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Case Digest: TAMPCO v. Duclan (March 16, 2016)

G.R. No. 203005

March 14, 2016



Petitioner Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) is a duly registered cooperative based in Tabuk City, Kalinga. It is engaged in the business of obtaining investments from its members which are lent out to qualified member-borrowers. The two other petitioners are both officers of TAMPCO.

On the other hand, respondent Duclan, was employed as TAMPCO cashier. One of her duties as Cashier was to sign checks for release.

In 2002, TAMPCO introduced Special Investment Loans (SILs) to its members and prospective borrowers. A year after introducing the SIL program, TAMPCO realized that a considerable amount of the cooperative's loanable funds was being allocated to SILs, which thus adversely affected its ability to lend under the regular loan program. It further discovered that single individual borrowings under the SIL program reached precarious levels, thus placing the resources of the cooperative at risk. Thus, in June 2003, the TAMPCO BOD issued BA No. 28, putting a cap on SIL borrowings at P5 million. In October of the same year, BA No. 55 was issued, completely prohibiting the grant of SILs.

Despite issuance of BA Nos. 28 and 55, respondent and the other officers of the cooperative including its former General Manager, continued to approve and release SILs to borrowers, among them Falgui and Kotoken, who received millions of pesos in loans in January and December of 2004, and in January 2005. Eventually, Falgui claimed insolvency, and Kotoken failed to pay back her loans.

Upon discovery of the said irregularity, TAMPCO BOD initiated an investigation. Respondent and the other officers who appeared to be responsible were made to explain. Respondent admitted to her failure to obey BA Nos. 28 & 55 despite knowledge of the directives. Thus, TAMPCO BOD suspended them from work and were ordered to collect the amount lost by the cooperative with a threat that should they fail to collect, they would be dismissed.

Respondent failed to collect the amount she was told to collect and thereafter, after notice, the cooperative dismissed her service.

Thus, respondent filed a complaint for illegal dismissal.


Whether or not respondent was dismissed for a just cause.


The dismissal is proper.

Under Article 282 of the Labor Code, the employer may terminate the services of its employee for the latter's serious misconduct or willful disobedience of its or its representative's lawful orders. And for willful disobedience to constitute a ground, it is required that: "(a) the conduct of the employee must be willful or intentional; and (b) the order the employee violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties that he had been engaged to discharge.

In releasing loan proceeds to SIL borrowers like Falgui and Kotoken even after the BOD issued BA Nos. 28 and 55, respondent, and the other cooperative officers, willfully and repeatedly defied a necessary, reasonable and lawful directive of the cooperative's BOD, which directive was made known to them and which they were expected to know and follow as a necessary consequence of their respective positions in the cooperative. They placed the resources of the cooperative - the hard-earned savings of its members - in a precarious state as a result of the inability to collect the loans owing to the borrowers' insolvency or refusal to honor their obligations, Respondent committed gross insubordination which resulted in massive financial losses to the cooperative. Applying Article 282, her dismissal is only proper.

In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. In this case, due process was properly observed since respondent was given a chance to explain and was informed of the decision after a thorough investigation.

Respondent cannot question the TAMPCO BOD’s decision as regards the General Manager, whom the BOD permitted to retire and collect his benefits in full, for such decision is management’s prerogative on which the courts cannot interfere unless they violate labor laws, CBA and general principles of fairness & justice.

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