RepublicofthePhilippines

SupremeCourt
Manila

SECONDDIVISION

ELMERLOPEZ,

Petitioner,

versus

G.R.No.176800

Present:

CARPIO,J.,Chairperson,
BRION,
PEREZ,
MENDOZA,*and
SERENO,JJ.

Promulgated:

September5,2011

KEPPELBANKPHILIPPINES,
INC.,MANUELBOSANOIIIand
STEFANTONGWAIMUN,
Respondents.
xx

DECISION

BRION,J.:

We resolve the present petition for review on certiorari

decision

[1]

seeking the nullification of the

[2]
[3]
and the resolution of the Court of Appeals (CA), dated December 19, 2006 and

February7,2007,respectively,renderedinCAG.R.CEBSP.No.01754.
TheAntecedents

Thefacts,assetoutintheassailedCAdecision,aresummarizedbelow.

PetitionerElmerLopezwastheBranchManageroftherespondentKeppelBankPhilippines,Inc.
(bank) in Iloilo City. Allegedly, through his efforts, Hertz Exclusive Cars, Inc. (Hertz) became a
clientofthebank.

[4]
BynoticedatedAugust12,2003, thebankaskedLopeztoexplaininwritingwhyheshouldnot
be disciplined for issuing, without authority, two purchase orders (POs) for the Hertz account
amountingtoatotalofP6,493,000.00,representingthepurchasepriceof13SuzukiBravoandtwo
NissanExaltavehicles.

Lopezsubmittedhiswrittenexplanationonthesameday,

[5]
butthebankrefusedtogiveitcredit.

Through respondents Manuel Bosano III (VicePresident and Head of Retail Banking
Division/Consumer Banking Division) and Stefan Tong Wai Mun (VicePresident/Comptroller),
[6]
thebankterminatedLopezsemploymenteffectiveimmediately.

Lopezaskedthebankforreconsideration.

[7]
Inresponse,thebank,throughtherespondentofficers,

met with Lopez at its headquarters in Cubao, Quezon City on September 25, 2003. Lopez came
withhislawyer(Atty.EdmundoV.Buensuceso)andamilitaryman(oneCol.Flordeliza).Afterthe
meeting,thebankfoundnoreasontoreconsiderandreiterateditsdecisiontodismissLopez.

[8]

Lopezfiledacomplaintforillegaldismissalandmoneyclaimsagainstthebank,BosanoandTong.
TheCompulsoryArbitrationProceedings

LopezallegedbeforethelaborarbiterthatheissuedthePOsaspartofhisstrategytoenhancethe
banks business, in line with his duty as branch manager to promote the growth of the bank. He
claimedthatthebankhonoredthefirstPOforP1.8Mfromwhichthebankderivedanincomeof
P142,000.00. He added that the second PO did not materialize because Mr. James Puyat
Concepcion, a Hertz incorporator and director who opened the Hertz account, stopped depositing
with the bank because of the negative credit rating he received from the banks credit committee.
Allegedly,thecommitteediscoveredthatJamesPuyatConcepcionhadseveralpendingcourtcases.

Foritspart,thebankdeniedapprovingthefirstPO,arguingthatLopezdidnothavetheauthorityto
issuethePOsfortheHertzaccountastherewasastandingadvicethatnoHertzloanapplication
wastobeapproved.ItstressedthatLopezcommittedaseriousviolationofcompanyruleswhenhe
issuedthePOs.

InadecisiondatedApril28,2004,

[9]
LaborArbiterCesarD.SideoruledthatLopezwasillegally

dismissed. Accordingly, the labor arbiter ordered Lopezs immediate reinstatement, and awarded
him backwages of P392,000.00, moral and exemplary damages of P8M, and P550,000.00 the
purchase price of a Toyota Revo which Lopez allegedly brought over from his stint with Global
Bank (now Metrobank). The labor arbiter found that contrary to the banks claim, the evidence
showed that Lopez had been issuing POs which the bank had paid, including the first of the two
[10]
POsthatledtohisdismissal.
Onappealbythebank,theNationalLaborRelationsCommission(NLRC)renderedadecisionon
[11]
reversing the labor arbiters ruling. It dismissed the complaint for lack of

October 11, 2005

merit.TheNLRCfoundmeritinthebankssubmissionthatbyissuingthequestionedPOswithout
authority and against the banks express orders, Lopez thereby committed a willful disobedience
againsthissuperiorsasufficientbasisforthebanktoloseitstrustandconfidenceinhimasbranch
manager.ItthusfoundthatLopezhadbeendismissedforcauseaftertheobservanceofdueprocess.
Lopezmovedforreconsideration,buttheNLRCdeniedthemotioninitsresolutionofJanuary25,
2006.

[12]
Lopez sought relief from the CA through a petition for certiorari, charging the NLRC

withgraveabuseofdiscretionforsettingasidethelaborarbitersdecision.

TheCADecision

On December 19, 2006, the CA rendered its now assailed decision,

[13]
denying the petition and

affirmingtheOctober11,2005decisionoftheNLRC.ItfullyagreedwiththeNLRCfindingthat
Lopezhadnotbeenillegallydismissed.

Lopez moved for, but failed to obtain, a reconsideration of the CA decision. The CA denied the
[14]

motiononFebruary7,2007.


TheCaseforLopez

[15]
[16]
thereplytothebankscommentdatedFebruary11,2008,
and

Throughthepresentpetition,

[17]
the memorandum dated September 22, 2008,
Lopez entreats the Court to nullify the CA
decision, contending that the CA erred in: (1) not ruling that the banks appeal with the NLRC
shouldhavebeendismissedonthegroundofnonperfectionand(2)affirmingthedecisionofthe
NLRCthathewasdismissedforajustcause(lossoftrustandconfidence)andthathewasafforded
dueprocess.

Lopez argues, with respect to the first assignment of error, that the bank failed to comply with
Sections4and6,RuleVI,ofthe2002RulesofProcedureoftheNLRC.

[18]
Hepointsoutthatthe

bankdidnotfileanoticeofappealtogetherwithitsmemorandumofappeal,whichinturnwasnot
supportedbyacertificateofnonforumshoppingandneitherdidthebankfurnishhim,asappellee,
acertifiedcopyoftheappealbond.

Onthesubstantiveaspectofthecase,Lopezpositsthatthebankfailedtojustifyhisdismissalon
thegroundoflossoftrustandconfidence.Heinsiststhat,asbranchmanager,hehadtheauthority
toissuePOsasinfactheissuedseveraloftheminthepast,whichPOswerehonoredandpaidby
thebank.Thelaborarbiterproperlyreliedonthepasttransactionsinhisdecision.Theseincluded,
he reiterates, the first PO for the Hertz account which was paid by the bank on July 18, 2003, a
transactionwherethebankevenearnedasubstantialincome(P142,000.00).Hemaintainsthatthe
bankfailedtosubstantiateitspositionthathewasnotauthorizedtoissuethePOs.Headdsthatthe
banks claim that his issuance of the POs exposed the bank to financial loss is a lame excuse to
justifytheterminationofhisemployment.

Lopez argues that his dismissal was a mere afterthought on the part of the bank management,
particularlyBosano,tocoverupitsembarrassmentwhenhe(Lopez)madeinquiriesanddiscovered
thatHertzsJamesPuyatConcepcionhadnopendingcourtcasesandwasthereforecreditworthy.
HeaddsthatassumingthathedidnothavetheauthoritytoissuePOs,still,hecannotbeheldguilty
ofwillfuldisobedienceevenifhehadbeenguilty,dismissalwasaveryharshpenalty.

Finally,Lopezsubmitsthatthebankfailedtoaccordhimdueprocessbecausethebankdidnotgive
him the opportunity to prepare for his defense. He points out that his written explanation (dated
[19]
[20]
August12,2003)
precededthebanksletter(ofthesamedate)
thatrequiredhimtoexplain
whyheissuedthePOsinquestion.LopezcontendsinthisregardthatonAugust12,2003,hewent
toBosanosofficeinQuezonCityallthewayfromIloiloCityandthere,hewascorneredbyBosano
whoverballyinstructedhimtoimmediatelywritedownhisexplanationevenbeforehewasserved
withthebanksAugust12,2003letter.HemaintainsthatBosanospreemptivemovedeprivedhimof
theopportunitytosecuretheservicesofacounsel.

While Lopez believes his dismissal to be illegal, he does not seek reinstatement due to the
antagonismthathasdevelopedbetweenhim,andthebankanditsofficers,duetothepresentcase.
He only asks for separation pay of one month pay for every year of service, full backwages,
allowancesandotherbenefits.Additionally,hepraysformoralandexemplarydamages,aswellas
attorneysfees,tocompensatehimforadismissalthatwasattendedbybadfaithandeffectedina
wanton,oppressiveandmalevolentmanner.

TheCasefortheBankanditsOfficers

Through its comment to the petition

[21]
[22]
and memorandum,
the bank submits that the CA

committednoreversibleerrorindenyingLopezspetitionforcertiorari,andinaffirmingtheruling
oftheNLRCthatLopezwasdismissedforajustcauseandafterdueprocess.

ThebankispuzzledwhyLopezisstandingfirmonhispositionthathedidnothingwrongwhenhe
issued the questioned POs despite the express directive not to proceed with the Hertz loan
applicationunlessitsadversecreditinvestigationreportisexplainedtothebankscreditcommittee.
Itpositsthatnobankwouldgambletomaintainasbranchmanagerapersonwhodarestosupplant
a major decision of the banks top leadership with his personal decision. It argues that in this
situation, the law (Labor Code) provides protection to the employer through its management
prerogativerightsandtherighttodismissemployeesonjustandvalidgrounds.

The bank refutes Lopezs contention that there was no willful disobedience that warranted his
dismissal. It points out that there was an order for him not to proceed with the Hertz loan
application.Theorderwasveryreasonableasitisthestandardpolicyofeverybanktoconductan

investigationonthecreditworthinessofanyloanapplicant.Sinceitappearedfromtheinvestigation
ofitscreditcommitteethatJamesPuyatConcepcionofHertzhadvariouscourtcases,itwasonly
properforthebanktoputonholdtheloanapplicationofHertzuntiltheadversefindingcouldbe
cleared.ItinsiststhatLopezwillfullyandknowinglydisobeyedthisorder.

Further,thebankquestionsLopezssubmission,throughasupplementaladdendumtohisposition
paper,ofevidencethatithonoredandpaidPOsissuedbyLopezinthepast.Itmaintainsthatitwas
notfurnishedacopyofthissubmissionhence,itwasunabletocontrovertthisevidence.

Ontheproceduraldueprocessissue,thebankdeniesLopezsallegationthathewasnotgiventhe
opportunitytodefendhimself.ItpointsoutthatboththeNLRCandtheCAconfirmedthatLopez
wasnotdeprivedtheopportunitytobeheardtheopportunitycommencedwith:(1)thenoticefor
himtoexplainhissideregardinghisunauthorizedissuanceofPOs(2)thenoticeofhistermination
fromemploymentand(3)thehearingcalledinresponsetohismotionforreconsiderationwherehe
wasassistedbyhislawyerandhissoldierfriend.
TheCourtsRuling

Theproceduralissue

LopezfaultstheCAfornotrulingthatthebanksappealtotheNLRCshouldhavebeendismissed
for nonperfection. He argues that no notice of appeal accompanied the memorandum of appeal
neitherwasthereacertificateofnonforumshoppingnoranycopyfurnishedtohimofthecertified
truecopyoftheappealbond.

Theproceduralquestionisanonissue.LopezdidnotraiseitbeforetheCAinfact,hechallenged
[23]
onitsmeritsandnotonitsform.We,therefore,seeno

theNLRCdecisionofOctober11,2005
needtofurtherdiscussthisargument.

Themeritsofthecase

Onthesubstantiveaspectofthecase,wenotethatLopezwasdismissedfromtheservicebyreason
[24]
oflossoftrustandconfidence,ajustcauseforanemployeesdismissalunderthelaw.
Lopez
insiststhoughthattheactwhichtriggeredthedismissalactiondoesnotjustifyhisseparationfrom

theservice.

IsLopezliableforlossoftrustandconfidenceforissuingthetwodisputedPOs?

Therightofanemployertofreelyselectordischargehisemployeeisarecognizedprerogativeof
managementanemployercannotbecompelledtocontinueemployingonewhohasbeenguiltyof
actsinimicaltoitsinterests.Whenthishappens,theemployercandismisstheemployeeforlossof
[25]
confidence.

At the same time, loss of confidence as a just cause of dismissal was never intended to provide
employerswithablankcheckforterminatingemployment.Lossofconfidenceshouldideallyapply
only (1) to cases involving employees occupying positions of trust and confidence, or (2) to
situations where the employee is routinely charged with the care and custody of the employers
money or property. To the first class belong managerial employees, i.e., those vested with the
powersandprerogativestolaydownmanagementpolicesand/ortohire,transfer,suspend,layoff,
recall, discharge, assign or discipline employees, or effectively recommend such managerial
actions. To the second class belong cashiers, auditors, property custodians, or those who, in the
normal and routine exercise of their functions, regularly handle significant amounts of money or
[26]
property.

Asbranchmanager,Lopezclearlyoccupiesapositionoftrust.Hisholdonhispositionandhisstay
intheservicedependontheemployerstrustandconfidenceinhimandonhismanagerialservices.
[27]
According to the bank, Lopez betrayed this trust and confidence when he issued the subject
POs without authority and despite the express directive to put the clients application on hold. In
response,Lopezinsiststhathehadsufficientauthoritytoactashedid,asthisauthorityisinherent
inhispositionasbankmanager.HepointstohisrecordinthepastwhenheissuedPOswhichwere
honored and paid by the bank and which constituted the arbiters overwhelming evidence

[28]

in

supportofthefindingthatcomplainantsdismissalfromworkwaswithoutjustcause,hence,illegal.
[29]

WedisagreewithLopezscontention.Despiteevidenceofhispastexerciseofauthority(asfound

by the labor arbiter), we cannot disregard evidence showing that in August 2003, the bank
specificallyinstructedLopeznottoproceedwiththeHertzloanapplicationbecauseofthenegative
creditratingissuedbythebankscreditcommittee.WefinditundisputedthatLopezprocessedthe
loandespitetheadversecreditrating.Infact,headmittedthatheoverlookedthecontrolaspectsof
thetransactionasfarasthebankwasconcernedbecauseofhiseagernesstogetabiggershareof
[30]

themarket.

Lopezsgoodintentions,assumingthemtobetrue,arebesidethepointfor,ultimately,whatcomes
outishisdefianceofadirectorderofthebankonamatterofbusinessjudgment.Hewentoverthe
headsofthebankofficers,includingthecreditcommittee,when,basedoninquirieshemadeonhis
ownregardingthecreditworthinessofJamesPuyatConcepcion,hesimplyproceededtoactonthe
basis of his own judgment. Evident in his written explanation

[31]
was his failure to inform the

creditcommitteeofhisowneffortstocheckonthecommitteesadversefindingsagainstHertzand
hisindependentactionbasedsolelyonhisownauthority.

As a bank official, the petitioner must have been aware that it is basic in every sound
managementthatpeopleunderonessupervisionanddirectionareboundtofollowinstructionsorto
informtheirsuperiorofwhatisgoingonintheirrespectiveareasofconcern,especiallyregarding
matters of vital interest to the enterprise. Under these facts, we find it undisputed that Lopez
disobeyedthebanksdirectivetoputtheHertzloanapplicationonhold,anddidnotwaituntilits
negativecreditratingwasclearedbeforeproceedingtoact.Thathemighthavebeenprovenrightis
immaterial. Neither does the submission that the bank honored and paid the first PO and even
realized a profit from the transaction, mitigate the gravity of Lopezs defiance of the directive of
higherauthorityonabusinessjudgment.What appears clear is that the bank cannot in the future
trustthepetitionerasamanagerwhowouldfollowdirectivesfromhigherauthoritiesonbusiness
policy and directions. The bank can be placed at risk if this kind of managerial attitude will be
repeated,especiallyifitbecomesanacceptedruleamonglowermanagers.

[32]
we reiterated the guidelines for the application of loss of confidence as

In Nokom v. NLRC,

follows:(1)lossofconfidence,shouldnotbesimulated(2)itshouldnotbeusedasasubterfugefor
causeswhichareimproper,illegalorunjustified(3)itmaynotbearbitrarilyassertedinthefaceof
overwhelming evidence to the contrary and (4) it must be genuine, not a mere afterthought to

justifyanearlieractiontakeninbadfaith.

Underthecircumstancesofthiscase,weareconvincedthatthebankwasjustifiedinterminating
Lopezs employment by reason of loss of trust and confidence. He admitted issuing the two POs,
claimingmerelythathehadtherequisiteauthority.Hecouldnotpresentanyproofinthisregard,
however,excepttosaythatitwaspartofhisinherentdutyasbankmanager.Healsoclaimedthat
thebankacquiescedtotheissuanceofthePOsasitpaidthefirstPOandthePOsheissuedinthe
past.Thissubmissionfliesinthefaceofthebanksdirectiveforhimnottoproceedunlessmatters
areclearedwiththebankscreditcommittee.Thebankhadagenuineconcernovertheissueasit
foundthroughitscreditcommitteethatHertzwasacreditrisk.Whetherthecreditcommitteewas
correctornotisimmaterialasthebanksdirectorderleftLopezwithoutanyauthoritytoclearthe
loanapplicationonhisown.Afterthisdefiance,wecannotblamethebankforlosingitsconfidence
inLopezandinseparatinghimfromtheservice.

Thedueprocessissue

As the NLRC and the CA did, we find Lopez to have been afforded due process when he was
dismissed. He was given the required notices. More importantly, he was actually given the
opportunitytobeheardwhenhemovedforreconsiderationofthebanksdecisiontoterminatehis
employment,itscheduledahearingwhereheappearedtogetherwithhislawyerandamilitaryman.
Thiswasanopportunitytobeheardthatthelawrecognizes.

Infine,wefindnomeritinthepetition.

WHEREFORE,premisesconsidered,weherebyDENYthepetitionforlackofmerit.Theassailed
decision and resolution of the Court of Appeals are AFFIRMED. Costs against petitioner Elmer
Lopez.

SOORDERED.

ARTUROD.BRION
AssociateJustice


WECONCUR:

ANTONIOT.CARPIO
AssociateJustice
Chairperson

JOSEPORTUGALPEREZJOSECATRALMENDOZA
AssociateJusticeAssociateJustice

MARIALOURDESP.A.SERENO
AssociateJustice

ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecase
wasassignedtothewriteroftheopinionoftheCourtsDivision.

ANTONIOT.CARPIO
AssociateJustice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons
Attestation, it is hereby certified that the conclusions in the above Decision had been reached in
consultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.


RENATOC.CORONA
ChiefJustice

*DesignatedasadditionalMemberviceAssociateJusticeBienvenidoL.ReyesperSpecialOrderNo.1066datedAugust23,2011.
[1]
Rollo,pp.935filedpursuanttoRule45oftheRulesofCourt.
[2]
Id. at 3846 penned by Associate Justice Isaias P. Dicdican, and concurred in by Associate Justices Romeo F. Barza and Priscilla
BaltazarPadilla.
[3]
Id.at4748.
[4]
Id.at63Petition,AnnexE.
[5]
Id.at6162Petition,AnnexD.
[6]
Id.at64NoticeofTerminationdatedAugust27,2003Petition,AnnexF.
[7]
Id.at6568Petition,AnnexG.
[8]
Id.at7273LettersignedbyTong,datedOctober3,2003Petition,AnnexH.
[9]
Id.at118135Petition,AnnexK.
[10]
Id.at186192.
[11]
Ibid.
[12]
Id.at197198.
[13]
Supranote2.
[14]
Supranote3.
[15]
Supranote1.
[16]
Rollo,pp.263266.
[17]
Id.at276310.
[18]
Now2005RevisedRulesofProcedureoftheNLRC.
[19]
Supranote5.
[20]
Supranote4.
[21]
Rollo,pp.205228.
[22]
Id.at317352.
[23]
Supranote10.
[24]
LABORCODE,Article282(c).
[25]
CesarioAlverioAzucena,Jr.,TheLaborCodewithCommentsandCases,VolumeII,SixthEdition(2007),p.752citingTabacalera
InsuranceCo.v.NLRC,236Phil.714(1987).
[26]
Mabezav.NLRC,338Phil.386(1997).
[27]
InternationalHarvesterMacleod,Inc.v.IntermediateAppellateCourt,233Phil.655(1987).

[28]
Supranote10.
[29]
Id.at132.
[30]
Supranote5.
[31]
Ibid.
[32]
390Phil.1228(2000).