PNB v. Dan Padao, GR 180849, November 2011Main Point: While the 1987 Constitution underscores the protection and importance and economic significance of labor when it declared in Art II, Section 18 that it affirms labor as a primary social economic force, and as such, the State is bound to protect the rights of workers and promote their welfare, it is also an employer’s basic right to freely select or discharge its employees, if only as a measure of self-protection against acts inimical to its interest.

Facts: Dan Padao was a credit and loan officer in PNB Dipolog who was allegedly involved in the granting of behest loans, where the collateral was over appraised and the credit standings of the loan applicants were fabricated allowing them to obtain larger loans from PNB causing PNB to suffer millions in losses. After due investigation, PNB found Padao guilty of gross and habitual neglect of duty and ordered him dismissed from the bank. Padao appealed to the banks Board of Directors but was ignored. So after almost 3 years, Padao filed a complaint against the PNB with the NLRC Regional Arbitration Branch (RAB) No. IX in Zamboanga City for  reinstament, backawages, illegal dismissal and treachery/badfaith and palpable discrimination in the Treatment of Employees with administrative cases. 

The ELA found the dismissal valid but still awarded separation pay of one-half (1/2) months pay for every year of service, citing PLDT v. NLRC & Abucay. And further stating that in the case of Padao, there was no clear conclusive showing of moral turpitude and thus he should not be left without any remedy.

 Padao appealed to the NLRC which reversed and declared Padao’s dismissal to be illegal. He was ordered to be reinstated to his previous position without loss of seniority rights and PNB was ordered to pay him full backwages and attorneys fees equivalent to ten percent (10%) of the total monetary award.

 PNB filed an MR but was denied by the NLRC and thus it filed a petition for certiorari with the CA.

Issue: Whether or not Padao was illegally dismissed by PNB.

Held: NO. Padao was not illegally dismissed by PNB as he was terminated under an authorized or just cause as laid down in Article 282 (b - Gross and habitual neglect by the employee of his duties) of the Labor Code which . While the 1987 Constitution underscores the protection and importance and economic significance of labor when it declared in Art II, Section 18 that it affirms labor as a primary social economic force, and as such, the State is bound to protect the rights of workers and promote their welfare, it is also an employer’s basic right to freely select or discharge its employees, if only as a measure of self-protection against acts inimical to its interest. Thus the law sets the valid grounds for termination as well as the proper procedure to be followed when terminating the services of an employee in the Labor Code of the Philippines