[G.R. No. 141093.

February 20, 2001]

PRUDENTIAL BANK and TRUST COMPANY, petitioner, vs. CLARITA T. REYES, respondent.
GONZAGA-REYES, J.:
Facts: Clarita Tan Reyes filed against Prudential Bank and Trust Company (the Bank) before the
labor arbiter a complaint for illegal suspension and illegal dismissal with prayer for moral and
exemplary damages, gratuity, fringe benefits and attorneys fees Prior to her dismissal, private
respondent Reyes held the position of Assistant Vice President in the foreign department of the Bank,
tasked with the duties, among others, to collect checks drawn against overseas banks payable in
foreign currency and to ensure the collection of foreign bills or checks purchased, including the
signing of transmittal letters covering the same.
The auditors of the Bank discovered that two checks, No. 011728-7232-146, in the amount of
US$109,650.00, and No. 011730-7232-146, in the amount of US$115,000.00, received by the Bank
on April 6, 1989, drawn by the Sanford Trading against Hongkong and Shanghai Banking Corporation,
Jurong Branch, Singapore, in favor of Filipinas Tyrom, were not sent out for collection to Hongkong
Shanghai Banking Corporation on the alleged order of the complainant until the said checks became
stale.
The Bank created a committee to investigate the findings of the auditors involving the two checks
which were not collected and became stale.
After a review of the Committees findings, the Board of Directors of the Bank resolved not to re-elect
complainant any longer to the position of assistant president pursuant to the Banks By-laws.
On July 19, 1991, complainant was informed of her termination of employment from the Bank by
Senior Vice President Benedicto L. Santos.
Judgment was rendered by Labor Arbiter Cornelio L. Linsangan finding the dismissal of complainant
to be without factual and legal basis and ordering the respondent bank to pay her back wages for
three (3) years in the amount of P540,000.00 (P15,000.00 x 36 mos.). In lieu of reinstatement, the
respondent is also ordered to pay complainant separation pay equivalent to one month salary for
every year of service, in the amount of P420,000.00 (P15,000 x 28 mos.). In addition, the respondent
should also pay complainant profit sharing and unpaid fringe benefits. Attorneys fees equivalent to
ten (10%) percent of the total award should likewise be paid by respondent.
Issues:1) whether the NLRC has jurisdiction over the complaint for illegal dismissal;
(2) whether complainant Reyes was illegally dismissed; and
(3) whether the amount of back wages awarded was proper.
Held: 1) Petitioner Bank can no longer raise the issue of jurisdiction under the principle of
estoppel. The Bank participated in the proceedings from start to finish. It filed its position paper with
the Labor Arbiter. When the decision of the Labor Arbiter was adverse to it, the Bank appealed to the
NLRC. When the NLRC decided in its favor, the bank said nothing about jurisdiction. Even before the
Court of Appeals, it never questioned the proceedings on the ground of lack of jurisdiction. It was only
when the Court of Appeals ruled in favor of private respondent did it raise the issue of
jurisdiction. The Bank actively participated in the proceedings before the Labor Arbiter, the NLRC and
the Court of Appeals. While it is true that jurisdiction over the subject matter of a case may be raised
at any time of the proceedings, this rule presupposes that laches or estoppel has not supervened. In
this regard, Baaga vs. Commission on the Settlement of Land Problems,[11] is most
enlightening. The Court therein stated:
This Court has time and again frowned upon the undesirable practice of a party submitting his case
for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction
when adverse. Here, the principle of estoppel lies. Hence, a party may be estopped or barred from
raising the question of jurisdiction for the first time in a petition before the Supreme Court when it
failed to do so in the early stages of the proceedings.

2) Upon this point, the rule that proof beyond reasonable doubt is not required to terminate an
employee on the charge of loss of confidence and that it is sufficient that there is some basis for such
loss of confidence, is not absolute. The right of an employer to dismiss employees on the ground that
it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause. For
loss of trust and confidence to be valid ground for an employees dismissal, it must be substantial and
not arbitrary, and must be founded on clearly established facts sufficient to warrant the employees
separation from work (Labor vs. NLRC, 248 SCRA 183).
After painstakingly examining the testimonies of Ms. Joven and respondents other witnesses this
Office finds the evidence still wanting in proof of complainants guilt.
There are other factors that constrain this Office to doubt even more the legality of complainants
dismissal based on the first ground stated in the letter of dismissal. The non-release of the dollar
checks was reported to top management sometime on 15 November 1989 when complainant,
accompanied by Supervisor Dante Castor and Analiza Castillo, reported the matter to Vice President
Santos. And yet, it was only on 08 March 1991, after a lapse of sixteen (16) months from the time the
non-release of the checks was reported to the Vice President, that complainant was issued a
memorandum directing her to submit an explanation. And it took the bank another four (4) months
before it dismissed complainant.
The delayed action taken by respondent against complainant lends credence to the assertion of the
latter that her dismissal was a mere retaliation to the criminal complaints she filed against the banks
top officials.
3) Jurisprudence is clear on the amount of backwages recoverable in cases of illegal
dismissal. Employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21,
1989 are entitled to backwages up to three (3) years without deduction or qualification, while those
illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their
monetary equivalent from the time their actual compensation was withheld from them up to the time of
their actual reinstatement.[20] Considering that private respondent was terminated on July 19, 1991,
she is entitled to full backwages from the time her actual compensation was withheld from her (which,
as a rule, is from the time of her illegal dismissal) up to the finality of this judgment (instead of
reinstatement) considering that reinstatement is no longer feasible as correctly pointed out by the
Court of Appeals on account of the strained relations brought about by the litigation in this
case. Since reinstatement is no longer viable, she is also entitled to separation pay equivalent to one
(1) month salary for every year of service. [21] Lastly, since private respondent was compelled to file an
action for illegal dismissal with the labor arbiter, she is likewise entitled to attorneys fees [22] at the rate
above-mentioned. There is no room to argue, as the Bank does here, that its liability should be
mitigated on account of its good faith and that private respondent is not entirely blameless. There is
no showing that private respondent is partly at fault or that the Bank acted in good faith in terminating
an employee of twenty-eight years. In any event, Article 279 of Republic Act No. 6715 [23] clearly and
plainly provides for full backwages to illegally dismissed employees.