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G.R. No. 182475 : Lenn Morales v. Metropolitan Bank and Trust Company

G.R. No. 182475 : Lenn Morales v. Metropolitan Bank and Trust Company



G.R. No. 182475 : November 21, 2012




Filed pursuant to Rule 45 of the 1997 Rules on Civil Procedure, the Petition for Review on Certiorari at bench primarily assails the Decision1ςrνll dated 20 September 2007 rendered by the then Nineteenth Division of the Court of Appeals (CA) in CA-G.R. SP No. 02405,2ςrνll the dispositive portion of which states:

WHEREFORE, the petition for certiorari filed by Morales is hereby xxx DENIED for lack of merit. Accordingly, the assailed decision and resolution of the NLRC dated June 28, 2006 and September 15, 2006, are hereby UPHELD respectively.


The facts are not in dispute.

Sometime in August 1992, petitioner Lenn Morales was hired by Solidbank as Teller for its Rizal Avenue Branch in Tacloban City. With said banks merger with respondent Metropolitan Bank & Trust Company (Metrobank ) in September 2000, the latter, as surviving entity, absorbed Morales and assigned him to its Customer Service Relations-Reserve Pool (CSR-RP) which was composed of employees who, with no permanent places of assignment, acted as relievers whenever temporary vacancies arise in other branches. Designated as reliever for Metrobanks Main Branch in Tacloban City, Morales was likewise assigned to work in the same capacity for the banks other Visayas Region III branches. From a job with a grade four rank, Morales was subsequently promoted in April 20034ςrνll to the position of Customer Service Representative (CSR), with a job grade 6 rank and a gross monthly salary of P16,250.00. It was while occupying the latter position that Morales was informed by Federico Mariano , the Senior Manager of Metrobanks Tacloban City Main Branch, that he was covered by the banks Special Separation Program (SSP) and that, in accordance therewith, his employment was going to be terminated on the ground of redundancy.5ςrνll

On 27 August 2003, Morales was furnished a copy of a memorandum of the same date informing him that, after a review of its organizational structure, Metrobank had found his services redundant and will consider him separated effective 1 October 2003. Assured that his termination was through no fault of his own but mainly due to business exigencies and developments in the banking industry, Morales was notified that he shall be paid the following: (a) a redundancy premium/separation pay, on top of his entitlements under the banks retirement plan; (b) proportionate 13th month pay; (c) cash conversion of his outstanding vacation and sick leave credits; and, if applicable, (d) the return of his Provident Fund contributions; and, (e) cash surrender value of his Insurance.6ςrνll Having signed a form on the same day signifying his unqualified and unconditional acceptance of Metrobanks decision to terminate his employment,7ςrνll Morales executed on 10 November 2003 a Release, Waiver and Quitclaim acknowledging receipt of the sum of P158,496.95 as full payment of his monetary entitlements.8ςrνll

On 20 February 2004, Morales filed against Metrobank a complaint for illegal dismissal, separation pay, backwages, moral and exemplary damages as well as attorneys fees.9ςrνll Together with a similar complaint filed by one Raymundo Piczon , Morales complaint was docketed as NLRC RAB Case No. 2-0046-04 before the Regional Arbitration Branch No. VIII of the National Labor Relations Commission (NLRC). In support of his complaint, Morales alleged that, despite being an organic member of the Rizal Avenue Branch, he was assigned to Metrobanks Zamora St. Branch in view of his having signed a petition against the driver of the armored car who was eventually dismissed. With his actions suddenly closely watched and blown out of proportion, Morales claimed that he started receiving directives for him to explain his unauthorized absences and out of town allowances which, far from being infractions, were simply the results of miscommunication. Arbitrarily singled out for termination, he was supposedly forced to sign the Release, Waiver and Quitclaim by Mariano who embarrassed him by announcing that his services had already been terminated and that he was no longer required to report for work.10ςrνll

In its position paper, Metrobank averred that it had adopted the SSP since 1995 as a way of addressing worsening economic conditions and stiff competition with strategies designed to make its operations efficient but cost-effective. Towards said end, it claimed to have embarked on a major component of SSP called the Headcount Rationalization Program (HRP) which, taking into consideration the volume of its transactions vis-vis the massive computerization and automation of its operating systems, targeted the reduction of its existing workforce by 10% by the end of 2003. Having created and/or consolidated branches, centralized loan processing and adopted a branch headcount reduction scheme, Metrobank asserted that it identified 291 positions as superfluous, utilizing as criteria such factors as performance, work attitude and cost. Among the areas where the HRP was conducted was Visayas Region III which was directed to reduce the manpower of its 13 branches spread out in three provinces by 15 employees. Affected was its eight-man reserve pool which was composed of former Solidbank employees who acted as relievers whenever temporary vacancies occurred in the Regions branches.11ςrνll

Metrobank further asserted that the volume of the Regions transactions required only six employees in the reserve pool, thereby rendering two positions superfluous. As a member of the reserve pool, Morales allegedly had a record of unauthorized absences as well as complaints for undesirable and unprofessional conduct from various Branch Heads. In view of the absence of redeployment opportunities for him, Metrobank claimed Morales was included in the SSP and was eventually considered for termination on the ground of redundancy. Aside from the fact that Morales was duly informed of the managements decision more than one month ahead of his actual severance from service, Metrobank claimed to have served the Department of Labor and Employment (DOLE) the required Establishment Termination Report on 29 August 2003. Likewise accorded the separation benefits included in the SSP, Morales supposedly expressed his unqualified and unconditional acceptance of his termination and, upon receipt of his monetary entitlements, voluntarily executed the aforesaid Release, Waiver and Quitclaim. Claiming good faith in the implementation of its redundancy program, Metrobank prayed for the dismissal of Morales complaint for lack of merit.12ςrνll

On 11 November 2005, Executive Labor Arbiter Jesselito Latoja rendered a decision finding Morales termination from service illegal on the ground that his promotion in April 2003 contradicted Metrobanks claim that his poor work performance contributed to his inclusion in the SSP. Brushing aside the Release, Waiver and Quitclaim for having been prepared by Metrobank, the Labor Arbiter ruled that Morales was entitled to reinstatement without loss of seniority rights, backwages assessed at P390,005.00 at the time of the rendition of the decision, 13th month pay in the sum of P32,500.50, quarterly bonus in the sum of P130,002.00 and CBA signing bonus in the sum of P120,000.00. On the ground that Morales dismissal from service was tainted with bad faith and malice, the Labor Arbiter likewise held Metrobank liable to pay said employee P100,000.00 in moral damages, P100,000.00 in exemplary damages and attorneys fees which, at 10% of the total award, was computed at P87,250.65. From the grand total of P959,757.15 in monetary awards, the Labor Arbiter decreed the deduction of the sum of P158,496.95 which Morales had acknowledged to have received by way of separation benefits.13ςrνll

On appeal, the foregoing decision was reversed and set aside in the 20 July 2006 Decision rendered by the Fourth Division of the NLRC in NLRC Case No. V-000200-2006. Finding that Metrobank validly implemented the HRP on a nationwide scale in connection with the SSP, the NLRC ruled that Morales termination in accordance therewith belied the latters claim that he was arbitrarily singled out for dismissal from service. Given that the reserve pool in Visayas Region III was overstaffed, Morales was legitimately terminated in view of his poor work performance and negative attitude which, at one point, gravely jeopardized the operations of the branch to which he was temporarily assigned. Applying the general rule that the characterization of an employees services as redundant is a management prerogative which should not be interfered with absent showing of abuse, the NLRC also upheld the validity of the Release, Waiver and Quitclaim on the ground that the P158,496.95 Morales received represented a reasonable settlement of his claims.14ςrνll Morales motion for reconsideration of the decision was denied for lack of merit in the NLRCs Resolution dated 15 September 2006.15ςrνll

Aggrieved, Morales filed the Rule 65 Petition for Certiorari docketed before the CA Cebu City Station as CA-G.R. SP No. 02405, on the ground that the NLRC gravely abused its discretion in reversing the Labor Arbiters decision. Maintaining that Metrobanks claim of redundancy was belied by its hiring of one Abigail Perez as replacement for his position, Morales also argued that Metrobank did not comply with the notice requirement for a termination of employment on the ground of redundancy.16ςrνll On 20 September 2007, however, the CAs Nineteenth Division rendered the herein assailed decision, denying the foregoing petition for lack of merit. Upholding the validity of Morales termination from employment, the CA discounted the grave abuse of discretion imputed against the NLRC for ruling that Metrobanks redundancy program legitimately entailed reduction of its workforce to make it more responsive to the actual demands and necessities of its business. Considering that Abigail Perez was hired as a clerk on a permanent status for the banks Ormoc Branch, the CA also ruled that said employee could not be considered as Morales replacement. Finding that Metrobank complied with the noticerequirement under Article 283 of the Labor Code, the CA ultimately sustained the validity of the Release, Waiver and Quitclaim executed by Morales.17ςrνll

Dissatisfied, Morales filed the Rule 45 petition for review at bench,18ςrνll seeking the reversal of the CAs 20 September 2007 Decision on the following grounds:









We find the petition bereft of merit.

One of the authorized causes for the dismissal of an employee,20ςrνll redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise.21ςrνll A position is redundant when it is superfluous, and superfluity of a position or positions could be the result of a number of factors, such as the overhiring of workers, a decrease in the volume of business or the dropping of a particular line or service previously manufactured or undertaken by the enterprise.22ςrνll Time and again, it has been ruled that an employer has no legal obligation to keep more employees than are necessary for the operation of its business.23ςrνll For the implementation of a redundancy program to be valid, however, the employer must comply with the following requisites: (1) written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.24ςrνll

Contrary to the first and second errors Morales imputes against the CA, our perusal of the record shows that Metrobank has more than amply proven compliance with the third and fourth of the above-enumerated requisites for the validity of his termination from service on the ground of redundancy. Under the SSP which Metrobank adopted in 1995, employees who voluntarily gave up their employment were paid the amount of separation pay they were entitled under the law and a premium equivalent to 50%-75% of their salaries. It appears that employees "whose work evaluation showed consistent poor performance and/or those who had not been promoted for five years" were also considered primary candidates for optional separation from service.25ςrνll In order to meet the challenges of the business and to make its operations efficient and cost effective, however, it was shown that Metrobank further conducted a bank-wide operational review and study which resulted in the adoption in March 2003 of the HRP, a major component of the SSP which was designed to reduce its workforce by 10%. Entailing various initiatives like conversion of regular branches into mini-branches, consolidation of branches, centralization of loans processing and branch headcount reduction, the HRP yielded 291 employees who could no longer be redeployed, fifteen (15) of whom belonged to Visayas Region III.26ςrνll

In implementing a redundancy program, it has been ruled that the employer is required to adopt a fair and reasonable criteria, taking into consideration such factors as (a) preferred status; (b) efficiency; and (c) seniority,27ςrνll among others. Consistent with this principle, Metrobank established that, as a direct result of the adoption of the HRP, it was determined that the volume of transactions in Visayas Region III required the further reduction of its eight-man reserve pool by two employees.28ςrνll As these employees had no permanent place of assignment and merely acted as relievers whenever temporary vacancies arise in other branches, they were the most logical candidates for inclusion in the SSP. Already lacking preferred status in Metrobanks hierarchy of positions, Morales was included in the SSP because of his poor work performance which reportedly caused complaints from the branches where he was temporarily assigned as reliever.29ςrνll To our mind, the foregoing circumstances contradict Morales claim that he was arbitrarily singled out for termination by Metrobank which, having validly determined the surplus in its manpower complement, appears to have appropriately identified him as a candidate for the SSP on account of his work attitude.

As evidence of the bad faith which supposedly attended his termination from service, Morales argues that his promotion in April 2003 should have excluded him from the coverage of the SSP. Aside from the fact that his promotion rendered his position less cost-effective, however, Morales loses sight of the fact that it was precisely his work performance subsequent to his promotion which was cited by Metrobank as reason for his inclusion in the SSP. In his 19 May 2003 Memorandum, R.D. Barrientos , the Branch Manager of Metrobanks Baybay Branch, reported that Morales caused delay in the processing of over-the-counter transactions on a busy Monday when he was absent himself without an approved leave. Since it was Morales third absence while he was assigned at said branch as reliever of an employee who was on maternity leave, Barrientos even requested for another reliever on the ground that the risk of losing clients as a consequence of Morales unpredictability which was inimical to the banks interest.30ςrνll Despite being advised against being absent from work on Mondays and Fridays in view of the expected volume of transactions on said days,31ςrνll it appears, however, that Morales obstinately went ahead with his planned absence and simply apprised a colleague and the branch security guard of his decision not to report for work on 19 May 2003.32ςrνll

Given Morales previous record of not reporting for work for one whole week without prior leave of absence while assigned as reliever in its Borongan, Samar Branch,33ςrνll we find that Metrobank cannot be faulted for including him in the list of employees covered by the SSP. The rule is settled that "the determination that the employees services are no longer necessary or sustainable and, therefore, properly terminable for being redundant is an exercise of business judgment of the employer."34ςrνll "While it is true that management may not, under the guise of invoking its prerogative, ease out employees and defeat their constitutional right to security of tenure,"35ςrνll the wisdom and soundness of such characterization or decision is not subject to discretionary review unless a violation of law or arbitrary or malicious action is shown.36ςrνll Against Morales bare assertion that he was arbitrarily and maliciously terminated from service, Metrobank was able to establish that its action was based on the fair application of a criterion established in connection with the implementation of a well-thought redundancy program. For these reasons, we find that the CA cannot be faulted for upholding the NLRCs finding that Morales termination pursuant to the SSP was valid.

Morales next insists that Metrobank failed to comply in good faith with the notice requirement under Article 283 of the Labor Code which allows the employer to terminate the employment of any employee due to redundancy by serving a written notice on the worker and the DOLE at least one (1) month before the intended date thereof. Intended to enable the employee to prepare himself for the legal battle to protect his tenure of employment and to find other means of employment and ease the impact of the loss of his job and his income,37ςrνll said notice requirement is also designed to allow the DOLE to ascertain the verity of the cause for the termination.38ςrνll

As correctly determined by the CA, Metrobanks compliance with this requirement is evident from its service of the 27 August 2003 notice of termination upon Morales on the same date, effective 1 October 2003 or 30 days after the date of said notice.39ςrνll On 29 August 2003, Metrobank similarly served the DOLE with an Establishment Termination Report, together with a list of the 43 employees about to be terminated on the ground of redundancy, effective 1 October 2003.40ςrνll

By and of themselves, the notices of termination Metrobank served to the DOLE and Morales one month before their intended effectivity date significantly belie the latters claim that he was told not to report for work anymore immediately upon receipt thereof. As proof of the bad faith and malice which supposedly attended his separation from service, Morales asserted that Mariano caused him great embarrassment by announcing that he was no longer required to report for work, within hearing distance of his colleagues. For one who claims to have been immediately terminated from employment, however, Morales quite distinctly indicated in his 18 February 2004 complaint that he was dismissed on 30 September 2003.41ςrνll Reckoned from the service of notice of termination upon Morales on 27 August 2003, said admitted date of dismissal clearly confirms Metrobanks compliance with the above-discussed one-month prior notice that the law requires for severance from service on the ground of redundancy.

Neither are we inclined to entertain Morales belated argument that the real cause for his termination was retrenchment to prevent losses and that Metrobank failed to establish the requirements therefor. For one, said theory contradicts Morales claim that he was dismissed from employment for personal reasons, in a manner amounting to constructive dismissal. For another, not having been raised before the Labor Arbiter, the NLRC and the CA, it stands to reason that Morales theory of termination to preserve the viability of Metrobanks business cannot be entertained for the first time in connection with the petition at bench. Consistent with the principle that issues not raised a quo cannot be raised for the first time on appeal,42ςrνll points of law, theories and arguments not brought to the attention of the CA need not and ordinarily will not be considered by this Court.43ςrνll For a reviewing court to allow otherwise would be offensive to the basic rules of fair play, justice and due process.44ςrνll

Morales, finally, argues that the CA erred in upholding the validity of the 10 November 2003 Release, Waiver and Quitclaim which he supposedly signed out dire economic necessity. While "it may be accepted as ground to annul a quitclaim if the consideration is unconscionably low and the employee was tricked into accepting it, dire necessity is not, however, an acceptable ground for annulling the release when it is not shown that the employee has been forced to execute it."45ςrνll Not having sufficiently proved that he was forced to sign said Release, Waiver and Quitclaim, Morales cannot expediently argue that quitclaims are looked upon with disfavor and considered ineffective to bar claims for the full measure of a workers legal rights. This Court has held that not all quitclaims are per se invalid or against public policy, except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable on their face.46ςrνll These two instances are not present in this case.ςηαοblενιrυαllαωlιbrαr

WHEREFORE, premises considered, the petition is DENIED for lack of merit.ςrαlαωlιbrαr



1ςrνll Penned by Court of Appeals Associate Justice Pampio A. Abarintos and concurred in by Associate Justices Priscilla Baltazar-Padilla and Stephen C. Cruz.

2ςrνll CA rollo, 20 September 2007 Decision in CA-G.R. SP No. 02405, pp. 307-317.

3ςrνll Id. at 317.

4ςrνll Stated as April 2004 int p. 5 of Morales Rule 65 Petition for Certiorari dated 19 December 2006.

5ςrνll CA rollo, pp. 4-5, 122 and 308.

6ςrνll Metrobanks 27 August 2003 Memorandum, id. at 174.

7ςrνll Morales 27 August 2003 Letter, id. at 176.

8ςrνll Morales 10 November 2003 Release, Waiver and Quitclaim, id. at 178-179 .

9ςrνll Morales 18 February 2004 Complaint, id. at 79.

10ςrνll Id. at 30-33.

11ςrνll Metrobanks 24 September 2004 Position Paper, id. at 112-148.

12ςrνll Id.

13ςrνll Labor Arbiters 11 November 2005 Decision, id. at 15-25.

14ςrνll NLRCs 20 July 2006 Decision, id. at 27-50.

15ςrνll NLRCs 15 September 2006 Resolution, id. at 64-65.

16ςrνll Morales 19 December 2006 Petition for Certiorari, id. at 3-12.

17ςrνll CAs 20 September 2007 Decision, id. at 307-317.

18ςrνll Rollo, G.R. No. 182475, Morales 16 April 2008 Petition for Review on Certiorari, pp. 3-17.

19ςrνll Id. at 9.

20ςrνll Dole Philippines, Inc. v. National Labor Relations Commission, 417 Phil. 428, 439 (2001).

21ςrνll Soriano, Jr. v. National Labor Relations Commission, G.R. No. 165594, 23 April 2007, 521 SCRA 526, 543.

22ςrνll Edge Apparel, Inc. v. NLRC, 349 Phil. 972, 982 (1998) citing American Home Assurance Co. v. NLRC, 328 Phil. 606, 618 (1996).

23ςrνll Almodiel v. National Labor Relations Commission, G.R. No. 100641, 14 June 1993, 223 SCRA 341, 348.

24ςrνll Lambert Pawnbrokers and Jewelry Corporation v. Binamira, G.R. No. 170464, 12 July 2010, 624 SCRA 705, 718.

25ςrνll CA rollo, CA-G.R. SP No. 02405, 26 July 2004 Affidavit of Ricardo Villanueva, Metrobanks Head of Employee Relations and Benefits Division, Human Resources Management Group (HRMG), pp. 152-153.

26ςrνll 26 July 2004 Affidavit of Crisostomo De Guzman, Metrobanks Head of Organization, Planning and Placements Division-HRMG, id. at 149-151.

27ςrνll Lopez Sugar Corp. v. Franco, 497 Phil. 806, 819 (2005).

28ςrνll CA rollo, CA-G.R. SP No. 02405, 27 July 2004 Affidavit of Federico Mariano, Metrobanks Head of its Tacloban-Main Branch, pp. 154-157.

29ςrνll Id.

30ςrνll Barrientos 19 May 2003 Memorandum, id. at 160.

31ςrνll CTY Banez 30 May 2003 E-mail, id. at 163.

32ςrνll Morales 29 May 2003 Memorandum, id. at 162.

33ςrνll Id. at 155; 168.

34ςrνll AMA Computer College, Inc. v. Garcia, G.R. No. 166703, 14 April 2008, 551 SCRA 254, 264.

35ςrνll Santos v. Court of Appeals, 413 Phil. 41, 56 (2001).

36ςrνll Smart Communications, Inc. v. Astorga, G.R. Nos. 148132, 151079 & 151372, 28 January 2008, 542 SCRA 434, 448.

37ςrνll Serrano v. NLRC, 380 Phil. 416, 458-459 (2000).

38ςrνll International Hardware, Inc. v. NLRC (Third Division), 257 Phil. 261, 264 (1989).

39ςrνll CA rollo, CA-G.R. SP No. 02405, Metrobanks 27 August 2003 Memorandum, p 164.

40ςrνll Id. at 181-183.

41ςrνll Id. at 79.

42ςrνll R.P. Dinglasan v. Construction, Inc. v. Atienza, G.R. No. 156104, 29 June 2004, 433 SCRA 263, 271.

43ςrνll Tolosa v. NLRC, 449 Phil. 271, 284 (2003).

44ςrνll Romago Electric Co., Inc. v. Court of Appeals, 388 Phil. 964, 977 (2000).

45ςrνll Coats Manila Bay, Inc. v. Ortega, G.R. No. 172628, 13 February 2009, 579 SCRA 300, 312.

46ςrνll Lacuesta v. Ateneo de Manila University, G.R. No. 152777, 9 December 2005, 477 SCRA 217, 226, citing Bogo Medellin Sugarcane Planters Asso., Inc. v. NLRC, 357 Phil. 110, 126 (1998).

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