The antecedents of this labor case are sufficiently and faithfully summarized in the Comment of the Office of the Solicitor General, quoted as follows:^[1]

"Petitioners Alma Cosep, Dulcevita Soriano, Marilou Coquia and Mary Jane Raborar were regular employees of private respondent Premiere Development Bank at its Guadalupe Branch, then headed by area manager Gloria Doplito. Cosep began working with private respondent on October 11, 1989, Coquia, on March 7, 1994, Soriano, on April of 1992, and Raborar, on March 4, 1994.

On November 17, 1994, private respondent suspended Doplito for alleged malversation of money belonging to its clients. Commiserating with Doplito, petitioners wrote an open letter which criticized private respondent's handling of the case of Doplito. The open letter, which was disseminated to the employees of private respondent's various branches, stated:

'The transfer of assignment of Mrs. Gloria Doplito and subsequently her suspension have tremendously affected us, the officers and staff of Guadalupe and the branch as a whole. Guadalupe will not be the same without Ate Oyah around because whatever success it has attained, no one can take credit for it but only one person with a heart as big as she is the person we've mentioned above. We felt that the Management's decision was very inconsiderate, unfair, biased, even inhuman. For the past 26 years, her loyalty to the bank was unquestionable, her integrity has been intact for those long years and worth mentioning here is her love to the bank which we think no officers(sic) or staff can surpass. Whatever she did that management compelled(sic) to suspend her that we cannot question. We cannot just say Forgive and Forget. What we're saying is to give her another chance because we felt the accusations hurled against her were all peanuts' compared to Girlie Rocco's of Concepcion branch who admitted having committed the crime of stealing other people's money and yet remained scot-free. What you've become to tolerate this decision, you yourself can only answer. Its very scary working under this system wherein there is no justice. If they want to throw you out even if you're innocent, they can. If this can happen to the officers of the bank how much more the security of the rank and file(sic)? Let's put some decency to the bank and most importantly, to ourselves. If we cannot do this, we're not worth to be called educated bank employees who can carry on any tasks courageously but ROBOTS.

Whatever may come out of this, we're ready to face the consequences for the love of Ate Oyah. We've grown attached to her for all the kindness and love she has shown us. Her many friends and supporters can attest to this. The clients she has unselfishly served and given enough accommodation(sic) to the extent of sacrificing a part of herself, specifically her career, will always be grateful to her. WE ALL ARE.

Before we end, we want to make it clear that nobody forced us to do this. We did this on our own free will to show Ate Oyah how much we love her. Please give her a chance, that's what we're only asking(sic).

Thank You,
Guadalupe Staff'

Private respondent required petitioners to explain what they meant by issuing the 'open letter.' It also suspended petitioner and did not pay their 13th month pay and wages in the meantime.

Petitioners filed an answer, explaining that the 'open letter' was just an exercise of their right to freedom of speech.

On January 20, 1995, private respondent sent to each petitioner a memorandum dismissing them from the service effective immediately, on the ground that they undermined the interest of the bank. However, on January 23, 1995, private respondent issued to each petitioner a 'transfer of assignment' temporarily suspending the effects of the previous memorandum ordering their dismissal. Petitioners ignored the memorandum transferring them to other branches and, instead, filed a complaint before the Labor Arbiter against private respondent for illegal dismissal and unpaid wages and 13th month pay. They asked for separation pay and the award of moral and exemplary damages.

Despite the filing of the complaint, private respondent again instructed petitioners in separate letters dated February 8, 1995 that they should report to their new assignments, warning that 'their continued failure and/or refusals to do so shall leave' the bank 'without any option but (to) take such action as may be warranted under the circumstances' to protect its interest.

Petitioners subsequently wrote a letter to private respondent dated February 9, 1995, informing the bank that as of January 20, 1995, they considered themselves dismissed from the service, and that they have already filed a complaint with public respondent.

At the time of the filing of the complaint, Cosep was a cashier with a monthly salary of P5,440.00. Coquia, a teller, was earning P3,900.00 a month. Soriano, an accounting clerk, was receiving P4,500.00 monthly. On the other hand, Raborar, a new accounts clerk, was being paid P3,900.00 a month.

On June 23, 1995, Labor Arbiter Manuel P. Asuncion issued his decision, the decretal part of which states:

'WHEREFORE, all the foregoing considered, judgment is hereby rendered declaring complainants to have been illegally dismissed and ordering the respondent to pay the former the following:

xxx xxx xxx ^[2]

SO ORDERED." (citations omitted).

Private respondents appealed the judgment to public respondent National Labor Relations Commission (NLRC) which rendered a decision reversing that of the Labor Arbiter. The dispositive part of the NLRC decision provides:

'WHEREFORE, premises considered, the appealed decision is modified by deleting the awards of separation pay, backwages, moral and exemplary damages. Respondent is ordered to pay complainants their unpaid wages and 13th month pay as computed in the Labor Arbiter's decision." ^[3]

When its motion for reconsideration was denied, petitioners elevated the case to this Court via petition for certiorari and imputed grave abuse of discretion to respondent NLRC in reversing the labor arbiter's finding that petitioners were illegally dismissed. The issues raised are:

"I

Public respondent committed grave abuse of discretion in declaring that petitioners' 'temporary suspension' of termination resulted in the lifting of their termination.

II

Public respondent committed grave abuse of discretion in finding that there were just causes for petitioners' dismissal i.e., insubordination and for signing the 'open letter'

III

Public respondent committed grave abuse of discretion in declaring that petitioners were validly dismissed despite private respondent's assertion that they were merely being reassigned.

IV

Public respondent committed grave abuse of discretion in omitting to make a finding whether or not procedural due process requirements were complied with."^[4]

The petition is impressed with merit.

In the assailed Decision, respondent NLRC declared that:

"While there is no dispute that the complainants were notified of their termination effective January 20, 1995, it also appears clear that the respondent lifted the effects of that termination by so informing them that effective January 23, 1995, they are being reassigned to different branches of bank. As January 20, 1995 is a Friday and January 23, 1995 is a Monday, the two-day gap are non-working days in the bank. This is the basis of respondent in saying that the complainants were not dismissed. Respondent may have realized the severity of the earlier decision.

Under such circumstances, We believe that there was no illegal dismissal of the complainants.

Complainants, consistent with the stand that they have been dismissed, remained adamant in their refusal to report for work. The acts of the complainants in refusing to obey the transfer order issued to them constitute valid and lawful basis for their termination due to insubordination. They should be answerable by their very acts. Even if they believe that the order is unreasonable, it did not give the complainants the prerogative not to comply." ^[5]

According to respondent NLRC, petitioners were dismissed for insubordination which corresponds to willful disobedience under par. (a) of Article 282 of the Labor Code. We ruled in Gold City Integrated Port Services, Inc. vs. NLRC^[6] that willful disobedience of the employer's lawful orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two (2) requisites: the employee's assailed conduct must have been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.

It appears from the record, however, that the earlier memorandum issued by private respondent dated January 20, 1995 terminated the services of petitioners on the ground of serious misconduct for violation of Rule IV of the Bank's Code of Conduct,^[7] where it held as follows:

"As you are well aware of, Rule IV of the Bank's Code of Conduct strictly prohibits an employee from undermining the interest of the Bank by issuing malicious, derogatory or false statements involving the good name of the Bank or its management/stockholders. As you are likewise aware of such action is considered as a serious misconduct for which the penalty is outright dismissal.

By your own admission of your willful and collective authorship of the subject letter as well as the surreptitious distribution thereof with the other Guadalupe Branch personnel concerned, and based on the results of the investigation on such other Guadalupe Branch personnel, you have been determined to have committed a serious misconduct and willfully violated the lawful order of the Bank as embodied in Rule IV of the Banks' Code of Conduct which penalizes such offense with dismissal. In accordance with Article 282 of the Labor Code of the Philippines, you are hereby dismissed from your employment immediately upon your receipt hereof."^[8]

Normally, the factual findings of quasi-judicial agencies, such as the NLRC, which have acquired expertise in the matters entrusted to their jurisdiction are accorded by the Supreme Court not only respect but even finality if they are supported by substantial evidence, or that amount of relevant evidence which a reasonable man might accept as adequate to justify a conclusion.^[9] But this is true only when they do not come under the established exceptions. One of these is where the findings of the labor arbiter and the NLRC are contrary to each other. In the instant case, the findings of the NLRC and the labor arbiter are inconsistent, hence there is a necessity to review the records to determine which of them should be preferred as more conformable to the evidentiary facts.

Contrary to the findings of the NLRC that there is a valid ground for dismissal, i.e. insubordination, we find that petitioners were not actually dismissed due to insubordination in refusing to comply with the notices of transfer of assignment but were dismissed for admitting authorship of the "open-letter," as evidenced by the memorandum issued to petitioners last January 20, 1995. Thus, for want of substantial basis, in fact or in law, we cannot give the stamp of finality and conclusiveness normally accorded to the factual findings of an administrative agency, such as herein public respondent NLRC,^[10] as even decisions of administrative agencies which are declared "final" by law are not exempt from the judicial review when so warranted.^[11]

Private respondent bank maintains that petitioners violated a company policy. It is a recognized principle that company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally valid and binding on the parties and must be complied with until finally revised or amended, unilaterally or preferably through negotiation, by competent authority.^[12] Notwithstanding the company policy violated, the issue is whether or not the infraction committed by them warrants the penalty of dismissal. We believe not.

The fundamental guarantees of security of tenure and due process dictate that no worker shall be dismissed except for just and authorized cause provided by law and after due process.^[13] Under Article 282 of the Labor Code, as amended, an employer may validly terminate the services of an employee on the following grounds: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing.

In termination cases, the burden of proof rests on the employer to show that the dismissal is for just cause.^[14] When there is no showing of a clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid or authorized cause.^[15]

In this case, private respondent has not established nor presented sufficient basis for the dismissal of petitioners from service on the ground of serious misconduct. As correctly found by the Labor Arbiter, there is nothing wrong with the petitioners issuance of the open-letter. It does not lay any material claims upon the bank, nor does it threaten any sanction, nor invoke right to credit, nor preferential treatment. It merely expressed an opinion. Thus, there was here no prejudice, nor intent to prejudice respondent as a banking entity.^[16]

Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious within the meaning of the Act must be of such a grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the employee's work to constitute just cause for his separation.^[17] In this case however, the misconduct has no relation to the work of petitioners; hence, not a valid ground.

On moral and exemplary damages, we found no evidence showing that private respondent's dismissal of petitioners was in bad faith. Moral damages are recoverable only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy.^[18] A dismissal may be contrary to law but by itself, it does not establish bad faith.^[19] In Primero vs. IAC, ^[20] we ruled:

"xxx if the evidence adduced by the employee before the Labor Arbiter should establish that the employer did indeed terminate the employee's services without just cause or without judgment it shall be for the employer to reinstate the employee and pay him his backwages, or exceptionally, for the employee simply to receive separation pay. These are reliefs explicitly prescribed by the Labor Code. But any award of moral damages by the Labor Arbiter obviously cannot be based on the Labor Code but should be grounded on the Civil Code. Such an award cannot be justified solely upon the premise (otherwise sufficient for redress under the Labor Code) that the employer fired his employee without just cause or due process. Additional facts must be pleaded under the Civil Code, these being, to repeat, that the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and, of course, that social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom.

IN VIEW WHEREOF, the assailed Decision of the NLRC is SET ASIDE and the decision of the Labor Arbiter is REINSTATED subject to the MODIFICATION that the award of MORAL and EXEMPLARY DAMAGES is DELETED.

SO ORDERED.

Regalado, (Chairman), Puno, and Mendoza, JJ., concur.

Melo, J., on leave.

---

^[1] Comment, Office of the Solicitor General, Rollo, p. 194.

^[2] "1). ALMA COSEP
a. P3,900.00 as separation pay (in lieu of reinstatement)
b. P18,837.00 as backwages
c. P 2,925.00 as 13th month pay
d. P 2,574.00 as unpaid wages
e. P20,000.00 as moral and exemplary damages

2). DULCEVITA SORIANO
a. P27,200.00 as separation pay
b. P26,275.00 as backwages
c. P 5,440.00 as 13th month pay
d. P 9,030.00 as unpaid wages
e. P20,000.00 as moral and exemplary damages

3). MARILOU COQUIA
a. P13,500.00 as separation pay
b. P21,735.00 as backwages
c. P 4,500.00 as 13th month pay
d. P 2,970.00 as unpaid wages
e. P20,000.00 as moral and exemplary damages

4). MARY JANE RABORAR
a. P 3,900.00 as separation pay
b. P18,837.00 as backwages
c. P 2,925.00 as 13th month pay
d. P 2,574.00 as unpaid wages
e. P20,000.00 as moral and exemplary damages."

^[3] NLRC Decision promulgated on February 19, 1996, penned by Presiding Commissioner Raul T. Aquino with Commissioners Victoriano R. Calaycay, and Rogelio I. Rayala, concurring; Annex "A" of Petition; Rollo, p. 28.

^[4] Petition, Rollo, at p. 9.

^[5] Annex "A" of Petition, Rollo, p. 40.

^[6] G.R. No. 86000, 21 September 1990, 189 SCRA 811.

^[7] Rule IV. Offenses Against Integrity of the Bank.

Under no circumstances shall any employee of the Bank, directly or indirectly, express, imply or manifest agreement to, any word derogatory or inimical to the prestige and integrity of the Bank nor in any manner cause doubt to be cast upon the integrity and financial soundness of the Bank and to the good morale of its management.

These offenses are, but not limited to the following:

A. Undermining the interest of the Bank by making or issuing malicious, derogatory or false statements involving the good name of the Bank, or its management/stockholders.

1. First Offense - - - - - - - - - - - - - - - - - - - - - - - - - - - Dismissal.

^[8] Annex " O, P, Q, R", Petition, pp. 161-168

^[9] Falguera vs. Linsangan, 251 SCRA 364

^[10] Foodmine, Inc. vs. NLRC, et. al., G.R. No. 84688, August 20, 1990, 188 SCRA 748; Artex Development Co., Inc. vs. NLRC, et. al., G.R. No. 65045, July 19, 1990, 187 SCRA 611; Tiu vs. NLRC, et. al., G.R. No. 83433, November 12, 1992, 215 SCRA 469.

^[11] Chung Fu Industries (Phils.) Inc. vs. Court of Appeals, et. al., G.R. No. 96283, February 25, 1992, 206 SCRA 545.

^[12] Tañala vs. National Labor Relations Commission, 252 SCRA 314.

^[13] Section 1, Rule XIV, Book V, Omnibus Rules Implementing the Labor Code.

^[14] Agoy vs. National Labor Relations Commission, 252 SCRA 588.

^[15] Valiant Machinery and Metal Corporation vs. NLRC, G.R. No. 15877, 25 January 1996.

^[16] Annex "G," Petition, pp. 99-100.

^[17] Department of Labor Manual, Section 4343.01, cited in Azucena, The Labor Code, Vol. II, Revised Edition, 1996, p. 662.

^[18] Lopez vs. Javier, 252 SCRA 68.

^[19] Palmeria, Sr. vs. NLRC, G.R. No. 113290-91 August 3, 1995, 247 SCRA 57.

^[20] 156 SCRA 435 [1987]; See Suario vs. Bank of P.I., 176 SCRA 695 [1989].