600 SUPREME COURT REPORTS ANNOTATED

Batongbacal vs. Associated Bank

*
No. L72977. December 21, 1988.

BIENVENIDO R. BATONGBACAL, petitioner, vs.

ASSOCIATED BANK and NATIONAL LABOR
RELATIONS COMMISSION, respondents.

Labor Relations; Resignation, meaning of; That courtesy

resignations were utilized in government reorganizations did not
give private respondent the right to use it as well in its own
reorganization and rehabilitation plan.While it may be said
that the private respondents call for courtesy resignations was
prompted by its determination to survive, we cannot lend legality
to the manner by which it pursued its goal. By directing its
employees to submit letters of courtesy resignation, the bank in
effect forced upon its employees an act which they themselves
should voluntarily do. It should be emphasized that resignation
per se means voluntary relinquishment of a

_______________

* THIRD DIVISION.

601

VOL. 168, DECEMBER 21, 1988 601

Batongbacal vs. Associated Bank

position or office. Adding the word courtesy did not change the
essence of resignation. That courtesy resignations were utilized in
government reorganization did not give private respondent the
right to use it as well in its own reorganization and rehabilitation
plan. There is no guarantee that all employers will not use it to
rid themselves arbitrarily of employees they do not like, in the
guise of streamlining its organization. On the other hand,
employees would be unduly exposed to outright termination of
employment which is anathema to the constitutional mandate of
security of tenure.

Same; Same; Same; Dismissal; Insubordination may not be

imputed to one who refused to follow an unlawful order.
Petitioners dismissal was effected through a letter accepting his
resignation. Private respondent rationalizes that this was done,
even if petitioner did not actually submit such letter, so as not to
jeopardize his chances of future employment. But it is also clear
from its pleadings that private respondent terminated petitioners
employment for insubordination in view of his failure to comply
with the order to submit his letter of courtesy resignation. We
hold, however, that insubordination may not be imputed to one
who refused to follow an unlawful order.

Same; Same; Same; Same; Loss of Confidence as a ground for

dismissal must be supported by satisfactory evidence.Private
respondent asserts that petitioners refusal to submit his letter of
courtesy resignation was sufficient reason to distrust him. Loss
of confidence as a ground for dismissal must be supported by
satisfactory evidence. Even with respect to managerial employees
who, under Policy Instructions No. 8, may be dismissed for lack of
confidence, loss of trust must be substantiated and clearly proven.

Same; Same; Same; Same; No proof of malfeasance or

misfeasance committed by petitioner which jeopardized private
respondents interest.The record fails to show any valid reasons
for terminating the employment of petitioner. There are no proofs
of malfeasance or misfeasance committed by petitioner which
jeopardized private respondents interest. The latters allegations
that petitioner was purged because he sabotaged the bank and
that he contributed, directly or indirectly to its downfall are
mere subjective conclusions unsubstantiated by hard facts. To
clothe with legality petitioners dismissal for his failure to submit
his letter of courtesy resignation is to add a ground for
termination of employment to the provisions of the Labor Code.

602

602 SUPREME COURT REPORTS ANNOTATED

Batongbacal vs. Associated Bank

Same; Same; Same; Same; Private respondents claim that it

needed to trim down its employees as a selfpreservation measure
is belied by the amount of salaries it was giving to its other
assistant vicepresidents.However, we agree with the Solicitor
General and the NLRC that petitioner is not entitled to an award
of the difference between his actual salary and that received by
the assistant vicepresident who had been given the salary next
higher to his. There is a semblance of discrimination in this
aspect of the banks organizational setup but we are not prepared
to preempt the employers prerogative to grant salary increases
to its employees. In this connection, we may point out that private
respondents claim that it needed to trim down its employees as a
selfpreservation measure is belied by the amount of salaries it
was giving its other assistant vicepresidents.

Same; Same; Same; Same; Managerial Employee; Definition

of, under Art. 212(k) of the Labor Code; Case at bar.Article
212(k) of the Labor Code defines a managerial employee as one
who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend,
layoff, recall, discharge, assign or discipline employees, or to
effectively recommend such managerial actions. The same article
provides that all employees not falling within said definition are
considered rankandfile employees. Under Policy Instructions No.
8 which was issued by the then Secretary of Labor and which took
effect on April 23, 1976, managerial employees are those (1) who
have the power to lay down management policies; (2) who have
the power to hire, fire, demote, promote, etc.; and (3) who have the
power to recommend effectively (1) and (2). With these definitions,
a determination of whether petitioner is a managerial employee
would have been easy had the matter been properly threshed out
below. The onus of proof on the matter fell on the private
respondent but, as correctly observed by the Solicitor General, it
did not present substantial proof that petitioner is vested with
any of the powers and prerogatives of a managerial employee. It
merely relied upon provisions of the banks amended bylaws
specifically Article V, Section 2 and Article VI, Section 5 thereof.

Same; Same; Same; Same; The nature of the employees

function and not the nomenclature or title given to his job which
determines whether the employee has rankandfile or managerial
status.The only other evidence on record from which the
functions of an assistant vicepresident may be gleaned is the
copy of petitioners original appointment as such. It is stated
therein that petitioner would

603

VOL. 168, DECEMBER 21, 1988 603

 Batongbacal vs. Associated Bank

assist the vicepresident in the performance of his job. Said

function implies that he was not actually a policydetermining
employee but one who had to wait for assignments from his
superior. Notwithstanding that, both the labor arbiter and the
NLRC proceeded from the presumption that petitioner was a
managerial employee. A determination of the nature of the
functions of an assistant vicepresident gains importance in the
face of the variance of causes for the termination of employment
of rankandfile managerial employees. Much more so in the
instant petition wherein the parties present contradictory views
on the status of petitioner. Of primordial consideration also is the
fact that it is the nature of the employees functions and not the
nomenclature or title given to his job which determines whether
the employee has rankandfile or managerial status.

Same; Same; Same; Same; Justice and equity demand that

not only the factual issue of whether or not an assistant vice
president is a managerial employee but also whether he is entitled
to moral and exemplary damages, be considered.We are aware
that to remand this case below would mean further delay in its
disposition, particularly as the petitioner is now around sixty
three years old. However, justice and equity demand that not only
the factual issue of whether or not an assistant vicepresident is a
managerial employee but also whether or not petitioner is entitled
to an award of moral and exemplary damages, should be
considered. Indeed, the proceedings had below leave much to be
desired.

PETITION for certiorari to review the decision of the

National Labor Relations Commission.

The facts are stated in the opinion of the Court.

F.B. Santiago, Calabio & Associates for private
respondent.
The Solicitor General for public respondent.

FERNAN, C.J.:

The issue in this petition for certiorari is whether or not an

employer bank may legally dismiss its assistant vice
president for refusal to tender his courtesy resignation
which the bank required in line with its reorganization
plan.
Petitioner Bienvenido R. Batongbacal, a lawyer who was
admitted to the Bar in 1952, began his banking career in
1961 as manager of the Second Rizal Development Bank.
On Novem
 604

604 SUPREME COURT REPORTS ANNOTATED

Batongbacal vs. Associated Bank

ber 2, 1966, he transferred to the Citizens Bank and Trust

Company. He was appointed assistant vicepresident
therein to assist the Senior VicePresident as directly in
charge of the Loans and Discounts Department and,
concurrently, as acting manager of the personnel and
administration 1department in lieu of the VicePresident
and Treasurer. Said appointment was without a definite
period.
On October 14, 1975, Citizens Bank and Trust Company
merged with the Associated Banking Corporation. The
merged corporate entity later became known as Associated
Bank. In the new bank, petitioner resumed his position as
assistant vicepresident.
More than six years later or in March, 1982, petitioner
learned that the salary and allowances he was receiving
were very much below the standard remuneration of the
banks other assistant vice presidents as in fact they were
even less than those paid for employees holding positions
lower than the rank of assistant vicepresident.
Consequently, he wrote the banks board of directors
requesting that he be paid the accrued 2
salary and
allowance arbitrarily withheld from him. He later wrote
the board
3
of directors a followup letter on November 12,
1982. Since his letters were unanswered, on February 4,
1983, petitioner wrote the newly appointed vicepresident
for administration about the glaring inequality in the
salaries and allowances of the banks assistant vice
presidents. Thus, he stated therein that while he was the
most senior of them all, he was receiving an annual salary
of P27,000 while the four other assistant vicepresidents
were each receiving P42,000,
4
P54,000, P60,000 and
P72,000 annual salaries. Apparently, said letter fell on
deaf ears.
Meanwhile, on March 15, 1983, the banks board of
directors met and approved the following resolution:

_______________

1 Rollo, p. 28.
2 Rollo, p. 29.
3 Rollo, p. 30.
4 Rollo, p. 31.
 605

VOL. 168, DECEMBER 21, 1988 605

Batongbacal vs. Associated Bank

BE IT RESOLVED that the new management be given the

necessary flexibility in streamlining the operations of the Bank
and for the purpose it is hereby resolved that the Bank officers at
the Head Office and the Branches with corporate rank of Manager
and higher be required, as they hereby are required to submit
IMMEDIATELY to the President their courtesy resignations.
IT IS FURTHER RESOLVED to authorize the President as he
5
is hereby authorized to implement this resolution.

Petitioner did not submit his courtesy resignation. On May

3, 1983, he received the following letter:

26 April 1983

Atty. Bienvenido Batongbacal

Acquired Assets Unit
Administrative Division
Present

Dear Atty. Batongbacal:

We have been given the task of advising you that
the Board of Directors of our Bank has accepted your
resignation effective immediately.
Therefore, please arrange with the Personnel
Administration Unit for the settlement of any
accountabilities and turn over all pending official
matters to your respective division/department head as
soon as possible.
We wish you all the best in your future endeavors.
Very truly yours,
For the Steering Committee:
(Sgd.)
RAMON F. CHANYUNGCO 6
Exec. VicePresident

Shocked by this turn of events, petitioner on the same day

wrote the banks executive vicepresident requesting a
reconsideration of the board of directors decision accepting
his

________________

5 Rollo, p. 58.
6 Rollo, p. 33.
 606

606 SUPREME COURT REPORTS ANNOTATED

Batongbacal vs. Associated Bank

resignation. He stated therein that he thought the call for

the submission of courtesy resignations was only for erring
loathsome officers and not those like him who had served
the bank honestly and sincerely for sixteen years; that
although he was a stockholder with the smallest
investment in the bank, he had called the attention of
higher officers on matters that are of vital importance to
the banks financial stability; and that should there be
evidence of any act of dishonesty on his part, the bank
should so inform him so that
7
he could accordingly submit
his voluntary resignation.
Starting May 4, 1983, petitioner was not paid his usual
salary and allowance. Nevertheless, he made repeated
requests for the reconsideration of the banks decision to
terminate his employment. His requests were ignored.
Hence, he filed a complaint for illegal dismissal and
damages in the arbitration branch of the National Labor
Relations Commission (NLRC).
On January 31, 1984, the labor arbiter upheld the
petitioners arguments and claims in an Order the
dispositive portion of which states:

IN VIEW OF THE FOREGOING, judgment is rendered in the

following tenor:

1. Respondent is hereby ordered to reinstate complainant to

his former post with full backwages and other fringe
benefits until actually reinstated;
2. Respondent should make good the salary differential of
complainant computed from his last rate up to P42,000.00
per annum, the next rate of Asst. Vice President effective
on the date said P42,000.00 was given to the next higher
salary rate Asst. Vice President up to the present;
3. Respondent is further ordered to pay the complainant the
amount of P500,000.00 moral damages and P200,000.00
exemplary damages;
4. Respondent is finally ordered to post this decision in at
least two conspicious (sic) places in the bank for all
concerned to see, read and be informed for at least two
months from receipt.
8
SO ORDERED.
The bank filed a motion for reconsideration of said order.
Its

_______________

7 Rollo, pp. 3436.

8 Rollo, pp. 8182.

607

VOL. 168, DECEMBER 21, 1988 607

Batongbacal vs. Associated Bank

motion having been denied, the bank appealed to the

National Labor Relations Commission (NLRC) which, in its
decision of July 12, 1985, ruled in favor of the legality of
petitioners dismissal from employment. The dispositive
portion of said decision states:

WHEREFORE, premises considered, the appealed Decision is as

it is hereby SET ASIDE and another one issued considering the
dismissal valid but ordering respondentappellant to pay
complaintappellee his accumulative leave credits and separation
pay equivalent to one (1) month for every year of service, a period
of at least six (6) months considered as one (1) year, as well as
other benefits he is entitled to under existing policies of
respondentappellant granted to any of its retiring personnel.
The Corporate Auditing Examiner of this Commission is
directed to proceed to the premises of respondentappellant to
compute the amount of accumulative leave credits and
termination pay and such other benefits he is entitled as above
mentioned.
9
SO ORDERED.

Petitioners motion for reconsideration of said decision was

denied. Hence, the instant petition for certiorari.
We are aware of the circumstances surrounding the
dismissal of the petitioner. Private respondent was, since
1981, in the throes of financial reverses due to the Dewey
Dee scandal. It was through the infusion of capital supplied
by the Development Bank of the Philippines and the
emergency loan provided by the Central Bank that private
respondent was able to redeem itself. Accordingly, to
streamline its operation, the new management of the
bank called upon all its employees to submit their courtesy
resignations and considered all executive positions vacant.
Private respondent claims that those who submitted letters
of resignation were allowed to reapply for positions where
their qualifications were best suited while those who did
not submit such letters were terminated from employment
for their alleged
10
deliberate refusal to cooperate in its
rehabilitation.

_______________

9 Rollo, p. 135.
10 Rollo, pp. 128130.

608

608 SUPREME COURT REPORTS ANNOTATED

Batongbacal vs. Associated Bank

While it may be said that the private respondents call for

courtesy resignations was prompted by its determination to
survive, we cannot lend legality to the manner by which it
pursued its goal. By directing its employees to submit
letters of courtesy resignation, the bank in effect forced
upon its employees an act which they themselves should
voluntarily do. It should be emphasized that resignation
per se11 means voluntary relinquishment of a position or
office. Adding the word courtesy did not change the
essence of resignation. That courtesy resignations were
utilized in government reorganization did not give private
respondent the right to use it as well in its own
reorganization and rehabilitation plan. There is no
guarantee that all employers will not use it to rid
themselves arbitrarily of employees they do not like, in the
guise of streamlining its organization. On the other hand,
employees would be unduly exposed to outright
termination of employment which is anathema to the
constitutional mandate of security of tenure.
Petitioners dismissal was effected through a letter
accepting his resignation. Private respondent rationalizes
that this was done, even if petitioner did not actually
submit such letter, 12so as not to jeopardize his chances of
future employment. But it is also clear from its pleadings
that private respondent terminated petitioners
employment for insubordination in view of his failure to
comply with the order to submit his letter of courtesy
resignation. We hold, however, that insubordination may
not be imputed to one who refused to follow an unlawful
order.
Private respondent asserts that petitioners refusal to
submit his letter of courtesy
13
resignation was sufficient
reason to distrust him. Loss of confidence as a ground for
dismissal must be supported by satisfactory evidence. Even
with respect to managerial employees who, under Policy
Instructions No. 8, may be dismissed for lack of confidence,
14
loss of trust must be substantiated and clearly proven.

_______________

11 See Ortiz v. Comelec, G.R. No. 78957, June 28, 1988.

12 Rollo, p. 90.
13 Rollo, p. 190.
14 De Leon v. NLRC, G.R. No. 52056, October 30, 1980, 100 SCRA 691;
St. Lukes Hospital, Inc. v. NLRC, G.R. Nos. 54068 & 54142,

609

VOL. 168, DECEMBER 21, 1988 609

Batongbacal vs. Associated Bank

The record fails to show any valid reasons for terminating

the employment of petitioner. There are no proofs of
malfeasance or misfeasance committed by petitioner which
jeopardized private respondents interest. The latters
allegations that petitioner
15
was purged because he
sabotaged the bank and16that he contributed, directly or
indirectly to its downfall are mere subjective conclusions
unsubstantiated by hard facts. To clothe with legality
petitioners dismissal for his failure to submit his letter of
courtesy resignation is to add a ground for termination of
employment to the provisions of the Labor Code.
However, we agree with the Solicitor General and the
NLRC that petitioner is not entitled to an award of the
difference between his actual salary and that received by
the assistant vicepresident who had been given the salary
next higher to his. There is a semblance of discrimination
in this aspect of the banks organizational setup but we are
not prepared to preempt the employers prerogative to
grant salary increases to its employees. In this connection,
we may point out that private respondents claim that it
needed to trim down its employees as a selfpreservation
measure is belied by the amount of salaries it was giving
its other assistant vicepresidents.
Notwithstanding the foregoing discussion, the Court
cannot rule outright in favor of the petitioner. There are
factual issues which must be dealt with below.
A pivotal point to consider is whether petitioner is a
managerial or a rankandfile employee. Petitioner claims
that inspite of his pompous title of assistant vicepresident,
he is actually a rankandfile employee. On the other hand,
private respondent asserts that petitioner is a managerial
employee because he is not only a department/unit head
but an assistant vicepresident who is ranked higher than
a manager by any standard and therefore, to consider
him a rankandfile 17
employee is to stretch ones
imagination too far.

_______________

August 30, 1982, 116 SCRA 240; D.M. Consunji, Inc. v. NLRC, G.R. No.
71456, July 30, 1986, 143 SCRA 204.
15 Rollo, p. 52.
16 Rollo, p. 192.
17 Rollo, p. 250.

610

610 SUPREME COURT REPORTS ANNOTATED

Batongbacal vs. Associated Bank

Article 212(k) of the Labor Code defines a managerial

employee as one who is vested with powers or prerogatives
to lay down and execute management policies and/or to
hire, transfer, suspend, layoff, recall, discharge, assign or
discipline employees, or to effectively recommend such
managerial actions. The same article provides that all
employees not falling within said definition are considered
rankandfile employees. Under Policy Instructions No. 8
which was issued by the then Secretary of Labor and which
took effect on April 23, 1976, managerial employees are
those (1) who have the power to lay down management
policies; (2) who have the power to hire, fire, demote,
promote, etc.; and (3) who have the power to recommend
effectively (1) and (2).
With these definitions, a determination of whether
petitioner is a managerial employee would have been easy
had the matter been properly threshed out below. The onus
of proof on the matter fell on the private respondent but, as
correctly observed by the Solicitor General, it did not
present substantial proof that petitioner is vested with any 18
of the powers and prerogatives of a managerial employee.
It merely relied upon provisions of the banks amended by
laws specifically
19
Article V, Section 2 and Article VI, Section
5 thereof.
The only other evidence on record from which the
functions of an assistant vicepresident may be gleaned is
the copy of petitioners original appointment as such. It is
stated therein that petitioner would assist the vice
president in the performance of his job. Said function
implies that he was not actually a policydetermining
employee but one who had to wait for assignments from his
superior. Notwithstanding that, both the labor arbiter and
the NLRC proceeded from the

_______________

18 Rollo, p. 208.
19 Article V, Section 2 provides that the board of directors may appoint
any number of vicepresidents and/or assistant vicepresidents as may be
deemed necessary upon the recommendation of the executive vice
president with the concurrence of the president (Rollo, p. 65). Article VI,
Section 5 on the other hand, states that the vicepresident and/or
assistant vicepresidents shall perform such powers and duties as the
board of directors may, from time to time, prescribe according to the
recommendation of the president.

611

VOL. 168, DECEMBER 21, 1988 611

Batongbacal vs. Associated Bank

presumption that petitioner was a managerial employee.

A determination of the nature of the functions of an
assistant vicepresident gains importance in the face of the
variance of causes for the termination of employment of
rankandfile managerial employees. Much more so in the
instant petition wherein the parties present contradictory
views on the status of petitioner. Of primordial
consideration also is the fact that it is the nature of the
employees functions and not the nomenclature or title
given to his job which determines whether
20
the employee
has rankandfile or managerial status.
We are aware that to remand this case below would
mean further delay in its disposition, particularly as the
petitioner is now around sixtythree years old. However,
justice and equity demand that not only the factual issue of
whether or not an assistant vicepresident is a managerial
employee but also whether or not petitioner is entitled to
an award of moral and exemplary damages, should be
considered. Indeed, the proceedings had below leave much
to be desired.
We note with dismay the impracticality of the position
paper method of disposing labor cases. As exemplified by
this case, there are instances wherein claims of parties are
not properly ventilated because they agree to dispense with
the hearing not knowing that more often than not both of
them suffer adverse consequences. In this case, had the
parties agreed to a hearing and the concomitant
presentation of evidence, private respondent could have
proven that petitioner was a managerial employee when he
was dismissed and petitioner could have proven the extent
of damages he sustained thereby.
WHEREFORE, this case is hereby remanded to the
National Labor Relations Commission for determination of
the factual issues of whether petitioner, as assistant vice
president of the respondent bank, is a managerial employee
and whether he is entitled to an award of moral and
exemplary damages.
The respondent Commission is ordered to conduct with
dispatch a hearing thereon and thereafter, to render a
decision in accordance with the guidelines set herein. This
decision is immediately executory. No costs.

________________

20 Engineering Equipment, Inc. v. NLRC, G.R. No. 59221, December 26,

1984, 113 SCRA 752, 760.

612

612 SUPREME COURT REPORTS ANNOTATED

De Guzman vs. Court of Appeals

SO ORDERED.

Gutierrez, Jr., Bidin and Corts, JJ., concur.

Feliciano, J., on leave.

Case remanded to NLRC for determination of factual

issues.

Notes.Dismissal of employee on ground of

abandonment of work must be proved. (Peaflor vs. NLRC,
120 SCRA 68.)
View that petitioner terminated his employment by his
own act of not wanting to be transferred or promoted
(Dosch vs. NLRC, 123 SCRA 296.)

o0o
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