G.R. No.
73681 June 30, 1988 (e) It was also ascertained that the company sustained damages resulting from the infractions committed
COLGATE PALMOLIVE PHILIPPINES, Inc., petitioners, vs. HON. BLAS F. OPLE, COLGATE
PALMOLIVE SALES UNION, respondents. PARAS, J.:
Before Us is a Petition for certiorari seeking to set aside and annul the Order of respondent Minister of
Labor and Employment (MOLE) directly certifying private respondent as the recognized and duly-
authorized collective bargaining agent for petitioner's sales force and ordering the reinstatement of three
employees of petitioner.
Acting on the petition for certiorari with prayer for temporary restraining order, this Court issued a
Temporary Restraining Order enjoining respondents from enforcing and/or carrying out the assailed order.
The antecedent facts are as follows:
On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR)
on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union officers/
members; and coercing employees to retract their membership with the union and restraining non-union
members from joining the union.
After efforts at amicable settlement proved unavailing, the Office of the MOLE, upon petition of petitioner
assumed jurisdiction over the dispute pursuant to Article 264 (g) of the Labor Code, Thereafter the case
was captioned AJML-3-142-85, BLR-3-86-85 "In Re: Assumption of Jurisdiction over the Labor Dispute at
Colgate Palmolive Philippines, Inc." In its position paper, petitioner pointed out that —
(a) There is no legal basis for the charge that the company refused to bargain collectively with the union
considering that the alleged union is not the certified agent of the company salesmen;
(b) The union's status as a legitimate labor organization is still under question because on 6 March 1985,
a certain Monchito Rosales informed the BLR that an overwhelming majority of the salesmen are not in
favor of the Notice of Strike allegedly filed by the Union (Annex "C");
(c) Upon verification of the records of the Ministry of Labor and Employment, it appeared that a petition for
cancellation of the registration of the alleged union was filed by Monchito Rosales on behalf of certain
salesmen of the company who are obviously against the formation of the Colgate Palmolive Sales Labor
Union which is supposed to represent them;
(d) The preventive suspensions of salesmen Peregrino Sayson, Salvador Reynante and Cornelio Mejia,
and their eventual dismissal from the employ of the company were carried out pursuant to the inherent
right and prerogative of management to discipline erring employees; that based on the preliminary
investigation conducted by the company, there appeared substantial grounds to believe that Sayson,
Reynante and Mejia violated company rules and regulations necessitating their suspension pending
further investigation of their respective cases;
by the three salesmen, and that the final results of the investigation fully convinced the company of the
existence of just causes for the dismissal of the three salesmen;
(f) The formation of the union and the membership therein of Sayson, Reynante and Mejia were not in
any manner connected with the company's decision to dismiss the three; that the fact that their dismissal
came at a time when the alleged union was being formed was purely coincidental;
(g) The union's charge therefore, that the membership in the union and refusal to retract precipitated their
dismissal was totally false and amounted to a malicious imputation of union busting;
(h) The company never coerced or attempted to coerce employees, much less interferred in the exercise
of their right to self-organization; the company never thwarted nor tried to defeat or frustrate the
employees' right to form their union in pursuit of their collective interest, as long as that right is exercised
within the limits prescribed by law; in fact, there are at present two unions representing the rank and file
employees of the company-the factory workers who are covered by a CBA which expired on 31 October
1985 (which was renewed on May 31, 1985) and are represented by Colgate Palmolive Employees Union
(PAFLU); whereas, the salaried employees are covered by a CBA which will expire on 31 May 1986
represented by Philippine Association of Free Labor Union (PAFLU)-CPPI Office Chapter. (pp. 4-6, Rollo)
The respondent Union, on the other hand, in its position paper, reiterated the issue in its Notice to Strike,
alleging that it was duly registered with the Bureau of Labor Relations under Registry No. 10312-LC with
a total membership of 87 regular salesmen (nationwide) out of 117 regular salesmen presently employed
by the company as of November 30, 1985 and that since the registration of the Union up to the present,
more than 2/3 of the total salesmen employed are already members of the Union, leaving no doubt that
the true sentiment of the salesmen was to form and organize the Colgate-Palmolive Salesmen Union. The
Union further alleged that the company is unreasonably delaying the recognition of the union because
when it was informed of the organization of the union, and when presented with a set of proposals for a
collective bargaining agreement, the company took an adversarial stance by secretly distributing a
"survey sheet on union membership" to newly hired salesmen from the Visayas, Mindanao and Metro
Manila areas, purposely avoiding regular salesmen who are now members of the union; that in the
accomplishment of the form, District Sales Managers, and Sales Supervisors coerced salesmen from the
Visayas and Mindanao by requiring them to fill up and/or accomplish said form by checking answers
which were adverse to the union; that with a handful of the survey sheets secured by management
through coercion, it now would like to claim that all salesmen are not in favor of the organization of the
union, which acts are clear manifestations of unfair labor practices.
On August 9,1985, respondent Minister rendered a decision which:
(a) found no merit in the Union's Complaint for unfair labor practice allegedly committed by petitioner as
regards the alleged refusal of petitioner to negotiate with the Union, and the secret distribution of survey
sheets allegedly intended to discourage unionism,
(b) found the three salesmen, Peregrino Sayson, Salvador Reynante & Cornelio Mejia "not without fault"
and that "the company 1 has grounds to dismiss above named salesmen"
and at the same time respondent Minister directly certified the respondent Union as the collective
bargaining agent for the sales force in petitioner company and ordered the reinstatement of the three
salesmen to the company on the ground that the employees were first offenders.
Petitioner filed a Motion for Reconsideration which was denied by respondent Minister in his assailed
Order, dated December 27, 1985. Petitioner now comes to Us with the following:
Assignment of Errors
I. Respondent Minister committed a grave abuse of discretion when he directly certified the Union solely
on the basis of the latter's self-serving assertion that it enjoys the support of the majority of the sales force
in petitioner's company.
II. Respondent Minister committed a grave abuse of discretion when, notwithstanding his very own finding
that there was just cause for the dismissal of the three (3) salesmen, he nevertheless ordered their
reinstatement. (pp. 7-8, Rollo)
Petitioner concedes that respondent Minister has the power to decide a labor dispute in a case assumed
by him under Art. 264 (g) of the Labor Code but this power was exceeded when he certified respondent
Union as the exclusive bargaining agent of the company's salesmen since this is not a representation
proceeding as described under the Labor Code. Moreover the Union did not pray for certification but
merely for a finding of unfair labor practice imputed to petitioner-company.
The petition merits our consideration. The procedure for a representation case is outlined in Arts. 257-260
of the Labor Code, in relation to the provisions on cancellation of a Union registration under Arts. 239-240
thereof, the main purpose of which is to aid in ascertaining majority representation. The requirements
under the law, specifically Secs. 2, 5, and 6 of Rule V, Book V, of the Rules Implementing the Labor Code
are all calculated to ensure that the certified bargaining representative is the true choice of the employees
against all contenders. The Constitutional mandate that the State shall "assure the rights of the workers to
self-organization, collective bargaining, security of tenure and just and humane conditions of work,"
should be achieved under a system of law such as the aforementioned provisions of the pertinent
statutes. When an overzealous official by-passes the law on the pretext of retaining a laudable objective,
the intendment or purpose of the law will lose its meaning as the law itself is disregarded. When
respondent Minister directly certified the Union, he in fact disregarded this procedure and its legal
requirements. There was therefore failure to determine with legal certainty whether the Union indeed
enjoyed majority representation. Contrary to the respondent Minister's observation, the holding of a
certification election at the proper time is not necessarily a mere formality as there was a compelling legal
reason not to directly and unilaterally certify a union whose legitimacy is precisely the object of litigation in
a pending cancellation case filed by certain "concerned salesmen," who also claim majority status. Even
in a case where a union has filed a petition for certification elections, the mere fact that no opposition is
made does not warrant a direct certification. More so as in the case at bar, when the records of the suit
show that the required proof was not presented in an appropriate proceeding and that the basis of the
direct certification was the Union's mere allegation in its position paper that it has 87 out of 117 regular
salesmen. In other words, respondent Minister merely relied on the self-serving assertion of the
respondent Union that it enjoyed the support of the majority of the salesmen, without subjecting such
assertion to the test of competing claims. As pointed out by petitioner in its petition, what the respondent
Minister achieved in rendering the assailed orders was to make a mockery of the procedure provided
under the law for representation cases because:
(a) He has created havoc by impliedly establishing a procedural short-cut to obtaining a direct
certification-by merely filing a notice of strike.
(b) By creating such a short-cut, he has officially encouraged disrespect for the law.
(c) By directly certifying a Union without sufficient proof of majority representation, he has in effect
arrogated unto himself the right, vested naturally in the employees, to choose their collective bargaining
representative.
(d) He has in effect imposed upon the petitioner the obligation to negotiate with a union whose majority
representation is under serious question. This is highly irregular because while the Union enjoys the
blessing of the Minister, it does not enjoy the blessing of the employees. Petitioner is therefore under
threat of being held liable for refusing to negotiate with a union whose right to bargaining status has not
been legally established. (pp. 9-10, Rollo)
The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their
part is not in conformity with law. Reinstatement is simply incompatible with a finding of guilt. Where the
totality of the evidence was sufficient to warrant the dismissal of the employees the law warrants their
dismissal without making any distinction between a first offender and a habitual delinquent. Under the law,
respondent Minister is duly mandated to equally protect and respect not only the labor or workers' side
but also the management and/or employers' side. The law, in protecting the rights of the laborer,
authorizes neither oppression nor self-destruction of the employer. To order the reinstatement of the
erring employees namely, Mejia, Sayson and Reynante would in effect encourage unequal protection of
the laws as a managerial employee of petitioner company involved in the same incident was already
dismissed and was not ordered to be reinstated. As stated by Us in the case of San Miguel Brewery vs.
National Labor Union, 2 "an employer cannot legally be compelled to continue with the employment of a
person who admittedly was guilty of misfeasance or malfeasance towards his employer, and whose
continuance in the service of the latter is patently inimical to his interest."
In the subject order, respondent Minister cited a cases 3 implying that "the proximity of the dismissal of the
employees to the assumption order created a doubt as to whether their dismissal was really for just cause
or due to their activities." 4
This is of no moment for the following reasons:
(a) Respondent Minister has still maintained in his assailed order that a just cause existed to justify the
dismissal of the employees.
(b) Respondent Minister has not made any finding substantiated by evidence that the employees were
dismissed because of their union activities.
WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the Order of the
respondent Minister, dated December 27, 1985 for grave abuse of discretion. However, in view of the fact
that the dismissed employees are first offenders, petitioner is hereby ordered to give them separation pay.
The temporary restraining order is hereby made permanent. SO ORDERED.
G.R. No. 85668 August 10, 1989
GELMART INDUSTRIES PHILS., INC., petitioner, 
 x x x.
vs.

THE HON. NATIONAL LABOR RELATIONS COMMISSION AND FELIX FRANCIS, respondents.
Bienvenido S. Hernandez & Associates for petitioner.
Koronado B. Apuzen for private respondent.
GANCAYCO, J.:
At issue in this petition is whether or not the National Labor Relations Commission (hereinafter referred to
as NLRC) committed a grave abuse of discretion amounting to lack or excess of jurisdiction in ordering
the reinstatement of private respondent to his former position with payment of backwages equivalent to
six (6) months. 1
As revealed by the records, the background facts are as follows:
Private respondent Felix Francis started working as an auto-mechanic for petitioner Gelmart Industries
Phils., Inc. (hereinafter referred to as GELMART) sometime in 1971. As such, his work consisted of the
repair of engines and underchassis, as well as trouble shooting and overhauling of company vehicles. He
is likewise entrusted with some tools and spare parts in furtherance of the work assigned to him.
On April 11, 1987, private respondent was caught by the security guards taking out of GELMART's
premises one (1) plastic container filled with about 16 ounces of "used' motor oil, without the necessary
gate pass to cover the same as required under GELMART's rules and regulations. By reason thereof,
petitioner, on April 13, 1987, was placed under preventive suspension pending investigation for violation
of company rules and regulations. Under the said rules, theft and/or pilferage of company property merits
an outright termination from employment.
After due investigation, or on May 20, 1987, private respondent was found guilty of theft of company
property. As a consequence, his services were severed.
Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a decision dated
February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private respondent was illegally
dismissed and, accordingly, ordered the latter's reinstatement with full backwages from April 13, 1987 up
to the time of actual reinstatement. 2
The ground relied upon by the labor arbiter in her decision is worth quoting hereunder, to wit:
The most important aspect that should be considered in interpreting this rule (referring to the company's
rules on theft and pilferages) is the deprivation of the company of property belonging to it without any
compensation. Hence, the property that must be stolen or pilfered must be property which has value.
x x x.
In the respondent company, ... the used oil is thrown away by the mechanics. ... In other words, the taking
by complainant of the subject 16 ounces of used oil did not deprive the respondent company of anything.
As it appears, the said used oil for as part of the waste that should be thrown away and the respondent
company had no use for the same, hence, the respondent company was not deprived of any property ...
and, therefore, and (sic) it is the position of this Labor Arbiter that there was no stealing or pilferage to
speak of. 3 (Emphasis supplied.)
From this decision, GELMART interposed an appeal with the NLRC. In its decision dated October 21,
1988, the NLRC affirmed with modification the ruling of Labor Arbiter Diosana, 4 the dispositive portion of
which reads as follows:
WHEREFORE, in view of the foregoing, the decision is hereby MODIFIED. Respondent-appellant is
hereby directed to reinstate complainant-appellee to his former position without loss of seniority rights and
to pay him backwages equivalent to six (6) months.
SO ORDERED. 5
On December 12, 1988, GELMART filed before this Court a special civil action for certiorari with a prayer
for the issuance of a temporary restraining order.
On January 18, 1989, this Court, without necessarily giving due course to the petition, issued a temporary
restraining order enjoining respondents from enforcing the assailed decision. On the same date, this
Court required respondents to comment on the petition.
Aside from the substantive issues raised in their comment which will be discussed later on in this
decision, public respondent pointed to a procedural error allegedly committed by petitioner. 6 The Solicitor
General contends that petitioner failed to exhaust "[t]he administrative remedies afforded by law ... before
resort can be had to the courts ... 7 More specifically, our attention is called to the fact that no motion for
reconsideration of the NLRC decision was filed by petitioner. The Solicitor General then concludes that
"[s]ince petitioners failed to avail of the plain, speedy and adequate remedy accorded to them in the
ordinary course of law ..., the instant petition for certiorari ran is prematurely filed, and hence, does not
state a cause of action. 8
The legal provision pertinent to this issue is found in Article 223 of the Labor Code which provides, in part:
ART. 223. Appeal. ... .
x x x.
The decision of the Commission shall be immediately executory even pending appeal ... (Emphasis
supplied.)
From this provision, it can be gleaned that the filing of a motion for reconsideration may not prove to be
an adequate remedy. For one, assuming that a motion for reconsideration is filed, nowhere does it state
that the filing thereof would automatically suspend the execution of the decision. Second, although a
motion for reconsideration has often been considered a condition precedent for granting the writ
of certiorari, this rule, however, finds exception in cases where execution had been ordered and the need
for relief is extremely urgent. 9
This Court is not unaware of Section 2, Rule XI of the Revised Rules of the National Labor Relations
Commission which provides in paragraphs (a) and (b) thereof:
See. 2. Finality of Decisions of the Commission —
(a) The decisions, resolutions or orders of the Commission shall become executory after ten (10) calendar
days from receipt of the same.
(b) Should there be a motion for reconsideration in accordance with Sec. 9, Rule X of these Rules, the
decision shall be executory after 10 days from receipt of the resolution on such motion.
x x x.
However, this Court has already ruled against the validity of the abovecited rule, particularly Section 2,
Rule XI, paragraph (a) in Juan vs. Musngi. 10 Interpreting the word "immediately" in Article 223 of the
Labor Code to mean "without interval of time" or "without delay," this Court declared that the NLRC rules
which provide that decisions, resolutions or orders of the Commission shall become executory after ten
(10) calendar days from receipt thereof cannot prevail over Article 223 of the Labor Code. Further
amplifying on this ruling, this Court stated that administrative regulations under legislative authority by a
particular department must be in harmony with the provision of the law for the sole purpose of carrying
into effect its general provisions. 11 Otherwise stated, no period of time need elapse before the decision of
the NLRC becomes executory.
From the foregoing, it will be seen that a motion for reconsideration may not be a plain, speedy and
adequate remedy. Hence, a petition for certiorari with this Court with a prayer for the issuance of a
temporary restraining order is but a proper remedy to forestall the immediate execution of the assailed
decision.
The Court will now look into the substance of this petition. In their petition, GELMART ascribes grave
abuse of discretion on the part of the NLRC for rendering a decision that is contrary to law and existing
jurisprudence.
We find no merit in this petition.
Consistent with the policy of the State to bridge the gap between the underprivileged workingmen and the
more affluent employers, the NLRC rightfully tilted the balance in favor of the workingmen — and this was
done without being blind to the concomitant right of the employer to the protection of his property. The
NLRC went on to say as follows:
We do not fully concur with the findings of the Labor Arbiter. Complainant-appellee's suspension prior to
termination had sufficient basis. We disagree with the conclusion that complainant-appellee did not violate
respondent-appellant's rule requiring a gate pass for taking out company property as the used motor oil
was not really in a sense ' property' considering that it was plain waste and had no commercial value. ...
Used motor oil is not plain waste because it had its use to respondent-appellant's motor pool. ... Besides,
it is not for complainant-appellee to interpret the rule according to his own understanding. Respondent
appellant had the right to interpret the rule and ... to exact discipline ... in the light of its policy to instill
discipline on its 6,000 workforce.
We find however, complainant-appellee's dismissal unwarranted. ... The penalty of preventive suspension
was sufficient punishment for the violation under the circumstances. ... 12 (Emphasis supplied)
Thus, without being too harsh to the employer, on the one hand, and naively liberal to labor, on the other,
the NLRC correctly pointed out that private respondent cannot totally escape liability for what is patently a
violation of company rules and regulations.
To reiterate, be it of big or small commercial value, intended to be re-used or altogether disposed of or
wasted, the "used" motor oil still remains, in legal contemplation, the property of GELMART. As such, to
take the same out of GELMART's premises without the corresponding gate pass is a violation of the
company rule on theft and/or pilferage of company property. However, as this Court ruled in Meracap vs.
International Ceramics Mfg. Co., Inc., "[w]here a penalty less punitive would suffice, whatever missteps
may be committed by labor ought not to be visited with a consequence so severe. 13 On this score, it is
very difficult for this Court to discern grave abuse of discretion on the part of the NLRC in modifying the
appealed decision. The suspension imposed upon private respondent is a sufficient penalty for the
misdemeanor committed.
As stated earlier, petitioner assails the NLRC decision on the ground that the same is contrary to existing
jurisprudence, particularly citing in support thereof Firestone Tire and Rubber Co. of the Phil. vs.
Lariosa 14Petitioner contends that by virtue of this ruling they have the right to dismiss private respondent
from employment on the ground of breach of trust or loss of confidence resulting from theft of company
property.
We believe otherwise.
There is nothing in Firestone which categorically gives management an unhampered right in terminating
an employee's services. The, decision in Firestone specifically focuses only on the legality of a dismissal
by reason of acts of dishonesty in the handling of company property for what was involved in that case is
theft of sixteen (16) flannel swabs which were supposed to be used to clean certain machineries in the
company. 15 In fact, a careful review of the cases cited in Firestone 16 will readily reveal that the
underlying reason behind sustaining the personam. of dismissal or outright termination is that, under the
circumstances obtaining in those cases, there exists ample reason to distrust the employees concerned.
Thus, in upholding the dismissal of a cashier found guilty of misappropriating corporate funds, this Court,
in Metro Drug," 17 made, a distinction between managerial personnel and-in other employees occupying
positions of trust and-in confidence from ordinary employees. On the other hand, in Dole
Philippines, 18 this Court spoke of the "nature of participation" which renders one absolutely unworthy of
the trust and-in confidence demanded by the position in upholding the dismissal of employee found guilty
of illegally selling for their philosophy benefit two (2) drums of crude oil belonging to the company.
Additionally, in Firestone, it clearly appears that to retain the employee would "[i]n the long run, endanger
the company's viability. 19
The, Court rules that these circumstances are not present in this instant case.
Contrary to the assertion of petitioner, the ruling in Firestone does not preclude the NLRC from looking
into the particular facts of the case to determine if there is ample reason to dismiss an employee charged
and subsequently found guilty of theft of company property. The, said decision cannot be deemed as a
limitation on the right of the State in the exercise of its paramount police power to regulate or temper the
prerogative of management to dismiss an erring employee. 20 Consequently, even when there exists
some rules agreed upon between the employer and-in the employee, it cannot preclude the State from
inquiring on whether or not its rigid application would work too harshly on the employee.
Considering that private respondent herein has no previous derogatory record in his fifteen (15) years of
service with petitioner GELMART the value of the property pilfered (16 ounces of used motor oil) is very
minimal, plus the fact that petitioner failed to reasonably establish that non-dismissal of private
respondent would work undue prejudice to the viability of their operation or is patently inimical to the
company's interest, it is more in consonance with the policy of the State, as embodied in the Constitution,
to resolve all doubts in favor of labor. This is our ruling in Philippine Air Lines, Inc. vs. Philippine Air Lines
Employees Association 21 involving as it does essentially the same facts and in circumstances. At this
point, this Court does not see any reason to deviate from the said ruling.
WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit. The, restraining order
issued by this Court on January 18, 1989 enjoining the enforcement of the questioned decision of the
National Labor Relations Commission is hereby lifted. No pronouncement as to costs.
SO ORDERED.
G.R. No. 121004 January 28, 1998
ROMEO LAGATIC, petitioner, 

vs.

NATIONAL LABOR RELATIONS COMMISSION, CITYLAND DEVELOPMENT CORPORATION,
STEPHEN ROXAS, JESUS GO, GRACE LIUSON, and ANDREW LIUSON, respondents.
ROMERO, J.:
Petitioner seeks, in this petition for certiorari under Rule 65, the reversal of the resolution of the National
Labor Relations Commission dated May 12, 1995, affirming the February 17, 1994, decision of Labor
Arbiter Ricardo C. Nora finding that petitioner had been validly dismissed by private respondent Cityland
Development Corporation (hereafter referred to as Cityland) and that petitioner was not entitled to
separation pay, premium pay and overtime pay.
The facts of the case are as follows:
Petitioner Romeo Lagatic was employed in May 1986 by Cityland, first as a probationary sales agent, and
later on as a marketing specialist. He was tasked with soliciting sales for the company, with the
corresponding duties of accepting call-ins, referrals, and making client calls and cold calls. Cold calls refer
to the practice of prospecting for clients through the telephone directory. Cityland, believing that the same
is an effective and cost-efficient method of finding clients, requires all its marketing specialists to make
cold calls. The number of cold calls depends on the sales generated by each: more sales mean less cold
calls. Likewise, in order to assess cold calls made by the sales staff, as well as to determine the results
thereof, Cityland requires the submission of daily progress reports on the same.
On October 22, 1991, Cityland issued a written reprimand to petitioner for his failure to submit cold call
reports for September 10, October 1 and 10, 1991. This notwithstanding, petitioner again failed to submit
cold call reports for September 2, 5, 8, 10, 11, 12, 15, 17, 18, 19, 20, 22, and 28, as well as for October 6,
8, 9, 10, 12, 13 and 14, 1992. Petitioner was required to explain his inaction, with a warning that further
non-compliance would result in his termination from the company. In a reply dated October 18, 1992,
petitioner claimed that the same was an honest omission brought about by his concentration on other
aspects of his job. Cityland found said excuse inadequate and, on November 9, 1992, suspended him for
three days, with a similar warning.
Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call reports
for February 5, 6, 8, 10 and 12, 1993. He was verbally reminded to submit the same and was even given
up to February 17, 1993 to do so. Instead of complying with said directive, petitioner, on February 16,
1993, wrote a note, "TO HELL WITH COLD CALLS! WHO CARES?" and exhibited the same to his co-
employees. To worsen matters, he left the same lying on his desk where everyone could see it.
On February 23, 1993, petitioner received a memorandum requiring him to explain why Cityland should
not make good its previous warning for his failure to submit cold call reports, as well as for issuing the
written statement aforementioned. On February 24, 1993, he sent a letter-reply alleging that his failure to
submit cold call reports should trot be deemed as gross insubordination. He denied any knowledge of the
damaging statement, "TO HELL WITH COLD CALLS!"
Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on
February 26, 1993. Aggrieved by such dismissal, petitioner filed a complaint against Cityland for illegal
dismissal, illegal deduction, underpayment, overtime and rest day pay, damages and attorney's fees. The
labor arbiter dismissed the petition for lack of merit. On appeal, the same was affirmed by the NLRC;
hence the present recourse.
Petitioner raises the following issues:
1. WHETHER OR NOT RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION 1N NOT FINDING
THAT PETITIONER WAS ILLEGALLY DISMISSED;
2. WHETHER OR NOT RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT
PETITIONER IS NOT ENTITLED TO SALARY DIFFERENTIALS, BACKWAGES, SEPARATION PAY,
OVERTIME PAY, REST DAY PAY, UNPAID COMMISSIONS, MORAL AND EXEMPLARY DAMAGES AND
ATTORNEY'S FEES.
The petition lacks merit.
To constitute a valid dismissal from employment, two requisites must be met, namely: (1) the employee
must be afforded due process, and (2) the dismissal must be for a valid cause.1 In the case at bar,
petitioner contends that his termination was illegal on both substantive and procedural aspects. It is his
submission that the failure to submit a few cold calls does not qualify as willful disobedience, as, in his
experience, cold calls are one of the least effective means of soliciting sales. He thus asserts that a
couple of cold call reports need not be accorded such tremendous significance as to warrant his dismissal
for failure to submit them on time.
These arguments are specious. Petitioner loses sight of the fact that "(e)xcept as provided for, or limited
by, special laws, an employer is free to regulate, according to his discretion and judgment, all aspects of
employment."2 Employers may, thus, make reasonable rules and regulations for the government of their
employees, and when employees, with knowledge of an established rule, enter the service, the rule
becomes a part of the contract of employment.3 It is also generally recognized that company policies and
regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on
the parties and must be complied with.4 "Corollarily, an employee may be validly dismissed for violation of
a reasonable company rule or regulation adopted for the conduct of the company business. An employer
cannot rationally be expected to retain the employment of a person whose . . . lack of regard for his
employer's rules . . . has so plainly and completely been bared."5 Petitioner's continued infraction of
company policy requiring cold call reports, as evidenced by the 28 instances of non-submission of
aforesaid reports, justifies his dismissal. He cannot be allowed to arrogate unto himself the privilege of
setting company policy on the effectivity of solicitation methods. To do so would be to sanction oppression
and the self-destruction of the employer.
Moreover, petitioner made it worse for himself when he wrote the statement, "TO HELL WITH COLD
CALLS! WHO CARES?" When required to explain, he merely denied ally knowledge of the same.
Cityland, on the other hand, submitted the affidavits of his co-employees attesting to his authorship of the
same. Petitioner's only defense is denial. The rule, however, is that denial, if unsubstantiated by clear and
convincing evidence, is negative and self-serving evidence which has no weight in law.6 More telling,
petitioner, while making much capital out of his lack of opportunity to confront the affiants, never, in all of
his pleadings, categorically denied writing the same. He only denied knowledge of the allegation that he
issued such a statement.
Based on the foregoing, we find petitioner guilty of willful disobedience. Willful disobedience requires the
concurrence of at least two requisites: the employee's assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful and 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.7
Petitioner's failure to comply with Cityland's policy of requiring cold call reports is clearly willful, given the
28 instances of his failure to do so, despite a previous reprimand and suspension. More than that, his
written statement shows his open defiance and disobedience to lawful rules and regulations of the
company. Likewise, said company policy of requiring cold calls and the concomitant reports thereon is
clearly reasonable and lawful, sufficiently known to petitioner, and in connection with the duties which he
had been engaged to discharge. There is, thus, just cause for his dismissal.
On the procedural aspect, petitioner claims that he was denied due process. Well settled is
the dictum that the twin requirements of notice and hearing constitute the elements of due process in the
dismissal of employees. Thus, the employer must furnish the employee with two written notices before the
termination of employment can be effected. The first apprises the employee of the particular acts or
omissions for which his dismissal is sought; the second informs him of the employer's decision to dismiss
him.8
In the case at bar, petitioner was notified of the charges against him in a memorandum dated February
19, 1993, which he received on February 23, 1993. He submitted a letter-reply thereto on February 24,
1993, wherein he asked that his failure to submit cold call reports be not interpreted as gross
insubordination.9 He was given notice of his termination on February 26, 1993. This chronology of events
clearly show that petitioner was served with the required written notices.
Nonetheless, petitioner contends that he has not been given the benefit of an effective hearing. He
alleges that he was not adequately informed of the results of the investigation conducted by the company,
nor was he able to confront the affiants who attested to his writing the statement, "TO HELL WITH COLD
CALLS!" While we have held that in dismissing employees, the employee must be afforded ample
opportunity to be heard, "ample opportunity" connoting every kind of assistance that management must
afford the employee to enable him to prepare adequately for his defense, 10 it is also true that the
requirement of a hearing is complied with as long as there was an opportunity to be heard, and not
necessarily that an actual hearing be conducted.11 Petitioner had an opportunity to be heard as he
submitted a letter-reply to the charge. He, however, adduced no other evidence on his behalf. In fact, he
admitted his failure to submit cold call reports, praying that the same be not considered as gross
insubordination. As held by this Court in Bernardo vs. NLRC,12 there is no necessity for a formal hearing
where an employee admits responsibility for an alleged misconduct. As to the written statement, "TO
HELL WITH COLD CALLS!," petitioner merely denied knowledge of the same. He failed to submit
controverting evidence thereon although the memorandum of February 19, 1993, clearly charged that he
had shown said statement to several sales personnel. Denials are weak forms of defenses, particularly
when they are not substantiated by clear and convincing evidence. Given the foregoing, we hold that
petitioner's constitutional right to due process has not been violated.
As regards the second issue, petitioner contends that he is entitled to amounts illegally deducted from his Petitioner's Basic Salary — AR = P 1,410.00
commissions, to unpaid overtime, rest day and holiday premiums, to moral and exemplary damages, as
well as attorney's fees and costs. While it is true that an increase in salary would cause an increase in AR, with the same being deducted
from credits earned, thus lessening his commissions, the fact remains that petitioner still receives his
Petitioner anchors his claim for illegal deductions of commissions on Cityland's formula for determining basic salary without deductions. Petitioner's argument that he is indebted to respondent by P1,410.00 is
commissions, viz: fallacious as his basic salary remains the same and he continues to receive the same, regardless of his
collections. The failure to attain a CE equivalent to the AR of P5,640.00 only means that the difference
COMMISSIONS = Credits Earned (CE) less CUMULATIVE NEGATIVE
 would be credited to his CN for the next month. Clearly, the purpose of the same is to encourage sales
(CN) less AMOUNTS RECEIVED (AR) personnel to accelerate their sales in order for them to earn commissions.

= (CE - CN) - AR where CE = Monthly Sales Volume x
 Additionally, there is no law which requires employers to pay commissions, and when they do so, as
Commission Rate (CR)
 stated in the letter-opinion of the Department of Labor and Employment dated February 19, 1993, "there
AR = Monthly Compensation/.75
 is no law which prescribes a method for computing commissions. The determination of the amount of
CR = 4.5% commissions is the result of collective bargaining negotiations, individual employment contracts or
established employer practice." 14 Since the formula for the computation of commissions was presented
to and accepted by petitioner, such prescribed formula is in order. As to the allegation that said formula
Under said formula, an increase in salary would entail an increase in AR, thus diminishing the amount of diminishes the benefits being received by petitioner whenever there is a wage increase, it must be noted
commissions that petitioner would receive. Petitioner construes the same as violative of the non- that his commissions are not meant to be in a fixed amount. In fact, there was no assurance that he
diminution of benefits clause embodied in the wage orders applicable to petitioner. Inasmuch as Cityland would receive any commission at all. Non-diminution of benefits, as applied here, merely means that the
has paid petitioner commissions based on a higher AR each time there has been a wage increase, the company may not remove theprivilege of sales personnel to earn a commission, not that they are entitled
difference between the original AR and the subsequent ARs have been viewed by petitioner as illegal to a fixed amount thereof.
deductions, to wit:
With respect to petitioner's claims for overtime pay, rest day pay and holiday premiums, Cityland
Wage Order Date of Amount of Corresponding Duration Up To Total maintains that Saturday and Sunday call-ins were voluntary activities on the part of sales personnel who
Effectivity Increase Increase in 2/26/93 wanted to realize more sales and thereby earn more commissions. It is their contention that sales
Quota (AR) personnel were clamoring for the "privilege" to attend Saturday and Sunday call-ins, as well as to
entertain walk-in clients at project sites during weekends, that Cityland had to stagger the schedule of
RA 6640 1/1/88 P265.75 P 353.33 x 62 mos P 2 1,906.46 sales employees to give everyone a chance to do so. But simultaneously, Cityland claims that the same
were optional because call-ins and walk-ins were not scheduled every weekend. If there really were a
RA 6727 7/1/89 780.75 1,040.00 x 44 mos. 45,760.00 clamor on the part of sales staff to "voluntarily" work on weekends, so much so that Cityland needed to
schedule them, how come no call-ins or walk-ins were scheduled on some weekends?
NCR 01 11/1/90 785.75 1,046.67 x 28 mos. 29,306.7
In addition to the above, the labor arbiter and the NLRC sanctioned respondent's practice of offsetting
NCR 01-A rest day or holiday work with equivalent time on regular workdays on the ground that the same is
authorized by Department Order 21, Series of 1990. As correctly pointed out by petitioner, said D.O. was
misapplied in this case. The D.O. involves the shortening of the workweek from six days to five days but
Grand Total P 96,973.2213
with prolonged hours on those five days. Under this scheme, non-payment of overtime premiums was
allowed in exchange for longer weekends for employees. In the instant case, petitioner's workweek was
never compressed. Instead, he claims payment for work over and above his normal 5 1/2 days of work in
Petitioner even goes as far as to claim that with the use of Cityland's formula, he is indebted to the a week. Applying by analogy the principle that overtime cannot be offset by undertime, to allow off-setting
company in the amount of P1,410.00, illustrated as follows: would prejudice the worker. He would be deprived of the additional pay for the rest day work he has
rendered and which is utilized to offset his equivalent time off on regular workdays. To allow Cityland to do
Petitioner' s Basic Salary = P 4,230.00 so would be to circumvent the law on payment of premiums for rest day and holiday work.

= 4,230.00/.75 Notwithstanding the foregoing discussion, petitioner failed to show his entitlement to overtime and rest
day pay due, to the lack of sufficient evidence as to the number of days and hours when he rendered
overtime and rest day work. Entitlement to overtime pay must first be established by proof that said
A.R. = 5,640.00 overtime work was actually performed, before an employee may avail of said benefit. 15 To support his
allegations, petitioner submitted in evidence minutes of meetings wherein he was assigned to work on
weekends and holidays at Cityland's housing projects. Suffice it to say that said minutes do not prove that
petitioner actually worked on said dates. It is a basic rule in evidence that each party must prove his
affirmative allegations. 16 This petitioner failed to do. He explains his failure to submit more concrete
evidence as being due to the decision rendered by the labor arbiter without resolving his motion for the
production and inspection of documents in the control of Cityland. Petitioner conveniently forgets that on
January 27, 1994, he agreed to submit the case for decision based on the records available to the labor
arbiter. This amounted to an abandonment of above-said motion, which was then pending resolution.
Lastly, with the finding that petitioner's dismissal was for a just and valid cause, his claims for moral and
exemplary damages, as well as attorney's fees, must fail.
WHEREFORE, premises considered, the assailed Resolution is AFFIRMED and this petition is hereby
DISMISSED for lack of merit. Costs against petitioner.
SO ORDERED.
G.R. No. 156515 October 19, 2004
CHINA BANKING CORPORATION, petitioner, 

vs.
 On October 8, 1996, the respondent wrote a Memorandum to the petitioner Bank’s senior management
MARIANO M. BORROMEO, respondent.
DECISION
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari filed by China Banking Corporation seeking the
reversal of the Decision1 dated July 19, 2002 of the Court of Appeals in CA-G.R. SP No. 57365,
remanding to the Labor Arbiter for further hearings the complaint for payment of separation pay, mid-year
bonus, profit share and damages filed by respondent Mariano M. Borromeo against the petitioner Bank.
Likewise, sought to be reversed is the appellate court’s Resolution dated January 6, 2003, denying the
petitioner Bank’s motion for reconsideration.
The factual antecedents of the case are as follows:
Respondent Mariano M. Borromeo joined the petitioner Bank on June 1, 1989 as Manager assigned at
the latter’s Regional Office in Cebu City. He then had the rank of Manager Level I. Subsequently, the
respondent was laterally transferred to Cagayan de Oro City as Branch Manager of the petitioner Bank’s
branch thereat.
For the years 1989 and 1990, the respondent received a "highly satisfactory" performance rating and was
given the corresponding profit sharing/p>erformance bonus. From 1991 up to 1995, he consistently
received a "very good" performance rating for each of the said years and again received the
corresponding profit sharing/p>erformance bonus. Moreover, in 1992, he was promoted from Manager
Level I to Manager Level II. In 1994, he was promoted to Senior Manager Level I. Then again, in 1995, he
was promoted to Senior Manager Level II. Finally, in 1996, with a "highly satisfactory" performance rating,
the respondent was promoted to the position of Assistant Vice-President, Branch Banking Group for the
Mindanao area effective October 16, 1996. Each promotion had the corresponding increase in the
respondent’s salary as well as in the benefits he received from the petitioner Bank.
However, prior to his last promotion and then unknown to the petitioner Bank, the respondent, without
authority from the Executive Committee or Board of Directors, approved several DAUD/BP
accommodations amounting to ₱2,441,375 in favor of Joel Maniwan, with Edmundo Ramos as surety.
DAUD/BP is the acronym for checks "Drawn Against Uncollected Deposits/Bills Purchased." Such
checks, which are not sufficiently funded by cash, are generally not honored by banks. Further, a DAUD/
BP accommodation is a credit accommodation granted to a few and select bank clients through the
withdrawal of uncollected or uncleared check deposits from their current account. Under the petitioner
Bank’s standard operating procedures, DAUD/BP accommodations may be granted only by a bank officer
upon express authority from its Executive Committee or Board of Directors.
As a result of the DAUD/BP accommodations in favor of Maniwan, a total of ten out-of-town checks (7
PCIB checks and 3 UCPB checks) of various dates amounting to ₱2,441,375 were returned unpaid from
September 20, 1996 to October 17, 1996. Each of the returned checks was stamped with the notation
"Payment Stopped/Account Closed."
requesting for the grant of a ₱2.4 million loan to Maniwan. The memorandum stated that the loan was "to
regularize/liquidate subject’s (referring to Maniwan) DAUD availments." It was only then that the petitioner
Bank came to know of the DAUD/BP accommodations in favor of Maniwan. The petitioner Bank further
learned that these DAUD/BP accommodations exceeded the limit granted to clients, were granted without
proper prior approval and already past due. Acting on this information, Samuel L. Chiong, the petitioner
Bank’s First Vice- President and Head-Visayas Mindanao Division, in his Memorandum dated November
19, 1996 for the respondent, sought clarification from the latter on the following matters:
1) When DAUD/BP accommodations were allowed, what efforts, if any, were made to establish the
identity and/or legitimacy of the alleged broker or drawers of the checks accommodated?
2) Did the branch follow and comply with operating procedure which require that all checks
accommodated for DAUD/BP should be previously verified with the drawee bank and history if not
outright balances determined if enough to cover the checks?
3) How did the accommodations reach ₱2,441,375.00 when our records indicate that the borrowers B/p>-
DAUD line is only for ₱500,000.00? When did the accommodations start exceeding the limit of
₱500,000.00 and under whose authority?
4) When did the accommodated checks start bouncing?
5) What is the status of these checks now and what has the branch done so far to protect/ensure
collectibility of the returned checks?
6) What about client Joel Maniwan and surety Edmund Ramos, what steps have they done to pay the
checks returned?2
In reply thereto, the respondent, in his Letter dated December 5, 1996, answered the foregoing queries in
seriatim and explained, thus:
1. None
2. No
3. The accommodations reach ₱2.4 million upon the request of Mr. Edmund Ramos, surety, and this
request was subsequently approved by undersigned. The excess accommodations started in July ’96
without higher management approval.
4. Checks started bouncing on September 20, 1996.
5. Checks have remained unpaid. The branch sent demand letters to Messrs. Maniwan and Ramos and
referred the matter to our Legal Dept. for filing of appropriate legal action.
6. Mr. Maniwan, thru his lawyer, Atty. Oscar Musni has signified their intention to settle by Feb. 1997.
Justification for lapses committed (Item nos. 1 to 3).
The account was personally endorsed and referred to us by Mr. Edmund Ramos, Branch Manager of
Metrobank, Divisoria Br., Cagayan de Oro City. In fact, the CASA account was opened jointly as &/or
(Maniwan &/or Ramos). Mr. Ramos gave us his full assurance that the checks that we intend to purchase
are the same drawee that Metrobank has been purchasing for the past one (1) year already. He even
disclosed that these checks were verified by his own branch accountant and that Mr. Maniwan’s loan
account was being co-maked by Mr. Elbert Tan Yao Tin, son of Jose Tan Yao Tin of CIFC. To show his
sincerity, Mr. Ramos signed as surety for Mr. Maniwan for ₱2.5MM. Corollary to this, Mr. Ramos applied
for a loan with us mortgaging his house, lot and duplex with an estimated market value of ₱4.508MM. The
branch, therefore, is not totally negligent as officer to officer bank checking was done. In fact, it is also for
the very same reason that other banks granted DAUD to subject account and, likewise, the checks
returned unpaid, namely:
Solidbank ₱1.8 Million
Allied Bank .8
Far East Bank 2.0
MBTC 5.0
The attached letter of Mr. Ramos dated 19 Nov. 1996 will speak for itself. Further to this, undersigned
conferred with the acting BOH VSYap if these checks are legitimate 3rd party checks.
On the other hand, Atty. Musni continues to insist that Mr. Maniwan was gypped by a broker in the total
amount of ₱10.00 Million.
Undersigned accepts full responsibility for committing an error in judgment, lapses in control and abuse of
discretion by relying solely on the word, assurance, surety and REM of Mr. Edmund Ramos, a friend and
a co-bank officer. I am now ready to face the consequence of my action.3
In another Letter dated April 8, 1997, the respondent notified Chiong of his intention to resign from the
petitioner Bank and apologized "for all the trouble I have caused because of the Maniwan case."4 The
respondent, however, vehemently denied benefiting therefrom. In his Letter dated April 30, 1997, the
respondent formally tendered his irrevocable resignation effective May 31, 1997.5
In the Memorandum dated May 23, 1997 addressed to the respondent, Nancy D. Yang, the petitioner
Bank’s Senior Vice-President and Head-Branch Banking Group, informed the former that his approval of
the DAUD/BP accommodations in favor of Maniwan without authority and/or approval of higher
management violated the petitioner Bank’s Code of Ethics. As such, he was directed to restitute the
amount of ₱1,507,736.79 representing 90% of the total loss of ₱1,675,263.10 incurred by the petitioner
Bank. However, in view of his resignation and considering the years of service in the petitioner Bank, the
management earmarked only ₱836,637.08 from the respondent’s total separation benefits or pay. The
memorandum addressed to the respondent stated:
After a careful review and evaluation of the facts surrounding the above case, the following have been
conclusively established:
1. The branch granted various BP/DAUD accommodations to clients Joel Maniwan/Edmundo Ramos in
excess of approved lines through the following out-of-town checks which were returned for the reason
"Payment Stopped/Account Closed":
1. PCIB Cebu Check No. 86256 ₱251,816.00
2. PCIB Cebu Check No. 86261 235,880.00
3. PCIB Cebu Check No. 8215 241,443.00
4. UCPB Tagbilaran Check No. 277,630.00
5. PCIB Bogo, Cebu Check No. 6117 267,418.00
6. UCPB Tagbilaran Check No. 216070 197,467.00
7. UCPB Tagbilaran Check No. 216073 263,920.00
8. PCIB Bogo, Cebu Check No. 6129 253,528.00
9. PCIB Bogo, Cebu Check No. 6122 198,615.00
10. PCIB Bogo, Cebu Check No. 6134 253,658.00
2. The foregoing checks were accommodated through your approval which was in excess of your
authority.
3. The branch failed to follow the fundamental and basic procedures in handling BP/DAUD
accommodations which made the accommodations basically flawed.
4. The accommodations were attended by lapses in control consisting of failure to report the exception
and failure to cover the account of Joel Maniwan with the required Credit Line Agreement.
Since the foregoing were established by your own admissions in your letter explanation dated 5
December 1996, and the Audit Report and findings of the Region Head, Management finds your actions
in violation of the Bank’s Code of Ethics:
Table 6.2., no. 1: Compliance with Standard Operating Procedures
- "Infraction of Bank procedures in handling any bank transactions or work assignment which results
in a loss or probable loss."
Table 6.3., no. 6: Proper Conduct and Behavior -
"Willful misconduct in the performance of duty whether or not the bank suffers a loss," and/or
Table 6.5., no. 1: Work Responsibilities -
"Dereliction of duty whether or not the Bank suffers a loss," and/or
Table 6.6., no. 2: Authority and Subordination -
"Failure to carry out lawful orders or instructions of superiors."
Your approval of the accommodations in excess of your authority without prior authority and/or approval
from higher management is a violation of the above cited Rules.
In view of these, you are directed to restitute the amount of ₱1,507,736.79 representing 90% of the total
loss of ₱1,675,263.10 incurred by the Bank as your proportionate share. However, in light of your
voluntary separation from the Bank effective May 31, 1997, in view of the years of service you have given
to the Bank, management shall earmark and segregate only the amount of ₱836,637.08 from your total
separation benefits/p>ay. The Bank further directs you to fully assist in the effort to collect from Joel
Maniwan and Edmundo Ramos the sums due to the Bank.6
In the Letter dated May 26, 1997 addressed to the respondent, Remedios Cruz, petitioner Bank’s Vice-
President of the Human Resources Division, again informed him that the management would withhold the
sum of ₱836,637.08 from his separation pay, mid-year bonus and profit sharing. The amount withheld
represented his proportionate share in the accountability vis-à-vis the DAUD/BP accommodations in favor
of Maniwan. The said amount would be released upon recovery of the sums demanded from Maniwan in
Civil Case No. 97174 filed against him by the petitioner Bank with the Regional Trial Court in Cagayan de
Oro City.
Consequently, the respondent, through counsel, made a demand on the petitioner Bank for the payment
of his separation pay and other benefits. The petitioner Bank maintained its position to withhold the sum
of ₱836,637.08. Thus, the respondent filed with the National Labor Relations Commission (NLRC),
Regional Arbitration Branch No. 10, in Cagayan de Oro City, the complaint for payment of separation pay,
mid-year bonus, profit share and damages against the petitioner Bank.
The parties submitted their respective position papers to the Labor Arbiter. Thereafter, the respondent
filed a motion to set case for trial or hearing. Acting thereon, the Labor Arbiter, in the Order dated January
29, 1999, denied the same stating that:
... This Branch views that if complainant finds the necessity to controvert the allegations in the
respondent’s pleadings, then he may file a supplemental position paper and adduce thereto evidence and
additional supporting documents, the soonest possible time. All the evidence will be evaluated by the
Branch to determine whether or not a clarificatory hearing shall be conducted.7
On February 26, 1999, the Labor Arbiter issued another Order submitting the case for resolution upon
finding that he could judiciously pass on the merits without the necessity of further hearing.
On even date, the Labor Arbiter promulgated the Decision8 dismissing the respondent’s complaint.
According to the Labor Arbiter, the respondent, an officer of the petitioner Bank, had committed a serious
infraction when, in blatant violation of the bank’s standard operating procedures and policies, he approved
the DAUD/BP accommodations in favor of Maniwan without authorization by senior management. Even
the respondent himself had admitted this breach in the letters that he wrote to the senior officers of the
petitioner Bank.
The Labor Arbiter, likewise, made the finding that the respondent offered to assign or convey a property
that he owned to the petitioner Bank as well as proposed the withholding of the benefits due him to
answer for the losses that the petitioner Bank incurred on account of unauthorized DAUD/BP
accommodations. But even if the respondent had not given his consent, the Labor Arbiter held that the
petitioner Bank’s act of withholding the benefits due the respondent was justified under its Code of Ethics.
The respondent, as an officer of the petitioner Bank, was bound by the provisions of the said Code.
Aggrieved, the respondent appealed to the National Labor Relations Commission. After the parties had
filed their respective memoranda, the NLRC, in the Decision dated October 20, 1999, dismissed the
appeal as it affirmed in toto the findings and conclusions of the Labor Arbiter. The NLRC preliminarily
ruled that the Labor Arbiter committed no grave abuse of discretion when he decided the case on the
basis of the position papers submitted by the parties. On the merits, the NLRC, like the Labor Arbiter,
gave credence to the petitioner Bank’s allegation that the respondent offered to pledge his property to the
bank and proposed the withholding of his benefits in acknowledgment of the serious infraction he
committed against the bank. Further, the NLRC concurred with the Labor Arbiter that the petitioner Bank
was justified in withholding the benefits due the respondent. Being a responsible bank officer, the
respondent ought to know that, based on the petitioner Bank’s Code of Ethics, restitution may be imposed
on erring employees apart from any other penalty for acts resulting in loss or damage to the bank. The
decretal portion of the NLRC decision reads:
WHEREFORE, the decision of the Labor Arbiter is Affirmed. The appeal is Dismissed for lack of merit.
SO ORDERED.9
The respondent moved for a reconsideration of the said decision but the NLRC, in the Resolution of
December 20, 1999, denied his motion.
The respondent then filed a petition for certiorari with the Court of Appeals alleging that the NLRC
committed grave abuse of discretion when it affirmed the findings and conclusions of the Labor Arbiter. He
vehemently denied having offered to pledge his property to the bank or proposed the withholding of his
separation pay and other benefits. Further, he argued that the petitioner Bank deprived him of his right to
due process because it unilaterally imposed the penalty of restitution on him. The DAUD/BP
accommodations in favor of Maniwan allegedly could not be considered as a "loss" to the bank as the
amounts may still be recovered. The respondent, likewise, maintained that the Labor Arbiter should not
have decided the case on the basis of the parties’ position papers but should have conducted a full-blown
hearing thereon.
On July 19, 2002, the CA rendered the Decision10 now being assailed by the petitioner Bank. The CA
found merit in the respondent’s contention that he was deprived of his right to due process by the
petitioner Bank as no administrative investigation was conducted by it prior to its act of withholding the
respondent’s separation pay and other benefits. The respondent was not informed of any charge against
him in connection with the Maniwan DAUD/BP accommodations nor afforded the right to a hearing or to
defend himself before the penalty of restitution was imposed on him. This, according to the appellate
court, was contrary not only to the fundamental principle of due process but to the petitioner Bank’s Code
of Ethics as well.
The CA further held that the Labor Arbiter, likewise, failed to afford the respondent due process when it
denied his motion to set case for trial or hearing. While the authority of the Labor Arbiter to decide a case
based on the parties’ position papers and documents is indubitable, the CA opined that factual issues
attendant to the case, including whether or not the respondent proposed the withholding of his benefits or
pledged the same to the petitioner Bank, necessitated the conduct of a full-blown trial. The appellate court
explained that:
Procedural due process, as must be remembered, has two main concerns, the prevention of unjustified or
mistaken deprivation and the promotion of participation and dialogue by affected individuals in the
decision-making process. Truly, the magnitude of the case and the withholding of Borromeo’s property as
well as the willingness of the parties to conciliate, make a hearing imperative. As manifested by the bank,
it did not contest Borromeo’s motion for hearing or trial inasmuch as the bank itself wanted to fully
ventilate its side.11
Accordingly, the CA set aside the decision of the NLRC and ordered that the records of the case be
remanded to the Labor Arbiter for further hearings on the factual issues involved.
The petitioner Bank filed a motion for reconsideration of the said decision but the CA, in the assailed
Resolution of January 6, 2003, denied the same as it found no compelling ground to warrant
reconsideration.12 Hence, its recourse to this Court alleging that the assailed CA decision is contrary to
law and jurisprudence in that:
I.
THE FACTUAL FINDINGS OF THE LABOR ARBITER AS AFFIRMED BY THE NATIONAL LABOR
RELATIONS COMMISSION ARE SUPPORTED BY SUBSTANTIAL EVIDENCE AND SHOULD HAVE
BEEN ACCORDED RESPECT AND FINALITY BY THE COURT OF APPEALS IN ACCORDANCE WITH
GOVERNING JURISPRUDENCE.
II.
AT ALL TIMES, THE LABOR ARBITER ACTED IN ACCORDANCE WITH THE REQUIREMENTS OF
DUE PROCESS IN THE PROCEEDINGS A QUO.
III.
THERE WAS NO VIOLATION BY PETITIONER BANK OF RESPONDENT’S RIGHT TO DUE PROCESS
AS NO ADMINISTRATIVE INVESTIGATION WAS NEEDED TO BE CONDUCTED ON HIS ADMITTED
MISCONDUCT.13
The petitioner Bank posits that the sole factual issue that remained in dispute was whether the
respondent pledged his benefits as guarantee for the losses the bank incurred resulting from the
unauthorized DAUD/BP accommodations in favor of Maniwan. On this issue, both the Labor Arbiter and
the NLRC found that the respondent had indeed pledged his benefits to the bank. According to the
petitioner Bank, this factual finding should have been accorded respect by the CA as the same is
supported by the evidence on record. By ordering the remand of the case to the Labor Arbiter, the CA
allegedly unjustifiably analyzed and weighed all over again the evidence presented.
The petitioner Bank insists that the Labor Arbiter acted within his authority when he denied the
respondent’s motion to set case for hearing or trial and instead decided the case on the basis of the
position papers and evidence submitted by the parties. Due process simply demands an opportunity to be
heard and the respondent was not denied of this as he was even given the opportunity to file a
supplemental position paper and other supporting documents, but he did not do so.
The petitioner Bank takes exception to the findings of the appellate court that the respondent was not
afforded the right to a hearing or to defend himself by the petitioner Bank as it did not conduct an
administrative investigation. The petitioner Bank points out that it was poised to conduct one but was
preempted by the respondent’s resignation. In any case, respondent himself in his Letter dated December
5, 1996, in reply to the clarificatory queries of Chiong, admitted that the DAUD/BP accommodations were
granted "without higher management approval" and that he (the respondent) "accepts full responsibility
for committing an error of judgment, lapses in control and abuse of discretion ..." Given the respondent’s
admission, the holding of a formal investigation was no longer necessary.
For his part, the respondent, in his Comment, maintains that the DAUD/BP accommodations in favor of
Maniwan were approved, albeit not expressly, by the senior management of the petitioner Bank. He cites
the regular reports he made to Chiong, his superior, regarding the DAUD/BP transactions made by the
branch, including that of Maniwan, and Chiong never called his attention thereto nor stopped or
reprimanded him therefor. These reports further showed that he did not conceal these transactions to the
management.
The respondent vehemently denies having offered the withholding of his benefits or pledged the same to
the petitioner Bank. The findings of the Labor Arbiter and the NLRC that what he did are allegedly not
supported by the evidence on record.
The respondent is of the view that restitution is not proper because the petitioner Bank has not, as yet,
incurred any actual loss as the amount owed by Maniwan may still be recovered from him. In fact, the
petitioner Bank had already instituted a civil case against Maniwan for the recovery of the sum and the
RTC rendered judgment in the petitioner Bank’s favor. The case is still pending appeal. In any case, the
respondent argues that the petitioner Bank could not properly impose the accessory penalty of restitution
on him without imposing the principal penalty of "Written Reprimand/Suspension" as provided under its
Code of Ethics. He, likewise, vigorously avers that, in contravention of its own Code of Ethics, he was
denied due process by the petitioner Bank as it did not conduct any administrative investigation relative to
the unauthorized DAUD/BP accommodations. He was not informed in writing of any charge against him
nor was he given the opportunity to defend himself.
The petition is meritorious.
The Court shall first resolve the procedural issue raised in the petition, i.e., whether the CA erred in
remanding the case to the Labor Arbiter. The Court rules in the affirmative. It is settled that administrative
bodies like the NLRC, including the Labor Arbiter, are not bound by the technical niceties of the law and
procedure and the rules obtaining in courts of law.14 Rules of evidence are not strictly observed in
proceedings before administrative bodies like the NLRC, where decisions may be reached on the basis of
position papers.15 The holding of a formal hearing or trial is discretionary with the Labor Arbiter and is
something that the parties cannot demand as a matter of right.16 As a corollary, trial-type hearings are not
even required as the cases may be decided based on verified position papers, with supporting documents
and their affidavits.17
Hence, the Labor Arbiter acted well within his authority when he issued the Order dated February 26,
1999 submitting the case for resolution upon finding that he could judiciously pass on the merits without
the necessity of further hearing. On the other hand, the assailed CA decision’s directive requiring him to
conduct further hearings constitutes undue interference with the Labor Arbiter’s discretion. Moreover, to
require the conduct of hearings would be to negate the rationale and purpose of the summary nature of
the proceedings mandated by the Rules and to make mandatory the application of the technical rules of
evidence.18 The appellate court, therefore, committed reversible error in ordering the remand of the case
to the Labor Arbiter for further hearings.
Before delving on the merits of the case, it is well to remember that factual findings of the NLRC affirming
those of the Labor Arbiter, both bodies being deemed to have acquired expertise in matters within their
jurisdiction, when sufficiently supported by evidence on record, are accorded respect, if not finality, and
are considered binding on this Court.19 As long as their decisions are devoid of any arbitrariness in the
process of their deduction from the evidence proffered by the parties, all that is left is for the Court to
stamp its affirmation.20
In this case, the factual findings of the Labor Arbiter and those of the NLRC concur on the following
material points: the respondent was a responsible officer of the petitioner Bank; by his own admission, he
granted DAUD/BP accommodations in excess of the authority given to him and in violation of the bank’s
standard operating procedures; the petitioner Bank’s Code of Ethics provides that restitution/forfeiture of
benefits may be imposed on the employees for, inter alia, infraction of the bank’s standard operating
procedures; and, the respondent resigned from the petitioner Bank on May 31, 1998. These factual
findings are amply supported by the evidence on record.
Indeed, it had been indubitably shown that the respondent admitted that he violated the petitioner Bank’s
standard operating procedures in granting the DAUD/BP accommodations in favor of Maniwan without
higher management approval. The respondent’s replies to the clarificatory questions propounded to him
by way of the Memorandum dated November 19, 1996 were particularly significant. When the respondent
was asked whether efforts were made to establish the identity and/or legitimacy of the drawers of the
checks before the DAUD/BP accommodations were allowed,21 he replied in the negative.22 To the query
"did the branch follow and comply with operating procedure which require that all checks accommodated
for DAUD/BP should be previously verified with the drawee bank and history, if not outright balances,
determined if enough to cover the checks?"23 again, the respondent answered "no."24 When asked under
whose authority the excess DAUD/BP accommodations were granted,25 the respondent expressly stated
that they were "approved by undersigned (referring to himself)" and that the excess accommodation was
granted "without higher management approval."26 More telling, however, is the respondent’s statement
that he "accepts full responsibility for committing an error in judgment, lapses in control and abuse of
discretion by relying solely on the word, assurance, surety and REM of Mr. Edmundo Ramos."27 The
respondent added that he was "ready to face the consequence of [his] action."28
The foregoing sufficiently establish that the respondent, by his own admissions, had violated the petitioner
Bank’s standard operating procedures. Among others, the petitioner Bank’s Code of Ethics provides:
* With restitution, if warranted.
Further, the said Code states that:
7.2.5. Restitution/Forfeiture of Benefits
Restitution may be imposed independently or together with any other penalty in case of loss or damage to
the property of the Bank, its employees, clients or other parties doing business with the Bank. The Bank
may recover the amount involved by means of salary deduction or whatever legal means that will prompt
offenders to pay the amount involved. But restitution shall in no way mitigate the penalties attached to the
violation or infraction.
Forfeiture of benefits/p>rivileges may also be effected in cases where infractions or violations were
incurred in connection with or arising from the application/availment thereof.
It is well recognized that company policies and regulations are, unless shown to be grossly oppressive or
contrary to law, generally binding and valid on the parties and must be complied with until finally revised
or amended unilaterally or preferably through negotiation or by competent authority.29 Moreover,
management has the prerogative to discipline its employees and to impose appropriate penalties on
erring workers pursuant to company rules and regulations.30 With more reason should these truisms
apply to the respondent, who, by reason of his position, was required to act judiciously and to exercise his
authority in harmony with company policies.31
Contrary to the respondent’s contention that the petitioner Bank could not properly impose the accessory
penalty of restitution on him without imposing the principal penalty of "Written Reprimand/Suspension,"
the latter’s Code of Ethics expressly sanctions the imposition of restitution/forfeiture of benefits apart from
or independent of the other penalties. Obviously, in view of his voluntary separation from the petitioner
Bank, the imposition of the penalty of reprimand or suspension would be futile. The petitioner Bank was
left with no other recourse but to impose the ancillary penalty of restitution. It was certainly within the
petitioner Bank’s prerogative to impose on the respondent what it considered the appropriate penalty
under the circumstances pursuant to its company rules and regulations.
Anent the issue that the respondent’s right to due process was violated by the petitioner Bank since no
administrative investigation was conducted prior to the withholding of his separation benefits, the Court
rules that, under the circumstances obtaining in this case, no formal administrative investigation was
necessary. Due process simply demands an opportunity to be heard and this opportunity was not denied
the respondent.32
Prior to the respondent’s resignation, he was furnished with the Memorandum33 dated November 19,
1996 in which several clarificatory questions were propounded to him regarding the DAUD/BP
accommodations in favor of Maniwan. Among others, the respondent was asked whether the bank’s
standard operating procedures were complied with and under whose authority the accommodations were
granted. From the tenor thereof, it could be reasonably gleaned that the said memorandum constituted
notice of the charge against the respondent.
Replying to the queries, the respondent, in his Letter34 dated December 5, 1996, admitted, inter alia, that
he approved the DAUD/BP accommodations in favor of Maniwan and the amount in excess of the credit
limit of ₱500,000 was approved by him without higher management approval. The respondent, likewise,
admitted non-compliance with the bank’s standard operating procedures, specifically, that which required
that all checks accommodated for DAUD/BP be previously verified with the drawee bank and history, if
not outright balances determined if enough to cover the checks. In the same letter, the respondent
expressed that he "accepts full responsibility for committing an error in judgment, lapses in control and
abuse of discretion" and that he is "ready to face the consequence of his action."
Contrary to his protestations, the respondent was given the opportunity to be heard and considering his
admissions, it became unnecessary to hold any formal investigation.35 More particularly, it became
unnecessary for the petitioner Bank to conduct an investigation on whether the respondent had
committed an "[I]nfraction of Bank procedures in handling any Bank transaction or work assignment which
results in a loss or probable loss" because the respondent already admitted the same. All that was
needed was to inform him of the findings of the management36 and this was done by way of the
Memorandum37 dated May 23, 1997 addressed to the respondent. His claim of denial of due process
must perforce fail.
Significantly, the respondent is not wholly deprived of his separation benefits. As the Labor Arbiter
stressed in his decision, "the separation benefits due the complainant (the respondent herein) were
merely withheld."38 The NLRC made the same conclusion and was even more explicit as it opined that
the respondent "is entitled to the benefits he claimed in pursuance to the Collective Bargaining Agreement
but, in the meantime, such benefits shall be deposited with the bank by way of pledge."39 Even the
petitioner Bank itself gives "the assurance that as soon as the Bank has satisfied a judgment in Civil Case
No. 97174, the earmarked portion of his benefits will be released without delay."40
It bears stressing that the respondent was not just a rank and file employee. At the time of his resignation,
he was the Assistant Vice- President, Branch Banking Group for the Mindanao area of the petitioner
Bank. His position carried authority for the exercise of independent judgment and discretion, characteristic
of sensitive posts in corporate hierarchy.41 As such, he was, as earlier intimated, required to act
judiciously and to exercise his authority in harmony with company policies.42
On the other hand, the petitioner Bank’s business is essentially imbued with public interest and owes
great fidelity to the public it deals with.43 It is expected to exercise the highest degree of diligence in the
selection and supervision of their employees.44 As a corollary, and like all other business enterprises, its
prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to
company rules and regulations must be respected.45 The law, in protecting the rights of labor, authorized
neither oppression nor self-destruction of an employer company which itself is possessed of rights that
must be entitled to recognition and respect.46
WHEREFORE, the petition is GRANTED. The Decision dated July 19, 2002 of the Court of Appeals and
its Resolution dated January 6, 2003 in CA-G.R. SP No. 57365 are REVERSED AND SET ASIDE. The
Resolution dated October 20, 1999 of the NLRC, affirming the Decision dated February 26, 1999 of the
Labor Arbiter, is REINSTATED.
SO ORDERED.