Title
Enriquez vs. Bank of the Philippine Islands
Case
G.R. No. 172812
Decision Date
Feb 12, 2008
BPI managers Enriquez and Sia dismissed for concealing cash shortage, breaching trust; SC upheld termination, citing banking industry standards and loss of confidence.
breach of trust
dishonesty
illegal dismissal
A

Case Summary (G.R. No. 85867)

Factual Background

The Court found that, on 27 December 2002, BPI’s Bacolod Singcang Branch experienced a heavy volume of transactions because it was the last banking day of the year. Petitioners’ account was that the teller’s alleged cash shortage was merely an oversight that was fully regularized before the close of business. Descartin purportedly discovered a cash shortage of P36,000.00 and informed Sia, who then directed Enriquez to trace the cause. Descartin explained that the discrepancy stemmed from the failure of her mother-in-law, Remedios Descartin, to sign the withdrawal slip for a prior withdrawal of P36,000.00. Enriquez then ordered Descartin and co-teller Fregil to submit written memoranda about the incident. Descartin was allowed to leave to secure Remedios’ signature. By around 7:00 p.m., Descartin returned with the signed withdrawal slip, and the amount was debited from the client’s account, leading petitioners to assert that there was neither actual loss nor unaccounted shortage because the transaction had been regularized before end of day.

Respondents presented a different narrative. They claimed that Descartin’s shortage of P36,000.00 was incurred because she had temporarily borrowed the money to meet financial obligations, intending to return it during the first week of January. Fregil allegedly reported the matter to Sia and Enriquez, and both purportedly advised Descartin to fill the shortage with a loan from her family. Descartin allegedly replied that her family did not have the money, so she borrowed the amount from her in-laws. Thus, at 5:21 p.m., Descartin allegedly posted the unsigned withdrawal slip for P36,000.00 against the joint account of her parents-in-law. Because the amount exceeded tellers’ floor limits requiring approval of a superior, either Enriquez or Sia allegedly approved the transaction at 5:22 p.m. As to the later signing of the withdrawal slip, Descartin left to obtain Remedios’ signature and returned after 7:00 p.m. with the signed slip.

Respondents also alleged that, on 28 December 2002, Fregil was informed that Descartin would prepare a “white lie” report signed by both of them, stating that Descartin had inadvertently misplaced the withdrawal slip and that the transaction had been regularized the same day. On 2 January 2003, Fregil allegedly signed the report. In February 2003, Fregil allegedly confided her uneasiness to a colleague assigned to the main branch, which led to the matter being reported and ultimately brought to Puentevella’s attention. Later, on 3 March 2003, Fregil allegedly retracted her earlier statement and executed another letter asserting that petitioners helped cover up the shortage incident.

Proceedings Leading to Termination

Based on the ensuing investigation, BPI’s Auditing Division allegedly supported Fregil’s later claims. The audit allegedly revealed that petitioners failed to make the necessary report on the shortage and instead helped cover up Descartin’s wrongdoing. On 25 April 2003, petitioners were instructed to report for polygraph testing, but they objected to the polygraph test. On 27 June 2003, they received separate show-cause memoranda directing them to explain in writing why they should not be sanctioned for conflict of interest and breach of trust. Petitioners denied the charges in their respective replies.

On 14 July 2003, a committee of BPI conducted a hearing in which petitioners and the tellers Descartin and Fregil were separately interviewed. Ultimately, on 3 September 2003, BPI dismissed petitioners on grounds of breach of trust and confidence and dishonesty. On 4 September 2003, petitioners filed separate complaints for illegal dismissal and money claims, praying for reinstatement or, alternatively, payment of separation pay, and also seeking backwages, retirement pay, attorneys’ fees, and moral and exemplary damages in the amount of P10,000,000.00.

Labor Arbiter’s Ruling

After submission of position papers, Labor Arbiter Danilo C. Acosta rendered a decision dated 29 March 2004. The Labor Arbiter ruled that petitioners were illegally dismissed. In substance, the Labor Arbiter’s findings rejected respondents’ theory that petitioners’ actions amounted to a cover-up and breach of trust.

The Labor Arbiter ordered respondents to reinstate petitioners without loss of seniority rights and to pay full back wages and allowances totaling P1,173,434.50. It also awarded moral and exemplary damages of P3,000,000.00 each (total P6,000,000.00) and attorneys’ fees of P717,343.45, plus retirement and separation pay rules applicable upon compulsory retirement pending final resolution.

NLRC and Court of Appeals Dispositions

Respondents appealed to the NLRC. The NLRC reversed and set aside the Labor Arbiter’s decision. It found that the records substantiated that petitioners tried to cover up Descartin’s infraction rather than take appropriate action. Accordingly, the NLRC ruled that respondents had just cause to terminate employment based on loss of trust and confidence, and it dismissed the complaints. However, it ordered BPI to provide petitioners with financial assistance equivalent to one-half months pay for every year of service.

Petitioners then elevated the case to the Court of Appeals. The Court of Appeals affirmed the NLRC in toto and denied petitioners’ appeal.

Issues Raised by Petitioners

Petitioners argued first that respondents’ NLRC appeal was defective. They contended that the Memorandum of Appeal was signed by Puentevella alone without showing a board resolution authorizing him to represent the corporation, allegedly violating Rule VI, Section 4 of the NLRC Rules of Procedure, which requires that the appeal be verified by the appellant himself and in accordance with the Rules of Court verification requirements.

Petitioners also challenged the merits. They argued that the Court of Appeals erred in concluding that they were validly terminated and claimed that the decisions were rendered in disregard of evidence and jurisprudence. They likewise assailed the disposition of respondents’ NLRC appeal, allegedly pointing to irregularity in the alleged “breakneck speed” of resolution by Commissioner Oscar Uy, including the fact that petitioners’ counsel filed a complaint against him before the Ombudsman.

Resolution on the Procedural Objection to the NLRC Appeal

The Court rejected the procedural attack. It acknowledged the legal rule invoked by petitioners, but emphasized that the labor case called for a liberal construction of procedural rules in the interest of justice. The Court held that verification serves to ensure that allegations in a pleading are true, correct, and made in good faith. It ruled that the vice presidents’ signing of verification and certification did not contravene the objectives of verification even without an express board resolution at all times. It relied on the explanation described in BPI’s Motion for Reconsideration, where the Court stated that the signatory was actually authorized to sign as shown by a written confirmation attached to the motion, and that the signatory was presumed to know the requirements for valid signing.

The Court further reiterated that procedural rules are tools intended to facilitate the attainment of justice. It held that technicalities should not defeat substantive rights and that, in labor cases, substantial compliance and a liberal interpretation of procedural requirements align with the constitutional commitment to social justice.

Legal Basis and Reasoning on the Merits: Loss of Trust and Confidence

On the merits, the Court reiterated that loss of trust and confidence is a valid ground for termination. It explained that dismissal requires a showing that the employee occupies a position of trust and confidence or is routinely charged with the care and custody of the employer’s money or property; that the breach must be related to the employee’s function; and that the employee must be a managerial employee because “trust and confidence” is restricted to that class. The Court then applied these principles to the petitioners’ role as branch manager and assistant branch manager.

The Court focused on the evidence involving Fregil’s statements and retraction. It recognized the general disfavor with which retractions are usually treated, but held that retractions may be accepted when the circumstances indicate that a later declaration reflects the truth. The Court found sufficient evidentiary basis to accord full probative value to Fregil’s retraction letter and subsequent affidavits. It stressed that BPI’s independent audit supported the claim that wrongdoing was concealed by petitioners from the bank. The Court also reviewed the transaction summary of Descartin and found it reinforced the conclusion that the shortage in Descartin’s cash box was due to a temporary borrowing, the cover-up of which was sanctioned by petitioners.

The Court then addressed petitioners’ reliance on banking policy. Petitioners argued that, under BPI policy, failure to report a shortage was not a ground for termination. The Court rejected the argument as shortsighted. It held that BPI’s policy was unambiguous. It required that shortages be declared and booked properly on the same day they were incurred. It further required that shortages be reported by the branch head to designated bank officers and departments not later than the second banking day from the date of booking. The Court quoted provisions from BPI’s Personnel Policies and Benefits Manual. It particularly emphasized that employees who knowingly aid, abet, or conceal, or deliberately permit irregular or fraudulent acts directed against the bank are treated as equally guilty as principals. The Court also noted that management would not tolerate violations of banking and/or established procedures in conflict-of-interest situations, especially where irregular transactions or omissions are intended to benefit the officer concerned or relate

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