PHILIPPINE COMMERCIAL INTERNATIONAL BANK (NOW BDO UNIBANK, INC., PETITIONER, VS. JOSEPHINE D. GOMEZ, RESPONDENT.

Philippine Commercial International Bank versus Gomez

The Case

This is a petition for review on certiorari brought by Philippine Commercial International Bank, now BDO Unibank, against its former teller Josephine D. Gomez. The bank challenges the damages awarded to her after it deducted amounts from her salary to cover a loss caused by an impostor who withdrew funds from a depositor's account. The case matters for two reasons. First, it fixes the boundary between the jurisdiction of the Labor Arbiters and that of the regular civil courts when an employee sues her employer for damages. Second, it applies the abuse of right principle under Article 19 of the Civil Code to an employer's high-handed treatment of a subordinate.

Procedural History

Josephine filed a complaint for damages with a prayer for preliminary injunction before the Regional Trial Court of Makati City, Branch 145. The bank answered with counterclaims and even filed a separate complaint before another branch of the same court. In its decision of May 25, 1999, the trial court ruled for Josephine, awarding actual damages, moral damages, and attorney's fees, and finding that the bank acted in bad faith.

The bank appealed to the Court of Appeals, arguing that the trial court had no jurisdiction because the matter was a labor dispute, and that there was no basis for damages. The Court of Appeals affirmed the trial court in full, holding that the bank was estopped from questioning jurisdiction because it had itself invoked the court's authority. The Court of Appeals denied reconsideration, so the bank elevated the case to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Josephine was a teller at the bank's Domestic Airport Branch. In January 1985, a certain Colin R. Harrington opened a savings account with the branch. The following day, two genuine bank drafts issued by the Bank of New Zealand were presented for deposit, one payable to Harrington and the other payable to Servants, care of Harrington. Josephine asked her supervisor whether the drafts were acceptable, was told they were, and the deposits were entered in Harrington's account.

On two separate occasions, an impostor representing himself as Harrington withdrew 45,000 pesos and 5,600 pesos. The bank later discovered the fraud and paid Harrington 50,600 pesos, the value of the drafts in his name. It then issued a memorandum asking Josephine to explain, and she answered that as a new teller she was not fully oriented and had sought her supervisor's approval.

The bank deducted 423 pesos and 38 centavos from her salary in November 1985. After investigation, it issued another memorandum finding her grossly negligent and requiring her to pay 50,600 pesos through deductions from her salary, allowances, bonuses, and profit sharing. When Josephine asked for the factual and legal basis of that finding, the bank gave none. It admitted that as early as January 1986 it had begun deducting 200 pesos from her salary and half of her bonuses and profit sharing. Notably, the other employees involved in the transaction were never penalized; Josephine alone was made to bear the loss.

Issues

• Whether or not the Regional Trial Court had jurisdiction over Josephine's complaint for damages, or whether the matter fell within the exclusive jurisdiction of the Labor Arbiters as a claim arising from an employer-employee relationship.
• Whether or not the bank is liable for damages under the abuse of right principle for the manner in which it deducted amounts from Josephine's salary.
• Whether or not the award of moral damages and attorney's fees in Josephine's favor was proper.

Applicable Provisions

Article 19 of the Civil Code provides:

Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

This is the abuse of right principle, the standard the bank violated when it penalized Josephine unjustly.

Article 20 of the Civil Code provides:

Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same.

This is one of the sanctions for violating Article 19.

Article 21 of the Civil Code provides:

Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs, or public policy shall compensate the latter for damages.

This is the other sanction, and it grounds Josephine's cause of action in the civil courts.

Article 224 of the Labor Code, as the Court refers to the provision on the jurisdiction of Labor Arbiters, provides that they have original and exclusive jurisdiction over claims for damages arising from employer-employee relations. The Court holds that this grant does not reach a cause of action with no reasonable connection to that relationship.

Ruling

On the first issue, the Court holds that the civil courts have jurisdiction. Although Josephine's cause of action arose from her employer's deductions, her complaint is anchored on a quasi-delict under Article 19 in relation to Article 21 of the Civil Code, not on the employment relationship itself. The Court quotes its earlier ruling that when the cause of action has no reasonable connection with the claims covered by the Labor Code, jurisdiction lies with the regular courts. What Josephine challenged was not her dismissal or any labor claim, but the manner in which the bank exercised its right to penalize her, which violated her right to fair treatment.

On the second issue, the Court affirms the finding of liability. A right, though legal in itself, may become the source of illegality when exercised contrary to Article 19. The bank had the right to penalize a negligent employee, but it exercised that right unjustly. It deducted from Josephine's salary while the investigation was still pending, issued its finding of gross negligence without giving her any basis when asked, continued the deductions, and singled her out although other employees participated in the transaction. The Court quotes the principle that a right, though by itself legal, may nevertheless become the source of some illegality when exercised in a manner that does not conform with the norms of Article 19 and results in damage to another.

On the third issue, the Court holds that the award of moral damages and attorney's fees is proper, since the bank's oppressive acts were established. The Court also notes that a Rule 45 review is limited to errors of law, and that the factual findings of the trial court, affirmed by the Court of Appeals, bind the Court.

Doctrine

Jurisdiction over a claim for damages lies with the regular courts, not the Labor Arbiters, when the cause of action has no reasonable causal connection to the employer-employee relationship. A complaint grounded on Articles 19 and 21 of the Civil Code, attacking the manner in which an employer exercised its rights rather than the employment relation itself, is cognizable by the civil courts. Under the abuse of right principle, a right, though legal, becomes a source of illegality when exercised without justice, without giving each person his due, and without honesty and good faith, and the wrongdoer is liable under Articles 20 and 21. An employer may penalize a negligent employee, but it must do so fairly, with due process, and without singling out one employee while sparing others equally involved.

Disposition

The Supreme Court denied the bank's petition and affirmed in full the decision and resolution of the Court of Appeals, sustaining the awards of damages and attorney's fees in Josephine's favor.

Remember This

Memorize this line: a right, though legal, may become the source of illegality when exercised contrary to Article 19, and the remedy lies under Articles 20 and 21. Examiners use this case to test the jurisdiction boundary between Labor Arbiters and civil courts, and to illustrate the abuse of right principle in the employment setting.