PNB v.

Dan Padao, GR 180849, November 2011

Main 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 employers basic right to freely select or discharge its employees, if only as a measure of selfprotection 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 Padaos 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 employers 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