By way of exception, a legally dismissed employee may be awarded separation pay provided that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the employee.

G.R. No. 188747, 28 January 2014

Previously, complainant was hired as an Instrument Technician. Sometime afterwards, Defendant discovered that 24 meters were missing in its stockroom. “Upon initial investigation, it appeared that [complainant] and his co-employee, a certain Danilo Manguera, were involved in the pilferage and the sale of water meters to the company’s contractor. Consequently, Manila Water issued a Memorandum dated 23 June 2000, directing [complainant] to explain in writing within 72 hours why he should not be dealt with administratively for the loss of the said water meters. In his letter-explanation, [complainant] confessed his involvement in the act charged and pleaded for forgiveness, promising not to commit similar acts in the future.”

To give ample opportunity for him to explain, an administrative hearing was conducted wherein complainant was found responsible  for the loss of the water meters. Thus, he was found liable for violating the company’s Code of Conduct. Accordingly, he was dismissed. As a result, complainant filed this labor complaint. Throughout the proceedings, it was held that there was no illegal dismissal but complainant was awarded separation pay considering that he had served 21 years to the company.

On review before the Supreme Court, the issue raised is with respect to the award by the appellate court of separation pay.

HELD: The award of separation pay is deleted. “As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to a separation pay.” However, in exceptional cases, separation pay has been granted to a legally dismissed employee as an act of “social justice” or on “equitable grounds.” In either case, “it is required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the employee.”

Citing the leading case of PLDT v. NLRC (247 Phil. 641, 1988), the Supreme Court laid down the rule “that separation pay shall be allowed as a measure of social justice only in the instances where the employee is validly dismissed for causes other than serious misconduct reflecting his moral character…”

In subsequent cases, the high tribunal “expanded the exclusions and elucidated that separation pay shall be allowed as a measure of social justice only in instances where the employee is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his moral character… the labor officials [were instructed] that they must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the court to the cause of the labor should not embarrass us from sustaining the employers when they are right… In fine, [the Court] should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of liberality of the law.”

Here, complainant’s claim for separation pay was denied “since the admitted cause of his dismissal amounts to serious misconduct. He is not only responsible for the loss of the water meters in flagrant violation of the company’s policy but his act is in utter disregard of his partnership with his employer in the pursuit of mutual benefits.”

It should be noted that the years of service may determine the separation pay to be awarded if proper. However, that is not the reason why such pay should be granted at all. “That Del Rosario rendered 21 years of service to the company will not save the day for him.”