Tabuk Multipurpose Cooperative, Inc. (TAMPCO) vs. Duclan
G.R. No. 203005, March 14, 2016


Petitioner Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) is a duly registered cooperative based in Tabuk City, Kalinga.  It is engaged in the business of  obtaining  investments  from  its  members  which  are  lent  out  to  qualified member-borrowers. Respondent Magdalena Duclan was employed as TAMPCO Cashier. In 2002, TAMPCO introduced Special Investment Loans (SILs) to its members and prospective borrowers.  Among those who availed themselves of the SILs were Brenda Falgui (Falgui) and Juliet Kotoken (Kotoken).

In June 2003, the TAMPCO BOD issued Board Action (BA) No. 28 which limited the grant of SILs to P5 million and instructed management to collect outstanding loans and thus reduce the amount of loans granted to allowable levels. However, despite said board action, SILs were granted to Falgui and Kotoken over and above the ceiling set.  This prompted the BOD to issue BA No. 55 completely halting the grant of SILs pending collection of outstanding loans. Despite issuance of BA No. 55, however, additional SILs were granted to Falgui amounting to P6,697,000.00 and to Kotoken amounting to P3.5 million. Eventually, Falgui filed for insolvency while Kotoken failed to pay back her loans.

AMPCO indefinitely suspended respondent and other cooperative officials and required them to replace the amount of P6 million representing unpaid loans.  Subsequently, respondent’s suspension was fixed at 15 days, and she was ordered to return to work on March 15, 2004. Respondent submitted to the TAMPCO BOD fact-finding committee a letter, admitting that despite the issuance of BA No. 55, she and her co-respondents approved and released SILs, and that she acknowledged responsibility therefor.

The BOD adopted the report of the committee and ordered that respondent be suspended; respondent was likewise  directed  to  collect,  within  the  said  period,  the unauthorized SIL releases she made, otherwise she would be terminated from employment. Unable to collect or account for the P1.5 million as required, respondent was dismissed from employment. Respondent filed a case for illegal dismissal with money claims.

LA Ruling:

The LA held that respondent was legally suspended, then illegally dismissed.  In view of the fact that this decision was a collective act of the Board of Directors and Officers of the respondent, they, as well as the respondent Cooperative, are hereby  jointly  and  severally  held  liable  to  pay  to  the complainant.

The LA found that respondent’s  first  suspension  was  for  an  indefinite period, hence illegal; respondent was not accorded the opportunity to explain her side before she was meted the penalty of suspension; the second suspension was illegal because it was beyond 30 days; respondent was suspended twice for the same infraction; the letter informing respondent of her termination is redundant since respondent has been deemed constructively dismissed as early as February 23, 2004 when she was indefinitely suspended; as  cashier, respondent’s signing of the check before its release is merely ministerial; she has no hand in the processing or approval of the loans; TAMPCO had previously tolerated the practice of releasing loans ahead of the processing of vouchers and board approval and during the prohibited period; and petitioners did not terminate respondent’s co-workers who were charged with committing the same infraction.

NLRC Ruling:

The  NLRC  noted  that  petitioners already  modified  the  period  from  being  indefinite  to  only  15  days  and  that respondent  was  properly  paid  her  wages  corresponding  to  said  period  of suspension. Thus, there was no need to discuss the validity of said suspension. Regarding the second suspension, the NLRC found the same as illegal considering that it was imposed as a penalty and not as a preventive suspension pending investigation of her administrative liability.

However, as regards her dismissal from service, the NLRC found the same as valid and for cause.  The NLRC opined that respondent was notified of the investigation to be conducted by the Fact-Finding Committee; the notice apprised her that she was being charged with: (1) violation of BA No. 55 stopping the giving of SILs; (2) violation of BA No. 28 limiting the individual grant of SIL to P5 million; and (3) violation of lending policies requiring the consent of spouse in the granting of loans.  Respondent was given the opportunity to answer the charges against her.  In fact, she admitted having released SILs despite the board resolution discontinuing the same. Despite this admission, petitioners continued with the investigation. Respondent moved to reconsider.  However, it was denied prompting her to file petition for certiorari with the CA.

CA Ruling:

The CA reversed and set aside the Decision of the NLRC.

The CA held that respondent’s dismissal was illegal; that she was not guilty of violating her duties and responsibilities as Cashier; that she was under the supervision of the cooperative’s Finance and Credit Managers, who are primarily responsible for the approval of loan applications; that as Cashier, she was a mere co-signatory of check releases and simply acts as a “check and balance on the power and  authority  of  the  General  Manager;”  that  she  does  not exercise discretion on the matter of SILs – specifically the assessment, recommendation, approval and granting thereof; that only the Loan Officers, as well as the Credit, Finance, and General Managers, have a direct hand in the evaluation, assessment and approval of SIL applications, including their required attachments/documents; that while the questioned SILs were released without the approval of the BOD, such  practice  was  sanctioned  and  had  been  adopted  and  tolerated  within TAMPCO ever since; that it is unjust to require respondent to pay the amounts released to SIL borrowers but which could no longer be collected; that it was unfair  to  condemn  and  punish  respondent  for  the  anomalies,  while  her  co-respondents, particularly the former General Manager, was given a graceful exit, honorably discharged, and was even allowed to collect his retirement benefits in full; that respondent’s suspension from November 8 to December 31, 2004 was illegal; and that petitioners failed to comply with the twin-notice rule prior to her dismissal.

Petitioners filed a Motion for Reconsideration, but the CA denied the same in its July 11, 2012 Resolution.  Hence, the present Petition.


Whether or not the dismissal for willful disobedience was valid

SC Ruling:

The SC granted the petition.

The persistent refusal of the employee to obey the employer’s lawful order amounts to willful disobedience.  Indeed, “[o]ne of the fundamental duties of an employee is to obey all reasonable rules, orders and instructions of the employer.  Disobedience, to be a just cause for termination, must be willful or intentional, willfulness being  characterized by  a  wrongful  and  perverse  mental  attitude rendering the employee’s act inconsistent with proper subordination.

Respondent cannot pretend to ignore the clear mandate of BA Nos. 28 and 55 and justify her actions in releasing the loan proceeds to borrowers by claiming that she had  no  choice  but  to  release  the  loan  proceeds  after  the SIL loan applications were evaluated and approved by the loan investigator, the Credit Committee, and the General Manager.  These officers were themselves bound to abide by BA Nos. 28 and 55 – they, just as respondent, are subordinate to the TAMPCO BOD.

An employee’s willful and repeated disregard of a resolution issued by a cooperative’s board of directors (BOD) declaring a moratorium on the approval and release of loans, thus placing the resources of the cooperative and ultimately the hard-earned savings of its members in a precarious state constitutes willful disobedience which justifies the penalty of dismissal under Article 282 of the Labor Code.

The Court likewise finds that in dismissing respondent, petitioners observed the requirements of due process.  An investigation was conducted by a fact-finding committee; respondent and  her  colleagues  were  summoned  and  required  to explain  –  and  they  did;  respondent  submitted  an  October  21,  2004  letter acknowledging and confessing her wrongdoing – that despite BA No. 55, she and her colleagues continued to approve and release SILs.  After the investigation proceedings, the committee  prepared  a  detailed  Report  of  its  findings.

As to unfair for TAMPCO to treat respondent differently from the former General Manager, who was permitted to retire and collect his benefits in full, management is not precluded from condoning the infractions of its employees; as with any other legal right, the management prerogative to discipline employees and impose punishment may be waived. As far as respondent is concerned, the cooperative chose not to waive its right to discipline and punish her; this is its privilege as the holder of such right.  Finally, it cannot be said that respondent was discriminated against or singled out, for among all those indicted, only the former General Manager  was  accorded leniency;  the rest,  including respondent, were treated on equal footing.  As to why the former General Manager was allowed  to  retire,  this  precisely  falls  within  the  realm  of  management prerogative; what matters, as far as the Court is concerned, is that respondent was not singled out and treated unfairly.


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