BOARD OF DIRECTORS OF THE PHILIPPINE NATIONAL BANK, PETITIONER, VS. THE COURT OF APPEALS AND OSCAR C. MELLA, RESPONDENTS.

From the decision of the Court of Appeals (in CA-G.R. No. 22887-R) ordering
the reinstatement to his former position, with back salaries, of dismissed
employee Oscar C. Mella, the Board of Directors of the Philippine National Bank
(PNB) interposed an appeal by way of the instant petition for certiorari.

As contained in the decision of the Court of Appeals, it appears that Oscar
C. Mella first entered employment in the PNB in 1937, working in various
capacities until, after the war, he was promoted to the position of paying
teller.

In 1949, one Jose D. Cortes, allegedly in connivance with certain employees
of the Bank, succeeded in effecting fraudulent withdrawals in the Savings
Account Division through the use of fictitious ledger cards. The paying tellers
from whom the withdrawals were made, the bookkeepers who initialed the
withdrawal slips and verified the balances as well as the chief and assistant
chief of the division, who acted on said withdrawals, were placed under
suspicion. One of the paying tellers so affected was Oscar C. Mella.

On March 21, 1949, the Bank’s cashier and auditor interrogated Mella on the
fraudulent withdrawals. The questions and his answers thereto which were reduced
to writing, contained specific denial that he knew Jose D. Cortes and the
various names the latter had assumed in the fictitious ledger cards, and a
statement that the withdrawal slips were previously approved by the bookkeeper
and chief of the Savings Division. On the following day, Mella was suspended,
and the matter of the fraudulent withdrawals was referred to the National Bureau
of Investigation, (NBI).

On April 9, Mella was interrogated by two NBI agents, before whom he signed a
sworn statement admitting his initials on the questioned withdrawal slips, after
they were duly approved by the bookkeeper and the division chief, and denying
personal knowledge of the depositors. On June 24 of the same year, Mella was
requested to appear, as he did appear, before a special committee composed of
members of the PNB Board of Directors, created to inquire into these irregular
transactions. The questions asked Mella, as well as his answers thereto, which
were along the same line as those given in the previous interrogations were also
reduced to writing.

On June 29, 1949, the Board of Directors promulgated Resolution No. 758
ordering the immediate reinstatement of Mella “in view of the findings of the
Committee that there is no ground whatsoever for the action taken by the
Management in suspending Tellers * * * Oscar Mella of the said Division since
March 23rd this year, and that the NBI report makes no charges against them”.
However, the Board directed that he be transferred to another position where he
will have no cash responsibility.

Later, on September 11, 1951, he was again re-assigned to the position of
paying teller.

On April 15, 1952, Mella was again notified that he was being suspended from
the service, effective at the close of business hours of that day, in connection
with the same case of People vs. Jose D. Cortes, et al., then pending
investigation in the City Fiscal’s Office.

On April 30, 1952, Mella addressed a letter to the President of the Bank
calling the latter’s attention to the fact that he (Mella) was never required to
answer any specific charge or charges before his suspension, and requesting the
Bank to specify the cause of his said suspension to enable him to defend
himself. This letter was answered by the Bank President, informing him that as
the case was already under consideration by the City Fiscal, the matter was no
longer within the power of the Board to pass upon.

Mella once more wrote to said Bank official, but he did not receive any
reply.

On May 28, 1953, he was notified of Board Resolution No. 557, adopted on May
27, 1953, approving his dismissal for cause effective April 16, 1952
(date of the suspension), without prejudice to the Bank’s instituting the
corresponding civil or criminal action independently of administrative
proceedings. Said resolution was based on the report by NBI Agent No. 13,
gathered during the investigation conducted on March 30, 1953, allegedly
impugning the honesty and integrity of five bank employees, one of them was
Mella. Said report by the NBI, however, was not presented in court because
neither the NBI-copy nor that of the Bank could be found in their respective
files.

On June 10, 1953, Mella wrote to the President of the Bank professing his
innocence and requesting for a hearing, to no avail.

Thereafter or on July 7, 1953, and not knowing that his dismissal was based
on a report by NBI Agent No. 13, he submitted to the interrogations of said NBI
Agent, before whom he maintained his ignorance of the identity of Jose D.
Cortes. He also sent several letters to the Board of Directors on various dates,
without receiving any reply. Finally, on April 12, 1955, Mella instituted in the
Court of First Instance of Manila the present action for mandamus to compel the
Board of Directors to reinstate him to his former position, on the ground that
his dismissal was arbitrary and unwarranted, amounting to a deprivation of his
property without due process of law.

After trial, the lower court declared the dismissal of petitioner improper
and without justifiable cause, and ordered his reinstatement, with back
salaries. Petitioner was further awarded moral damages in the sum of P5,000.00
and P3,000.00 as attorney’s fees. On appeal by the Bank, the Court of Appeals
affirmed the aforesaid decision, except as to that portion awarding moral
damages and attorney’s fees which were eliminated. From this decision of the
Court of Appeals, the Philippine National Bank has interposed the instant
petition for review by certiorari.

It is clear from the foregoing facts, that no formal or specific charges were
formulated against herein respondent Oscar C. Mella, much less has there been a
hearing before he was dismissed from employment. What were conducted were mere
interrogations or inquiries primarily for the purpose of eliciting facts or
information about the fraudulent withdrawals. These are the factual findings of
both the trial and the appellate courts, which can not be reviewed by us.
Certainly, such inquiries cannot take the place of an investigation and due
hearing wherein the suspected erring employee is given opportunity to defend
himself against certain specified charges.

But this notwithstanding, herein petitioner Board of Directors now claims
thst under the Charter of the Philippine National Bank^[1] it has broad and plenary power to suspend or
remove any of its employees, with or without cause, with or without prior
investigation, citing as source of this power, section 23 of Act No. 2612, as
amended, which, in pertinent part reads:

“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; * * *.”

It is claimed that the Charter specifically excludes PNB employees from the
operation of the Civil Service Law, and consequently they are not protected by
the provisions thereof. While this may be true, still the Bank’s Board of
Directors itself, in the exercise of its power to adopt internal rules and
regulations, has expressly promulgated RULES AND REGULATIONS FOR THE GUIDANCE OF
OFFICERS AND EMPLOYEES OF THE PHILIPPINE NATIONAL BANK, Article V, Section 2 of
which provides:

“The following offenses if found to have been committed by any officer or
employee after proper investigation shall be sufficient ground for dismissal
from the service of the Bank:

1. Violation of the provisions of the Bank’s charter, special attention is
   invited to Sections 26, 29, 36 and 43 thereof.
2. Dishonesty and infidelity in the handling of Bank’s funds and properties.
3. Immorality.
4. Incorrigible gambling and drinking habits.
5. Grave misconduct towards customers and officers of the Bank.
6. Insubordination or refusal to obey lawful orders from superiors.
7. Receiving tips, gifts, favors, and soliciting business, from customers of
   the Bank.” (Emphasis supplied.)

These Rules and Regulations, which the PNB Board has wisely promulgated, as
it should, for the exercise of its power of removal, are binding upon itself
while in force and can not be disregarded. They are a salutary implementary
complement of the provisions of the charter intended to guard against
arbitrariness. Petitioner contends, however, that since Mella’s dismissal was
for lack of confidence, a cause not included in the enumeration, the provision
therein requiring prior investigation is not applicable to Mella.

The contention is devoid of merit. A reading of the above-quoted regulation
shows that the enumeration therein of offenses that may serve as basis for
separation is inclusive. The position of a paying teller does not involve any
confidence apart from the fact that he handles the bank’s funds and deals with
its customers. Consequently, the loss of confidence to be a ground of dismissal
necessarily is in connection with the handling of the bank’s funds and his
dealings with the bank’s customers. And it is admitted by petitioner that the
dismissal of Mella was in relation to the fraudulent withdrawals by Jose D.
Cortes, a relation bearing on offenses b and g of the enumeration
(see infra).

Petitioner next contends that the petition for mandamus having been filed
only on April 12, 1955 or after the lapse of more than one year from the date of
his separation, Mella has already lost the right to question the legality of
such dismissal, by inaction or laches.

Suffice it for us to state that the ruling invoked by petitioner applies only
to public officers and employees. The reason for fixing a short duration, i.e.,
one year, within which the matter of the legality of a dismissal or separation
from public employment may be brought in court, is given when we said:

“* * *. There are weighty reasons of public policy and convenience that
demand the adoption of a similar period (one year) for persons claiming rights
to positions in the civil service. There must be stability in the service
so that public business may not be unduly retarded; delays in the settlement of
the right to position in the service must be discouraged.” (Unabia vs.
City Mayor, 99 Phil., 253; 53 Off. Gaz. 132; (Italics
supplied.)

Admittedly, positions in the PNB are not governed by Civil Services Law; that
employment in the said institution can not definitely be said to be a public
office. Consequently, the ruling invoked by petitioner, which we have
consistently applied only in cases of public offices, can not be applied
herein.

Moreover, the records disclose that after Mella was advised of the resolution
of May 27, 1953 dismissing him for cause, he wrote to the President of the bank
requesting for a formal hearing. Then in July, 1953, he was again subjected to
interrogations by NBI Agent No. 13 before whom he maintained his ignorance of
the identity of Cortes. He repeated his request for a hearing in several letters
to the Board on various dates, without receiving any reply. Hence, on April 12,
1955 he finally filed his action. Under the circumstance, we do not believe that
Mella is guilty of laches.

This decision, it is to be noted, as well as that of the Court of Appeals and
the trial court, determines the right of the employee Mella to a formal
investigation of whatever specific charges the PNB has against him. Since he was
deprived of that right, his dismissal will have to be set aside. But whether or
not there are sufficient grounds for some disciplinary action, we do not here
decide as this matter has not been litigated in this case. The report of the NBI
agent upon which the resolution of dismissal was based is not in the record. As
a consequence, all that this Court can order, in view of the conclusions
reached, is the reinstatement of respondent Oscar C. Mella in the service of the
Philippine National Bank, not necessarily in the same position from which he was
dismissed.

Modified in the manner herein indicated, the decision of the Court of Appeals
is hereby affirmed in all other respects, without pronouncement as to costs. So
ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L., Paredes, Dizon, De Leon and Natividad, JJ., concur.

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^[1] Act 2612, as amended by Acts 2747 and
2938.