February 2008 - Philippine Supreme Court Decisions/Resolutions

Philippine Supreme Court Jurisprudence

G.R. No. 172812 - AMELIA R. ENRIQUEZ, ET AL. v. BANK OF THE PHILIPPINE ISLANDS, ET AL.

SECOND DIVISION

[G.R. NO. 172812 : February 12, 2008]

AMELIA R. ENRIQUEZ and REMO SIA, Petitioners, v. BANK OF THE PHILIPPINE ISLANDS and LUIS A. PUENTEVELLA, AVP, Respondents.

D E C I S I O N

TINGA, J.:

In this Petition for Review on Certiorari, petitioners Amelia R. Enriquez (Enriquez) and Remo L. Sia (Sia) assail the Decision¹ of the Court of Appeals dated 30 November 2005 affirming in toto the Decision² of the Fourth Division of the National Labor Relations Commission (NLRC), Cebu City which dismissed their complaint for illegal dismissal and money claims. The NLRC had earlier reversed and set aside the decision of Executive Labor Arbiter Danilo C. Acosta finding that petitioners were illegally dismissed by respondent Bank of the Philippine Islands (BPI).

The antecedents, as culled from the records, are as follows:

Enriquez and Sia were the branch manager and assistant branch manager, respectively, of the BPI-Bacolod Singcang Branch. Enriquez was first employed by respondent bank in 1971 and had been an employee thereof for 32 years at the time of her termination,³ whereas Sia had been in respondent bank's employ since 1974, or for a total of 29 years at the time of his dismissal.⁴ Respondent Luis A. Puentevella (Puentevella) is one of respondent's principal officers and was impleaded in his personal capacity.

Petitioners maintain that on 27 December 2002, their branch experienced a heavy volume of transactions owing to the fact that it was the last banking day of the year. When banking hours came to a close, teller Geraldine Descartin (Descartin) purportedly discovered that she had a cash shortage of P36,000.00 and informed Sia about it. Sia, in turn, informed Enriquez of the problem and was directed to review the day's transactions to trace its cause.⁵

Descartin claimed that the discrepancy was due to an innocent oversight and recalled that the unaccounted shortage was due to the failure of her mother-in-law, Remedios Descartin (Remedios), to sign the withdrawal slip when the latter withdrew P36,000.00 earlier that day. With that explanation, Enriquez directed Descartin and her co-teller Evelyn Fregil (Fregil) to submit their written memorandum of the incident. Descartin was permitted to leave the bank to look for Remedios so that the latter could sign the withdrawal slip. At around 7:00 p.m., she returned to the bank with the signed withdrawal slip and debited the amount from the client's account. Thus, petitioners aver, the transaction was regularized before the end of the day.⁶

It is the position of petitioners that as there was neither shortage nor loss to the bank because the initial discrepancy was accounted for and that it was due to a mere oversight, they put the matter to rest. In the meantime, Sia began to wind up his affairs as 27 December 2002 was his last working day with the bank before going on terminal leave prior to his optional retirement.

Respondents, however, have a different version of what transpired on 27 December 2002. According to them, teller Descartin's shortage of P36,000.00, which she confided to her co-teller Fregil, was incurred because she had temporarily borrowed the money that week to pay her financial obligations but intended to return the same on the first week of January. Teller Fregil reported the matter to Sia and Enriquez, both of whom suggested that teller Descartin fill the shortage with a loan from her family. Teller Descartin replied that her family did not have the money, she instead borrowed the amount from her in-laws. Thus, at 5:21 p.m., teller Descartin posted the unsigned withdrawal slip for the amount of P36,000.00 against the joint account of her parents-in-law. As the amount exceeded the floor limit for tellers which would require the approval of a superior officer, either Enriquez or Sia approved the transaction at 5:22 p.m. as reflected on the account records. Teller Descartin thereafter left the bank to secure the signature of her mother-in-law Remedios and returned at past 7:00 p.m. with the signed withdrawal slip.⁷

On 28 December 2002, teller Fregil was allegedly informed that teller Descartin was going to prepare a "white lie" report, to be signed by both of them, stating that teller Descartin had inadvertently misplaced the withdrawal slip of her mother-in-law and that the transaction was regularized within the same day. On 2 January 2003, teller Fregil signed the report. However, in February 2003, teller Fregil bumped into a colleague assigned to the BPI-Bacolod Main Branch and confided to the latter her uneasiness about the 27 December 2002 incident. The matter was reported and ultimately brought to the attention of respondent Puentevella.⁸

Thus, sometime in February 2003, respondent Puentevella initiated further investigation on the incident. Later, on 3 March 2003, teller Fregil retracted her original statement and instead executed another letter claiming that there was a cover-up of the shortage on the day in question. Respondents assert that the investigation conducted by the Auditing Division of BPI bolstered teller Fregil's claims of irregularity as the audit report disclosed that petitioners failed to make the necessary report on the shortage and instead assisted in covering-up teller Descartin's wrongdoing.

On 25 April 2003, petitioners were instructed to report to the BPI head office for polygraph testing. While they expressed their willingness to be interviewed, petitioners objected to the polygraph test. On 27 June 2003, petitioners received show-cause memos directing them to explain in writing why they should not be sanctioned for conflict of interest and breach of trust. Petitioners submitted their respective replies in which they denied the charges against them. On 14 July 2003, a committee of respondent bank conducted a hearing of the case and as part of the investigation, separately interviewed petitioners and tellers Descartin and Fregil. On 3 September 2003, petitioners were dismissed from employment on grounds of breach of trust and confidence and dishonesty.

Hence, on 4 September 2003, petitioners filed their respective Complaints⁹ for illegal dismissal against respondents and prayed for reinstatement or, in lieu thereof, payment of separation pay. Additionally, they sought backwages, retirement pay, attorney's fees and moral and exemplary damages in the amount of P10,000,000.00.

After the submission by the parties of their position papers, Labor Arbiter Acosta rendered a Decision¹⁰ on 29 March 2004 finding that petitioners had been illegally dismissed. The dispositive portion of the decision states:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. DECLARING that complainants were illegally dismissed by respondents;

2. ORDERING respondents to reinstate complainants to their former position without loss of seniority rights and to pay them their corresponding full back wages inclusive of allowances and other benefits as computed, in the sum of Pesos: ONE MILLION ONE HUNDRED SEVENTY-THREE THOUSAND, FOUR HUNDRED THIRTY-FOUR AND 50/100 ONLY (P1,173,434.50);

3. ORDERING respondents to jointly and severally pay complainants moral and exemplary damages in the amount of P3,000,000.00 each or a total of P6,000,000.00;

4. ORDERING respondents to jointly and severally pay attorney's fees in the amount of P717,343.45 which is equivalent to 10% of the total judgment award, thereby making a total of SEVEN MILLION EIGHT HUNDRED NINETY THOUSAND, SEVEN HUNDRED SEVENTY-SEVEN AND 95/100 ONLY (P7,890,777.95), the same to be deposited with the Cashier of this Office within ten (10) calendar days from receipt of this Decision;

5. ORDERING respondents to jointly and severally pay complainants in case they reach the compulsory retirement age of 60 years old pending final resolution of this case, their Retirement pay equivalent to two (2) months latest salary for every year of service and their Separation pay equivalent to one (1) month salary for every year of service computed from the time they were hired up to their retirement period.¹¹

Aggrieved, respondents appealed to the NLRC. Finding that the records substantiated the conclusion that petitioners tried to cover up teller Descartin's infraction instead of taking the appropriate action thereon, the NLRC ruled that respondents had just cause to terminate their employment. Hence, the NLRC reversed and set aside the challenged decision and although it dismissed the complaint, it ordered respondents to give petitioners financial assistance equivalent to one-half month's pay for every year of service.¹²

Petitioners thereafter elevated the case to the Court of Appeals. The appellate court, agreeing with the NLRC, denied petitioners' appeal and affirmed in toto the latter's assailed decision.

Before us, petitioners raise the following assignment of errors:

THE COURT OF APPEALS ERRED IN NOT DECLARING THAT RESPONDENTS' APPEAL TO THE NLRC WAS DEFECTIVE FOR FAILING TO COMPLY WITH RULE VI, SECTION 4 OF THE NLRC RULES OF PROCEDURE.

THE APPEALED DECISION AND RESOLUTION OF THE COURT OF APPEALS ARE MANIFESTLY ERRONEOUS AND RENDERED IN DISREGARD OF THE EVIDENCE IN RECORD AND EXISTING JURISPRUDENCE.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN CONCLUDING THAT PETITIONERS WERE VALIDLY TERMINATED FROM EMPLOYMENT.

THE COURT OF APPEALS ERRED IN AFFIRMING THE NLRC'S DECISION AND RESOLUTION THAT ARE IRREGULAR AND ANOMALOUS.¹³

The petition should be denied.

Petitioners maintain that the Memorandum of Appeal¹⁴ filed by respondents before the NLRC should have been dismissed due to a defect in its verification. In particular, petitioners assert that the document was signed by Puentevella alone, who did not show any board resolution authorizing him to represent the corporation on appeal, in violation of Rule VI, Section 4 of the NLRC Rules of Procedure which provides:

Section 4. REQUISITES FOR PERFECTION OF APPEAL. A) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rules, shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court x x x.

For their part, respondents argue that the board of directors of a corporation, in vesting authority to another person or body, does not necessarily have to be express and in writing at all times. They cited the following excerpt from the case of People's Aircargo and Warehousing Co., Inc. v. Court of Appeals¹⁵ to support their contention:

The general rule is that, in the absence of authority from the board of directors, no person, not even its officers, can validly bind a corporation. A corporation is a juridical person, separate and distinct from its stockholders and members, "having xxx powers, attributes and properties expressly authorized by law or incident to its existence."

Being a juridical entity, a corporation may act through its board of directors, which exercises almost all corporate powers, lays down all corporate business policies and is responsible for the efficiency of management, as provided in Section 23 of the Corporation Code of the Philippines:

x x x

Under this provision, the power and the responsibility to decide whether the corporation should enter into a contract that will bind the corporation is lodged in the board, subject to the articles of incorporation, bylaws, or relevant provisions of law. However, just as a natural person may authorize another to do certain acts for and on his behalf, the board of directors may validly delegate some of its functions and powers to officers, committees or agents. The authority of such individuals to bind the corporation is generally derived from law, corporate bylaws or authorization from the board, either expressly or impliedly by habit, custom or acquiescence in the general course of business, viz.:

"A corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that [the] authority to do so has been conferred upon him, and this includes powers which have been intentionally conferred, and also such powers as, in the usual course of the particular business, are incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation has caused persons dealing with the officer or agent to believe that it has conferred."

x x x Apparent authority is derived not merely from practice. Its existence may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. x x x¹⁶

Therefore, according to respondents, there was acquiescence on the part of BPI which amounted to a valid authority as it never showed any indication that it had not given its authority to respondent Puentevella to act on its behalf in the filing of the appeal with the NLRC.

After assiduously weighing the arguments of the parties, we find that a liberal construction of the rules is in order. To serve the interest of justice, compelling reason obtains to address respondents' arguments and brush aside technicality. The Court frowns upon the practice of dismissing cases purely on procedural grounds.¹⁷ Instructive is our pronouncement in the case of Bank of the Philippine Islands v. Court of Appeals,¹⁸ thus:

Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. x x x We see no circumvention of these objectives by the vice president's signing the verification and certification without express authorization from any existing board resolution.

As explained in BPI's Motion for Reconsideration, he was actually authorized to sign the verification and the certification, as shown by the written confirmation attached to the Motion. Furthermore, he is presumed to know the requirements for validly signing those documents. (Emphasis supplied)¹⁹

While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and the swift unclogging of court dockets is a laudable objective, it nevertheless must not be met at the expense of substantial justice.²⁰ This Court has time and again reiterated the doctrine that the rules of procedure are mere tools aimed at facilitating the attainment of justice, rather than its frustration. A strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should never be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities.²¹ Considering that there was substantial compliance, a liberal interpretation of procedural rules in this labor case is more in keeping with the constitutional mandate to secure social justice.²²

Having disposed of the procedural matter raised by petitioners, we now address the merits of the petition. There is no denying that loss of trust and confidence is a valid ground for termination of employment.²³ Hence, the basic requisite for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence²⁴ or is routinely charged with the care and custody of the employer's money or property.²⁵ Moreover, the breach must be related to the performance of the employee's function.²⁶ Also, it must be shown that the employee is a managerial employee, since the term "trust and confidence" is restricted to said class of employees.²⁷ In reviewing this petition, we have fully taken into account the foregoing considerations.

Petitioners challenge the reliance of the assailed decisions on the letters and affidavits executed by Teller Fregil, which retracted her original statement dated 28 December 2002 consistent with petitioners' version of the facts. While retractions are generally looked upon with disfavor by the courts, there may exist instances, as in the case at bar, when a retraction may be accepted. Before doing so, it is necessary to examine the circumstances surrounding it and the possible motives for reversing the previous declaration.

We find sufficient basis in evidence to accord full probative value to Teller Fregil's retraction letter which she later affirmed through subsequent affidavits. The independent audit conducted by the auditing division of BPI notably supports her claim that the wrongdoing was concealed by petitioners from respondent bank. Moreover, a review of the teller's transaction summary²⁸ of teller Descartin reinforces the conclusion that the shortage in her pico box was due to a "temporary borrowing," the cover-up of which was sanctioned by petitioners.

It is likewise asserted by petitioners that under BPI's bank policy, failure to report a shortage is not a ground to terminate employment. The argument is short-sighted.

BPI's policy on tellers' shortages is unambiguous. It requires that all shortages be declared properly and booked accordingly on the same day they are incurred.²⁹ Furthermore, the same must be reported by the branch head to the designated bank officers and departments not later than the second banking day from the date of booking.³⁰

The pertinent provisions of BPI's Personnel Policies and Benefits Manual, in Chapter IV, Section 20 (B) thereof, provides:

2.1 Breach of Trust and Confidence; Dishonesty

x x x

2.1.2 Misappropriation, malversation or withholding of funds.

1^st offense - dismissal

x x x

2.2 Violation of Operating Procedures

2.2.1 Willful non-observance of standard operating procedures in the handling of any transaction or work assignment for purposes of personal gain, profit, or advantage of another person.

1^st offense - dismissal

x x x

3.5 Any employee who knowingly aids, abets, or conceals or otherwise deliberately permits the commission of any irregular or fraudulent act directed against the Unibank will be considered equally guilty as the principal perpetuators of the fraud or irregularity, and will be dealt with accordingly.

3.5.1 Management will not tolerate violations of banking and/or established procedures by an employee where there is a conflict-of-interest situation and where the irregular transaction or omission is intended to benefit the officer concerned or a related interest, at the Unibank's expense or risk. x x x³¹

Taken together with the attending circumstances of the case, the failure of petitioners to report the cash shortage of teller Descartin, even if done in good faith, nonetheless resulted in their abetting the dishonesty committed by the latter. Under the personnel policies of respondent bank, this act of petitioners justifies their dismissal even on the first offense. Even assuming the version of petitioners as the truth, the fact remains that they willfully decided against reporting the shortage that occurred. As a result, in either situation, petitioners' acts have caused respondents to have a legitimate reason to lose the trust reposed in them as senior managerial employees. Their participation in the cover-up of the misconduct of teller Descartin makes them unworthy of the trust and confidence demanded by their positions.

It is well-settled that the power to dismiss an employee is a recognized prerogative that is inherent in the employer's right to freely manage and regulate his business. An employer cannot be expected to retain an employee whose lack of morals, respect and loyalty to his employer or regard for his employer's rules and appreciation of the dignity and responsibility of his office has so plainly and completely been bared.³² Thus, to compel respondent bank to keep petitioners in its employ after the latter have betrayed the confidence given to them would be unjust to respondent bank. The expectation of trust is more so magnified in the instant case in light of the nature of respondent bank's business. The banking industry is imbued with public interest and is mandated by law to serve its clients with extraordinary care and diligence. To be able to fulfill this duty, it in turn must rely on the honesty and loyalty of its employees.³³

As a final challenge to the decision of the appellate court, petitioners maintain that irregularity and anomaly attended the disposition of respondents' appeal before the NLRC. In particular, petitioners bewail the alleged "breakneck speed" at which the appeal was resolved by Commissioner Oscar Uy who, they claim, took an unusual interest in the case. Petitioners' counsel even filed a complaint against Commissioner Uy before the Ombudsman.

We must sustain the appellate court in treating such suppositions as mere allegations pending the result of the formal investigation by the Ombudsman. Absent a definitive finding on the accusations of irregularity, we cannot in this case consider petitioners' arguments on the matter. It is a separate matter in itself which has to be addressed first by the Ombudsman in the case pending before it. At all events, the assailed decision at bar is basically sound, aligned with law and jurisprudence, and supported by the evidence on record.

Besides, the province of the instant Rule 45 Petition for Review is to correct errors of law committed by the Court of Appeals. After a judicious and meticulous review of the records of the case, we are convinced that the Court of Appeals did not err in finding that petitioners were validly terminated from employment.

Clearly, as a measure of self-preservation against acts patently inimical to its interests, respondent bank had every right to dismiss petitioners for breach of trust, loss of confidence and dishonesty. Indeed, in cases of this nature, the fact that petitioners had been employees of BPI for a long time, if it is to be considered at all, should be taken against them. Their manifest condonation and even concealment of an offense prejudicial to their employer's interest committed by a subordinate under their supervision reflect a regrettable lack of loyalty which they should have reinforced, instead of betrayed.³⁴ So Sosito v. Aguinaldo Development Corporation³⁵ prescribes:

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges

in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.³⁶

WHEREFORE, finding no reversible error, the instant petition is DENIED.

SO ORDERED.

Endnotes:

---

¹ Rollo, pp. 40-49; penned by Associate Justice Enrico A. Lanzanas and concurred in by Associate Justices Mercedes Gozo-Dadole and Pampio A. Abarintos.

² Id. at 305-313; penned by Commissioner Oscar S. Uy and concurred in by Presiding Commissioner Gerardo C. Nograles, dated 7 October 2004.

³ Id. at 86.

⁴ Id. at 108.

⁵ Id. at 5.

⁶ Id. at 5-6.

⁷ Id. at 432-436.

⁸ Id. at 437-438.

⁹ CA rollo, pp. 73-76.

¹⁰ Id. at 191-207.

¹¹ Id. at 206-207.

¹² Rollo, p. 313.

¹³ Id. at 14.

¹⁴ Id. at 469-470.

¹⁵ 357 Phil. 850 (1998).

¹⁶ Id. at 862-864.

¹⁷ Penaranda v. Baganga Plywood Corporation and Chua, G.R. No. 159577, 3 May 2006, 489 SCRA 94, 101, citing Pacific Life Assurance Corporation v. Sison, 359 Phil. 332; Empire Insurance Company v. National Labor Relations Commission, 355 Phil. 694, 14 August 1998; People Security Inc. v. National Labor Relations Commission, 226 SCRA 146, 8 September 1993; Tamargo v. Court of Appeals, 209 SCRA 518, 3 June 1992.

¹⁸ 450 Phil. 532 (2003).

¹⁹ Id. at 540, citing Shipside Incorporated v. Court of Appeals, 352 SCRA 334, 346, 20 February 2001. Emphasis ours.

²⁰ Philippine Amusement and Gaming Corporation v. Angara, G.R. No. 142937, 15 November 2005, 475 SCRA 41, citing Wack Wack Golf and Country Club v. NLRC, G.R. No.149793, 15 April 2005, 456 SCRA 280; General Milling Corporation v. NLRC, G.R. No. 153199, 17 December 2002, 394 SCRA 207.

²¹ Id. citing Reyes v. Court of Appeals, G.R. No. 149580, 16 March 2005, 453 SCRA 498; Development Bank of the Philippines v. Court of Appeals, G.R. No. 139034, 6 June 2001, 358 SCRA 501.

²² Penaranda v. Baganga Plywood Corporation and Chua, supra; citing Const., Art. II, Sec. 18 and Art. XIII, Sec. 3 and Ablaza v. Court of Industrial Relations, 126 SCRA 247, 21 December 1983.

²³ Villanueva v. NLRC (Third Division), 354 Phil. 1056, 1060, citing Madlos v. NLRC, 254 SCRA 248 (1996); Zamboanga City Electric Cooperative v. Buat, 243 SCRA 47 (1997).

²⁴ Id. at 1061, citing NASUREFCO v. NLRC, G.R. No. 122277, 24 February 1998.

²⁵ Id., citing Mabeza v. NLRC, 271 SCRA 670 (1997).

²⁶ Id., citing Quezon Electric Cooperative v. NLRC, 172 SCRA 94 (1989).

²⁷ Id., citing De la Cruz v. NLRC, 268 SCRA 458 (1997).

²⁸ CA rollo, pp. 377-380.

²⁹ USC Policy No. 94/029 with date last revised 09/02/94. See rollo, p. 167.

³⁰ Id.

³¹ Rollo, pp. 171-172.

³² See Perez v. The Medical City General Hospital, G.R. No. 150198, 6 March 2006, 484 SCRA 138, 145.

³³ Villanueva v. Citytrust Banking Corporation, 413 Phil. 776, 785 (2001).

³⁴ See Salvador v. Philippine Mining Service Corporation, 443 Phil. 878, 893 (2003), citing Flores v. National Labor Relations Commission, 219 SCRA 350 (1993).

³⁵ No. L-48926, 14 December 1987, 156 SCRA 392.

³⁶ Id. at 396.

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