G.R. No. 198620 - P.J. Lhuillier, Inc. vs. Velayo

On June 13, 2003, PJ (Cebu) Lhuillier, Inc. (herein “petitioner”) hired Flordeliz M. Abatayo (respondent) as an Accounting Clerk at its LH-4, Cagayan de Oro City Branch with a monthly basic salary of P9,353.00.
The respondent, though initially employed as an accounting clerk, eventually performed dual functions—as vault custodian, cashier, and bookkeeper—thereby assuming a position of utmost trust and fiduciary responsibility.

On October 29, 2007, during a branch transaction involving the “Pera Padala” cash remittance service, the respondent failed to record a cash receipt amounting to P540.00 in the company’s computerized operating system.
It was later determined through a branch audit that the unexplained cash overage stemmed from a customer's remittance, yet proper accounting procedures to record this amount were not followed.
The respondent later explained that her failure to record the overage was due to the branch manager’s absence (Tuling was on leave) and her continued attempts to trace the source of the cash surplus.

On February 9, 2008, the respondent was served with a Show Cause Memo by Area Operations Manager Mario Ramon Ludena, ordering her to explain why disciplinary action should not be taken against her for alleged dishonesty, misappropriation, theft, or embezzlement in violation of company policy.
She was placed under preventive suspension for a period lasting until March 8, 2008 while the incident was investigated.

Following a formal investigation, on March 10, 2008, PJ Lhuillier terminated the respondent’s employment via Notice of Termination on grounds of serious misconduct and breach of trust.
The employer contended that the respondent’s omission to report the overage and failure to record it in the system constituted not a mere mistake but an act of dishonesty that undermined the fiduciary duty expected of her.

On March 14, 2008, the respondent filed a complaint for illegal dismissal, separation pay, and other damages against PJ Lhuillier, Inc. and its Area Operations Manager.
The Labor Arbiter (LA) initially ruled in favor of the petitioner, finding that the termination was valid and that the respondent’s misconduct was more than a simple negligence because she intentionally set aside the P540.00 for personal use rather than reporting it.
On appeal, however, the National Labor Relations Commission (NLRC) reversed the LA’s finding, holding that the respondent was illegally dismissed because the evidence did not support a finding of “serious misconduct” or a willful breach of trust.
The NLRC acknowledged that although the respondent’s explanation—that she could not report the cash due to the supervisor’s absence and that it was merely a mistake—could mitigate the allegation, the relationship between the parties had become strained; thus, reinstatement was not ordered. The NLRC instead awarded separation pay based on one month’s salary for every year of service, full back wages, and 10% attorney’s fees.

On July 31, 2009, petitioners filed a petition for certiorari in the Court of Appeals (CA) along with a prayer for a temporary restraining order (TRO) and/or writ of preliminary injunction.
The CA, after considering issues including alleged grave abuse of discretion by the NLRC and the entitlement to a TRO, denied the petitioners’ request for a TRO, finding no imminent irreparable injury.
The remaining issue before the CA was whether the NLRC committed grave abuse of discretion when it set aside the factual findings of the Labor Arbiter. The CA ruled against petitioners, concurring with the NLRC that the respondent’s misconduct did not rise to the level of serious misconduct and that the dismissal was disproportionate to any alleged infraction.

Petitioners raised issues in the Supreme Court challenging the characterization of the respondent’s actions as “a simple mistake” and contested whether the misappropriation of P540.00, along with subsequent denials and cover-up claims, amounted to serious misconduct warranting termination.
They argued that under the company’s Code of Conduct, particularly Rule V(A)(11), the respondent’s actions constituted a “First Level Offense” justifying outright dismissal.
The issues raised were aimed at validating that a breach of trust had occurred beyond mere negligence given the critical nature of the respondent’s fiduciary functions.

Whether the respondent’s failure to immediately report and properly record the cash overage of P540.00 constitutes a simple mistake or amounts to serious misconduct that justifies dismissal.

Sub-issue: Whether her explanation—that the branch manager was on leave and that she was still tracing the discrepancy—is sufficient to mitigate the gravity of the offense.

Whether the act of not recording the overage, and the subsequent actions of denying its existence and concocting false explanations, evidences a willful breach of trust and confidence necessary to justify termination under Article 282(c) of the Labor Code.
Whether the disciplinary action imposed by the petitioners—namely, preventive suspension followed by termination—was commensurate with the nature and gravity of the respondent’s misconduct given her position of trust.
Whether the NLRC and the CA erred in their findings, particularly regarding the characterization of the respondent’s lapse as simple negligence versus serious misconduct, thus affecting the validity of the dismissal.
Whether the petitioners are entitled to a temporary restraining order or other provisional remedies pending the resolution of the issues raised in the petition for review.