Republic of the
SUPREME COURT
SECOND DIVISION
MARILOU S. GENUINO, G.R. Nos. 142732-33
Petitioner,
Present:
- versus -
QUISUMBING,
J., Chairperson,
CARPIO,
NATIONAL LABOR RELATIONS CARPIO
MORALES,
COMMISSION, CITIBANK, N.A., TINGA,
and
WILLIAM
AZIZ RAJKOTWALA,
Respondents.
x
------------------------------------------- x
CITIBANK, N.A., WILLIAM G.R. Nos. 142753-54
RAJKOTWALA,
Petitioners,
- versus - Promulgated:
NATIONAL LABOR RELATIONS
COMMISSION and MARILOU
GENUINO,
Respondents.
x-----------------------------------------------------------------------------------------x
D E C I S I
O N
VELASCO, JR., J.:
The Case
This Petition for Review on
Certiorari under Rule 45 seeks to set aside the September 30, 1999 Decision[1]
and March 31, 2000 Resolution[2] of
the Court of Appeals (CA) in the consolidated cases docketed as CA-G.R. SP Nos.
51532 and 51533. The appellate court
dismissed the parties’ petitions involving the National Labor Relations Commission’s
(NLRC’s) Decision[3] and Resolution,[4]
which held that Marilou S. Genuino was validly dismissed by Citibank, N.A.
(Citibank). The NLRC likewise ordered the payment of salaries from the time
that Genuino was reinstated in the payroll to the date of the NLRC
decision. Upon reconsideration, however,
the CA modified its decision and held that Citibank failed to observe due
process in CA-G.R. SP No. 51532; hence, Citibank should indemnify Genuino in
the amount of PhP 5,000. Both parties
are now before this Court assailing portions of the CA’s rulings. In G.R. Nos. 142732-33, Genuino assails the
CA’s finding that her dismissal was valid.
In G.R. Nos. 142753-54, Citibank questions the CA’s finding that
Citibank violated Genuino’s right to procedural due process and that Genuino
has a right to salaries.
Citibank is an American banking
corporation duly licensed to do business in the
Genuino was employed by Citibank sometime
in January 1992 as Treasury Sales Division Head with the rank of Assistant
Vice-President. She received a monthly
compensation of PhP 60,487.96, exclusive of benefits and privileges.[6]
On
Genuino wrote Citibank on
a.
Confront our client with the factual and legal basis of
your charges, and afford her an opportunity to explain;
b.
Substantiate your charge of fraudulent transactions
against our client; or if the same cannot be substantiated;
c. Correct/repair/compensate the damage you have caused our client.[8]
On
As you are well aware, the bank served you a letter dated August 23, 1993 advising you that ongoing investigations show that you are involved and/or know of irregular transactions which are at the very least in conflict with the bank’s interest, and, may even be fraudulent in nature.
These transactions are those involving Global Pacific and/or Citibank and the following bank clients, among others:
1. Norma T. de Jesus
2. Carmen Intengan/Romeo Neri
3. Mario Mamon
4.
5. William Samara
6. Roberto Estandarte
7. Rita Browner
8. Ma. Redencion Sumpaico
9. Cesar Bautista
10. Teddy Keng
11. NDC-Guthrie
12. Olivia Sy
In view of the foregoing, you are
hereby directed to explain in writing three (3) days from your receipt hereof
why your employment should not be terminated in view of your involvement in
these irregular transactions. You are
also directed to appear in an administrative investigation of the matter which
is set on
Genuino’s counsel replied through a
letter dated
1.2. [T]he bank has no intention of converting the
administrative investigation of this case to a full blown trial. What it is prepared to do is give your
client, as required by law and Supreme Court decisions, an opportunity to
explain her side on the issue of whether she violated the conflict of interest
rule—either in writing (which could be in the form of a letter-reply to the
September 13, 1993 letter to Citibank, N.A.) or in person, in the
administrative investigation which is set for tomorrow afternoon vis-à-vis the
bank clients/parties mentioned in the letter of Citibank, N.A.
x x x x
2.2. You will certainly
not deny that we have already fully discussed with you what is meant by the
conflict with the bank’s interest vis-à-vis the bank clients/parties named in
the
Genuino did not appear in the
administrative investigation held on
On
Genuino’s employment was terminated
by Citibank on grounds of (1) serious misconduct, (2) willful breach of the
trust reposed upon her by the bank, and (3) commission of a crime against the
bank.[13]
On October 15, 1993, Genuino filed
before the Labor Arbiter a Complaint[14]
against Citibank docketed as NLRC Case No. 00-10-06450-93 for illegal
suspension and illegal dismissal with damages and prayer for temporary
restraining order and/or writ of preliminary injunction. The Labor Arbiter rendered a Decision[15]
on
WHEREFORE, finding the dismissal of the complainant Marilou S. Genuino to be without just cause and in violation of her right to due process, respondent CITIBANK, N.A., and any and all persons acting on its behalf or by or under their authority are hereby ordered to reinstate complainant immediately to her former position as Treasury Sales Division Head or its equivalent without loss of seniority rights and other benefits, with backwages from August 23, 1993 up to April 30, 1994 in the amount of P493,800.00 (P60,000 x 8.23 mos.) subject to adjustment until reinstated actually or in the payroll.
Respondents are likewise ordered to pay complainant the amount of 1.5 Million Pesos and P500,000.00 by way of moral and exemplary damages plus 10% of the total monetary award as attorney’s fees.[16]
Both parties appealed to the NLRC.
The NLRC, in its
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the appealed decision of the Labor Arbiter; (2) DECLARING the dismissal of the complainant valid and legal on the ground of serious misconduct and breach of trust and confidence and consequently DISMISSING the complaint a quo; but (3) ORDERING the respondent bank to pay the salaries due to the complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of this decision.
SO ORDERED.[17]
The parties’ motions for
reconsideration were denied by the NLRC in a resolution dated
The Ruling of the Court of Appeals
On
Genuino’s petition before the CA was
docketed as CA-G.R. SP No. 51532 while Citibank’s petition was docketed as
CA-G.R. SP No. 51533. Genuino prayed for
the reversal of the NLRC’s decision insofar as it declared her dismissal valid
and legal. Meanwhile, Citibank
questioned the NLRC’s order to pay Genuino’s salaries from the date of
reinstatement until the date of the NLRC’s decision.
The CA promulgated its decision on
WHEREFORE, save for the MODIFICATION ordering Citibank, N.A. to pay Ms. Marilou S. Genuino five thousand pesos (P5,000.00) as indemnity for non-observance of due process in CA-G.R. SP No. 51532, this Court’s 30 September 1999 decision is REITERATED and AFFIRMED in all other respects.
SO ORDERED.[21]
Hence, we have this petition.
The Issue
WHETHER OR NOT THE DISMISSAL OF GENUINO IS FOR A JUST CAUSE AND IN ACCORDANCE WITH DUE PROCESS
In G.R. Nos. 142732-33, Genuino
contends that Citibank failed to observe procedural due process in terminating
her employment. This failure is
allegedly an indication that there were no valid grounds in dismissing her. In G.R. Nos. 142753-54, Citibank questions
the ruling that Genuino has a right to reinstatement under Article 223 of the
Labor Code. Citibank contends that the
Labor Arbiter’s finding is not supported by evidence; thus, the decision is
void. Since a void decision cannot give
rise to any rights, Citibank opines that there can be no right to payroll
reinstatement.
The dismissal was for just cause but lacked
due process
We affirm that Genuino was dismissed
for just cause but without the observance of due process.
In
a string of cases, [22] we have repeatedly said that the
requirement of twin notices must be met.
In the recent case of King of
Kings Transport, Inc. v. Mamac, we explained:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.
(2) After serving the first
notice, the employers should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the
chance to defend themselves personally, with the assistance of a representative
or counsel of their choice. Moreover, this conference or hearing could be used
by the parties as an opportunity to come to an amicable settlement.
(3) After determining that
termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been considered; and (2)
grounds have been established to justify the severance of their employment.[23]
The Labor Arbiter found that Citibank
failed to adequately notify Genuino of the charges against her. On the contrary, the NLRC held that “the
function of a ‘notice to explain’ is only to state the basic facts of the
employer’s charges, which x x x the letters of September 13 and 17, 1993 in
question have fully served.”[24]
We agree with the CA that the
dismissal was valid and legal, and with its modification of the NLRC ruling
that PhP 5,000 is due Genuino for failure of Citibank to observe due process.
The Implementing Rules and
Regulations of the Labor Code provide that any employer seeking to dismiss a
worker shall furnish the latter a written notice stating the particular acts or
omissions constituting the grounds for dismissal.[25] The purpose of this notice is to sufficiently
apprise the employee of the acts complained of and enable him/her to prepare
his/her defense.
In this case, the letters dated
August 23, September 13 and 20, 1993 sent by Citibank did not identify the particular acts or omissions allegedly committed by Genuino. The
While the bank gave Genuino an
opportunity to deny the truth of the allegations in writing and participate in
the administrative investigation, the fact remains that the charges were too
general to enable Genuino to intelligently and adequately prepare her
defense.
The two-notice requirement of the Labor Code is an essential part of due process. The first notice informing the employee of the charges should neither be pro-forma nor vague. It should set out clearly what the employee is being held liable for. The employee should be afforded ample opportunity to be heard and not mere opportunity. As explained in King of Kings Transport, Inc., ample opportunity to be heard is especially accorded the employees sought to be dismissed after they are specifically informed of the charges in order to give them an opportunity to refute such accusations leveled against them. Since the notice of charges given to Genuino is inadequate, the dismissal could not be in accordance with due process.
While we hold that Citibank failed to
observe procedural due process, we nevertheless find Genuino’s dismissal
justified.
Citibank maintains that Genuino was
aware of the bank’s Corporate Policy Manual specifically Chapter 3 on
“Principles and Policies” with regard to avoiding conflicts of interest. She had even submitted a Conflict of Interest
Survey to Citibank. In that survey, she
denied any knowledge of engaging in transactions in conflict with Citibank’s
interests. Citibank, for its part,
submitted evidence showing 99% ownership of Global stocks by Genuino and
We note also that during the
proceedings before the Labor Arbiter, Citibank presented the following
affidavits, with supporting documentary evidence against Genuino:
1) Vic Lim, an officer of Citibank
who investigated the anomalies of Genuino and
1)
[S]ome of the Term Investment Applications (TIA),
Applications for Money Transfer, all filled up in the handwriting of Ms.
Marilou Genuino. These documents
cover/show the transfer of the monies of the Citibank clients from their money
placements/deposits with Citibank, N.A. to Global and/or
2)
[S]ome of the checks that were drawn by Global and
3)
[S]ome of the checks drawn by the other companies in
favor of Global or
4)
[S]ome of the checks drawn by Global and
5) [S]ome of the checks drawn by Torrance and Global in favor of Citibank clients by which Global and Torrance remitted back to said bank clients their principal investments (or portions thereof) and the rates of interests realized from their investment placed with the other companies less the spreads made by Global and/or Torrance, Mr. Dante L. Santos and Ms. Marilou Genuino.[29]
In Lim’s Reply-Affidavit with
attached supporting documents, he stated that out of the competing money
placement activities, Genuino and
2)
Marilyn Bautista, a Treasury
Sales Specialist in the Treasury Department of the Global Consumer Bank of
Citibank and whose superiors were Genuino and
Based on documents that have subsequently come to my
knowledge, I realized that the two (Genuino and Dante L. Santos), with the
active cooperation of Redencion Sumpaico (the Accountant of Global) had …
brokered for their own benefits and/or of Global the sale of the financial
products of Citibank called “Mortgage Backed Securities” or MBS and in the
process made money at the expense of the (Citibank) investors and the bank.[31]
3) Patrick
Cheng attested to other transactions from which Genuino,
In her defense, Genuino asserts that
Citibank has no evidence of any wrongful act or omission imputable to her. According to her, she did not try to conceal
from the bank her participation in Global and she even disclosed the information
when Global designated Citibank as its depositary. She avers there was no conflict of interest
because Global was not engaged in Citibank’s accepting deposits and granting
loans, nor in money placement activities that compete with Citibank’s
activities; and neither does Citibank invest in the outlets used by
Global. She claims that the controversy between
Genuino further asserts that the
letter of termination did not indicate what existing company policy had been
violated, and what acts constituted serious misconduct or willful breach of the
trust reposed by the bank. She claims
that Lim’s testimony that the checks issued by Global in her name were profits was
malicious, hearsay, and lacked factual basis.
She also posits that as to the withdrawals of clients, she could not
possibly dictate on the depositors. She
pointed out that the depositors even sent Citibank a letter dated
Contrary to the Labor Arbiter’s
finding, the NLRC found the following facts supported by the records:
a)
Respondent bank has a conflict of interest rule,
embodied in Chapter 3 of its Corporate Policy Manual, prohibiting the officers
of the bank from engaging in business activities, situations or circumstances
that are in conflict with the interest of the bank.
b) Complainant was familiar with said conflict of interest rule of the bank and of her duty to disclose to the bank in writing any personal circumstances which conflicts or appears to be in conflict with Citibank’s interest.
c) Complainant is a substantial stockholder of Global Pacific, but she did not disclose fact to the bank.
d) Global Pacific is engaged in money placement business like Citibank, N.A.; that in carrying out its said money placement business, it used funds belonging to Citibank clients which were withdrawn from Citibank with participation of complainant and Dante L. Santos. In one transaction of this nature, P120,000,000.00 belonging to Citibank clients was withdrawn from Citibank, N.A. and placed in another foreign bank, under the control of Global Pacific. Said big investment money was returned to Citibank, N.A. only when Citibank, N.A. filed an injunction suit.
e) Global Pacific also engaged in the brokering of the ABS or MBS, another financial product of Citibank. It was the duty of complainant Genuino and Dante L. Santos to sell said product on behalf of Citibank, N.A. and for Citibank N.A.’s benefit. In the brokering of the ABS or MBS, Global Pacific made substantial profits which otherwise would have gone to Citibank, N.A. if only they brokered the ABS or MBS for and on behalf of Citibank, N.A.
Art. 282(c) of the Labor Code
provides that an employer may terminate an employment for fraud or willful
breach by the employee of the trust reposed in him/her by his/her employer or
duly authorized representative. In order
to constitute as just cause for dismissal, loss of confidence should relate to
acts inimical to the interests of the employer.[35] Also, the act complained of should have
arisen from the performance of the employee’s duties.[36] For loss of trust and confidence to be a
valid ground for an employee’s dismissal, it must be substantial and not
arbitrary, and must be founded on clearly established facts sufficient to
warrant the employee’s separation from work.[37] We also held that:
[L]oss
of confidence is a valid ground for dismissing an employee and proof beyond
reasonable doubt of the employee’s misconduct is not required. It is sufficient if there is some basis for
such loss of confidence or if the employer has reasonable ground to believe or
to entertain the moral conviction that the employee concerned is responsible
for the misconduct and that the nature of his participation therein rendered
him unworthy of the trust and confidence demanded by his position.[38]
As Assistant Vice-President of
Citibank’s Treasury Department, Genuino was tasked to solicit investments, and peso
and dollar deposits for, and keep them in Citibank; and to sell and/or push for
the sale of Citibank’s financial products, such as the MBS, for the account and
benefit of Citibank.[39] She held a position of trust and confidence. There is no way she could deny any knowledge
of the bank’s policies nor her understanding of these policies as reflected in the
survey done by the bank. She could not
likewise feign ignorance of the businesses of Citibank, and of Global and
All the pieces of evidence compel us
to conclude that Genuino did not have her employer’s interest. The letter of the bank’s clients which
attested that the withdrawals from Citibank were made upon their instructions is
of no import. It did not explain why
they preferred to invest in Global and
6. Contrary to the allegations of Mr. Lim in par. 6.1 up to 8.1 concerning the alleged scheme employed in the questioned transactions, insinuating an “in” and “out” movement of funds of the seven (7) depositors, the truth is that after said “depositors” instructed/authorized us to effect the withdrawal of their respective monies from Citibank to attain the common goal of higher yields utilizing Global as the vehicle for bulk purchases of securities or papers not dealt with/offered by Citibank, said pooled investment remained with Global, and were managed through Global for over a year until the controversy arose;
10. The seven (7) “depositors” mentioned in Mr. Lim’s Affidavits are the long-time friends of affiant Genuino who had formed a loosely constituted investment group for purposes of realizing higher yields derivable from pooled investments, and as the advisor of the group she had in effect chosen Citibank as the initial repository of their respective monies prior to the implementation of plans for pooled investments under Global. Hence, she had known and dealt with said “depositors” before they became substantial depositors of Citibank. She did not come across them because of Citibank.[40] (Emphasis supplied.)
All told, Citibank had valid grounds
to dismiss Genuino on ground of loss of confidence.
In view of Citibank’s failure to
observe due process, however, nominal damages are in order but the amount is
hereby raised to PhP 30,000 pursuant to Agabon
v. NLRC. The NLRC’s order for
payroll reinstatement is set aside.
In Agabon, we explained:
The violation of the petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.[41]
Thus, the award of PhP 5,000 to
Genuino as indemnity for non-observance of due process under the CA’s
Anent the directive of the NLRC in
its September 3, 1994 Decision ordering Citibank “to pay the salaries due to the
complainant from the date it reinstated complainant in the payroll (computed at
P60,000.00 a month, as found by the Labor Arbiter) up to and until the date of
this decision,” the Court hereby cancels said award in view of its finding that
the dismissal of Genuino is for a legal and valid ground.
Ordinarily, the employer is required
to reinstate the employee during the pendency of the appeal pursuant to Art.
223, paragraph 3 of the Labor Code, which states:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.
If the decision of the labor arbiter
is later reversed on appeal upon the finding that the ground for dismissal is
valid, then the employer has the right to require the dismissed employee on
payroll reinstatement to refund the salaries s/he received while the case was
pending appeal, or it can be deducted from the accrued benefits that the
dismissed employee was entitled to receive from his/her employer under existing
laws, collective bargaining agreement provisions, and company practices.[42] However, if the employee was reinstated to
work during the pendency of the appeal, then the employee is entitled to the compensation
received for actual services rendered without need of refund.
Considering that Genuino was not
reinstated to work or placed on payroll reinstatement, and her dismissal is
based on a just cause, then she is not entitled to be paid the salaries stated in
item no. 3 of the fallo of the September 3, 1994 NLRC Decision.
WHEREFORE, the petitions of Genuino in G.R. Nos. 142732-33 are DENIED for lack of merit. The petitions of Citibank in G.R. Nos. 142753-54 are GRANTED. The September 30, 1999 Decision and
WHEREFORE, Judgment is hereby rendered (1) SETTING ASIDE the
appealed decision of the Labor Arbiter; (2) DECLARING the dismissal of the
complainant valid and legal on the ground of serious misconduct and breach of
trust and confidence and consequently DISMISSING the complaint a quo; but (3) ORDERING
the respondent bank to pay the complainant nominal damages in the amount
of PhP 30,000.
SO ORDERED.
PRESBITERO
J. VELASCO, JR.
Associate Justice
WE CONCUR:
LEONARDO A.
QUISUMBING
Associate Justice
Chairperson
ANTONIO T.
CARPIO CONCHITA
CARPIO MORALES
Associate Justice
Associate Justice
DANTE O. TINGA
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
C E R T I F
I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo (G.R. Nos. 142732-33), pp.
66-77. Penned by J. Hector L. Hofileña
and concurred in by Associate Justices Omar U. Amin and Jose L. Sabio, Jr.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19] G.R.
No. 130866,
[20] Rollo (G.R. Nos. 142732-33), p. 76.
[22] Voyeur Visage Studio, Inc. v. CA, G.R. No. 144939, March 18, 2005, 453 SCRA 731; citing Colegio de San Juan de Letran-Calamba v. Villas, G.R. No. 137795, March 26, 2003, 399 SCRA 550, 555; Kingsize Manufacturing Corporation v. NLRC, G.R. Nos. 110452-54, November 24, 1994, 238 SCRA 349.
[24] Rollo (G.R. Nos. 142732-33), p. 112.
[25] Book V, Rule XIV, Sec. 2.
[26] Citibank
filed with the RTC of Makati an injunction case against Dante L. Santos and
INB. Thereafter, Citibank executed a
compromise agreement with Dante L. Santos, Global and
[27] Sec. 31. x x x When a director, trustee or officer attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence, as to which equity imposes a disability upon him to deal in his own behalf, he shall be liable as a trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation.
Sec. 144. Violations of the Code.—Violations of any of the provisions of this Code or its amendments not otherwise specifically penalized therein shall be punished by a fine of not less than one thousand (P1,000.00) pesos but not more than ten thousand (P10,000.00) pesos or by imprisonment for not less than thirty (30) days but not more than five (5) years, or both, in the discretion of the court.
[28] Rollo
(G.R. Nos. 142732-33), pp.
613-655.
[29]
[30]
[31]
[32]
[33]
[34]
[35] Tabacalera
Insurance Co. v. NLRC, No. L-72555,
[36] Equitable
Banking Corporation v. NLRC, G.R. No. 102467,
[37] Labor
v. NLRC, G.R. No. 110388,
[38] Reyes
v. Minister of Labor, G.R. No. 47805,
[39] Rollo
(G.R. Nos. 142732-33), p.
642.
[40]
[41] G.R.
No. 158693,
[42] Implementing Rules of the Labor Code, Book VI, Rule 1, Sec. 7.