ALLIED BANKING CORPORATION VS COURT OF APPEALS

GR 144412 November 18, 2003
Carpio, J.

Nature
CA upheld the Decision and Resolution of National Labor Relations Commission (NLRC) that held
Allied Banking Corporation illegally dismissed Potenciano L. Galanida and subsequently awarded
him separation pay, backwages, moral and exemplary damages and other amounts totalling
P1,264,933.33

Facts

January 11, 1978 Potenciano Galanida was hired by Allied Bank and rose from bookkeeper to
assistant manager in 1991. He was promoted several times and was
transferred to several branches
During a bank rotation, Allied Bank listed Galanida as 2
nd
in order of priority
to be assigned outside of Cebu City having been stationed in Cebu for 7
years
April 19, 1994 Letter to management stating his refusal to be transferred to Bacolod City
with reasons of parental obligations, expenses and anguish while away from
family
June 13, 1994 Allied Bank sent Galanida a letter stating “There is no discrimination in your
transfer X X X only you have refused the new assignment X X X to exempt
you from the office transfer would result in favouritism”

His refusal to transfer would be penalized. Penalty may range from
suspension to dismissal as determined by management (Art. XII of Bank’s
Employee Discipline Policy and Procedure)

“… please explain in writing within 3 days from receipt why no disciplinary
action should be meted against you…”
June16, 1994 Galanida replied “the ulterior motive is to accommodate some new officers
who happen to enjoy favourable connection with management…”
October 4, 1994 Galanida received a Memo dated Sept. 8, 1994 from Allied Bank’s VP for
Personnel. The Memo informed Galanida that his services are being
terminated effective September 1, 1994 on the grounds:
1. Continued refusal to be transferred (insubordination)
2. His refusal to report for work despite the denial of his application for
additional vacation leave
** All benefits that have accrued have been forfeited

Ruling of Labor Arbiter
 Allied Bank has abused its management prerogative in ordering the transfer
 Refusal to transfer did not amount to insubordination
 Misquoted Dosch v. NLRC stating that although it is the prerogative of management, it is
not absolute. “Refusal to obey a transfer order cannot be considered insubordination
where employee cited reason for said refusal…”
 Allied Bank failed to show any business urgency that would justify the transfer
 Awarded separation pay (272K), quarter bonus for 1994 (16K), 13
th
month pay for 1994
(16k) and refund of contribution to provident fund (20K)

Ruling of NLRC
 Termination is without just cause
 The transfer served as a demotion since the Bacolod and Tagbilaran branches were
smaller than the Jakosalem branch
 Unlawful discrimination since it did not transfer several junior accountants
 Termination was illegal for lack of due process: no hearing and failure to send
termination notice
 Awarded separation pay (336K), backwages (833.6K), proportional 13
th
month
(5,333.23), refund of Provident Fund Contribution (20K), moral damages (50K)

Ruling of CA
 Cited and again misquoted Dosch v. NLRC
 Affirmed Ruling of NLRC

August 8, 2000 Allied Bank filed Motion for Reconsideration in CA: DENIED
April 26, 2001 Appealed the CA’s decision and Resolution to SC praying
1. Issuance of TRO or Writ of Preliminary Injunction
2. Declare Galanida’s termination valid and legal
3. Set aside CA’s decision and resolution
4. Make permanent TRO
5. Order Galanida to pay the costs
6. Other equitable reliefs

ISSUES
1. W/N the facts presented has legal basis in petitioner’s exercise of its management
prerogatives? YES
2. W/N respondent’s violations of company rules constitute a ground to warrant dismissal?
YES
3. W/N there is a legal basis to hold that Allied Bank afforded Galanida the required due
process? YES
4. W/N there is a legal basis to hold that Galanida cannot recover any monetary award?


RATIO

Preliminary Matter: Misquoting Decision of Supreme Court

Ruling in Dosch v. NLRC: “X X X petitioner acknowledged receipt of former’s memorandum X X X
appreciated his promotion to Director of International Sales but at the same time regretted “that
at this time for personal reasons and reasons of my family, I am unable to accept the transfer
from the Philippines” X X X From this evidence, We cannot discern even the slightest hint of
defiance, much less imply insubordination on the part of the petitioner.”

The phrase “refusal to obey a transfer order cannot be considered insubordination where
employee cited reason for said refusal, such as that of being away from the family does not
appear anywhere in the Dosch decision. The erroneous phrase is in the syllabus of Dosch found
in the SCRA.

Syllabus of Cases is not the work of the Court nor does it state the Court’s decision.
It is simply the work of the reporter who gives his understanding of the decision. It
is for the convenience of lawyers in reading the reports. A counsel should not cite a
syllabus in place of the original text of the decision. It is at least patent carelessness,
if not an outright attempt to mislead the parties and the courts taking cognizance of
this case.

Whether Galanida was dismissed for just cause?
The Court gives weight and even finality to the factual findings of CA or lower courts except
when:
1. Findings are grounded on speculation, surmise and conjecture
2. Inference made is manifestly mistaken, absurd or impossible
3. Grave abuse of discretion in appreciation of facts
4. Factual findings of trial and appellate courts are conflicting
5. When CA has gone beyond the issues of the case and such findings are contrary to the
admissions of both appellant and appellee
6. When judgment of the appellate court is premised on misapprehension of facts or failed
to consider certain relative facts which when properly considered, will justify a different
conclusion
7. Findings of fact are conclusions without citation of specific evidence
8. Findings of CA are premised on the absence of evidence but are contradicted by the
evidence on record

In illegal dismissal cases, the employer has the burden of showing that the transfer is not
unnecessary, inconvenient and prejudicial to the displaced employee.

 Galanida was aware of bank’s policy of periodical transfer to other branches
 No discrimination to the transfer of Galanida because there were at least 14 other
accounting officers transferred
 Galanida was 2
nd
in line for assignment because he had been in Cebu for seven years
already. The 1
st
in line has been in Cebu for more than 10 years.
 Galanida’s transfer was not a demotion. No evidence of diminution of salary, benefits or
other privileges.
 Dosch is not applicable. Dosch refused a transfer consequential to a promotion. The
Court upheld the refusal because no law compels an employee to accept a promotion and
the position did not even exist at that time. The transfer of an employee to an overseas
post cannot be likened to a transfer from one city to another within same country,
distance-wise.
 CONCLUSION: Refusal to obey a valid transfer order constitutes wilful disobedience of a
lawful order of an employer. Galanida is not entitled to reinstatement or separation pay

Whether Galanida’s dismissal violated the requirement of notice and hearing?
For termination of employment based on just cause, there must be:
1. Written notice served on the employee specifying the ground or grounds for termination
and giving the said employee reasonable opportunity to explain his side.
- The first written notice was the letter on June 13, 1994 (see above)
- The Court has held that the essence of due process is simply an opportunity to be
heard, therefore actual hearing is not necessary. The letter dated June 16, 1994
would suffice as an opportunity of Galinada to explain his side.
2. A hearing or conference during which the employee concerned, with the assistance of
counsel if he so desires is given opportunity to respond to the charge
3. Written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
- Memo dated September 8, 1994 constitutes written notice of termination.
- He was unequivocally informed of decision to dismiss him stating “please be informed
that the Bank has terminated your services effective September 1, 1994…”
- Although captioned “Transfer and Reassignment” it did not preclude it from being a
notice of termination
- However, this notice suffered from certain errors.
o Written notice must be served on the employee
o Galanida’s dismissal could only take effect on October 5, 1994 upon his receipt
of Memo. Therefore, he is entitled to backwages for the period of September
1, 1994 to October 4, 1994
o Nominal damages of P10,000 to recognize or vindicate the right of a person
that another has violated. The law entitles Galanida to receive timely notice of
Allied Bank’s decision to dismiss him.

Decision
1. Decision by CA is MODIFIED
o No more separation pay, moral and exemplary damages for lack of basis
o Reducing award of backwages to cover only Sept 1, 1994 to October 4, 1994
o Nominal damages of P10,000
2. Case REMANDED to Labor Arbiter for computartion of backwages, within 30 days from
receipt of this Decision
3. Labor arbiter Dominador Almirante and Atty. Loreto Durano are ADMINISHED to be more
careful in citing the decisions of the SC in the future