G.R. No. 153784 - Cadiz vs. Court of Appeals

Romeo Cadiz was employed as a signature verifier.
Carlito Bongkingki served as a bookkeeper.
Prisco Gloria IV functioned as a foreign currency denomination clerk/bookkeeper-reliever.
All petitioners worked at the main office branch (MOB) of Philippine Commercial International Bank (PCIB).

Rosalina B. Alqueza filed a complaint for non-receipt of a Six Hundred Dollar (US$600) demand draft, originally purchased by her husband from Hongkong and Shanghai Banking Corporation.
Upon verification, it was found that the demand draft was deposited on 10 June 1988 into a Foreign Currency Deposit Unit (FCDU) Savings Account No. 1083-4, under the name of Sonia Alfiscar.
It was subsequently discovered that the demand draft, along with four other checks, was combined to appear as a single deposit documented by HSBC Check No. 979120 for US$1,232.00.

The Branch Manager, Ismael R. Sandig, held a series of meetings where the petitioners allegedly admitted involvement in a scheme to divert funds into the designated savings account.
Cadiz allegedly paid Alqueza P12,690.00 (the peso equivalent of the US$600) but made arrangements for the receipt to be issued in Alfiscar’s name.
A special internal audit examination was conducted, headed by Lizza G. Baylon, which revealed:

Cadiz had reserved the savings account in Alfiscar’s name as early as July 1987.
The account was opened on 27 November 1987 and closed on 23 June 1988.
Twenty-five deposit slips were posted by Bongkingki and sixteen by Gloria.
The audit found several irregularities including miscoded checks, forged signatures, non-validation of deposit slips by the tellers, wrongful deposit of second-endorsed checks into foreign currency deposit accounts, and the absence of proper approvals and teller validations.

Show-cause memoranda were served on the petitioners, requiring them to explain their involvement within seventy-two hours based on the findings of the special audit.
Written explanations were subsequently submitted by the petitioners on 22 March 1989.
Not satisfied with their explanations, PCIB dismissed the petitioners on 22 June 1989 for violating specific provisions of the bank’s internal Code of Discipline.
The dismissal was grounded on the alleged fraudulent transactions and mismanagement of the S/A No. 1083-4 account.

The petitioners filed a complaint before the labor arbiter on 18 September 1989, claiming illegal dismissal.
The labor arbiter ruled in favor of the petitioners, ordering their reinstatement and the payment of backwages, finding the dismissal to be couched in overly general terms and attributing the mis-coding as mere procedural inadequacies linked to the bank's operational laxities.
The National Labor Relations Commission (NLRC) reversed the labor arbiter’s decision on 30 June 1994, affirming that the dismissal was for just cause.
The Court of Appeals (CA) subsequently upheld the NLRC’s findings in its Decision dated 13 July 2001, reinforcing the view that the petitioners were validly terminated.

The petitioners contended that the CA erred by not sustaining the labor arbiter’s findings, alleging that they were dismissed without just cause and without due process.
Respondent bank argued that issues raised by petitioners were primarily questions of fact and not purely legal issues subject to review.
The Court was tasked with resolving the factual discrepancies between the labor arbiter’s findings and those of the NLRC and CA by reviewing the record, the evidentiary submissions, and the respective arguments.

Whether the Court of Appeals erred in disregarding the labor arbiter’s factual findings in favor of those of the NLRC concerning the petitioners’ dismissal.

Was there sufficient evidence to support that the petitioners engaged in fraudulent activities in connection with the mis-coding and diversion of funds?
Did the labor arbiter’s characterization of the errors as “mere procedural inadequacies” appropriately capture the gravity of the petitioners’ conduct?

Whether the dismissal of petitioners was carried out in accordance with due process requirements.

Did the respondent bank comply with the mandated two-notice rule under Article 277(b) of the Labor Code?
Was the opportunity afforded to the petitioners to explain and defend themselves adequate and in line with procedural due process?

Whether the absence of a direct financial loss to the bank mitigates the petitioners’ liability for engaging in anomalous banking practices and breaches of fiduciary duty.

Does the fact that the bank was not materially or pecuniarily disadvantaged affect the justifiability of terminating employees for fraudulent acts?