G.R. No. 72805 February 28, 1990
FILIPINAS MANUFACTURERS BANK, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION AND LUISITO FLORES, respondents.

FACTS

Luisito Flores was employed by Filipinas Manufacturers Bank in 1964 and was promoted to Branch Accountant. In August 1976, a Central Bank audit found the Shaw Boulevard Branch’s books in order. Subsequently, an internal audit by the bank allegedly discovered irregularities, leading to criminal charges against Flores and other officials. On September 29, 1976, Flores was transferred to the Head Office. When he attempted to collect his salary for October 16-31, 1976, it was withheld without explanation. After inquiry, the bank’s legal department disclaimed any official order for the withholding but stated he would be reinstated if found innocent. Flores later received his salary, but his pay for November 1-15, 1976, was again withheld, and he was allegedly informed of his suspension effective November 4, 1976, leading to his eventual dismissal.
The bank contended the dismissal was legal under Article 283 of the Labor Code for gross negligence and loss of trust and confidence, arguing that as Branch Accountant, Flores failed to detect anomalies causing a P2 million loss, indicating gross incompetence or participation. Flores argued his suspension and dismissal were illegal, done in bad faith, and without proper notice or hearing.

ISSUE

Whether the suspension and subsequent dismissal of Luisito Flores were legal.

RULING

The Supreme Court ruled the dismissal was illegal. While management has the prerogative to dismiss a managerial employee for just causes like loss of trust and confidence, this must be exercised without abuse of discretion and with compassion, considering the employee’s livelihood and constitutional right to security of tenure. The Labor Arbiter and NLRC found no basis for the bank’s claim of loss of confidence, and the Court found no grave abuse of discretion in this finding. Evidence failed to substantiate the claim; mere assertion is insufficient. The bank argued Flores was grossly negligent, but the Court held dismissal was too harsh a penalty for a first offense after twelve years of unblemished service without prior warning or reprimand. The penalty was not commensurate with the alleged misconduct. Due process requirements of notice and hearing were also not satisfied. The Court affirmed the NLRC’s decision, ordering Flores’s reinstatement to his former position or a similar one with equivalent compensation and payment of three years’ backwages from the time of dismissal. The petition was dismissed.