, it is undisputed that at the time of his dismissal, he was
holding a supervisory position after he rose from the ranks since commencement of his employment with Meralco. As a supervisor with duty and power that
included testing of service meters and investigation of violations of contract of customers, his position can be treated as one of trust and confidence,
requiring a high degree of honesty as compared with ordinary rank-and-file employees.
In this case, the acts complained of were clearly work-related because they related to matters the petitioner handled as branch field representative.
Taking into account the results of its investigations, Meralco cannot be expected to trust Yabut to properly perform his functions and to meet the demands of
his job. His dishonesty, involvement in theft and tampering of electric meters clearly prejudice respondent Meralco, since he failed to perform the duties
which he was expected to perform.

Unilever is a company engaged in the production, manufacture, sale, and distribution of various food, home and personal care products, while Rivera was employed
as its Area Activation Executive for Area 9 South in the cities of Cotabato and Davao. She was primarily tasked with managing the sales, distribution and promotional
activities in her area and supervising Ventureslink International, Inc., a third party service provider for the companys activation projects. Unilever enforces a strict policy
that every trade activity must be accompanied by a Trade Development Program (TDP) and that the allocated budget for a specific activity must be used for such activity
Sometime in 2007, Unilevers internal auditor conducted a random audit and found out that there were fictitious billings and fabricated receipts supposedly from
Ventureslink amounting to P11,200,000.00. It was also discovered that some funds were diverted from the original intended projects. Upon further verification,
Ventureslink reported that the fund deviations were upon the instruction of Rivera.
On July 16, 2007, Unilever issued a show-cause notice to Rivera asking her to explain the following charges, to wit: a) Conversion and Misappropriation of Resources;
b) Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity Issues.
Responding through an email, dated July 16, 2007, Rivera admitted the fund diversions, but explained that such actions were mere resourceful utilization of budget
because of the difficulty of procuring funds from the head office. She insisted that the diverted funds were all utilized in the companys promotional ventures in her area
of coverage.
Labor Arbiter: Valid dismissal.
NLRC: Valid Dismissal.
CA: Valid Dismissal
Is Rivera validly dismissed? If yes, is she entitled to payment of indemnity in the form of nominal damage due to violation of her right to statutory process?
Yes. In this case, Rivera was dismissed from work because she intentionally circumvented a strict company policy, manipulated another entity to carry out her
instructions without the companys knowledge and approval, and directed the diversion of funds, which she even admitted doing under the guise of shortening the
laborious process of securing funds for promotional activities from the head office. These transgressions were serious offenses that warranted her dismissal from
employment and proved that her termination from work was for a just cause. Hence, she is not entitled to a separation pay.
Yes, in this case, Unilever was not direct and specific in its first notice to Rivera. The words it used were couched in general terms and were in no way informative of
the charges against her that may result in her dismissal from employment. Evidently, there was a violation of her right to statutory due process warranting the payment
of indemnity in the form of nominal damages. Hence, the Court finds no compelling reason to reverse the award of nominal damages in her favor. The Court, however,
deems it proper to increase the award of nominal damages from P20,000.00 to P30,000.00, as initially awarded by the NLRC, in accordance with existing jurisprudence.