Lopez v. Keppel Bank

G.R. No. 176800 (September 5, 2011)

Elmer Lopez was dismissed for unauthorized orders; court upheld, citing breach of trust and duty.

Facts:

Petitioner Elmer Lopez served as the Branch Manager of Keppel Bank Philippines, Inc. in Iloilo City. His role involved promoting the bank's business, which included bringing in clients. Through his efforts, Hertz Exclusive Cars, Inc. became a client of the bank. On August 12, 2003, the bank issued a notice to Lopez, requiring him to explain why he should not be disciplined for issuing two unauthorized purchase orders (POs) totaling P6,493,000.00 for the Hertz account, which were intended for the purchase of vehicles.

Lopez submitted his explanation on the same day, but the bank dismissed him immediately, citing a lack of authority to issue the POs. Following his dismissal, Lopez sought reconsideration, which led to a meeting with bank officials, including his lawyer. However, the bank upheld its decision to terminate his employment.

Lopez subsequently filed a complaint for illegal dismissal and money claims against the bank and its officers. During the compulsory arbitration proceedings, he argued that the issuance of the POs was part of his duties as branch manager and that the bank had previously honored a PO he issued, generating income for the bank. The bank countered that Lopez acted against explicit instructions not to proceed with the Hertz loan application due to a negative credit rating from its credit committee.

The Labor Arbiter ruled in favor of Lopez, declaring his dismissal illegal and ordering his reinstatement along with damages. However, the National Labor Relations Commission (NLRC) reversed this decision, finding that Lopez had committed willful disobedience by issuing the POs without authority. Lopez then sought relief from the Court of Appeals (CA), which affirmed the NLRC's ruling.

Legal Issues:

  1. Whether the bank's appeal to the NLRC was properly perfected.
  2. Whether Lopez's dismissal was justified based on loss of trust and confidence.
  3. Whether Lopez was afforded due process in the termination of his employment.

Arguments:

Petitioner (Lopez):

  • The bank's appeal to the NLRC was not perfected as it lacked a notice of appeal, a certificate of non-forum shopping, and a certified copy of the appeal bond.
  • He had the authority to issue the POs as part of his managerial duties, and the bank had previously honored similar POs.
  • The bank's claim of loss of trust and confidence was unfounded, and the dismissal was a harsh penalty for his actions.
  • He was not given adequate opportunity to prepare his defense, as the bank's notice to explain came after he had already submitted his explanation.

Respondents (Keppel Bank and Officers):

  • The CA did not err in affirming the NLRC's decision, as Lopez's actions constituted willful disobedience of a direct order from the bank not to proceed with the Hertz loan application.
  • The bank had a legitimate reason to terminate Lopez's employment based on loss of trust and confidence, which is a valid ground for dismissal under the Labor Code.
  • Lopez was afforded due process, having received the necessary notices and an opportunity to be heard during the reconsideration process.

Court's Decision and Legal Reasoning:

The Supreme Court found no merit in Lopez's petition. It ruled that the procedural issue regarding the perfection of the bank's appeal was a non-issue since Lopez did not raise it before the CA. On the substantive issue, the Court upheld the NLRC's finding that Lopez's dismissal was justified due to loss of trust and confidence. The Court emphasized that as a branch manager, Lopez held a position of trust and was expected to follow directives from higher management. His decision to issue the POs despite explicit instructions not to proceed with the Hertz loan application constituted a breach of trust.

The Court also addressed the due process issue, confirming that Lopez was given the required notices and an opportunity to be heard, particularly during the reconsideration meeting where he was represented by counsel.

Significant Legal Principles Established:

  1. Loss of trust and confidence is a valid ground for dismissal, particularly for employees in positions of trust and authority.
  2. Employers have the prerogative to terminate employees for acts that undermine their trust, provided that the dismissal is based on just cause and due process is observed.
  3. Procedural issues regarding the perfection of appeals must be raised at the appropriate time; failure to do so may result in waiving the right to contest such issues.