EDMUND YAP, PETITIONER, VS. HON. AMADO G. INCIONG, IN HIS CAPACITY AS DEPUTY MINISTER OF LABOR AND ASSOCIATED CITIZENS BANK, RESPONDENTS.

This is a petition for certiorari under Rule 65 of the
Rules of Court seeking the annulment of the order of the respondent Deputy
Minister of Labor dated June 19, 1979 in Case No. R04-11-10474-77-T, entitled
“EDMUND YAP, Complainant, versus ASSOCIATED CITIZENS BANK, Respondent,”
which upheld the termination of
employment of petitioner and ordered the payment
of separation pay to the latter.

The antecedent facts are as follows:

Petitioner Edmund Yap was employed by respondent bank from February 1, 1967 up to February 28, 1977 as Assistant Vice-President.  He was assigned as branch manager
of the Quiapo branch of the former Associated Banking
Corporation.

In a letter dated January
13, 1977 signed by respondent’s Executive Vice-President,
petitioner was informed that his employment as Assistant Vice-President had
been terminated effective December
31, 1976 on the ground that he was not elected by the Board of
Directors to his position as Assistant Vice-President and for other reasons
including redundancy.  The Executive
Vice-President also expressed in behalf of the bank his sincere appreciation
for petitioner’s stay with the bank.  The
aforestated termination letter reads as follows:

”13
January 1977

“Mr. Edmund Yap

658 Jose Abed Santos

San
Juan, Rizal

“Dear Mr. Yap:

“We regret to inform you that following the merger of
Associated Banking Corporation and Citizens Bank and Trust Company, a board
resolution has been adopted declaring vacant all corporate positions, including
the position you were holding as Assistant Vice-President, and that you have
not been re­-elected by the Board to the position of Assistant
Vice-President.  For this, and other
reasons including redundancy, your services with the Bank are hereby formally
confirmed to be terminated as of 31
December 1976.

“Permit me to express, on behalf of the Bank, a sincere
appreciation for your stay in the Bank.

“Very truly yours,

“(SGD)
NORBERTO K. KATIGBAK
Executive Vice-President”

(p. 36, Rollo)

The effective date of termination of petitioner’s employment was
later moved to February 28, 1977.

Petitioner filed a complaint for illegal dismissal with the
Department of Labor against respondent bank. 
The case was set for hearing and notice thereof was served on the
parties.  At the hearing on December 19, 1977, petitioner
submitted his position paper in support of his complaint.  On the other hand, respondent bank filed its
position paper on February 1, 1978.

On March 13, 1978,
the Regional Director issued an Order, which stated in part:

“Incident to the merging of Associated Banking Corporation and
Citizens Bank and Trust Company a resolution was adopted by the Board of
Directors declaring all corporate position(s) to be vacant including the
position held by Mr. Edmundo Yap, as Assistant
Vice-President of the Associated Citizens Bank.

“Complainant is a managerial employee.  As (such) he can be
dismissed even without a prior clearance from this Office.  Moreover, we find that sufficient grounds exist to warrant the dismissal of
complainant.

“WHEREFORE, this case is hereby dismissed for lack of merit.

“SO ORDERED” (p. 26, Rollo).

Not satisfied with the aforementioned order, petitioner Yap
appealed to the Secretary of Labor alleging that the dismissal was without just
cause and praying that he be reinstated without loss of seniority rights, and backwages from the time of dismissal up to reinstatement.

On June 19, 1979, the
then Deputy Minister of Labor, Amado G. Inciong, issued an order which partially reversed the
appealed order of the Regional Director and which stated as follows:

It is apparent that one of the reasons or causes for terminating
the services of complainant was due to redundancy.  This being the case, complainant is entitled
to termination pay.  Thus, Section 9 (a),
Rule I, Book VI of the Implementing Rules and Regulations of the Labor Code
provides that a regular employee shall be entitled to termination pay
equivalent to at least one month salary or to one month salary for every year
of service, whichever is higher, a fraction of at least six (6) months being
considered as one whole year in case of termination of his employment due to
the installation of labor-saving device or redundancy.

“On the whole, we find for the complainant.  Complainant having served for ten (10) years
at the rate of P1,400.00, he is entitled P14,000.00 as
separation pay.

“WHEREFORE, the appealed Order is hereby set aside, and new
judgment is entered, ordering respondent to pay complainant P14,000.00 as separation pay.

“SO ORDERED.”  (pp. 36-37, Rollo)

Hence, this petition.  The issues
to be resolved in the instant case are: 
1) whether or not the dismissal of petitioner was for a just and valid cause; and 2) whether or not petitioner was deprived of
his constitutional right to due process in the proceedings before the Regional
office of the Department of Labor.

Anent the first issue, petitioner submits that he had been
illegally dismissed by respondent bank; that the ground of redundancy for which
he was dismissed was false because respondent Bank immediately created (3) new
positions of assistant vice-president after petitioner’s dismissal.  Petitioner also alleges that he was dismissed
retroactively, without prior notice or hearing and without the required
clearance from the Secretary of Labor.

The free will of management to conduct its own business affairs
to achieve its purpose cannot be denied (Abbot Laboratories v. NLRC, G.R. No.
76959, October 12, 1987, 154 SCRA 713). 
Even as the law is solicitous of the welfare of employees, it must also
protect the right of an employer to exercise what are clearly management
prerogatives.  Hence, management is not
precluded from undertaking a reorganization within the
company or entering into mergers with other companies to meet the demands of
the enterprise.  In such cases, the
company has the prerogative to abolish managerial and confidential positions or
create new ones as the necessity for them requires.

Petitioner Yap is the Assistant
Vice-President of respondent bank and at the same time the Branch Manager of
the bank’s Quiapo branch.  There is no doubt that he is a managerial
employee.  Records show that Associated
Banking Corporation entered into a merger with Citizens Bank and Trust Company,
which resulted in the creation of respondent Associated Citizens Bank.  In view thereof, the Board of Directors
adopted a resolution declaring all corporate positions vacant including the
position held by petitioner.  When the
latter was not subsequently re-appointed by the Board of Directors to the same
position of Assistant Vice-President, he was notified by the bank that his
services are terminated on grounds of non-reelection and redundancy.  Whatever was the reason behind petitioner’s
non-reelection by the Board of Directors is beyond the interference of this
Court.  It is worthy to mention however,
that petitioner had been previously found guilty by the bank for extending an
overdraft without an authority in the amount of P100,000.00
to a certain Ong King, an act constituting breach of
trust imposed upon him by the bank. 
Although he was merely suspended for
such act, management has the prerogative now not to re-appoint him to
its new set of officers in view of the changes being undertaken by the bank
pursuant to the merger.  To choose who to
appoint or re-appoint as its officers and managers is part of the bank’s inherent right to control and manage effectively its operations.

In the case of Bondoc
v. People’s Bank and Trust Company, No. L-43835, March 31, 1981, 103 SCRA 599, which substantially
contains similar set of facts, We held:

“Bondoc was not employed for a fixed
period.  He held his position of
department manager at the pleasure of the bank’s board of directors.  He occupied a managerial position and his stay therein depended on his
retention of the trust and confidence of the management and whether there was
any need for his services.

“Although some vindictive motivation might have impelled the
abolition of his position, yet it is undeniable that the bank’s board of
directors possessed the power to remove him and to determine whether the
interest of the bank justified the existence of his department.

“x x x.

“As already noted above, the facts of this case do not warrant
the conclusion that Bondoc’s right to security of
tenure was oppresively abridged.  He knew all along that his tenure as a department manager rested in the
discretion of the bank’s board of directors and that at anytime his services
might be dispensed with or his position might be abolished.”

Petitioner’s contention concerning the alleged retroactive
termination of his employment is untenable. 
Although the termination letter stated December 31, 1976 as the date of effectivity
of the termination of his employment, petitioner was actually dismissed on February 28, 1977 as found by public
respondents.

With regard to the clearance requirement imposed by the
Termination Pay Law, a law earlier in force, it is correct to reiterate
established rulings that as part of the procedural due process, a clearance
required under the old law for the dismissal of an employee should be obtained prior to the operative act of
termination.  However, this rule was not without
exceptions.  One exception is set forth
in Policy Instructions No. 8 issued by the then Secretary of Labor.  This policy dispenses with the clearance requirement in cases where managerial
employees are to be dismissed.  Policy
instructions No. 8, in part,
reads as follows:

“x x x

“The employer is not required to obtain a previous written clearance
to terminate managerial employees in order to enable him to manage
effectively.  x x x.  However, managerial employees may also not be
terminated without just cause although there are causes valid for terminating
managerial employees other than those applicable to the rank-and-file.  For instance, elective company officials may
lose their jobs as president, executive vice-president or vice-president, etc.
because the stockholders or the board of directors, for one reason or another
did not reelect them.  General managers, department managers, etc. whose powers and
functions are central to the effective operation of the company may be
terminated for lack of confidence.

“This policy is essential to the effective pursuit of
enterprise to effective management.”

Further, the findings
of facts of the Deputy Minister of Labor on the propriety of the dismissal of
petitioner are binding upon this Court. 
Findings of administrative agencies which have acquired expertise
because their jurisdiction is confined to specific matters are generally
accorded not only respect but even finality. 
Judicial review by the Supreme Court on labor cases does not go so far
as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based
his or its determination but are limited to issues of jurisdiction or grave
abuse of discretion (Special Events
and Central Shipping Office Workers Union v. San Miguel Corporation, Nos. L-51002-06, May 30, 1983, 122 SCRA 557).

Anent the second issue, petitioner submits that he was deprived
of his right to due process during the proceedings before the Regional Director
when the latter failed to conduct an actual hearing.  He also contends that the position papers
submitted by the parties to the Regional Director were not sufficient bases for
the latter’s findings that the dismissal of petitioner was valid.

The above contentions of petitioner must fail.  Records show that petitioner was accorded
ample opportunity to fully present his side of the case.  At the hearing, petitioner filed his position
paper while respondent filed its own later. 
When the order of the Regional Director was appealed, petitioner filed
his memorandum on appeal.  Thus, he had
sufficient opportunity to inform the labor officers concerned of his side of
the controversy.

It has been held that there is no denial of due process where
although the labor officer or tribunal dispensed with the actual hearing or
trial on the merits, the parties were heard through their position papers.  The procedure by which issues are resolved
based on position papers, affidavits and other documentary evidence is
recognized as not violative of procedural due process
(B. Sta. Rita & Company, Inc. v. Arroyo and NLRC, G.R. No. 80452, December
20, 1988, 168 SCRA 581).  This is based
on the principle that technical rules of evidence are not binding in labor
cases.  Further, the law presumes
regularity in the performance of labor officials’ functions in issuing the
orders.

ACCORDINGLY, the petition is hereby DISMISSED and the
assailed order of the Deputy Minister of Labor dated June 19, 1979 is AFFIRMED.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Griño-Aquino, JJ., concur.