Affidavits of Retraction and Evidence in Illegal Dismissal Cases: PNB v. Gregorio

The Supreme Court's 2017 ruling in Philippine National Bank v. Gregorio (G.R. No. 194944) clarifies two important points for employers and employees alike: how courts may review decisions of the National Labor Relations Commission (NLRC), and how affidavits of retraction are weighed in illegal dismissal disputes. The case also illustrates the kind of evidence an employer needs to prove a valid dismissal for just cause.

The Facts of the Case

Teresita Fe Gregorio worked for Philippine National Bank (PNB) for over two decades, rising from apprentice teller to Branch Manager of its Sucat, Parañaque branch. In 2003, PNB's Internal Audit Group investigated alleged irregular lending activities at the branch. The audit found that Gregorio and a customer relations specialist allegedly convinced depositors to invest in a high-yield scheme: depositors would take out loans secured by their own deposits, then lend the proceeds to third parties who promised to pay 5% monthly interest. Of this, 3% went to the depositors and 2% supposedly to the branch as commission—yet no such commissions appeared in bank records.

Three depositors executed affidavits describing these transactions. Gregorio was charged with gross misconduct and dishonesty. During the administrative proceedings, two of the three depositors executed affidavits of retraction. PNB's Administrative Adjudication Panel nonetheless recommended dismissal, and PNB terminated Gregorio in May 2004.

The Procedural Path

Gregorio filed an illegal dismissal complaint. The Labor Arbiter ruled in her favor, finding PNB's evidence insufficient—particularly since two of the three affidavits had been retracted. The NLRC reversed, holding that PNB had met its burden of proof. Gregorio then went to the Court of Appeals (CA) via a petition for certiorari under Rule 65, arguing grave abuse of discretion. The CA reinstated the Labor Arbiter's decision. PNB appealed to the Supreme Court.

The Issue: Scope of Judicial Review of NLRC Decisions

The Supreme Court granted PNB's petition and reinstated the NLRC ruling. The Court emphasized a crucial procedural point: NLRC decisions are not subject to appeal. They may be reviewed by the CA only through a special civil action for certiorari under Rule 65, and only on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction.

This is not the same as an appeal. In a Rule 65 petition, the CA cannot simply substitute its judgment on the facts. It must determine whether the NLRC acted capriciously, whimsically, or arbitrarily. Errors of judgment—even serious ones—do not amount to grave abuse of discretion. The Court found that Gregorio's petition before the CA essentially asked for a review of the merits, not a showing of jurisdictional error, and the CA erred in reversing the NLRC on that basis.

Affidavits of Retraction Are Generally Unreliable

On the evidence, the Court agreed with the NLRC that PNB had presented substantial evidence—"relevant evidence which a reasonable mind might accept as adequate to justify a conclusion"—of Gregorio's irregular activities. This included the audit memorandum, the depositors' affidavits, bank records, and testimony from branch tellers.

The Court rejected the CA's emphasis on the retractions. Citing settled jurisprudence, the Court noted that an affidavit of retraction does not automatically make the earlier statement false. Retractions are "generally unreliable and looked upon with considerable disfavor" because they can be easily fabricated. Their reliability is assessed like any other evidence, by examining the surrounding circumstances.

In this case, Villar's retraction was never identified or authenticated, making its weight highly suspect. Rebollo's retraction, read closely, actually affirmed Gregorio's participation—it stated that Gregorio introduced Rebollo to the person who would use her money. Even setting aside the retractions, the audit paper trail independently established the irregular transactions.

The Court also held that Gregorio had no right to confront her accuser in a company investigation. Due process in administrative proceedings only requires that the employee be given the opportunity to be heard and to refute the allegations—which Gregorio had.

Practical Takeaways

• NLRC decisions are final and not appealable. The only remedy is a Rule 65 petition for certiorari before the Court of Appeals, which succeeds only upon a showing of grave abuse of discretion, not mere error in judgment.
• Affidavits of retraction carry little weight by themselves. A retraction does not prove the original statement was false; courts examine the circumstances, including whether the retraction was authenticated and whether its contents actually support or undermine the original account.
• Employers may dismiss based on substantial evidence, not proof beyond reasonable doubt. An audit report, corroborating affidavits, and documentary evidence showing a pattern of irregular transactions can satisfy this standard.
• Confrontation of witnesses is not required in company investigations. Due process is satisfied when the employee is informed of the charges and given a chance to respond.
• For employees facing dismissal, bare denials are unlikely to overcome a documented paper trail. Presenting counter-evidence that directly explains or rebuts the documentary findings is essential.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.