ManilaSECOND
DIVISION
ASSOCIATED
CITIZENS BANK,
Petitioner,
G. R. No. L-48896
February 24, 1981
-versus-
HONORABLE
BLAS F. OPLE,Minister of Labor,
ANTONIO TRIA TIRONA,as Labor Arbiter of the
Department of Labor,and JOSE S. ARAMBULO,
Respondents.
R
E S O L U T I O N
AQUINO, J.:
The issue in
this case is whether a managerial
employee who had worked in the Bank for thirteen years and who, with
the
approval of the Department of Labor, was dismissed for having committed
a grave abuse of authority, is entitled to separation-pay equivalent to
his salary for thirteen [13] months plus accrued benefits.
Jose S. Arambulo
joined the Citizens Bank and
Trust Company on January 16, 1963. He became an Assistant
Vice-President
and concurrently, manager of the bank's Ylaya or Divisoria branch for
ten
years.cralaw:red
On January 1,
1976, Norberto K. Katigbak, the
Executive Vice-President, transferred Arambulo to the office of the
president
of the Associated Citizens Bank [a merger in 1975 of the Associated
Banking
Corporation and the Citizens Bank and Trust Company]. In a
memorandum
dated January 9, 1976, Katigbak advised Arambulo that he [Arambulo] was
under preventive suspension or forced vacation leave and that should
the
Credit Operations Review Unit, which was auditing the unauthorized loan
disbursements and overdrafts made in the Ylaya Branch, find that
Arambulo
had acted beyond the limits of his authority, that would be a ground
for
terminating his services. [p. 31, Rollo].cralaw:red
The auditing or
investigating committee, composed
of Roman S. Bernardo, Senior Vice-President; Rafael Noriega,
Vice-President,
and Michael Co, Assistant Vice-President, in a memorandum dated
February
27, 1976, found that Arambulo had committed irregularities and abuse of
discretion prejudicial to the bank. The committee recommended
Arambulo's
dismissal and appropriate legal action to protect the interest of the
bank.
[pp. 9-10, Rollo]. The investigating committee pinpointed the following
irregularities committed by Arambulo:
1. Current Account No. 1212 in the name
of
Clarita
Villanueva with an initial cash deposit of P1,000.00 was approved by
Mr.
Arambulo on August 3, 1974. The operation of the account was
characterized
by a daily check deposit in big amounts from P150,000.00 to P300,000.00
in aggregate, with simultaneous withdrawal of various checks almost in
equal amounts which were honored or approved by Arambulo although the
checks
deposited were not yet properly cleared
This manner of operation continued up
to
December
29, 1975 on which date, the account showed an overdraft balance of
P360,010.51
as a result of various checks drawn against the account which were
approved
by Mr. Arambulo although no corresponding deposit has been made.
The amount of overdrawing was
aggravated
when
it increased to P581,400.51 on January 5, 1976 as a result of the
return
by other banks of various checks deposited on December 24, 1975 and
which
were treated as COCI on said date. The outstanding overdraft balance as
of February 26, 1976 amounted to P504,269.26.
Our head office records also showed
that on
October
22, 1975, a loan of P210,000.00 was approved by the Loan Committee in
favor
of Clarita Villanueva upon the recommendation of Mr. Arambulo for the
purpose
of regularizing the TOD [temporary overdraft] granted by him amounting
to P210,007.30 as of September 29, 1975. This was granted against
chattel
mortgage on inventory for P854,130.20 with present balance of
P171.255.26.
[pp. 9-10, Rollo].
The
investigating committee also found that Arambulo
irregularly approved other temporary overdrafts and loan accounts
amounting
to P258,564.09 for fifteen customers which were still outstanding [p.
10,
Rollo]. The temporary overdrafts and drawings against uncollected
deposits, which Arambulo permitted in the Ylaya branch, were allegedly
in contravention of the bank president's office order dated March 16,
1975.
The bank president called the attention of branch managers to the
Monetary
Board Memorandum of May 26, 1972 which defined the conditions under
which
temporary overdrafts and drawings may be allowed.
In said order,
the bank president [Arambulo's
brother and a major stockholder of the bank, p. 12, Rollo] directed
that
all temporary overdrafts, whether secured or unsecured by assignment of
deposits, should be phased out by April 16, 1975; that the drawings
against
uncollected deposits should be permitted for the accommodation of
valued
clients only and should be non-recurrent; that the uncollected deposits
should be evidenced by manager's or cashier's checks and that the
withdrawal
should not exceed 50% of the face value of the checks. [pp.
77-78,
Rollo].cralaw:red
In a letter dated
March 22, 1976, Bernardo asked
Arambulo to submit an explanation regarding the said temporary
overdrafts
and drawings against uncollected deposits. [pp. 32-33,
Rollo].
Arambulo in his reply of April 1, 1976, alleged that he did not commit
any abuse of discretion as branch manager; that the questioned
transactions
were in accordance with sound banking practices; that he had to retain
the goodwill of the customers, considering that twenty-one banks had
branches
in the Ylaya area; that it had been a practice to grant credit
accommodations
to good clients with good reputation; that the account of Clarita
Villanueva
was fully secured and that the other accounts had been referred to the
legal department. [pp.34-35, Rollo].cralaw:red
Even before
Arambulo had submitted his explanation,
or on March 23, 1976, the bank applied for clearance to suspend
Arambulo
effective January 9, 1976 pending "investigation of anomalous
practices"
in the Ylaya branch. [p. 216, Rollo]. On April 22, 1976,
Arambulo,
44, filed with Regional Office No. IV this case for illegal suspension
and dismissal. [p. 36, Rollo]. While that case was pending,
or on July 15, 1976, Katigbak sent Arambulo a letter dismissing him
from
the service for cause, retroactive to the date of suspension. [p.
29, Rollo].cralaw:red
Katigbak in that
letter [substantially a repetition
of his letter of March 22, 1976] reminded Arambulo that the latter had
allowed the current account of Clarita Villanueva to be overdrawn by
P360,000
on December 29, 1975 and that the overdraft increased to P574,962.51 on
January 2, 1976 because the checks, which she deposited, were
dishonored.
[p. 29, Rollo]. Katigbak reiterated his previous charge that
Arambulo
allowed the said overdraft in spite of the fact that the loan of
P210,000,
which Arambulo had arranged to be granted to Clarita Villanueva to
cover
up a previously unauthorized temporary overdraft, had not yet been paid.cralaw:red
The result was
that as of July 15, 1976, Clarita
Villanueva's temporary overdraft had still an outstanding balance of
P255,358,
a situation which constituted a violation of the bank's policy and the
Central Bank's regulation against "kiting". [p. 29, Rollo].
(Merriam-Webster defines a "kite" as a check drawn against
uncollected
funds in a bank account" or "a check that has been fraudulently raised
before cashing"].cralaw:red
Katigbak informed
Arambulo that the investigating
committee concluded that Arambulo committed grave abuse of
authority
as a branch manager by exposing the bank to possible losses and of
being
penalized by the Central Bank and that Arambulo continued that
"irregular
banking practice in spite of persistent admonition from the bank
management."
[p. 29, Rollo].cralaw:red
On October 5,
1976, the legal officer of Regional
Office No. 4 of the Department of Labor, acting on the bank's
application
for clearance to terminate the services of Arambulo and two other
employees,
to which Arambulo did not interpose any opposition, granted the
application
pursuant to Article 272 of the. Labor Code, now Article 283 [p. 30,
Rollo].cralaw:red
The Labor Arbiter
in his decision of October 11,
1976, held that there was no valid ground for suspension or dismissal;
that Arambulo was deprived of due process of law; that the bank was
inconsistent
in first intending to allow Arambulo to resign and then later
dismissing
him; that Arambulo did not violate any bank regulation; that the bank
had
acquiesced in the practice of Arambulo; and that under the bank's
office
order, the penalty for the first offense was two week's suspension and
not dismissal. [pp. 51-54, Rollo].cralaw:red
The Labor Arbiter
ordered the bank to reinstate
Arambulo with full backwages and accrued benefits and without loss of
seniority
rights. If reinstatement even to an equivalent position would not be
possible,
the bank was ordered to pay him backwages or separation pay, "whichever
is higher" (the decision is not quite clear). [p. 56, Rollo].cralaw:red
From that
decision, the bank appealed to the National
Labor Relations Commission. Commissioners Diego P. Atienza ana Cleto T.
Villatuya in a Decision dated October 28, 1977 reversed the Decision of
the Labor Arbiter and dismissed Arambulo's complaint. Commissioner
Geronimo
Q. Quadra voted for the affirmance of the Labor Arbiter's decision.cralaw:red
Commissioners
Atienza and Villatuya, on the basis
of the facts set forth in the investigating committee's memorandum of
February
27, 1976, Bernardo's letter of March 22, 1976 and Katigbak's dismissal
letter of July 15, 1976 [pp. 9-10, Rollo, Annexes "D" and "G" of
Petition],
concluded that Arambulo repeatedly violated the bank regulation on
temporary
overdrafts and drawings against uncollected deposits and was,
therefore,
guilty of serious misconduct or willful disobedience to the bank's
order
in connection with his work. [pp. 78-79, Rollo].cralaw:red
The two
commissioners reasoned out that no temporary
overdrafts could be allowed after April 15, 1975 and that Clarita
Villanueva
should not have been allowed to issue checks against uncollected
deposits
because she was not a valued client. [p. 78, Rollo]. The
two
Commissioners also noted that under Policy Instructions No. 8 of the
Secretary
of Labor, Arambulo, as a managerial employee, could be suspended or
dismissed
without prior clearance from the Secretary of Labor. They disagreed
with
the Labor Arbiter's conclusion that Arambulo was denied due process of
law. [pp. 78-79, Rollo].cralaw:red
Arambulo appealed
to the Secretary of Labor. The
Secretary in his Order of April 11, 1978 [48 days before the issuance
of
Presidential Decree No. 1391 which eliminated appeals from the NLRC to
the Secretary of Labor] reversed the NLRC Decision and ordered the bank
to pay Arambulo "separation pay equivalent to one month salary for
every
year of service and other accruing benefits" [p. 220, Rollo]. The
socio-economic analyst of the NLRC computed Arambulo's separation pay
at
P27,300 which amount was arrived at by multiplying his basic monthly
salary
of P2,100 by 13. [p. 121, Rollo].cralaw:red
However, Arambulo
submitted a different computation.
According to his inflated computation, his separation pay for thirteen
months amounts to P65,000 because the basic salary of a '"senior
assistant
vice-president" in 1978 was P5,000 a month.cralaw:red
He said that he
was entitled to accruing benefits
amounting to P132,672.04 consisting of allowances, vacation leave, sick
leave, profit-sharing benefits and bonuses for the period from 1976 to
September 13, 1978. He computed his separation pay and accruing
benefits
at P197,672.04 as of September 13, 1978. [p. 127, Rollo].cralaw:red
We hold that the
Secretary of Labor erred in reversing
the decision of Commissioners Atienza and Villatuya. No grave abuse of
discretion was committed by the latter in confirming Arambulo's
dismissal
for "serious misconduct or willful disobedience by the employee of the
orders of his employer or representative in connection with his work"
(Art
272[b], now Art. 283[b], Labor Code). Arambulo's repeated
violations
of the bank president's office order and the Central Bank's memorandum
against temporary overdrafts and drawings against uncollected deposits
constituted a clear abuse of authority.cralaw:red
Obviously,
Arambulo committed the irregularities
complained of to suit his own purpose and not primarily to serve the
interest
of his employer. If he wanted to act in good faith, he should have
obtained
express authorization from the head office to allow the temporary
overdrafts
and drawings against uncollected deposits.cralaw:red
The contention
that Arambulo was denied due process
because he was not formally investigated is not correct. He was given
plenty
of time to present his side of the case. He was repeatedly informed of
the charges against him which were based on documentary evidence
consisting
of the records of the Ylaya branch which he had managed. He was
familiar
with those records.cralaw:red
It was not
necessary to undergo the ritual of
holding a hearing and presenting those records for his inspection. His
having allowed the temporary overdrafts and drawings against
uncollected
deposits, the irregularities imputed to him, was an uncontestable fact.
He did not deny it. His infringement of the office order and the
Central
Bank's memorandum is likewise incontrovertible. The management, having
lost its confidence in Arambulo, had the right to determine what
disciplinary
action should be taken against him under the termination of employment
provisions of the Labor Code.cralaw:red
WHEREFORE, the
Order of the Secretary of Labor
dated April 11, 1978 is reversed and set aside for having been issued
with
grave abuse of discretion.cralaw:red
We affirm the
decision of the NLRC dated October
28, 1977 dismissing respondent Arambulo's complaint for illegal
suspension
and dismissal. No costs.cralaw:red
SO ORDERED.cralaw:red
Concepcion, Jr.,
Fernandez, and De Castro, JJ.,
concur.
Justice Abad
Santos is on leave.
Justice
Fernandez was designated to sit in the
Second Division.
Separate Opinion
BARREDO, J.,
Concurring:
It appears that
when the legal officer of Regional
Office No. 4 of the Department of Labor approved the application of
petitioner
for clearance to terminate the service, Arambulo did not interpose any
opposition. The rest of the findings and conclusion in the main opinion
should indeed follow corollarily. |