Lopez v. Keppel Bank (Case Digest. G.R. No. 176800)
CASE DIGEST: ELMER LOPEZ, Petitioner, v. KEPPEL BANK PHILIPPINES, INC., MANUEL BOSANO III and STEFAN TONG WAI MUN, Respondents.
FACTS: Petitioner Elmer Lopez was the Branch Manager of the respondent Keppel Bank Philippines, Inc. (bank) in Iloilo City. Allegedly, through his efforts, Hertz Exclusive Cars, Inc. (Hertz) became a client of the bank.
By notice dated August 12, 2003, the bank asked Lopez to explain in writing why he should not be disciplined for issuing, without authority, two purchase orders (POs) for the Hertz account amounting to a total of P6,493,000.00, representing the purchase price of 13 Suzuki Bravo and two Nissan Exalta vehicles.
Lopez submitted his written explanation on the same day, but the bank refused to give it credit. Through respondents Manuel Bosano III (Vice-President and Head of Retail Banking Division/Consumer Banking Division) and Stefan Tong Wai Mun (Vice-President/Comptroller), the bank terminated Lopezs employment effective immediately.
Lopez asked the bank for reconsideration. In response, the bank, through the respondent officers, met with Lopez at its headquarters in Cubao, Quezon City on September 25, 2003. Lopez came with his lawyer (Atty. Edmundo V. Buensuceso) and a military man (one Col. Flordeliza). After the meeting, the bank found no reason to reconsider and reiterated its decision to dismiss Lopez.
Lopez filed a complaint for illegal dismissal and money claims against the bank, Bosano and Tong.
In a decision dated April 28, 2004, Labor Arbiter Cesar D. Side ruled that Lopez was illegally dismissed. Accordingly, the labor arbiter ordered Lopezs immediate reinstatement, and awarded him backwages ofP392,000.00, moral and exemplary damages ofP8M, and P550,000.00 the purchase price of a Toyota Revo which Lopez allegedly brought over from his stint with Global Bank (now Metrobank). The labor arbiter found that contrary to the banks claim, the evidence showed that Lopez had been issuing POs which the bank had paid, including the first of the two POs that led to his dismissal.
On appeal by the bank, the National Labor Relations Commission (NLRC) rendered a decision on October 11, 2005 reversing the labor arbiters ruling. It dismissed the complaint for lack of merit. The NLRC found merit in the banks submission that by issuing the questioned POs without authority and against the banks express orders, Lopez thereby committed a willful disobedience against his superiors a sufficient basis for the bank to lose its trust and confidence in him as branch manager. It thus found that Lopez had been dismissed for cause after the observance of due process. Lopez moved for reconsideration, but the NLRC denied the motion in its resolution of January 25, 2006. Lopez sought relief from the CA through a petition for certiorari, charging the NLRC with grave abuse of discretion for setting aside the labor arbiters decision.
On December 19, 2006, the CA rendered its now assailed decision, denying the petition and affirming the October 11, 2005 decision of the NLRC. It fully agreed with the NLRC finding that Lopez had not been illegally dismissed.
ISSUE: Is Lopez liable for loss of confidence for issuing the POs? HELD: On the substantive aspect of the case, we note that Lopez was dismissed from the service by reason of loss of trust and confidence, a just cause for an employees dismissal under the law. Lopez insists though that the act which triggered the dismissal action does not justify his separation from the service.
Is Lopez liable for loss of trust and confidence for issuing the two disputed POs?
The right of an employer to freely select or discharge his employee is a recognized prerogative of management; an employer cannot be compelled to continue employing one who has been guilty of acts inimical to its interests. When this happens, the employer can dismiss the employee for loss of confidence.
At the same time, loss of confidence as a just cause of dismissal was never intended to provide employers with a blank check for terminating employment. Loss of confidence should ideally apply only (1) to cases involving employees occupying positions of trust and confidence, or (2) to situations where the employee is routinely charged with the care and custody of the employers money or property. To the first class belong managerial employees, i.e., those vested with the powers and prerogatives to lay down management polices and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or effectively recommend such managerial actions. To the second class belong cashiers, auditors, property custodians, or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.
As branch manager, Lopez clearly occupies a "position of trust." His hold on his position and his stay in the service depend on the employers trust and confidence in him and on his managerial services. According to the bank, Lopez betrayed this trust and confidence when he issued the subject POs without authority and despite the express directive to put the clients application on hold. In response, Lopez insists that he had sufficient authority to act as he did, as this authority is inherent in his position as bank manager. He points to his record in the past when he issued POs which were honored and paid by the bank and which constituted the arbiters "overwhelming evidence" in support of the finding that "complainants dismissal from work was without just cause, hence, illegal."We disagree with Lopezs contention. Despite evidence of his past exercise of authority (as found by the labor arbiter), we cannot disregard evidence showing that in August 2003, the bank specifically instructed Lopez not to proceed with the Hertz loan application because of the negative credit rating issued by the banks credit committee. We find it undisputed that Lopez processed the loan despite the adverse credit rating. In fact, he admitted that he overlooked the "control aspects" of the transaction as far as the bank was concerned because of his eagerness to get a bigger share of the market.
Lopezs good intentions, assuming them to be true, are beside the point for, ultimately, what comes out is his defiance of a direct order of the bank on a matter of business judgment. He went over the heads of the bank officers, including the credit committee, when, based on inquiries he made on his own regarding the credit worthiness of James Puyat Concepcion, he simply proceeded to act on the basis of his own judgment. Evident in his written explanation was his failure to inform the credit committee of his own efforts to check on the committees adverse findings against Hertz and his independent action based solely on his own authority.
As a bank official, the petitioner must have been aware that it is basic in every sound management that people under ones supervision and direction are bound to follow instructions or to inform their superior of what is going on in their respective areas of concern, especially regarding matters of vital interest to the enterprise. Under these facts, we find it undisputed that Lopez disobeyed the banks directive to put the Hertz loan application on hold, and did not wait until its negative credit rating was cleared before proceeding to act. That he might have been proven right is immaterial. Neither does the submission that the bank honored and paid the first PO and even realized a profit from the transaction, mitigate the gravity of Lopezs defiance of the directive of higher authority on a business judgment. What appears clear is that the bank cannot in the future trust the petitioner as a manager who would follow directives from higher authorities on business policy and directions. The bank can be placed at risk if this kind of managerial attitude will be repeated, especially if it becomes an accepted rule among lower managers.
In Nokom v. NLRC, we reiterated the guidelines for the application of loss of confidence as follows: (1) loss of confidence, should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.
Under the circumstances of this case, we are convinced that the bank was justified in terminating Lopezs employment by reason of loss of trust and confidence. He admitted issuing the two POs, claiming merely that he had the requisite authority. He could not present any proof in this regard, however, except to say that it was part of his inherent duty as bank manager. He also claimed that the bank acquiesced to the issuance of the POs as it paid the first PO and the POs he issued in the past. This submission flies in the face of the banks directive for him not to proceed unless matters are cleared with the banks credit committee. The bank had a genuine concern over the issue as it found through its credit committee that Hertz was a credit risk. Whether the credit committee was correct or not is immaterial as the banks direct order left Lopez without any authority to clear the loan application on his own. After this defiance, we cannot blame the bank for losing its confidence in Lopez and in separating him from the service.
***
As the NLRC and the CA did, we find Lopez to have been afforded due process when he was dismissed. He was given the required notices. More importantly, he was actually given the opportunity to be heard; when he moved for reconsideration of the banks decision to terminate his employment, it scheduled a hearing where he appeared together with his lawyer and a military man. This was an opportunity to be heard that the law recognizes.
FACTS: Petitioner Elmer Lopez was the Branch Manager of the respondent Keppel Bank Philippines, Inc. (bank) in Iloilo City. Allegedly, through his efforts, Hertz Exclusive Cars, Inc. (Hertz) became a client of the bank.
By notice dated August 12, 2003, the bank asked Lopez to explain in writing why he should not be disciplined for issuing, without authority, two purchase orders (POs) for the Hertz account amounting to a total of P6,493,000.00, representing the purchase price of 13 Suzuki Bravo and two Nissan Exalta vehicles.
Lopez submitted his written explanation on the same day, but the bank refused to give it credit. Through respondents Manuel Bosano III (Vice-President and Head of Retail Banking Division/Consumer Banking Division) and Stefan Tong Wai Mun (Vice-President/Comptroller), the bank terminated Lopezs employment effective immediately.
Lopez asked the bank for reconsideration. In response, the bank, through the respondent officers, met with Lopez at its headquarters in Cubao, Quezon City on September 25, 2003. Lopez came with his lawyer (Atty. Edmundo V. Buensuceso) and a military man (one Col. Flordeliza). After the meeting, the bank found no reason to reconsider and reiterated its decision to dismiss Lopez.
Lopez filed a complaint for illegal dismissal and money claims against the bank, Bosano and Tong.
In a decision dated April 28, 2004, Labor Arbiter Cesar D. Side ruled that Lopez was illegally dismissed. Accordingly, the labor arbiter ordered Lopezs immediate reinstatement, and awarded him backwages ofP392,000.00, moral and exemplary damages ofP8M, and P550,000.00 the purchase price of a Toyota Revo which Lopez allegedly brought over from his stint with Global Bank (now Metrobank). The labor arbiter found that contrary to the banks claim, the evidence showed that Lopez had been issuing POs which the bank had paid, including the first of the two POs that led to his dismissal.
On appeal by the bank, the National Labor Relations Commission (NLRC) rendered a decision on October 11, 2005 reversing the labor arbiters ruling. It dismissed the complaint for lack of merit. The NLRC found merit in the banks submission that by issuing the questioned POs without authority and against the banks express orders, Lopez thereby committed a willful disobedience against his superiors a sufficient basis for the bank to lose its trust and confidence in him as branch manager. It thus found that Lopez had been dismissed for cause after the observance of due process. Lopez moved for reconsideration, but the NLRC denied the motion in its resolution of January 25, 2006. Lopez sought relief from the CA through a petition for certiorari, charging the NLRC with grave abuse of discretion for setting aside the labor arbiters decision.
On December 19, 2006, the CA rendered its now assailed decision, denying the petition and affirming the October 11, 2005 decision of the NLRC. It fully agreed with the NLRC finding that Lopez had not been illegally dismissed.
ISSUE: Is Lopez liable for loss of confidence for issuing the POs? HELD: On the substantive aspect of the case, we note that Lopez was dismissed from the service by reason of loss of trust and confidence, a just cause for an employees dismissal under the law. Lopez insists though that the act which triggered the dismissal action does not justify his separation from the service.
Is Lopez liable for loss of trust and confidence for issuing the two disputed POs?
The right of an employer to freely select or discharge his employee is a recognized prerogative of management; an employer cannot be compelled to continue employing one who has been guilty of acts inimical to its interests. When this happens, the employer can dismiss the employee for loss of confidence.
At the same time, loss of confidence as a just cause of dismissal was never intended to provide employers with a blank check for terminating employment. Loss of confidence should ideally apply only (1) to cases involving employees occupying positions of trust and confidence, or (2) to situations where the employee is routinely charged with the care and custody of the employers money or property. To the first class belong managerial employees, i.e., those vested with the powers and prerogatives to lay down management polices and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or effectively recommend such managerial actions. To the second class belong cashiers, auditors, property custodians, or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.
As branch manager, Lopez clearly occupies a "position of trust." His hold on his position and his stay in the service depend on the employers trust and confidence in him and on his managerial services. According to the bank, Lopez betrayed this trust and confidence when he issued the subject POs without authority and despite the express directive to put the clients application on hold. In response, Lopez insists that he had sufficient authority to act as he did, as this authority is inherent in his position as bank manager. He points to his record in the past when he issued POs which were honored and paid by the bank and which constituted the arbiters "overwhelming evidence" in support of the finding that "complainants dismissal from work was without just cause, hence, illegal."We disagree with Lopezs contention. Despite evidence of his past exercise of authority (as found by the labor arbiter), we cannot disregard evidence showing that in August 2003, the bank specifically instructed Lopez not to proceed with the Hertz loan application because of the negative credit rating issued by the banks credit committee. We find it undisputed that Lopez processed the loan despite the adverse credit rating. In fact, he admitted that he overlooked the "control aspects" of the transaction as far as the bank was concerned because of his eagerness to get a bigger share of the market.
Lopezs good intentions, assuming them to be true, are beside the point for, ultimately, what comes out is his defiance of a direct order of the bank on a matter of business judgment. He went over the heads of the bank officers, including the credit committee, when, based on inquiries he made on his own regarding the credit worthiness of James Puyat Concepcion, he simply proceeded to act on the basis of his own judgment. Evident in his written explanation was his failure to inform the credit committee of his own efforts to check on the committees adverse findings against Hertz and his independent action based solely on his own authority.
As a bank official, the petitioner must have been aware that it is basic in every sound management that people under ones supervision and direction are bound to follow instructions or to inform their superior of what is going on in their respective areas of concern, especially regarding matters of vital interest to the enterprise. Under these facts, we find it undisputed that Lopez disobeyed the banks directive to put the Hertz loan application on hold, and did not wait until its negative credit rating was cleared before proceeding to act. That he might have been proven right is immaterial. Neither does the submission that the bank honored and paid the first PO and even realized a profit from the transaction, mitigate the gravity of Lopezs defiance of the directive of higher authority on a business judgment. What appears clear is that the bank cannot in the future trust the petitioner as a manager who would follow directives from higher authorities on business policy and directions. The bank can be placed at risk if this kind of managerial attitude will be repeated, especially if it becomes an accepted rule among lower managers.
In Nokom v. NLRC, we reiterated the guidelines for the application of loss of confidence as follows: (1) loss of confidence, should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.
Under the circumstances of this case, we are convinced that the bank was justified in terminating Lopezs employment by reason of loss of trust and confidence. He admitted issuing the two POs, claiming merely that he had the requisite authority. He could not present any proof in this regard, however, except to say that it was part of his inherent duty as bank manager. He also claimed that the bank acquiesced to the issuance of the POs as it paid the first PO and the POs he issued in the past. This submission flies in the face of the banks directive for him not to proceed unless matters are cleared with the banks credit committee. The bank had a genuine concern over the issue as it found through its credit committee that Hertz was a credit risk. Whether the credit committee was correct or not is immaterial as the banks direct order left Lopez without any authority to clear the loan application on his own. After this defiance, we cannot blame the bank for losing its confidence in Lopez and in separating him from the service.
***
As the NLRC and the CA did, we find Lopez to have been afforded due process when he was dismissed. He was given the required notices. More importantly, he was actually given the opportunity to be heard; when he moved for reconsideration of the banks decision to terminate his employment, it scheduled a hearing where he appeared together with his lawyer and a military man. This was an opportunity to be heard that the law recognizes.
