Case Digest: Equitable PCI Bank v. Dompor

G.R. Nos. 163293 & 163297 : December 8, 2010




Respondent was employed by then Philippine Commercial and Industrial Bank (PCIB), which came to be Equitable PCI Bank and now herein petitioner Banco De Oro Unibank, Inc. He was assigned as branch manager of PCIBs Makati Cinema Branch. PCIBs Operations Subcenter Head, Gerardo C. Gabriel, called the attention of PCIBs Ayala-Makati Area Head, Cora Mallillin, regarding a number of PLDT dividend checks being sent for clearing by PCIB Makati Cinema Branch.It appears that respondent allowed Luz Fuentes, a client-depositor of PCIB Makati Cinema Branch who opened checking account no. 0672-04408-0 on July 14, 1995, to deposit several second-endorsed PLDT dividend checks beginning the last quarter of 1995. A special audit was then conducted from August 14-21, 1996.The audit reportshowed that 67,748 PLDT second-endorsed dividend checks, covered by 332 deposit slips, and with a total amount ofP6.713 million, were drawn on Rizal Commercial Banking Corporation-Makati and made payable to different payee corporations and prominent personalities. These checks were thereafter fraudulently negotiated in favor of Fuentes and deposited to her account from September 1995 to July 1996.The audit report also revealed striking similarities of strokes in the signatures of the different payees appearing on the checks.The report further noted that the transactions, which were inadequately documented, have exposed the bank to probable losses and could make the bank liable under its endorsement as the checks drawer may claim reimbursement on the ground of wrong payment or forgery.Thus, from its findings and evaluation, the audit committee recommended respondents dismissal from employment and setting up of a contingent liability for the potential loss for violation of banks policies and failure to exercise prudence expected of a branch head. Respondent was asked to explain in writing why no disciplinary action should be taken against him for committing serious policy violations. Respondent submitted his reply. Respondent received a Memo dismissing him from employment on the grounds of serious policy violations, willful breach of trust, and loss of confidence. Respondent filed a complaint for illegal dismissal before the Regional Arbitration Branch of the NLRC.The Labor Arbiter rendered a Decisionfinding respondents dismissal valid.BothpartiesappealedtotheNLRC.Respondentagainquestionedthe legality of his dismissal for want of substantive and procedural due process. For its part, petitioner partially appealed the decision insofar as the award of separation pay in favor of respondent is concerned stating that PCIBs Code of Discipline provides for the automatic forfeiture of all benefits in cases of dismissal; that respondents length of service should have instead been taken against him; and, that the amount granted is exorbitant. The NLRC dismissed both appeals for lack of merit and, consequently, affirmed the Labor Arbiters Decision.Petitioner and respondent then filed their separate petitions forcertiorariwith the CA, docketed as CA-G.R. SP No. 63948 and CA-G.R. SP No. 65259, respectively. The CA rendered its Decision reversing the ruling of the NLRC and holding that respondents dismissal was effected without due process of law and without just cause.

ISSUE: Whether or not respondent was illegally dismissed.

HELD: Court of Appeals decision is reversed.


To justify willful disobedience or insubordination as a valid ground for termination, the employees assailed conduct must have been willful or characterized by a wrongful or perverse attitude and the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.On the other hand, willful breach of trust requires that the loss of confidence must not be simulated; it should not be used as a subterfuge for causes which are illegal, improper or unjustified; it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; it must be genuine, not a mere afterthought to justify earlier action taken in bad faith; and, the employee involved holds a position of trust and confidence.

In the case at bench, respondent was validly dismissed on the grounds of willful disobedience and willful breach of trust under Article 282 of the Labor Code. While petitioners manual of procedures does not absolutely prohibit the negotiation or acceptance of second-endorsed checks for deposits, it does expressly disallow the acceptance of checks endorsed by corporations, societies, firms, etc. and checks with unusual endorsements.As shown by the records, this explicit policy was transgressed by respondent intentionally and willfully.It was not denied that on June 27, 1996, respondent was instructed by management to stop accepting second-endorsed checks due to the irregularities attendant to the transactions with Fuentes.Despite such reasonable order, on two occasions, respondent unhesitatingly accommodated the request of Fuentes to accept her checks allegedly on the strength of the Area Heads approval on the first instance and on the second instance, respondent justifies his acceptance of the checks as the same were nevertheless returned and cancelled on the ground that the checks include those payable to corporations.Indeed, the return and cancellation of these checks do not change the fact that respondent had accepted for deposit checks which are payable to corporations, thereby flagrantly violating bank guidelines. Respondent admittedly disobeyed not only his superiors directives but also simple bank rules. Moreover, in the investigation conducted on September 2, 1996, Gabriel observed that the signatures appearing at the back of the checks accepted by respondent bore the same strokes. As correctly noted by the Labor Arbiter, the negotiation of checks by hundreds of payees to only one individual should have alerted respondent as to the authenticity of the endorsements. These considerations have convinced the Court that the PLDT dividend checks indeed contain unusual and suspicious endorsements and cannot be overruled by the mere denial of respondent.

Respondent unduly yielded to the whims of a client and gave undue advantage to her instead of performing his duties towards the best interest of the bank.From the start, respondent was perceived to have been extending special favors to Fuentes even though such entails contravention of strict bank guidelines.As narrated by one of the branch staff personnel, Carmela C. Exconde, Fuentes was able to open an account thru respondents approval even without the requisite documents. Also, all transactions coursed by Fuentes were approved by respondent even if questionable.Despite several recommendations and orders by his superiors to close the account of Fuentes due to several infractions committed and mishandling of the account, respondent defied the instructions.Respondent even accommodated the negotiation of second-endorsed checks deposited by Fuentes even if the latter was not extended any credit line.It bears stressing that respondent failed to prove that Fuentes is a valued client, as to warrant the undue accommodation given her, as mere allegation does not suffice especially since petitioner contradicts the same.

Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with not only to ensure efficient bank operation which is imbued with public interest but also to serve the best interest of the bank as he holds a position of trust and confidence.As emphasized by petitioner, respondent was in charge of the overall administration of the branch and is tasked to ensure that all policies and procedures are strictly followed.Indubitably, any negligence in the exercise of his responsibilities can be sufficient ground for loss of trust and confidence demanded by his position.

The requirements of procedural due process were complied with when petitioner sent a Memo dated October 23, 1996 to respondent informing him of the specific charges and giving him opportunity to air his side.Subsequently, in a letter dated January 7, 1997, respondent was informed that on the basis of the results of the investigation conducted, his written explanation, the written explanation of other employees as well as the audit report, the management has decided to terminate him.The two-notice requirement, which includes a written notice of the cause of dismissal to afford the employee ample opportunity to be heard and defend himself, and written notice of the decision to terminate him which states the reasons therefor,was thus complied with.

Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causeother than serious misconduct. In addition to serious misconduct, separation pay should not be conceded to an employee who was dismissed based onwillful disobedience. In the instant case, the Labor Arbiters basis for the award of separation pay was respondents length of service and the fact that petitioner sustained no losses.However, as already discussed, it was established that the infractions committed by the respondent constituted serious misconduct or willful disobedience resulting to loss of trust and confidence.Clearly therefore, even based on equity and social justice, respondent does not deserve the award of separation pay.Consequently, the same should be deleted.