Palteng vs. UCPB, February 27, 2009

Facts:
Elizabeth D. Palteng was the Senior Assistant Manager/Branch Operations Officer of respondent United Coconut Planters Bank .On April 15, 1996, Area Head and Vice-President Eulallo S. Rodriguez reported to the bank’s Internal Audit and Credit Review Division that bank client Clariza L. Mercado-The Red Shop has incurred Past Due Domestic Bills Purchased (BP) of P34,260,000. After conducting a diligence audit, the division reported to the Audit and Examination Committee that Palteng committed several offenses under the Employee Discipline Code in connection with Mercado’s Past Due Domestic BP. It also recommended that the matter be referred to the Committee on Employee Discipline for proper disposition. Palteng was required to explain why no disciplinary action should be taken against her.
 
In response, Palteng explained that while she admitted committing a major offense that may cause her dismissal, she claimed that it was an honest mistake. After hearing and investigation, the committee recommended Palteng’s dismissal. Palteng filed a complaint for illegal dismissal seeking reinstatement to her former position without loss of seniority rights with full backwages, or in the alternative, payment of separation pay with full backwages, and recovery of her monetary claims with damages.

Issue:
Whether the award of backwages is proper.
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Held: 
No. Settled is the rule that an employee who is illegally dismissed from work is entitled to reinstatement without loss of seniority rights, and other privileges as well as to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
 
However, in the event that reinstatement is no longer possible, the employee may be given separation pay instead. In the case at bar, petitioner admitted that she granted the BP accommodation against Mercado’s personal checks beyond and outside her authority. The Labor Arbiter, the NLRC and the Court of Appeals all found her to have committed an “error of judgment,” “honest mistake,” “honest mistake” vis-à-vis a “major offense.”Since petitioner was not faultless in regard to the offenses imputed against her, we hold that the award of separation pay only, without backwages, is proper.