China Banking Corporation vs. Borromeo 440 SCRA 621, October 19, 2004

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VOL. 440, OCTOBER 19, 2004 621

China Banking Corporation vs. Borromeo
*
G.R. No. 156515. October 19, 2004.
CHINA BANKING CORPORATION, petitioner, vs. MARIANO M. BORROMEO, respondent.
Labor Law; National Labor Relations Commission (NLRC);Technicalities; Relation; It is settled that
administrative bodies like the NLRC, including the Labor Arbiter, are not bound by the technical niceties of
the law and procedure and the rules obtaining in courts of law.—It is settled that administrative bodies like
the NLRC, including the Labor Arbiter, are not bound by the technical niceties of the law and procedure and
the rules obtaining in courts of law. Rules of evidence are not strictly observed in proceedings before
administrative bodies like the NLRC, where decisions may be reached on the basis of position papers.
Same; Same; Factual Findings; Appeals; Factual findings of the NLRC affirming those of the Labor
Arbiter, are accorded respect, if not finality, and are considered binding on this Court.—Before delving on the
merits of the case, it is well to remember that factual findings of the NLRC affirming those of the Labor
Arbiter, both
_______________
* SECOND DIVISION.
622
622 SUPREME COURT REPORTS

ANNOTATED
bodies being deemed to have acquired expertise in matters within their jurisdiction, when sufficiently
supported by evidence on record, are accorded respect, if not finality, and are considered binding on this
Court.
Same; Employment; Management Prerogative; Company Policies and Regulations; Validity; Company
policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and
valid on the parties.—It is well recognized that company policies and regulations are, unless shown to be
grossly oppressive or contrary to law, generally binding and valid on the parties and must be complied with
until finally revised or amended unilaterally or preferably through negotiation or by competent authority.
Same; Same; Same; Same; Management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and regulations.—Management has the
prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to
company rules and regulations. With more reason should these truisms apply to the respondent, who, by
reason of his position, was required to act judiciously and to exercise his authority in harmony with
company policies.
PETITION for review on certiorari of the decision and resolution of the Court of Appals.
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The facts are stated in the opinion of the Court.

Ma. Hildelita N. Pagkatipunan-Alano for petitioner.
Adonis B. Nicanor for respondent.
CALLEJO, SR., J.:
Before the Court is the petition for1

review on certiorari filed by China Banking Corporation
seeking the reversal of the Decision dated July 19, 2002 of the Court of Appeals in
_______________
1 Penned by Associate Justice Oswaldo D. Agcaoili, with Associate Justices Eriberto U. Rosario, Jr. and Danilo B. Pine,
concurring; Rollo, pp. 69-90.
623
VOL. 440, OCTOBER 19, 2004 623

CA-G.R. SP No. 57365, remanding to the Labor Arbiter for further hearings the complaint for
payment of separation pay, mid-year bonus, profit share and damages filed by respondent
Mariano M. Borromeo against the petitioner Bank. Likewise, sought to be reversed is the
appellate court’s Resolution dated January 6, 2003, denying the petitioner Bank’s motion for
reconsideration.
The factual antecedents of the case are as follows:
Respondent Mariano M. Borromeo joined the petitioner Bank on June 1, 1989 as Manager
assigned at the latter’s Regional Office in Cebu City. He then had the rank of Manager Level I.
Subsequently, the respondent was laterally transferred to Cagayan de Oro City as Branch
Manager of the petitioner Bank’s branch thereat.
For the years 1989 and 1990, the respondent received a “highly satisfactory” performance
rating and was given the corresponding profit sharing/performance bonus. From 1991 up to 1995,
he consistently received a “very good” performance rating for each of the said years and again
received the corresponding profit sharing/performance bonus. Moreover, in 1992, he was
promoted from Manager Level I to Manager Level II. In 1994, he was promoted to Senior
Manager Level I. Then again, in 1995, he was promoted to Senior Manager Level II. Finally, in
1996, with a “highly satisfactory” performance rating, the respondent was promoted to the
position of Assistant Vice-President, Branch Banking Group for the Mindanao area effective
October 16, 1996. Each promotion had the corresponding increase in the respondent’s salary as
well as in the benefits he received from the petitioner Bank.
However, prior to his last promotion and then unknown to the petitioner Bank, the
respondent, without authority from the Executive Committee or Board of Directors, approved
several DAUD/BP accommodations amounting to P2,441,375 in favor of Joel Maniwan, with
Edmundo Ramos as surety. DAUD/BP is the acronym for checks “Drawn Against Uncollected
Deposits/Bills Purchased.” Such checks, which are not
624
624 SUPREME COURT REPORTS ANNOTATED

sufficiently funded by cash, are generally not honored by banks. Further, a DAUD/BP
accommodation is a credit accommodation granted to a few and select bank clients through the
withdrawal of uncollected or uncleared check deposits from their current account. Under the
petitioner Bank’s standard operating procedures, DAUD/BP accommodations may be granted
only by a bank officer upon express authority from its Executive Committee or Board of Directors.
As a result of the DAUD/BP accommodations in favor of Maniwan, a total of ten out-of-town
checks (7 PCIB checks and 3 UCPB checks) of various dates amounting to P2,441,375 were
returned unpaid from September 20, 1996 to October 17, 1996. Each of the returned checks was
stamped with the notation “Payment Stopped/Account Closed.”
On October 8, 1996, the respondent wrote a Memorandum to the petitioner Bank’s senior
management requesting for the grant of a P2.4 million loan to Maniwan. The memorandum
stated that the loan was “to regularize/liquidate subject’s (referring to Maniwan) DAUD
availments.” It was only then that the petitioner Bank came to know of the DAUD/BP
accommodations in favor of Maniwan. The petitioner Bank further learned that these DAUD/BP
accommodations exceeded the limit granted to clients, were granted without proper prior
approval and already past due. Acting on this information, Samuel L. Chiong, the petitioner
Bank’s First Vice- President and Head-Visayas Mindanao Division, in his Memorandum dated
November 19, 1996 for the respondent, sought clarification from the latter on the following
matters:
“1) When DAUD/BP accommodations were allowed, what efforts, if any, were made to
establish the identity and/or legitimacy of the alleged broker or drawers of the checks
accommodated?
“2) Did the branch follow and comply with operating procedure which require that all checks
accommodated for DAUD/BP should be previously verified with the drawee bank and
history if not outright balances determined if enough to cover the checks?
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VOL. 440, OCTOBER 19, 2004 625

“3) How did the accommodations reach P2,441,375.00 when our records indicate that the
borrowers B/P-DAUD line is only for P500,000.00? When did the accommodations start
exceeding the limit of P500,000.00 and under whose authority?
“4) When did the accommodated checks start bouncing?
“5) What is the status of these checks now and what has the branch done so far to
protect/ensure collectibility of the returned checks?
“6) What about client Joel Maniwan 2
and surety Edmund Ramos, what steps have they done
to pay the checks returned?”
In reply thereto, the respondent, in his Letter dated December 5, 1996, answered the foregoing
queries in seriatim and explained, thus:
“1. None
“2. No
“3. The accommodations reach P2.4 million upon the request of Mr. Edmund Ramos, surety,
and this request was subsequently approved by undersigned. The excess accommodations
started in July ’96 without higher management approval.
“4. Checks started bouncing on September 20, 1996.

“5. Checks have remained unpaid. The branch sent demand letters to Messrs. Maniwan and
Ramos and referred the matter to our Legal Dept. for filing of appropriate legal action.
“6. Mr. Maniwan, thru his lawyer, Atty. Oscar Musni has signified their intention to settle by
Feb. 1997.
“Justification for lapses committed (Item nos. 1 to 3).

“The account was personally endorsed and referred to us by Mr. Edmund Ramos, Branch Manager of
Metrobank, Divisoria Br., Cagayan de Oro City. In fact, the CASA account was opened jointly as &/or
(Maniwan &/or Ramos). Mr. Ramos gave us his full assurance that the checks that we intend to purchase
are the same drawee that Metrobank has been purchasing for the past one (1) year already. He even
disclosed that these checks were verified by his own branch accountant and that Mr. Maniwan’s loan
account
_______________
2 Rollo, p. 200.
626

was being co-maked by Mr. Elbert Tan Yao Tin, son of Jose Tan Yao Tin of CIFC. To show his sincerity, Mr.
Ramos signed as surety for Mr. Maniwan for P2.5MM. Corollary to this, Mr. Ramos applied for a loan with
us mortgaging his house, lot and duplex with an estimated market value of P4.508MM. The branch,
therefore, is not totally negligent as officer to officer bank checking was done. In fact, it is also for the very
same reason that other banks granted DAUD to subject account and, likewise, the checks returned unpaid,
namely:
Solidbank P1.8 Million
Allied Bank .8
Far East Bank 2.0
MBTC 5.0
“The attached letter of Mr. Ramos dated 19 Nov. 1996 will speak for itself. Further to this, undersigned
conferred with the acting BOH VS Yap if these checks are legitimate 3rd party checks.
“On the other hand, Atty. Musni continues to insist that Mr. Maniwan was gypped by a broker in the
total amount of P10.00 Million.
“Undersigned accepts full responsibility for committing an error in judgment, lapses in control and abuse
of discretion by relying solely on the word, assurance, surety and REM3 of Mr. Edmund Ramos, a friend and
a co-bank officer. I am now ready to face the consequence of my action.”
In another Letter dated April 8, 1997, the respondent notified Chiong of his intention to resign
from the petitioner
4
Bank and apologized “for all the trouble I have caused because of the
Maniwan case.” The respondent, however, vehemently denied benefiting therefrom. In his Letter
dated April
5
30, 1997, the respondent formally tendered his irrevocable resignation effective May
31, 1997.
In the Memorandum dated May 23, 1997 addressed to the respondent, Nancy D. Yang, the
petitioner Bank’s Senior
_______________
3 Id., at pp. 201-202.
4 Id., at p. 205.
5 Id., at p. 206.
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VOL. 440, OCTOBER 19, 2004 627

Vice-President and Head-Branch Banking Group, informed the former that his approval of the
DAUD/BP accommodations in favor of Maniwan without authority and/or approval of higher
management violated the petitioner Bank’s Code of Ethics. As such, he was directed to restitute
the amount of P1,507,736.79 representing 90% of the total loss of P1,675,263.10 incurred by the
petitioner Bank. However, in view of his resignation and considering the years of service in the
petitioner Bank, the management earmarked only P836,637.08 from the respondent’s total
separation benefits or pay. The memorandum addressed to the respondent stated:
“After a careful review and evaluation of the facts surrounding the above case, the following have been
conclusively established:
‘1. The branch granted various BP/DAUD accommodations to clients Joel Maniwan/Edmundo Ramos in
excess of approved lines through the following out-of-town checks which were returned for the reason
“Payment Stopped/Account Closed”:
1. PCIB Cebu Check No. 86256 P251,816.00

2. PCIB Cebu Check No. 86261 235,880.00
3. PCIB Cebu Check No. 8215 241,443.00
4. UCPB Tagbilaran Check No. 27 7,630.00
5. PCIB Bogo, Cebu Check No. 6117 267,418.00
‘2. The foregoing checks were accommodated through your approval which was in excess of your
authority.
‘3. The branch failed to follow the fundamental and basic procedures in handling BP/DAUD
accommodations which made the accommodations basically flawed.
628

‘4. The accommodations were attended by lapses in control consisting of failure to report the exception
and failure to cover the account of Joel Maniwan with the required Credit Line Agreement.’
“Since the foregoing were established by your own admissions in your letter explanation dated 5 December
1996, and the Audit Report and findings of the Region Head, Management finds your actions in violation of
the Bank’s Code of Ethics:
‘Table 6.2., no. 1: Compliance with Standard Operating Procedures
—“Infraction of Bank procedures in handling any bank transactions or work assignment which results in a loss or
probable loss.”
‘Table 6.3., no. 6: Proper Conduct and Behavior -
“Willful misconduct in the performance of duty whether or not the bank suffers a loss,” and/or
‘Table 6.5., no. 1: Work Responsibilities—
“Dereliction of duty whether or not the Bank suffers a loss,” and/or
‘Table 6.6., no. 2: Authority and Subordination—
“Failure to carry out lawful orders or instructions of superiors.’
Your approval of the accommodations in excess of your authority without prior authority and/or approval
from higher management is a violation of the above cited Rules.
“In view of these, you are directed to restitute the amount of P1,507,736.79 representing 90% of the total
loss of P1,675,263.10 incurred by the Bank as your proportionate share. However, in light of your voluntary
separation from the Bank effective May 31, 1997, in view of the years of service you have given to the
Bank, management shall earmark and segregate only the amount of P836,637.08 from your total separation
benefits/pay. The Bank further directs you 6to fully assist in the effort to collect from Joel Maniwan and
Edmundo Ramos the sums due to the Bank.”
_______________
6 Id., at pp. 209-210.
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VOL. 440, OCTOBER 19, 2004 629

In the Letter dated May 26, 1997 addressed to the respondent, Remedios Cruz, petitioner Bank’s
Vice-President of the Human Resources Division, again informed him that the management
would withhold the sum of P836,637.08 from his separation pay, mid-year bonus and profit
sharing. The amount withheld represented his proportionate share in the accountability vis-à-
vis the DAUD/BP accommodations in favor of Maniwan. The said amount would be released upon
recovery of the sums demanded from Maniwan in Civil Case No. 97174 filed against him by the
petitioner Bank with the Regional Trial Court in Cagayan de Oro City.
Consequently, the respondent, through counsel, made a demand on the petitioner Bank for the
payment of his separation pay and other benefits. The petitioner Bank maintained its position to
withhold the sum of P836,637.08. Thus, the respondent filed with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. 10, in Cagayan de Oro City, the complaint
for payment of separation pay, mid-year bonus, profit share and damages against the petitioner
Bank.
The parties submitted their respective position papers to the Labor Arbiter. Thereafter, the
respondent filed a motion to set case for trial or hearing. Acting thereon, the Labor Arbiter, in the
Order dated January 29, 1999, denied the same stating that:
“. . . This Branch views that if complainant finds the necessity to controvert the allegations in the
respondent’s pleadings, then he may file a supplemental position paper and adduce thereto evidence and
additional supporting documents, the soonest possible time. All the evidence
7
will be evaluated by the Branch
to determine whether or not a clarificatory hearing shall be conducted.”
On February 26, 1999, the Labor Arbiter issued another Order submitting the case for resolution
upon finding that he
_______________
7 CA Rollo, p. 145.
630

could judiciously pass on the merits without the necessity of further 8

hearing.
On even date, the Labor Arbiter promulgated the Decision dismissing the respondent’s
complaint. According to the Labor Arbiter, the respondent, an officer of the petitioner Bank, had
committed a serious infraction when, in blatant violation of the bank’s standard operating
procedures and policies, he approved the DAUD/BP accommodations in favor of Maniwan without
authorization by senior management. Even the respondent himself had admitted this breach in
the letters that he wrote to the senior officers of the petitioner Bank.
The Labor Arbiter, likewise, made the finding that the respondent offered to assign or convey a
property that he owned to the petitioner Bank as well as proposed the withholding of the benefits
due him to answer for the losses that the petitioner Bank incurred on account of unauthorized
DAUD/BP accommodations. But even if the respondent had not given his consent, the Labor
Arbiter held that the petitioner Bank’s act of withholding the benefits due the respondent was
justified under its Code of Ethics. The respondent, as an officer of the petitioner Bank, was bound
by the provisions of the said Code.
Aggrieved, the respondent appealed to the National Labor Relations Commission. After the
parties had filed their respective memoranda, the NLRC, in the Decision dated October 20, 1999,
dismissed the appeal as it affirmed in toto the findings and conclusions of the Labor Arbiter. The
NLRC preliminarily ruled that the Labor Arbiter committed no grave abuse of discretion when he
decided the case on the basis of the position papers submitted by the parties. On the merits, the
NLRC, like the Labor Arbiter, gave credence to the petitioner Bank’s allegation that the
respondent offered to pledge his property to the bank and proposed the withholding of his
benefits in acknowledgment of the serious infraction he
_______________
8 Id., at pp. 148-152.
631
VOL. 440, OCTOBER 19, 2004 631

committed against the bank. Further, the NLRC concurred with the Labor Arbiter that the
petitioner Bank was justified in withholding the benefits due the respondent. Being a responsible
bank officer, the respondent ought to know that, based on the petitioner Bank’s Code of Ethics,
restitution may be imposed on erring employees apart from any other penalty for acts resulting in
loss or damage to the bank. The decretal portion of the NLRC decision reads:
“WHEREFORE, the9 decision of the Labor Arbiter is Affirmed. The appeal is Dismissed for lack of merit.
SO ORDERED.”
The respondent moved for a reconsideration of the said decision but the NLRC, in the Resolution
of December 20, 1999, denied his motion.
The respondent then filed a petition for certiorari with the Court of Appeals alleging that the
NLRC committed grave abuse of discretion when it affirmed the findings and conclusions of the
Labor Arbiter. He vehemently denied having offered to pledge his property to the bank or
proposed the withholding of his separation pay and other benefits. Further, he argued that the
petitioner Bank deprived him of his right to due process because it unilaterally imposed the
penalty of restitution on him. The DAUD/BP accommodations in favor of Maniwan allegedly
could not be considered as a “loss” to the bank as the amounts may still be recovered. The
respondent, likewise, maintained that the Labor Arbiter should not have decided the case on the
basis of the parties’ position papers but should have 10conducted a full-blown hearing thereon.
On July 19, 2002, the CA rendered the Decision now being assailed by the petitioner Bank.
The CA found merit in the respondent’s contention that he was deprived of his right to due
process by the petitioner Bank as no administrative in-
_______________
9 Id., at p. 237.
10 Rollo, pp. 69-90.
632

vestigation was conducted by it prior to its act of withholding the respondent’s separation pay
and other benefits. The respondent was not informed of any charge against him in connection
with the Maniwan DAUD/BP accommodations nor afforded the right to a hearing or to defend
himself before the penalty of restitution was imposed on him. This, according to the appellate
court, was contrary not only to the fundamental principle of due process but to the petitioner
Bank’s Code of Ethics as well.
The CA further held that the Labor Arbiter, likewise, failed to afford the respondent due
process when it denied his motion to set case for trial or hearing. While the authority of the Labor
Arbiter to decide a case based on the parties’ position papers and documents is indubitable, the
CA opined that factual issues attendant to the case, including whether or not the respondent
proposed the withholding of his benefits or pledged the same to the petitioner Bank, necessitated
the conduct of a full-blown trial. The appellate court explained that:
“Procedural due process, as must be remembered, has two main concerns, the prevention of unjustified or
mistaken deprivation and the promotion of participation and dialogue by affected individuals in the
decision-making process. Truly, the magnitude of the case and the withholding of Borromeo’s property as
well as the willingness of the parties to conciliate, make a hearing imperative. As manifested by the bank, it
did not contest
11
Borromeo’s motion for hearing or trial inasmuch as the bank itself wanted to fully ventilate
its side.”
Accordingly, the CA set aside the decision of the NLRC and ordered that the records of the case
be remanded to the Labor Arbiter for further hearings on the factual issues involved.
The petitioner Bank filed a motion for reconsideration of the said decision but the CA, in the
assailed Resolution of January 6, 2003, denied the same as it found no compelling
_______________
11 Id., at p. 89. (Citations omitted).
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VOL. 440, OCTOBER 19, 2004 633

12
ground to warrant reconsideration. Hence, its recourse to this Court alleging that the assailed
CA decision is contrary to law and jurisprudence in that:
I.
THE FACTUAL FINDINGS OF THE LABOR ARBITER AS AFFIRMED BY THE NATIONAL LABOR
RELATIONS COMMISSION ARE SUPPORTED BY SUBSTANTIAL EVIDENCE AND SHOULD HAVE
BEEN ACCORDED RESPECT AND FINALITY BY THE COURT OF APPEALS IN ACCORDANCE WITH
GOVERNING JURISPRUDENCE.
II.
AT ALL TIMES, THE LABOR ARBITER ACTED IN ACCORDANCE WITH THE REQUIREMENTS OF
DUE PROCESS IN THE PROCEEDINGS A QUO.
III.
THERE WAS NO VIOLATION BY PETITIONER BANK OF RESPONDENT’S RIGHT TO DUE

PROCESS AS NO ADMINISTRATIVE
13
INVESTIGATION WAS NEEDED TO BE CONDUCTED ON HIS
ADMITTED MISCONDUCT.
The petitioner Bank posits that the sole factual issue that remained in dispute was whether the
respondent pledged his benefits as guarantee for the losses the bank incurred resulting from the
unauthorized DAUD/BP accommodations in favor of Maniwan. On this issue, both the Labor
Arbiter and the NLRC found that the respondent had indeed pledged his benefits to the bank.
According to the petitioner Bank, this factual finding should have been accorded respect by the
CA as the same is supported by the evidence on record. By ordering the remand of the case to the
Labor Arbiter, the CA allegedly unjustifiably analyzed and weighed all over again the evidence
presented.
_______________
12 Id., at p. 92.
13 Id., at p. 45.
634

The petitioner Bank insists that the Labor Arbiter acted within his authority when he denied the
respondent’s motion to set case for hearing or trial and instead decided the case on the basis of
the position papers and evidence submitted by the parties. Due process simply demands an
opportunity to be heard and the respondent was not denied of this as he was even given the
opportunity to file a supplemental position paper and other supporting documents, but he did not
do so.
The petitioner Bank takes exception to the findings of the appellate court that the respondent
was not afforded the right to a hearing or to defend himself by the petitioner Bank as it did not
conduct an administrative investigation. The petitioner Bank points out that it was poised to
conduct one but was preempted by the respondent’s resignation. In any case, respondent himself
in his Letter dated December 5, 1996, in reply to the clarificatory queries of Chiong, admitted
that the DAUD/BP accommodations were granted “without higher management approval” and
that he (the respondent) “accepts full responsibility for committing an error of judgment, lapses
in control and abuse of discretion . . .” Given the respondent’s admission, the holding of a formal
investigation was no longer necessary.
For his part, the respondent, in his Comment, maintains that the DAUD/BP accommodations
in favor of Maniwan were approved, albeit not expressly, by the senior management of the
petitioner Bank. He cites the regular reports he made to Chiong, his superior, regarding the
DAUD/BP transactions made by the branch, including that of Maniwan, and Chiong never called
his attention thereto nor stopped or reprimanded him therefor. These reports further showed that
he did not conceal these transactions to the management.
The respondent vehemently denies having offered the withholding of his benefits or pledged
the same to the petitioner Bank. The findings of the Labor Arbiter and the NLRC that what he
did are allegedly not supported by the evidence on record.
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VOL. 440, OCTOBER 19, 2004 635

The respondent is of the view that restitution is not proper because the petitioner Bank has not,
as yet, incurred any actual loss as the amount owed by Maniwan may still be recovered from him.
In fact, the petitioner Bank had already instituted a civil case against Maniwan for the recovery
of the sum and the RTC rendered judgment in the petitioner Bank’s favor. The case is still
pending appeal. In any case, the respondent argues that the petitioner Bank could not properly
impose the accessory penalty of restitution on him without imposing the principal penalty of
“Written Reprimand/Suspension” as provided under its Code of Ethics. He, likewise, vigorously
avers that, in contravention of its own Code of Ethics, he was denied due process by the petitioner
Bank as it did not conduct any administrative investigation relative to the unauthorized
DAUD/BP accommodations. He was not informed in writing of any charge against him nor was
he given the opportunity to defend himself.
The petition is meritorious.
The Court shall first resolve the procedural issue raised in the petition, i.e., whether the CA
erred in remanding the case to the Labor Arbiter. The Court rules in the affirmative. It is settled
that administrative bodies like the NLRC, including the Labor Arbiter, are not bound 14
by the
technical niceties of the law and procedure and the rules obtaining in courts of law. Rules of
evidence are not strictly observed in proceedings before administrative
15
bodies like the NLRC,
where decisions may be reached on the basis of position papers. The holding of a formal hearing
or trial is discretionary
16
with the Labor Arbiter and is something that the parties cannot demand
as a matter of right. As a corollary, trial-type hearings
_______________
14 Bantolino v. Coca-Cola Bottlers Phils., Inc., 403 SCRA 699 (2003).
15 Rabago v. National Labor Relations Commission, 200 SCRA 158(1991).
16 Columbus Philippines Bus Corp. v. National Labor Relations Commission, 364 SCRA 606 (2001).
636

are not even required as the cases may17 be decided based on verified position papers, with
supporting documents and their affidavits.
Hence, the Labor Arbiter acted well within his authority when he issued the Order dated
February 26, 1999 submitting the case for resolution upon finding that he could judiciously pass
on the merits without the necessity of further hearing. On the other hand, the assailed CA
decision’s directive requiring him to conduct further hearings constitutes undue interference with
the Labor Arbiter’s discretion. Moreover, to require the conduct of hearings would be to negate
the rationale and purpose of the summary nature of the proceedings mandated 18
by the Rules and
to make mandatory the application of the technical rules of evidence. The appellate court,
therefore, committed reversible error in ordering the remand of the case to the Labor Arbiter for
further hearings.
Before delving on the merits of the case, it is well to remember that factual findings of the
NLRC affirming those of the Labor Arbiter, both bodies being deemed to have acquired expertise
in matters within their jurisdiction, when sufficiently supported by evidence 19
on record, are
accorded respect, if not finality, and are considered binding on this Court. As long as their
decisions are devoid of any arbitrariness in the process of their deduction 20 from the evidence
proffered by the parties, all that is left is for the Court to stamp its affirmation.
In this case, the factual findings of the Labor Arbiter and those of the NLRC concur on the
following material points: the respondent was a responsible officer of the petitioner Bank; by his
own admission, he granted DAUD/BP accommo-
_______________
17 Bantolino v. Coca-Cola Bottlers Phils., Inc., supra.
18 Id., at p. 704.
19 Ignacio v. Coca-Cola Bottlers Phils., Inc., 365 SCRA 418 (2001).
20 Id., at p. 424.
637
VOL. 440, OCTOBER 19, 2004 637

dations in excess of the authority given to him and in violation of the bank’s standard operating
procedures; the petitioner Bank’s Code of Ethics provides that restitution/forfeiture of benefits
may be imposed on the employees for, inter alia, infraction of the bank’s standard operating
procedures; and, the respondent resigned from the petitioner Bank on May 31, 1998. These
factual findings are amply supported by the evidence on record.
Indeed, it had been indubitably shown that the respondent admitted that he violated the
petitioner Bank’s standard operating procedures in granting the DAUD/BP accommodations in
favor of Maniwan without higher management approval. The respondent’s replies to the
clarificatory questions propounded to him by way of the Memorandum dated No-vember 19, 1996
were particularly significant. When the respondent was asked whether efforts were made to
establish the identity and/or 21legitimacy of the drawers 22of the checks before the DAUD/BP
accommodations were allowed, he replied in the negative. To the query “did the branch follow
and comply with operating procedure which require that all checks accommodated for DAUD/BP
should be previously verified with the drawee
23
bank and history, if not outright 24
balances,
determined if enough to cover the checks?” again, the respondent answered “no.” 25
When asked
under whose authority the excess DAUD/BP accommodations were granted, the respondent
expressly stated that they were “approved by undersigned (referring to himself)” 26
and that the
excess accommodation was granted “without higher management approval.” More telling,
however, is the respondent’s statement that he “accepts full responsibility for committing
_______________
21 See Note 2.
22 See Note 3.
23 See Note 2.
24 See Note 3.
25 See Note 2.
26 See Note 3.
638

an error in judgment, lapses in control and abuse of27 discretion by relying solely on the word,
assurance, surety and REM of Mr. Edmundo 28
Ramos.” The respondent added that he was “ready
to face the consequence of [his] action.”
The foregoing sufficiently establish that the respondent, by his own admissions, had violated
the petitioner Bank’s standard operating procedures. Among others, the petitioner Bank’s Code of
Ethics provides:
Table 6.2 COMPLIANCE WITH STANDARD OPERATING PROCEDURES
VIOLATIONS PENALTIES
1ST 2ND 3RD 4TH
1. Infraction Written Suspension/Dismissal* Dismissal*
of Bank Reprimand/Suspension*
procedures in
handling any
Bank
transaction or
work
assignment
which results
in a loss or
probable loss
* With restitution, if warranted.
Further, the said Code states that:

“7.2.5. Restitution/Forfeiture of Benefits
Restitution may be imposed independently or together with any other penalty in case of loss or damage to
the property of the Bank, its employees, clients or other parties doing business with the Bank. The Bank
may recover the amount involved by means of salary deduction or whatever legal means that will prompt
offenders to pay the amount involved. But restitution shall in no way mitigate the penalties attached to the
violation or infraction.
_______________
27 Ibid.
28 Id.
639
VOL. 440, OCTOBER 19, 2004 639

“Forfeiture of benefits/privileges may also be effected in cases where infractions or violations were incurred
in connection with or arising from the application/availment thereof.”
It is well recognized that company policies and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and valid on the parties and must be complied
with until finally revised
29
or amended unilaterally or preferably through negotiation or by
competent authority. Moreover, management has the prerogative to discipline its employees and
to impose 30appropriate penalties on erring workers pursuant to company rules and
regulations. With more reason should these truisms apply to the respondent, who, by reason of
his position, was31 required to act judiciously and to exercise his authority in harmony with
company policies.
Contrary to the respondent’s contention that the petitioner Bank could not properly impose the
accessory penalty of restitution on him without imposing the principal penalty of “Written
Reprimand/Suspension,” the latter’s Code of Ethics expressly sanctions the imposition of
restitution/forfeiture of benefits apart from or independent of the other penalties. Obviously, in
view of his 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 the ancillary penalty of restitution. It was certainly within the petitioner Bank’s
prerogative to impose on the respondent what it considered the appropriate penalty under the
circumstances pursuant to its company rules and regulations.
_______________
29 Alcantara, Jr. v. Court of Appeals, 386 SCRA 370 (2002).
30 Philippine Airlines, Inc. v. National Labor Relations Commission (4th Division), 337 SCRA 286 (2000).
31 Philippine Long Distance Telephone Company v. National Labor Relations Commission, 303 SCRA 9 (1999).
640

Anent the issue that the respondent’s right to due process was violated by the petitioner Bank
since 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
administrative investigation was necessary. Due process 32simply demands an opportunity to be
heard and this opportunity was not denied the respondent. 33
Prior to the respondent’s resignation, he was furnished with the Memorandum dated
November 19, 1996 in which several clarificatory questions were propounded to him regarding
the DAUD/BP accommodations in favor of Maniwan. Among others, the respondent was asked
whether the bank’s standard operating procedures were complied with and under whose
authority the accommodations were granted. From the tenor thereof, it could be reasonably
gleaned that the said memorandum constituted notice of34the charge against the respondent.
Replying to the queries, the respondent, in his Letter dated December 5, 1996, admitted, inter
alia, that he approved the DAUD/BP accommodations in favor of Maniwan and the amount in
excess of the credit limit of P500,000 was approved by him without higher management approval.
The respondent, likewise, admitted non-compliance with the bank’s standard operating
procedures, specifically, that which required that all checks accommodated for DAUD/BP be
previously verified with the drawee bank and history, if not outright balances determined if
enough to cover the checks. In the same letter, the respondent expressed that he “accepts full
responsibility for committing an error in judgment, lapses in control and abuse of discretion” and
that he is “ready to face the consequence of his action.”
_______________
32 Ginetev. Sunrise Manning Agency, 359 SCRA 404 (2001).
33 See Note 2.
34 See Note 3.
641
VOL. 440, OCTOBER 19, 2004 641

Contrary to his protestations, the respondent was given the opportunity to be heard 35
and
considering his admissions, it became unnecessary to hold any formal investigation. More
particularly, it became unnecessary for the petitioner Bank to conduct an investigation on
whether the respondent had committed an “[I]nfraction of Bank procedures in handling any Bank
transaction or work assignment which results in a loss or probable loss” because the respondent
already admitted
36
the same. All that was needed was to inform 37
him of the findings of the
management and this was done by way of the Memorandum dated May 23, 1997 addressed to
the respondent. His claim of denial of due process must perforce fail.
Significantly, the respondent is not wholly deprived of his separation benefits. As the Labor
Arbiter stressed in his decision,38 “the separation benefits due the complainant (the respondent
herein) were merely withheld.” The NLRC made the same conclusion and was even more
explicit as it opined that the respondent “is entitled to the benefits he claimed in pursuance to the
Collective Bargaining Agreement
39
but, in the meantime, such benefits shall be deposited with the
bank by way of pledge.” Even the petitioner Bank itself gives “the assurance that as soon as the
Bank has satisfied a judgment40
in Civil Case No. 97174, the earmarked portion of his benefits will
be released without delay.”
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
_______________
35 Pampanga II Electric Cooperative, Inc. v. National Labor Relations Commission, 250 SCRA 31 (1995). See
also Bernardo v. National Labor Relations Commission, 255 SCRA 108 (1996); and Magos v. National Labor Relations
Commission, 300 SCRA 484 (1998).
36 Ibid.
37 See Note 6.
38 Rollo, p. 97.
39 Id., at 106.
40 Id., at 190.
642

Mindanao area of the petitioner Bank. His position carried authority for the exercise 41
of
independent judgment and discretion, characteristic of sensitive posts in corporate hierarchy. As
such, he was, as earlier intimated,
42
required to act judiciously and to exercise his authority in
harmony with company policies.
On the other hand, the petitioner Bank’s business43
is essentially imbued with public interest
and owes great fidelity to the public it deals with. It is expected
44
to exercise the highest degree of
diligence in the selection and supervision of their employees. As a corollary, and like all other
business enterprises, its prerogative to discipline its employees and to impose appropriate 45
penalties on erring workers pursuant to company rules and regulations must be respected. The
law, in protecting the rights of labor, authorized neither oppression nor self-destruction of an
employer46
company which itself is possessed of rights that must be entitled to recognition and
respect.
WHEREFORE, the petition is GRANTED. The Decision dated July 19, 2002 of the Court of
Appeals and its Resolution dated January 6, 2003 in CA-G.R. SP No. 57365 are REVERSED AND
SET ASIDE. The Resolution dated October 20, 1999 of the NLRC, affirming the Decision dated
February 26, 1999 of the Labor Arbiter, is REINSTATED.
SO ORDERED.
Puno (Chairman), Austria-Martinez and Tinga, JJ.,concur.
_______________
41 Dayan v. Bank of the Philippine Islands, 369 SCRA 712 (2001).
42 See Note 31.
43 Dayan v. Bank of the Philippine Islands, supra.
44 Philippine Commercial International Bank v. Court of Appeals, 350 SCRA 446 (2001).
45 See Note 30.
46 Dayan v. Bank of the Philippine Islands, supra.
643
VOL. 440, OCTOBER 19, 2004 643

Home Development Mutual Fund vs.
Commission on Audit
Chico-Nazario, J., On Leave.

Petition granted, judgment and resolution reversed and set aside.
Note.—Company policies and regulations are, unless shown to be grossly oppressive or

contrary to law, generally binding and valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably through negotiation or by competent
authority. (Alcantara, Jr. vs. Court of Appeals, 386 SCRA 370 [2002])

China Banking Corporation vs. Borromeo 440 SCRA 621, October 19, 2004

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China Banking Corporation vs. Borromeo 440 SCRA 621, October 19, 2004

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VOL. 440, OCTOBER 19, 2004 621

CHINA BANKING CORPORATION, petitioner, vs. MARIANO M. BORROMEO, respondent.

622 SUPREME COURT REPORTS

China Banking Corporation vs. Borromeo

The facts are stated in the opinion of the Court.

Before the Court is the petition for1

VOL. 440, OCTOBER 19, 2004 623

624 SUPREME COURT REPORTS ANNOTATED

VOL. 440, OCTOBER 19, 2004 625

“4. Checks started bouncing on September 20, 1996.

“Justification for lapses committed (Item nos. 1 to 3).

626 SUPREME COURT REPORTS ANNOTATED

VOL. 440, OCTOBER 19, 2004 627

1. PCIB Cebu Check No. 86256 P251,816.00

628 SUPREME COURT REPORTS ANNOTATED

‘Table 6.3., no. 6: Proper Conduct and Behavior -

‘Table 6.5., no. 1: Work Responsibilities—

“Dereliction of duty whether or not the Bank suffers a loss,” and/or

‘Table 6.6., no. 2: Authority and Subordination—

“Failure to carry out lawful orders or instructions of superiors.’

VOL. 440, OCTOBER 19, 2004 629

630 SUPREME COURT REPORTS ANNOTATED

could judiciously pass on the merits without the necessity of further 8

VOL. 440, OCTOBER 19, 2004 631

632 SUPREME COURT REPORTS ANNOTATED

VOL. 440, OCTOBER 19, 2004 633

THERE WAS NO VIOLATION BY PETITIONER BANK OF RESPONDENT’S RIGHT TO DUE

634 SUPREME COURT REPORTS ANNOTATED

VOL. 440, OCTOBER 19, 2004 635

636 SUPREME COURT REPORTS ANNOTATED

VOL. 440, OCTOBER 19, 2004 637

638 SUPREME COURT REPORTS ANNOTATED

Further, the said Code states that:

VOL. 440, OCTOBER 19, 2004 639

640 SUPREME COURT REPORTS ANNOTATED

VOL. 440, OCTOBER 19, 2004 641

642 SUPREME COURT REPORTS ANNOTATED

VOL. 440, OCTOBER 19, 2004 643

Chico-Nazario, J., On Leave.

Petition granted, judgment and resolution reversed and set aside.

Note.—Company policies and regulations are, unless shown to be grossly oppressive or

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