Continued existence

Can an employee be dismissed for offenses committed during her employment in a government owned or controlled corporation which were subsequently discovered by same corporation after it was privatized and after it rehired her? This is one of the questions answered in this case of Lucy.

Lucy started as a probationary clerk of the Philippine National Bank (PNB), then a government owned bank, on December 4, 1967. She rose from ranks and eventually became an Assistant Department Manager I by 1996. On May 26, 1996, when PNB was privatized, Lucy and her co-employees were deemed automatically retired. After clearing Lucy of any accountability, PNB computed her gratuity benefits, the monetary value of her leave credits and other benefits due her.

The next day May 27, 1996, however, the new management of the privatized PNB rehired Lucy and assigned her in a branch where she had been previously assigned. But less than four months later, the new management discovered that Lucy had committed several offenses and thus charged her administratively with serious misconduct, willful breach of trust and gross violation of the bank’s rules and regulations for: taking part in a “kiting operation” from January 2 to April 3, 1996 while she was assistant department manager in said branch; issuing six certificates of deposits between June 5,1992 to January 10, 1996 in amounts exceeding the balance of the deposits; for issuing two bank commitments dated January 24, 1994 and providing a credit line in favor of a government contractor without authority; and for tardiness and “under time” from October to December 1995.

In answer, Lucy denied the charges and explained that her actions were merely accommodations given to valued clients for business development with the knowledge and consent of the Manager and Comptroller where the bank did not suffer any loss; that she could not be guilty of tardiness and “under time” because she was a bank officer, aside from the fact that deductions were already made for such tardiness; and that these causes took place when she was yet a government official and since she already retired from government service, the employment that could be terminated no longer existed.

After due investigation however the new PNB management dismissed her from work for willful breach of trust and withheld her fringe benefits, gratuity benefits, monetary value of her leave credits, rights and interests in the provident fund and other benefits due her as of May 26, 1996. Was PNB correct?

It is correct in dismissing her for willful breach of trust but wrong in withholding her monetary benefits upon her retirement on May 26, 1996.

While PNB began as a government corporation, it did not mean that its corporate being ceased and was subsequently reestablished when it was privatized. It remained the same corporate entity before, during and after the change over with no break in its life as a corporation. Consequently the offenses committed by Lucy against the bank before its privatization continued to be offenses against the bank after privatization except that the Labor Code already governs its disciplinary action since it was already a private corporation when it looked into Lucy’s offenses.

As to the existence of a just cause, it is clear that Lucy admitted committing the acts or omissions constituting the offenses. Her uncorroborated defense is unsatisfactory, revealing a mind that was willing to disregard bank rules and regulations when other branch officers concurred. That the bank did not suffer any loss is of no moment. The focal point is that she betrayed the trust of the bank in her fidelity to its interest and rules. So the PNB rightfully separated her from work for willful breach of trust under the Labor Code.

But the PNB is wrong in withholding the monetary benefits due Lucy as of May 26, 1996 when she was automatically retired. Although the transformation of the PNB from a government owned corporation to a private one did not result in a break in its life as a juridical person, the same cannot be said of its employees. Section 27 of Proclamation 50 provided for the automatic termination of employer-employee relationship upon privatization of government owned and controlled corporation. It also provides that such privatization cannot deprive government employees involved, of their accrued benefits or compensation. Here when PNB was privatized Lucy’s employment with it as a government owned and controlled corporation ceased. In fact the PNB already computed the benefits due her and readied their payment after clearing her of any accountability. In the eyes of the law her record as employee of PNB was untarnished at the time of her separation from it when it was still government owned and controlled. Hence all those benefits already accrued to her on the date of her termination even if PNB as privatized immediately rehired her (Ang vs. PNB, G.R. 178762, June 16, 2010). –Jose C. Sison (The Philippine Star)

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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E-mail at: jcson@pldtdsl.net