G.R. No. L-44347 - Tan vs. City of Davao

On May 15, 1998, Philippine National Bank’s (PNB) Foreign Currency Denomination-Savings Account (FCD-S/A) No. 305703555-1 of Avelina Nomad-Spoor was credited with US$138.00.
Instead of posting its peso equivalent of P5,517.10, teller Mary Sheila Arcobillas erroneously posted US$5,517.10, causing an overcredit amounting to US$5,379.10.
The erroneous amount was later withdrawn by Nomad-Spoor on May 29 and June 8, 1998, resulting in a financial loss to PNB amounting to P214,641.23.
The misposting was discovered approximately seven months later, prompting an internal investigation by PNB’s Inspection and Investigation Unit.

Following the discovery, Arcobillas was charged administratively with neglect of duty.
In her Affidavit executed on May 5, 1999, she admitted the error, apologized, and asserted she did not gain any personal benefit from the mistake.
Arcobillas explained that the misposting occurred due to a heavy workload on a Friday (coinciding with payroll day), intermittent power interruptions, and a severe headache that impaired her performance.
On February 24, 2000, an Administrative Adjudication Panel found her guilty of gross neglect of duty and imposed forced resignation with benefits, effective immediately upon receipt.

Arcobillas filed a Complaint for illegal dismissal with money claims against PNB and its senior officials after her plea for reconsideration was denied.
The Labor Arbiter, in a Decision dated December 27, 2002, ruled in her favor by stating:

There was insufficient evidence to establish gross and habitual negligence.
Arcobillas had a record of “Very Satisfactory” performance ratings and her earlier similar infraction (in 1995) had not warranted dismissal.
The misposting was committed without malice, bad faith, or dishonest motive.
The damage resulted partly from failures of internal control by the bank’s accounting unit.

Consequently, the Labor Arbiter directed the reinstatement of Arcobillas with full backwages and benefits as computed, including monetary awards for alleged unpaid salaries and benefits.

PNB appealed to the National Labor Relations Commission (NLRC), arguing that malice or bad faith is not required to justify dismissal for negligence.
On August 31, 2004, the NLRC affirmed with modification the Labor Arbiter’s ruling:

It concurred that the misposting did not amount to gross and habitual neglect warranting dismissal.
It held that Arcobillas, along with other employees involved in validating transactions, should share equally the financial loss of P214,641.23.
The decision declared the misposting as a final warning for any future similar offenses.

Despite not filing a Motion for Reconsideration with the NLRC, PNB moved to the Court of Appeals (CA) via a Petition for Certiorari, which the CA eventually entertained.
The CA Decision dated November 15, 2006, dismissed the petition and modified the NLRC ruling by:

Maintaining that Arcobillas was not grossly and habitually negligent.
Allocating 40% of the financial loss to PNB and 60% to Arcobillas, with the latter’s share to be recovered through payroll deductions over three years.

Motions for Reconsideration by both parties before the CA were later denied in a Resolution dated August 17, 2007.

PNB subsequently filed a Petition for Review on Certiorari assailing the CA’s decision, focusing especially on:

The alleged justification of Arcobillas’ dismissal for habitual negligence.
The propriety of the CA correcting factual findings previously determined by the NLRC.
The CA delving into issues not raised by the parties.

Whether the dismissal of Mary Sheila Arcobillas on the ground of habitual negligence is justified under Article 282 of the Labor Code.
Whether the Court of Appeals has the authority to correct or re-evaluate the evidentiary findings of the NLRC through its petition for certiorari.
Whether the Court of Appeals may address or delve into an issue that was not raised by the parties in the underlying proceedings.