TL;DR

The Supreme Court upheld the dismissal of a cooperative cashier for willful disobedience after she repeatedly violated board resolutions prohibiting the release of special investment loans (SILs). Despite directives to halt SIL releases due to financial risks, the cashier continued to process these loans, endangering the cooperative’s funds. The Court ruled that this blatant disregard of lawful orders constituted just cause for termination under the Labor Code. This case reinforces that employees, even in ministerial roles, must adhere to company policies, and defiance of reasonable directives, especially those protecting organizational interests, can lead to dismissal. The decision underscores an employer’s right to enforce its policies and maintain financial stability through disciplinary actions against insubordinate employees.

When Policy is Defied: The Price of Insubordination in Cooperative Governance

Can an employee be dismissed for disobeying company policies, even if they claim their role is merely ministerial? This case delves into the delicate balance between employee rights and employer authority within the unique context of a multi-purpose cooperative. Magdalena Duclan, a cashier at Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO), found herself at the center of this legal storm. TAMPCO, grappling with the financial strain of unchecked Special Investment Loans (SILs), issued board resolutions to first limit and then completely halt their release. Despite these clear directives, Duclan, along with other officers, continued to process and release SILs, leading to significant financial losses for the cooperative when borrowers defaulted. This act of defiance triggered a series of disciplinary actions culminating in Duclan’s dismissal, which she contested as illegal.

The legal framework for this case rests on Article 282 of the Labor Code, which permits employers to terminate employment for “serious misconduct or willful disobedience” of lawful orders. The Supreme Court, in analyzing this provision, emphasized two critical elements for willful disobedience to justify dismissal: the employee’s conduct must be willful or intentional, and the violated order must be reasonable, lawful, known to the employee, and related to their duties. The core question became whether Duclan’s actions met these criteria, considering her role as cashier and the cooperative’s directives.

TAMPCO argued that Duclan’s repeated release of SILs, despite explicit board resolutions BA No. 28 and BA No. 55 prohibiting them, constituted willful disobedience. They presented evidence that Duclan was aware of these resolutions and that her role as cashier entailed responsibility for fund disbursement and adherence to cooperative policies. The cooperative highlighted the precarious financial situation created by the unchecked SIL releases, emphasizing the risk to members’ savings. Duclan, on the other hand, contended that her role was merely ministerial, implying she had no discretion to refuse loan releases once approved by higher authorities. She also pointed to the differential treatment compared to other officers involved in the SIL fiasco, particularly the General Manager who was allowed to retire with full benefits.

The Labor Arbiter initially sided with Duclan, declaring her dismissal illegal, citing procedural lapses and questioning the severity of the penalty. However, the National Labor Relations Commission (NLRC) reversed this decision, finding just cause for dismissal based on willful disobedience. The NLRC emphasized Duclan’s admission of releasing SILs despite knowing about the board resolutions and highlighted her responsibility as custodian of funds. The Court of Appeals (CA) then sided with Duclan again, reinstating the Labor Arbiter’s decision. The CA reasoned that Duclan’s role was indeed ministerial, and the responsibility for SIL approvals lay with higher-ranking officers. The CA also raised concerns about due process and unequal treatment.

The Supreme Court, however, ultimately overturned the CA’s decision, siding with the NLRC and TAMPCO. The Court meticulously examined the evidence and legal arguments, concluding that Duclan’s actions unequivocally constituted willful disobedience. The decision underscored that BA Nos. 28 and 55 were lawful and reasonable orders, duly issued by the cooperative’s Board of Directors, the highest governing body entrusted with managing the cooperative’s affairs under the Philippine Cooperative Code of 2008 (Republic Act No. 9520). These resolutions were clearly aimed at protecting the financial health of the cooperative and the interests of its members. The Court stated:

The persistent refusal of the employee to obey the employer’s lawful order amounts to willful disobedience. Indeed, “[o]ne of the fundamental duties of an employee is to obey all reasonable rules, orders and instructions of the employer. Disobedience, to be a just cause for termination, must be willful or intentional, willfulness being characterized by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination.

The Court rejected the notion that Duclan’s role was purely ministerial, emphasizing her responsibility as cashier for ensuring proper disbursement of funds and adherence to cooperative policies. Even if loan approvals originated from other officers, Duclan, as the final gatekeeper of funds, had a duty to refuse releases that violated established policies. Her continued processing of SILs, despite knowing the prohibitions, demonstrated a willful and intentional disregard for lawful orders. The Court also found that TAMPCO observed due process by conducting an investigation, providing Duclan an opportunity to explain, and issuing the required notices of suspension and termination. Regarding the alleged unequal treatment, the Court affirmed management’s prerogative to handle disciplinary actions differently, as long as there is no discrimination, and found no evidence of unfair treatment specifically targeting Duclan compared to similarly situated employees.

This ruling serves as a significant reminder of the importance of policy adherence in organizational governance, particularly within cooperatives where members’ collective savings are at stake. It clarifies that willful disobedience, even in roles perceived as ministerial, can be just cause for dismissal when employees knowingly violate lawful and reasonable orders that protect the organization’s interests. The case reinforces the employer’s right to enforce its policies and maintain discipline to ensure operational and financial stability.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) v. Duclan, G.R. No. 203005, March 14, 2016