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China Banking Corporation v. BorromeoG.R. No. 156515, 19 October 2004, SECOND DIVISION (Callejo, Sr., J.)

Mariano M. Borromeo, respondent and employee of China Banking Corporation (CBC),

petitioner, rose up the ranks from Manager Level I with a position of manager to Senior Manager LevelII with a position of Assistant Vice-President, having experienced a total of four promotions in sevenyears. Prior to his last promotion and then unknown to CBC, Borromeo, without authority from theExecutive Committee or the Board of Directors, approved several checks "Drawn Against UncollectedDeposits/Bills Purchased" (DAUD/BP) amounting to Php 2,441,375 in favor of Joel Maniwan.DAUD/BP are checks which are not sufficiently funded by cash and are generally not honored bybanks; the grant of such checks must be accompanied by express authority from CBC's ExecutiveCommittee or Board of Directors, pursuant to the bank's standard operating procedure. Uponknowledge of the bank of the unauthorized DAUD/BP accommodations, a letter was immediately sentto Borromeo for clarification purposes to which Borromeo answered his readiness to face theconsequences of his actions. Thereafter, Borromeo tendered his resignation from CBC. Subsequently, ina Memorandum issued by CBC, Borromeo was directed to restitute 90% of the amount representing thelosses suffered by CBC, however, in view of Borromeo's resignation, CBC earmarked a portion ofBorromeo's separation benefits or pay, to be withheld until CBC has satisfied its claims from the civilaction instituted against Maniwan (restitution).

Consequently, Borromeo filed a complaint before the National Labor Relations Commission(NLRC) for payment of separation pay, mid-year bonus, profit share and damages against CBC. TheLabor Arbiter promulgated the Decision dismissing Borromeo's complaint. On appeal, the NLRCdismissed the appeal and affirmed the findings of the Labor Arbiter. Borromeo's reconsideration waslikewise denied. Upon a petition for certiorari before the CA, the latter rendered a decision setting asidethe NLRC's decision and ordering the remand of the records of the case to the Labor Arbiter for furtherhearings.

ISSUES:

1. Whether or not the CA erred in remanding the case to the Labor Arbiter2. Whether or not restitution may be properly imposed on Borromeo3. Whether or not Borromeo's right to due process was violated by CBC

HELD:

It is settled that administrative bodies like the NLRC, including the Labor Arbiter, are not boundby the technical niceties of the law and procedure and the rules obtaining in courts of law. Rules ofevidence are not strictly observed in proceedings before administrative bodies like the NLRC, where

decisions may be reached on the basis of position papers. The holding of a formal hearing or trial isdiscretionary with the Labor Arbiter and is something that the parties cannot demand as a matter ofright. As a corollary, trial-type hearings are not even required as the cases may be decided based onverified position papers, with supporting documents and their affidavits. Hence, the Labor Arbiter actedwell within his authority when he issued the Order dated February 26, 1999 submitting the case forresolution upon finding that he could judiciously pass on the merits without the necessity of furtherhearing.

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On the other hand, the assailed CA decisions directive requiring him to conduct furtherhearings constitutes undue interference with the Labor Arbiters discretion. Moreover, to require theconduct of hearings would be to negate the rationale and purpose of the summary nature of theproceedings mandated by the Rules and to make mandatory the application of the technical rules ofevidence.

The appellate court, therefore, committed reversible error in ordering the remand of the case to

the Labor Arbiter for further hearings.

In this case, the factual findings of the Labor Arbiter and those of the NLRC concur on thefollowing material points: the respondent was a responsible officer of the petitioner Bank; by his ownadmission, he granted DAUD/BP accommodations in excess of the authority given to him and inviolation of the banks standard operatingprocedures; the petitioner Banks Code of Ethics provides thatrestitution/forfeiture of benefits may be imposed on the employees for, inter alia, infraction of thebanks standard operating procedures; and, the respondent resigned from the petitioner Ban k on May 31,1998. These factual findings are amply supported by the evidence on record.

It is well recognized that company policies and regulations are, unless shown to be grosslyoppressive or contrary to law, generally binding and valid on the parties and must be complied with untilfinally revised or amended unilaterally or preferably through negotiation or by competent authority.Moreover, management has the prerogative to discipline its employees and to impose appropriatepenalties on erring workers pursuant to company rules and regulations. With more reason should thesetruisms apply to the respondent, who, by reason of his position, was required to act judiciously and toexercise his authority in harmony with company policies.

Contrary to the respondents contention that the petitioner Bank could not properly impose theaccessory penalty of restitution on him without imposing the principal penalty of "WrittenReprimand/Suspension," the latters Code of Ethics expressly sanctions the imposition ofrestitution/forfeiture of benefits apart from or independent of the other penalties. Obviously, in view ofhis voluntary separation from the petitioner Bank, the imposition of the penalty of reprimand or

suspension would be futile. The petitioner Bank was left with no other recourse but to impose theancillary penalty of restitution. It was certainly within the petitioner Banks prerogative to impose on therespondent what it considered the appropriate penalty under the circumstances pursuant to its companyrules and regulations.

Anent the issue that the respondents right to due process was violated by the petitioner Banksince no administrative investigation was conducted prior to the withholding of his separation benefits,the Court rules that, under the circumstances obtaining in this case, no formal administrativeinvestigation was necessary. Due process simply demands an opportunity to be heard and thisopportunity was not denied the respondent.

It bears stressing that the respondent was not just a rank and file employee. At the time of his

resignation, he was the Assistant Vice- President, Branch Banking Group for the Mindanao area of thepetitioner Bank. His position the Assistant Vice- President, Branch Banking Group for the Mindanaoarea of the petitioner Bank. His position carried authority for the exercise of independent judgment anddiscretion, characteristic of sensitive posts in corporate hierarchy. As such, he was, as earlier intimated,required to act judiciously and to exercise his authority in harmony with company policies.

On the other hand, the petitioner Banks business is essentially imbued with public interest andowes great fidelity to the public it deals with. It is expected to exercise the highest degree of diligence inthe selection and supervision of their employees. As a corollary, and like all other business enterprises, its

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prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant tocompany rules and regulations must be respected. The law, in protecting the rights of labor, authorizedneither oppression nor self-destruction of an employer company which itself is possessed of rights thatmust be entitled to recognition and respect.