G.R. No. 171189 ; March 9, 2011
LORES REALTY ENTERPRISES, INC., LORENZO Y. SUMULONG III, Petitioners, vs. VIRGINIA E. PACIA, Respondent.

FACTS

Respondent Virginia E. Pacia was hired by petitioner Lores Realty Enterprises, Inc. (LREI) in 1982 and was the assistant manager and officer-in-charge of its Accounting Department. On October 28, 1998, LREI’s acting general manager, petitioner Lorenzo Y. Sumulong III, directed Pacia to prepare two checks (for ₱150,000.00 and ₱175,000.00) as payment for the company’s obligation to a bank. Pacia did not immediately comply, explaining that the company’s account had insufficient funds to cover the checks, and she wanted to protect LREI from liability under the Bouncing Checks Law. After repeated directives, she eventually prepared the checks. The following day, Sumulong issued a memorandum requiring Pacia to explain her refusal. She submitted a written explanation reiterating her concern about insufficient funds. On November 6, 1998, Pacia was dismissed for willful disobedience and loss of trust and confidence. She filed a complaint for illegal dismissal. The Labor Arbiter found the dismissal valid but ordered payment of unpaid salary and proportionate 13th month pay. The National Labor Relations Commission (NLRC) reversed the Labor Arbiter, ruling that Pacia was illegally dismissed, as her initial refusal was justified and the directive to issue checks against insufficient funds was not a lawful order. The Court of Appeals affirmed the NLRC decision.

ISSUE

Whether the dismissal of respondent Virginia E. Pacia was justified on the ground of willful disobedience of a lawful order.

RULING

No, the dismissal was not justified. The Supreme Court affirmed the decisions of the NLRC and the Court of Appeals, holding that Pacia was illegally dismissed. The Court ruled that for willful disobedience under Article 282 of the Labor Code to be a valid cause for termination, the employer’s order must be lawful and reasonable. The directive to prepare checks despite known insufficiency of funds was not a lawful order, as it would expose the company and its officers to criminal liability under Batas Pambansa Blg. 22 (the Bouncing Checks Law). Pacia’s initial reluctance was a good-faith act intended to protect the company, not a willful or perverse refusal to obey. Consequently, her termination was illegal. The Court upheld the award of backwages (computed from the time of dismissal until finality of the decision) and separation pay in lieu of reinstatement due to strained relations.