RIZALINA G. GALSIM AND HER HUSBAND BENIGNO C. GALSIM, PLAINTIFFS-APPELLANTS, VS. PHILIPPINE NATIONAL BANK, DEFENDANT-APPELLEE.

Galsim versus Philippine National Bank

The Case

This is the case of Galsim versus Philippine National Bank. Rizalina Galsim, a paying teller of the Philippine National Bank, was required by the bank to resign after she delivered ten thousand pesos in one hundred peso bills to a co-employee, a receiving teller named Deogracias Pauco, without the supporting bank forms. She refused to resign, was effectively dismissed, and sued the bank for reinstatement, back salaries, and damages. The case matters because it draws the line between the employer's right to hire and fire and the employee's protection against an abusive exercise of that right, and because it teaches what loss of confidence means for a teller entrusted with the bank's funds.

Procedural History

Rizalina Galsim and her husband Benigno Galsim filed a complaint for reinstatement, recovery of back salaries, and damages against the Philippine National Bank in the Court of First Instance of Manila. After trial, that court dismissed the complaint, with costs against her. The plaintiffs then appealed to the Supreme Court, which resolved the appeal in this decision.

Two related proceedings form the backdrop. The bank earlier sued the spouses to recover the ten thousand pesos; the Court of First Instance of Manila exonerated Mrs. Galsim, and the Court of Appeals affirmed that judgment, which became final. A criminal information for qualified theft was also filed against Mrs. Galsim and Pauco; on her petition, the Court of Appeals directed the dismissal of the criminal case against her, and the trial court did so.

Facts

On the morning of December 11, 1952, between nine fifteen and nine twenty, Deogracias Pauco, a receiving teller, entered the cage of paying teller Rizalina Galsim. She thought he was borrowing ten pesos and told him she had only two pesos with her. Pauco then made clear that he needed ten thousand pesos. Without inquiring into his purpose, she handed him one bundle of one hundred peso bills amounting to ten thousand pesos, presuming he would use it for exchange requested by customers. After ten or fifteen minutes, she went to his cage; he was not there. She checked his time card and found he had not timed in that day. She tried to report to an assistant cashier but could not speak with him until past eleven o'clock that morning.

Shortly after one o'clock that afternoon, she met Pauco at a drinking fountain and asked where he had taken the money. He angrily denied taking anything from her, turned his back, and left. She incurred a shortage of ten thousand pesos in her accountability for that day. The bank suspended both tellers the same day and called in the National Bureau of Investigation. The bank auditor reported that she was guilty of gross negligence and violation of regulations, citing her delay in reporting and her failure to have Pauco sign the usual Teller's Account Ticket, PNB General Form 34-B.

The National Bureau of Investigation later reported that her version was the truth and that Pauco was solely to blame; it found that Pauco really did borrow the ten thousand pesos and lost the money in a gambling game, and it recommended her reinstatement. A third investigation by a bank vice-president concluded that she had violated tellers' division rules and recommended dismissal. On June 21, 1954, the board of directors issued Resolution 668: it recognized that she acted in good faith and that lending cash between tellers was a prevailing practice, but found her at fault for failing to have PNB Forms 33-B and 34-B accomplished, held that this constituted negligence, and required her to resign. She did not comply. Her efforts at reinstatement failed, and she sued.

Issues

• Whether or not Rizalina Galsim, as an employee of the Philippine National Bank, is subject to the Civil Service Law and entitled to reinstatement on that ground.
• Whether or not there exists a valid ground, namely loss of confidence, to justify her dismissal.

Applicable Provisions

Section 23 of the bank's charter, Act Number 2612, as amended, provides:

SEC. 23. Other officers and employees, appointment and removal - Salaries - Non-applicability of the Civil Service Law. - All the other officers and employees of the Bank shall be appointed and removed by the Board of Directors, on recommendation of the President. Said officers and employees shall not be subject to the Civil Service Law, and their duties and compensation shall be fixed by the President with the approval of the board of directors; x x x.

This provision places the power to appoint and remove bank employees in the board of directors and expressly exempts them from the Civil Service Law, so Mrs. Galsim cannot claim the security of tenure that civil service rules give.

Ruling

On the first issue, the Court held that Mrs. Galsim is not subject to the Civil Service Law; her position is not a public office. Under Section 23 of the bank's charter, the board of directors has the right to choose its employees, the employer's right to hire and fire. That prerogative may be exercised with or without cause, but if exercised abusively, the employer answers to the dismissed employee for damages.

On the second issue, the Court held that a valid ground for dismissal exists. The Court stressed that for a dismissal for loss of confidence to be warranted, there should naturally be some basis for it. It noted that the final judgment in the civil case for recovery of the ten thousand pesos did not bind the question of reinstatement, which was not in issue there. It recalled its earlier ruling that the position of a paying teller involves confidence in connection with the handling of the bank's funds and dealings with its customers, and found that Mrs. Galsim handled a working amount of eighty six thousand six hundred eighty four pesos and forty three centavos on the day of the incident.

The Court found ample basis for the loss of confidence. She gave ten thousand pesos without inquiring into Pauco's purpose, did not require him to produce the equivalent in smaller denominations, did not follow him to his cage, and did not obtain any evidence that the money was with him, although the bank provided PNB General Forms 33-B and 34-B precisely to trace transfers of money from teller to teller. She knew a large sum was involved, that business had just begun, that Pauco was a receiving teller, and that there was an exchange teller whose duty was to exchange money. Her failure to obtain a receipt emboldened Pauco to pocket the money. The Court quoted its earlier ruling:

The relation of employer and employee, specially where the employee has access to the employer's property in the form of articles and merchandise for sale, necessarily involves trust and confidence. If said merchandise are lost and said loss is reasonably attributed to said employee, and he is charged with theft, even if he is acquitted of the charge on reasonable doubt, when the employer has lost its confidence in him, it would be highly unfair to require said employer to continue employing him or to reinstate him, for in that case, the former might find it necessary for its protection to employ another person to watch and keep an eye on him.

The Court concluded that reinstatement is neither sound in reason nor just in principle, being irreconcilable with trust and confidence, and affirmed the dismissal of the complaint.

Doctrine

An employee of the Philippine National Bank is not subject to the Civil Service Law, and the bank's board of directors may appoint and remove employees under Section 23 of its charter. This is the employer's right to hire and fire, which may be exercised with or without cause, but an abusive exercise entitles the dismissed employee to damages. For a dismissal for loss of confidence to be valid, there must be some basis for it. A paying teller holds a position of trust and confidence in the handling of the bank's funds and dealings with its customers, and a failure to observe the bank's safeguards, such as the required forms evidencing transfers of money, is a sufficient basis for loss of confidence. An employee's acquittal in a criminal case, or exoneration from civil liability for the loss, does not automatically entitle the employee to reinstatement.

Disposition

The Supreme Court affirmed the judgment dismissing the complaint, with costs against the plaintiffs.

Remember This

The line worth memorizing is that for a dismissal for loss of confidence to be warranted, there should naturally be some basis for it, and a teller's failure to use the bank's required forms supplies that basis. Examiners use this case to test the employer's right to hire and fire, the requisites of a valid dismissal for loss of confidence, and the rule that acquittal or exoneration does not compel reinstatement.