BANK OF THE PHILIPPINE ISLANDS. PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, MA. PAZ CORAZON D. LLORIN, RESPONDENTS.

Bank of the Philippine Islands versus National Labor Relations Commission

The Case

This is a petition for certiorari under Rule 65 of the 1997 Rules of Court, brought by the Bank of the Philippine Islands against the National Labor Relations Commission and its former bank teller, Ma. Paz Corazon D. Llorin. The bank asks the Supreme Court to overturn the Commission's finding that Llorin was illegally dismissed, insisting that she committed dishonesty when she gave a false written explanation during the bank's investigation of a fraudulent withdrawal. The case matters because it is the Court's clearest teaching on the limits of dishonesty as a just cause for dismissal: not every false statement is grave enough to cost a worker her employment, and the penalty must fit the wrong.

Procedural History

Llorin filed a complaint for constructive illegal dismissal, with prayers for reinstatement, backwages and damages, before the arbitration branch of the National Labor Relations Commission. The Labor Arbiter ruled in her favor, declaring her termination illegal and ordering reinstatement, backwages, moral and exemplary damages, and attorney's fees. The bank appealed by memorandum to the National Labor Relations Commission, which affirmed the Labor Arbiter's decision but deleted the award of moral and exemplary damages for lack of basis. The bank moved for reconsideration, and the Commission denied the motion for lack of merit. The bank then elevated the case directly to the Supreme Court by petition for certiorari under Rule 65, and the Court denied the petition and affirmed the Commission.

Facts

In December 1996, Ma. Paz Corazon D. Llorin began working on a probationary basis as a bank teller at the Iriga City branch of the Bank of the Philippine Islands. By March 1998 she became a permanent employee, and she later served as a teller at the Naga City branch until December 1999, when she was reassigned as a new accounts clerk.

The reassignment followed a withdrawal of 450,000 pesos made on September 30, 1999 at her teller cage from the Gold Savings Account of spouses Edmundo and Eden Tam. In October 1999, Mr. Tam contested the withdrawal, claiming that the signature on the withdrawal slip was a forgery. The bank manager directed Llorin to explain in writing, and in her explanation dated October 27, 1999 she stated that it was Mrs. Eden Tam herself who signed and personally withdrew the amount, with the bank officers approving the withdrawal. The spouses Tam then sued the bank in the Regional Trial Court of Naga City to recover the amount, and the bank, relying on Llorin's positive identification, answered that the withdrawal was genuine and authorized. The bank nonetheless sent the withdrawal slip to the PNP Crime Laboratory for examination and conducted an in-house investigation, whose result was a finding of procedural lapses only, with a recommendation that Llorin and two senior bank officers each pay 150,000 pesos and be suspended for five banking days, expressly erasing any fraud on Llorin's part.

Then another bank teller, Joanna Alcarioto, wrote a letter dated October 24, 2001 confessing that she alone had manipulated the withdrawal by forging Mrs. Tam's signature and personally obtaining the amount. The bank settled with the spouses Tam for a compromised amount of 1,050,000 pesos and sued Alcarioto criminally. The bank then issued a show cause memorandum to Llorin, and in her explanation dated November 6, 2001 she apologized for her false statements, saying she too had been a victim of Alcarioto's manipulation. A high officer of the bank verbally asked her to resign, failing which disciplinary action would be pursued, and out of fear she submitted a resignation letter dated July 1, 2002. Her employment ended on July 2, 2002. She filed her complaint on July 10, 2002; on July 17, 2002 the bank refused to accept the resignation and instead issued a Notice of Termination grounded on her dishonesty in making a false declaration during the investigation.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion in upholding the Labor Arbiter's finding that the bank illegally dismissed Llorin.
• Whether or not the National Labor Relations Commission committed grave abuse of discretion in upholding the Labor Arbiter's finding that the bank is liable to reinstate Llorin and pay her backwages, inclusive of allowances and other benefits.

Applicable Provisions

Article 282 of the Labor Code, as cited in the decision, lists the just causes for termination by the employer, and its paragraph (e) is the ground the bank invoked, dishonesty analogous to the other causes. The decision refers to it in this form:

Sec. 282 (e), Labor Code

This provision bears on the case because the Court measured Llorin's conduct against the requirement that the dishonesty be serious and grave before it can justify dismissal.

Ruling

On the first issue, the Court found no grave abuse of discretion and held that the dismissal was illegal. The ground relied upon by the bank was not enough to defeat Llorin's security of tenure, because the dismissal was not founded on clearly established facts sufficient to warrant separation from employment. When her written statement is read in its entirety, it was based on her honest belief and information that there was a genuine withdrawal at her teller cage; she made it in compliance with her superior's directive to explain within twenty-four hours, at a time when she was innocent of Alcarioto's acts, and she even recalled that the signature had been verified against the depositor's specimen signature card. These circumstances negated any intention to commit dishonesty. The Court defined the ground the bank invoked:

As defined by the Supreme Court, the term dishonesty implies a disposition to lie, cheat, deceive or defraud; untrustworthiness; lack of integrity.

But it immediately qualified the definition with the rule that controls the case:

Then again, to be lawful, the cause for termination (i.e. dishonesty) must be a serious and grave malfeasance to justify the deprivation of a means of livelihood.

Here, her statement did not evince a propensity to cheat and defraud the bank, and the bank, in deciding to fight the civil case, relied merely on her statements without making further investigations. The Court also stressed that dismissal is the most severe penalty an employer can impose, and that the penalty imposed was too severe, too harsh and excessive in light of her unblemished record and dedicated service. It quoted with approval the rule that the Constitution does not condone wrongdoing by the employee, yet urges a moderation of the sanction, and that where a penalty less punitive would suffice, missteps ought not to be visited with dismissal; if doubts exist between the evidence of the employer and the employee, the scales of justice must be tilted in favor of the latter, and the employer must affirmatively show rationally adequate evidence of a justifiable cause. On the second issue, the Court upheld the award of reinstatement and backwages, inclusive of allowances and other benefits, and agreed that the moral and exemplary damages awarded by the Labor Arbiter should be deleted, since moral damages are recoverable only where the dismissal was attended by bad faith or fraud, or was oppressive to labor, or contrary to morals, good customs or public policy, and a dismissal may be contrary to law without by itself establishing bad faith.

Doctrine

Dishonesty, as a just cause for termination analogous to those listed in Article 282 of the Labor Code, must be a serious and grave malfeasance; it implies a disposition to lie, cheat, deceive or defraud, untrustworthiness, and lack of integrity, but the employer must prove it by rationally adequate evidence. A false statement made in honest belief, in compliance with a superior's directive, and without intent to mislead or prejudice the employer, does not evince the propensity to cheat and defraud that the law requires. Dismissal is the most severe penalty an employer may impose, and where a less punitive penalty would suffice, dismissal is too harsh and disproportionate; every doubt between the evidence of the employer and the employee is resolved in favor of the employee. Moral damages lie only where the dismissal is attended by bad faith or fraud, or is oppressive to labor, or contrary to morals, good customs or public policy; illegality of dismissal alone does not establish bad faith.

Disposition

The petition was denied, and the Resolution of November 19, 2004 and the Order of April 20, 2005 of the National Labor Relations Commission were affirmed, with Llorin winning reinstatement and backwages and the award of moral and exemplary damages deleted.

Remember This

Memorize the line: to be lawful, the cause for termination must be a serious and grave malfeasance, because the Constitution urges a moderation of the sanction and every doubt is resolved in favor of the worker. Examiners use this case to test the grave dishonesty requirement, the proportionality of penalties, and the rule that an illegal dismissal does not by itself entitle the employee to moral damages.