Equitable PCI Bank v. Dompor
REITERATIONFacts
The Antecedents: Respondent Castor A. Dompor was employed by Equitable PCI Bank (PCIB) since October 1, 1975, and in 1995, was assigned as branch manager of PCIB’s Makati Cinema Branch. On July 24, 1996, PCIB’s Operations Subcenter Head noted irregularities concerning numerous Philippine Long Distance Telephone Company (PLDT) dividend checks being cleared by the Makati Cinema Branch. It was discovered that respondent allowed a client, Luz Fuentes, to deposit several second-endorsed PLDT dividend checks into her account from September 1995 to July 1996. A special audit revealed that 67,748 PLDT second-endorsed dividend checks totaling ₱6.713 million were fraudulently negotiated in favor of Fuentes. The audit report noted striking similarities in the signatures of the different payees and that the inadequately documented transactions exposed the bank to probable losses and potential liability. The audit committee recommended respondent’s dismissal for violation of bank policies and failure to exercise prudence. Procedural History: Respondent was placed under preventive suspension and subsequently asked to explain in writing why no disciplinary action should be taken against him for serious policy violations, including failure to comply with accounting procedures regarding checks payable to corporations or with unusual endorsements, allowing second-endorsed checks despite management instructions to stop, and failing to comply with credit policy regarding the purchase of second-endorsed PLDT checks without an approved credit line. Respondent submitted a reply, explaining his actions were for marketing considerations, that he had agreements to protect the bank, and that certain approvals were obtained. On January 7, 1997, respondent was dismissed for serious policy violations, willful breach of trust, and loss of confidence, with forfeiture of benefits and restitution. Respondent appealed to the Labor Arbiter, who found the dismissal valid but awarded separation pay for equity considerations. Both parties appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter’s decision, finding sufficient basis for loss of trust and confidence due to respondent’s disobedience. The NLRC also ruled that respondent was accorded due process. Both parties filed separate petitions for certiorari with the Court of Appeals (CA). The CA reversed the NLRC, holding that the dismissal was without due process and just cause, finding no transgression of bank rules and that the potential loss was speculative. The CA awarded respondent full backwages and other benefits. The Petition: Petitioner Equitable PCI Bank (now Banco De Oro Unibank, Inc.) assails the CA Decision and Resolution, arguing that the CA erred in reversing the NLRC’s findings, which had sufficient factual and legal bases. Petitioner contends that the CA erred in holding that the dismissal was not justified and not attended by due process, and in denying its petition. Petitioner asserts that the CA should have respected the concurrent findings of the Labor Arbiter and NLRC regarding the legality of respondent’s termination for willful disobedience and breach of trust, and that pecuniary damage is not an issue. Petitioner denies the dismissal was preordained and claims compliance with due process. Petitioner also argues that separation pay was unjustly awarded.
Issue(s)
Whether the Court of Appeals erred in reversing the Resolution of the NLRC, which affirmed the Labor Arbiter’s Decision upholding the legality of respondent’s dismissal, and whether respondent committed willful disobedience and willful breach of trust sufficient as just causes for his dismissal. Whether the Court of Appeals erred in holding that respondent’s dismissal was not justified. Whether the Court of Appeals erred in holding that respondent’s dismissal was not attended by due process. Whether the Court of Appeals erred in denying the petition for certiorari filed by petitioner, and whether separation pay should be awarded.
Ruling
The petition is impressed with merit. The Court reverses and sets aside the Decision and Resolution of the Court of Appeals and reinstates and affirms the Resolution of the National Labor Relations Commission, with the modification that the award of separation pay is deleted.
Ratio Decidendi
On the issue of whether respondent committed willful disobedience and willful breach of trust sufficient as just causes for his dismissal: The Court held that respondent was validly dismissed on these grounds. To justify willful disobedience, the employee's conduct must be wrongful or perverse, and the order violated must be reasonable, lawful, known, and pertain to the employee's duties. For willful breach of trust, the loss of confidence must be genuine and not simulated, and the employee must hold a position of trust. The Court found that respondent intentionally and willfully transgressed the explicit bank policy disallowing the acceptance of checks endorsed by corporations or with unusual endorsements. Despite being instructed to stop accepting second-endorsed checks, respondent accommodated the client's requests, even accepting checks payable to corporations, thus flagrantly violating bank guidelines. The Court noted that the signatures on the checks bore the same strokes, and the negotiation of checks by hundreds of payees to one individual should have alerted respondent to the authenticity of the endorsements. Respondent's actions were seen as extending special favors to the client, contravening strict bank guidelines, and defying superiors' orders to close the client's account. As a bank manager, respondent had a duty to ensure strict compliance with bank rules, and any negligence in his responsibilities constituted a sufficient ground for loss of trust and confidence. The Court emphasized that proof beyond reasonable doubt is not required for dismissal based on breach of trust, and the mere existence of a basis for believing that trust was breached suffices. On the issue of whether the Court of Appeals erred in holding that respondent’s dismissal was not justified: This issue is addressed in the ratio above regarding willful disobedience and willful breach of trust, which the court found to be valid grounds for dismissal. On the issue of whether the requirements of due process were satisfied: The Court found that procedural due process was complied with. Petitioner sent a Memo dated October 23, 1996, informing respondent of the specific charges and giving him an opportunity to be heard. Subsequently, respondent was informed of the decision to terminate him in a letter dated January 7, 1997, stating the reasons. The two-notice requirement was met. The Court rejected respondent's contention that his dismissal was preordained, finding no factual basis for this claim. Further investigations were conducted, and respondent was given ample opportunity to defend himself, including a hearing in September 1996. The audit report served only as a basis for the show cause memorandum and was not conclusive. The Court reiterated that the essence of due process is the opportunity to be heard, which respondent was adequately afforded. On the issue of whether separation pay should be awarded: The Court ruled that separation pay should not be awarded. While separation pay may be awarded as a measure of social justice, this is generally allowed only when an employee is validly dismissed for causes other than serious misconduct or willful disobedience. In this case, the infractions committed by respondent constituted serious misconduct and willful disobedience, resulting in a loss of trust and confidence. Therefore, even based on equity and social justice, respondent did not deserve the award of separation pay, and it was deleted.
Main Doctrine
A bank manager's abuse of authority in implementing bank policies constitutes a willful breach of trust and willful disobedience, which are just causes for termination. The requirements of procedural due process, including notice and hearing, were satisfied. Separation pay is not awarded in cases of dismissal for serious misconduct or willful disobedience.