Banco De Oro Unibank v. Dompor
REITERATIONFacts
The Antecedents: Castor A. Dompor (respondent) was employed by Philippine Commercial and Industrial Bank (PCIB), later Equitable PCI Bank, and then Banco De Oro Unibank, Inc. (petitioner), starting October 1, 1975. In 1995, he became branch manager of PCIB's Makati Cinema Branch. In July 1996, PCIB's Operations Subcenter Head, Gerardo C. Gabriel, reported irregularities concerning numerous second-endorsed Philippine Long Distance Telephone Company (PLDT) dividend checks deposited by client Luz Fuentes into her personal checking account, which she opened in July 1995. A special audit conducted from August 14-21, 1996, revealed that from September 1, 1995, to July 31, 1996, 67,748 PLDT dividend checks totaling P6.713 million were sent for clearing by the Makati Cinema Branch, mainly deposited by Fuentes. These checks were second-endorsed and payable to various entities and prominent personalities. The audit also found that 25 checks drawn on Fuentes' account were returned due to insufficient funds between December 1995 and July 1996, yet respondent failed to close the account. Furthermore, respondent approved the purchase of checks totaling P56,435.26 on October 25, 1995, without an established Bills Purchase Line for Fuentes, and continued to accept second-endorsed checks in July 1996 despite a management instruction on June 27, 1996, to stop doing so. The audit concluded that respondent committed gross negligence tantamount to fraud and abuse of authority, exposing the bank to potential losses. Procedural History: An investigating committee was formed, and a hearing was held on September 2, 1996, leading to respondent's preventive suspension. On October 23, 1996, respondent was directed to explain policy violations, to which he submitted a reply on November 28, 1996, claiming marketing considerations, verbal approval for some transactions, and the execution of an "Agreement on Acceptance of Second-Endorsed Checks" to protect the bank. On February 7, 1997, respondent received a memo dated January 7, 1997, dismissing him for serious policy violations, willful breach of trust, and loss of confidence, with forfeiture of benefits and contingent restitution. Respondent filed a case for illegal dismissal with money claims. The Labor Arbiter, in a Decision dated May 26, 1999, found respondent's dismissal valid due to serious misconduct or willful disobedience and loss of trust and confidence, but awarded separation pay of P495,000.00 for equity considerations. Both parties appealed to the National Labor Relations Commission (NLRC). The NLRC, in a Resolution dated August 31, 2000, affirmed the Labor Arbiter's Decision, dismissing both appeals. Both parties' motions for reconsideration were denied by the NLRC. Petitioner and respondent then filed separate petitions for certiorari with the Court of Appeals (CA), which were consolidated. The CA, in a Decision dated November 29, 2002, reversed the NLRC, finding respondent's dismissal illegal due to lack of due process and absence of just cause, awarding full backwages and accrued benefits. Both parties' subsequent motions were denied by the CA in a Resolution dated April 23, 2004. The Petition: Petitioner Equitable PCI Bank filed a Petition for Review on Certiorari before the Supreme Court, assailing the CA's Decision and Resolution. Petitioner argued that the CA seriously erred in granting respondent's petition for certiorari because the NLRC's resolution had sufficient factual and legal bases, and that the CA improperly reviewed factual findings. Petitioner contended that respondent's dismissal was justified due to his flagrant and willful disobedience of bank policies, abuse of discretion, and breach of trust, and that the bank complied with due process. Lastly, petitioner argued that the CA erred in denying its petition for certiorari and that separation pay was unjustly awarded, as willful disobedience does not warrant such equitable relief.
Issue(s)
Whether the Court of Appeals seriously erred in granting the petition for certiorari in CA-G.R. SP No. 65259, considering that the Resolution of the National Labor Relations Commission (NLRC) affirming the Labor Arbiter's Decision had sufficient factual and legal bases. Whether the Court of Appeals seriously erred in holding that respondent's dismissal was not justified. Whether the Court of Appeals seriously erred in holding that respondent's dismissal was not attended by due process. Whether the Court of Appeals seriously erred in denying the petition for certiorari in CA. S.P. G.R. No. 63948.
Ruling
The Supreme Court GRANTED the petition, REVERSED and SET ASIDE the November 29, 2002 Decision and April 23, 2004 Resolution of the Court of Appeals. The Resolution dated August 31, 2000 of the National Labor Relations Commission, affirming the Labor Arbiter's Decision upholding the legality of respondent's dismissal, was REINSTATED and AFFIRMED with MODIFICATION that the award of separation pay in the amount of P495,000.00 was DELETED.
Ratio Decidendi
On Issue 1: The Supreme Court acknowledged that the Court of Appeals (CA), by express mandate of the law, may review decisions of quasi-judicial and administrative agencies and resolve factual issues, as affirmed in Cosmos Bottling Corporation v. Nagrama, Jr. However, the Court disagreed with the CA's resultant decision in this particular case. The Court found that the National Labor Relations Commission's (NLRC) resolution, which affirmed the Labor Arbiter's finding of valid dismissal, was indeed supported by sufficient factual and legal bases. The CA's reversal of the NLRC's findings, particularly on the existence of just cause and compliance with due process, was deemed erroneous by the Supreme Court. The Court emphasized that while the CA has the power of review, its exercise must be grounded on a correct appreciation of the facts and the law, which the Supreme Court found lacking in the appellate court's decision. On Issue 2: The Supreme Court found that respondent's dismissal was justified, reversing the CA's finding. The Court held that respondent intentionally and willfully transgressed Section 5(A)(l)(b) of petitioner's Accounting & Procedures Manual, which explicitly prohibits the acceptance of checks endorsed by corporations, societies, firms, etc., for credit to a personal account and/or checks with unusual endorsements. Despite a clear instruction from management on June 27, 1996, to stop accepting second-endorsed checks, respondent continued to accommodate Fuentes on two occasions in July 1996, even accepting 3,028 second-endorsed PLDT checks totaling P283 million on the second occasion, some of which were issued to corporations. The Court rejected respondent's claim of good faith, noting the sheer number of checks and the similarity of endorsement strokes, which should have alerted him to potential fraud. Furthermore, the Court found that respondent violated Credit Policy Supervision No. 6 by approving the purchase of checks totaling P56,435.26 without an established Bills Purchase Line for Fuentes. Lastly, respondent committed serious misconduct by failing to close Fuentes' account despite multiple instances of dishonored checks due to insufficient funds and defying superiors' recommendations to close the account. These actions constituted abuse of authority and a willful breach of the trust reposed in him as a branch manager, which is a just cause for dismissal, as reiterated in Etcuban, Jr. v. Sulpicio Lines, Inc. and Abel v. Philex Mining Corporation. On Issue 3: The Supreme Court ruled that the requirements of due process were satisfied, contrary to the CA's finding. Petitioner complied with the two-notice requirement: first, a memo dated October 23, 1996, informing respondent of the specific charges and giving him an opportunity to submit a written explanation, which he did on November 28, 1996; and second, a memo dated January 7, 1997, informing him of the decision to terminate his employment based on the investigation results, his explanation, and the audit report. The Court clarified that the audit committee's conclusion to dismiss respondent was merely recommendatory and not conclusive, thus refuting the accusation that his dismissal was preordained. The Court emphasized that the essence of due process is the opportunity to be heard, as held in Sy v. Metropolitan Bank and Trust Company and KIT Fruits, Inc. v. WSR Fruits, Inc., and respondent was adequately heard and given the chance to rebut the accusations. On Issue 4: The Supreme Court's decision to grant petitioner's petition in G.R. Nos. 163293 & 163297 inherently meant that the CA erred in denying petitioner's petition for certiorari in CA-G.R. SP No. 63948. The CA's denial of petitioner's appeal, which sought to reverse the award of separation pay, was based on its erroneous finding of illegal dismissal. Since the Supreme Court found the dismissal to be legal and reversed the CA's decision, it logically followed that the CA's denial of petitioner's appeal was incorrect. The Supreme Court's reinstatement of the NLRC's decision, with the modification of deleting the separation pay, directly addressed and corrected the CA's error in this regard.
Main Doctrine
The Supreme Court held that a bank manager's abuse of authority in implementing bank policies, particularly the willful disregard of explicit instructions and established procedures regarding the acceptance and purchase of second-endorsed checks, constitutes serious misconduct and willful breach of trust. These acts are just causes for termination, as they demonstrate a betrayal of the employer's trust, especially for employees in positions of confidence. Furthermore, the Court reiterated that separation pay, as a measure of social justice, is not to be awarded to employees validly dismissed for serious misconduct or willful disobedience, thereby clarifying the limitations on such equitable relief.