Republic of the
SUPREME COURT
SECOND DIVISION
RETREADERS, INC.,
Petitioner, Present:
QUISUMBING, J.,
Chairperson,
CARPIO MORALES,
-
versus - TINGA,
VELASCO,
JR., and
BRION, JJ.
PRUDENCIO
J. DIASNES, Promulgated:
Respondent.
July
14, 2008
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D E C I S I
O N
VELASCO, JR., J.:
Respondent Prudencio J. Diasnes was initially hired by
petitioner Central Philippines Bandag Retreaders, Inc. (Bandag) as technical
service representative for the Visayas and Bicol areas. In the course of his employment with Bandag,
Diasnes was able to show his strengths and received numerous awards and
citations. In 1995, Diasnes received a
promotional appointment as sales manager/officer-in-charge and was assigned to
manage Eastern Visayas Retreaders, Inc. based in
It was at this latest posting that Diasnes’ work performance started to deteriorate. From July to September in 1995, six (6) company-issued checks were dishonored for causes attributable to Diasnes and for which he was suspended for six (6) days. It was also during this two-month stretch that his absences and tardiness became more frequent.
On
Therefore,
the committee unanimously agreed that SM-OIC Prudencio Diasnes be: Relieved for
three (3) months. This will give him enough time to help his wife’s problem;
After the period lapsed he may return to work, but with another position or
function; if he desire[s] to retire from the company separation/retirement pay
may be granted to him.[1]
Diasnes, however, did not avail himself of any of
the options set forth in the committee’s report and recommendations, but
requested a
Thereafter, on
SUBJECT: Habitual
tardiness and Absenteeism
Your attendance records from Sept. 1 to
During this period, you have not reported to work for
25 working days and these are all absences without official leave. This shows
that your absences [amounted to] 50% [of the official work days] and [you were
tardy] 100% [of the] period referred [to].
You have committed an act unbecoming of an officer and
a breach of our policy on attendance. Habitual absenteeism and tardiness are
cause for suspension and/or termination from employment.
You are therefore required to submit your written
explanation within 48 hrs. from receipt of this memo and present yourself to
the employees adjudication committee.
The Adjudication committee will convene immediately
upon receipt of your reply. This consultation is of a substance to assure you
that the management prerogative to discipline employees is not exercised in an
arbitrary manner.
For your information and strict compliance.
L.C. RICO[2]
Apparently finding Diasnes’ explanation to be
insufficient, Bandag dismissed Diasnes from the service effective
TO : P.J. DIASNES
DATE :
SUBJECT: TERMINATION
OF EMPLOYMENT
You had been notified for gross and habitual neglect
of your duty and had been given enough time to be heard by an employees
adjudication committee[.] Again, you [had been apprised] that the consultation
is of a substance to assure you that the management prerogative to discipline
employees is not exercise[d] in [an] arbitrary manner.
A number of company representatives had been sent to
your residence but all failed to see you in person. A verification with the
company Doctor, yield[ed] negative report of any health related consultation.
All those that has been done is indicative of the management’s concern of
employees.
The termination of your employment is base[d] on the
following:
1.
HABITUAL
TARDINESS FROM SEPT. 1, 1996 TO
2.
ABSENCES
WITHOUT OFFICIAL LEAVE DURING THE SAME PERIOD.
3.
FAILURE
TO REPORT FOR WORK FROM
This is a willful breach of trust given to you as
officer of the company and serious misconduct of an employee. And it is our
belief, that you have put an end to the employer-employee relationship without
serving any written notice to the company.
Therefore, your employment is terminated effective
(Sgd.) Loreto C. Rico
General Manager[3]
To contest his dismissal from the service, Diasnes filed a complaint with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal dismissal, non-payment of salaries and allowances, 13th month pay, and other benefits against Bandag, Sarmiento Management Group, and Rico, docketed as NLRC RAB VII-1492-96.
On
WHEREFORE,
premises considered, judgment is hereby rendered ordering the respondent
Central Philippines Bandag Retreaders, Inc. to pay the complainant Prudencio J.
Diasnes Separation Pay in the amount of P278,965.50 and proportionate 13th
month pay in the amount of P14,652.74.
The
case against respondents Sarmiento Management Corporation and Loreto Rico and
the other claims are dismissed for lack of merit.
SO
ORDERED.
Therefrom, both parties appealed to the NLRC, Diasnes assailing the labor arbiter’s finding on the validity of his dismissal, while Bandag impugning the labor arbiter’s decision insofar as the award of separation pay was concerned.
Thereafter, on
Aggrieved, Bandag filed a motion to reconsider the decision of the NLRC.
By Resolution dated October 29, 1999, the NLRC partially granted reconsideration and deleted the award for separation pay, Diasnes having failed to establish that Bandag has an established policy of granting separation pay of one and a half (1 ½) month for every year of service to separated employees. The fallo of the NLRC’s resolution reads:
WHEREFORE,
premises considered, the Motion for Reconsideration filed by respondent Central
Philippines Bandag Retreaders, Inc., is PARTIALLY GRANTED. The Decision
promulgated on 12 January 1999 is ABANDONED and a new one is entered ordering
respondent Central Philippines Bandag Retreaders, Inc. to pay complainant
Prudencio J. [Diasnes] the amount of P14,652.74 representing [his]
proportionate 13th month pay.
SO
ORDERED.
Unsatisfied with the turn of events, Diasnes filed with the
Court of Appeals (CA) a petition for certiorari and prohibition with prayer for
injunctive relief. Docketed as CA-G.R. SP No. 58916, the petition sought the
reinstatement of the NLRC’s Decision dated
On
In time, Bandag filed a motion for reconsideration, but the
CA, by Resolution[6]
dated
Bandag now comes before this Court with the present petition under Rule 45 raising the sole issue for resolution, rephrased as follows:
WHETHER
OR NOT A VALIDLY AND LEGALLY SEPARATED EMPLOYEE MAY BE ENTITLED TO SEPARATION
PAY.
The Court’s Ruling
The labor arbiter resolved the issue in
the affirmative, basing his award of
separation pay mainly on the recommendation of the Employee Adjudication
Committee and on the finding that Diasnes’ dismissal was for a cause not
constituting serious misconduct or reflective of his moral character. This
ruling, as earlier recited, was eventually reversed by the NLRC, but was
subsequently reinstated by the CA.
Bandag excepts, claiming that separation pay could not and should not be granted based solely on the recommendation made by its adjudication committee. As Bandag explains, the recommendation was merely an offer which Diasnes did not accept, much less avail himself of. Alternatively, Bandag argues that the formula used by the labor arbiter to compute the separation pay, i.e., 1 ½ month’s pay per year of service instead of only one month’s pay per year of service, is wrong.
Diasnes, arguing for the propriety of the grant of separation pay, states that, given his exemplary service with the company for ten (10) years, the ends of social and compassionate justice would best be served if he is awarded separation pay or financial assistance. Diasnes further states that other legally separated employees were also granted separation pay at the rate of 1 ½ month’s salary per year of service.
The petition has merit.
We
agree with Bandag that the report of its Employee Adjudication Committee
recommending the grant to Diasnes of separation pay in case he opts to retire
or voluntarily leave the company was merely in the nature of an offer. Contrary to the perception of the labor
arbiter and the CA, the offer was not an open-ended arrangement which Diasnes
was free to accept or reject when convenient.
As
may be recalled, sometime in January 1996, Diasnes was asked by his superior to
appear before the Employee Adjudication Committee to assess his performance
during his tenure as the sales manager of Region VIII. It was at this time that the committee came up
with the following recommendations: first,
that Diasnes be relieved from his post as sales manager for three months, after
which he may return to work with another position or function; and second, that if Diasnes would want to
retire instead of availing himself of the first option, he would be granted
retirement or separation pay. None of
these recommendations, however, was availed of by Diasnes, as he instead asked
to be transferred to
We also agree with the NLRC’s October 29, 1999 Decision where it held that Diasnes failed to prove that Bandag regularly grants separation pay to dismissed employees, as a policy, and without regard as to the cause of dismissal. Absent substantial proof to the contrary, we refuse to disturb the factual findings of the NLRC.
The labor arbiter also erred in awarding separation pay based on social justice.
Gabuay v. Oversea Paper Supply[7] defines separation pay as the amount that an employee receives at the time of his severance and is designed to provide the employee with the wherewithal during the period he is looking for another employment. In San Miguel Corporation v. Lao,[8] the Court held that the award of separation pay is authorized in the situations dealt with in Article 283 and Art. 284 of the Labor Code, but not in terminations of employment based on instances enumerated in Art. 282.[9] In Eastern Paper Mills, Inc. v. NLRC, this Court held that:
The only cases when separation pay shall be paid,
although the employee was lawfully dismissed, are when the cause of termination
was not attributable to the employee’s fault but due to: (1) the installation
of labor saving devices, (2) redundancy, (3) retrenchment, (4) cessation of
employer’s business, or (5) when the employee is suffering from a disease and
his continued employment is prohibited by law or is prejudicial to his health
and to the health of his co-employees (Articles 283 and 284, Labor Code.) Other
than these cases, an employee who is dismissed for a just and lawful cause is
not entitled to separation pay even if the award were to be called by another
name.[10]
Separation pay is likewise awarded in lieu of reinstatement if reinstatement is no longer feasible, as when the relationship between the employer and employee has become strained.[11] Still, in some cases, separation pay or financial assistance may be extended as a measure of social justice. PLDT v. NLRC settled the matter on the award and amount of financial assistance or separation pay that may be awarded a legally separated employee based on social or compassionate justice. This Court held:
There should be no question that where it comes to
such valid but not iniquitous causes as failure to comply with work standards,
the grant of separation pay to the dismissed employee may be both just and
compassionate, particularly if he has worked for some time with the company.
For example, a subordinate who has irreconcilable policy or personal
differences with his employer may be validly dismissed for demonstrated loss of
confidence, which is an allowable ground. A working mother who has to be
frequently absent because she also has to take care of her child may also be
removed because of her poor attendance, this being another authorized ground. x x x Under these and similar circumstances,
however, the award to the employee of separation pay would be sustainable under
the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious
than mere inefficiency, the generosity of the law must be more discerning.
There is no doubt it is compassionate to give separation pay to a salesman if
he is dismissed for his inability to fill his quota but surely he does not
deserve such generosity if his offense is misappropriation of the receipts of
his sales. This is no longer mere incompetence but clear dishonesty. A security
guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if
he was in fact not really sleeping but sleeping with a prostitute during his
tour of duty and in the company premises, the situation is changed completely.
This is not only inefficiency but immorality and the grant of separation pay
would be entirely unjustified.
We hold that henceforth separation pay shall be
allowed as a measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is,
for example, habitual intoxication or an offense involving moral turpitude,
like theft or illicit sexual relations with a fellow worker, the employer may
not be required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social
justice.[12]
As may noted, PLDT declared that separation pay or financial assistance should be
denied a legally separated employee when the cause for dismissal is for an act
constituting serious misconduct or that reflects on the employee’s moral character.
PLDT,
however, did not go further to state that the grant or award of separation pay
or financial assistance is automatically awarded when the dismissal is for a
cause other than that contemplated in said case. This PLDT
doctrine was later expanded in
In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or wrongful intent or they reflected adversely on the moral character of the employees. We, therefore, find that in addition to serious misconduct, in dismissals based on other grounds under Art. 282, like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family, separation pay should not be conceded to the dismissed employee.
In analogous causes for termination, like inefficiency, drug use, and others, the NLRC or the courts may opt to grant separation pay anchored on social justice in consideration of length of service of the employee, the amount involved, whether the act is the first offense, the performance of the employee and the like, using guideposts enunciated in PLDT on the propriety of the award of separation pay.[13] (Emphasis added.)
To
reiterate our ruling in Toyota, labor
adjudicatory officials and the CA must demur the award of separation pay based
on social justice when an employee’s dismissal is based on serious misconduct
or willful disobedience; gross and habitual neglect of duty; fraud or willful
breach of trust; or commission of a crime against the person of the employer or
his immediate family—grounds under Art. 282[14]
of the Labor Code that sanction dismissals of employees. 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 labor should not embarrass us from sustaining the
employers when they are right, as here.
In fine, we should be more cautious in awarding financial assistance to
the undeserving and those who are unworthy of the liberality of the law.
The
attendant circumstances in the present case considered, we are constrained to
deny Diasnes separation pay since the cause for the termination of his
employment amounts to gross and habitual
neglect of his duties. His repeated
and continuous absences without prior leave and his frequent tardiness within
the last two months prior to his dismissal exemplify his utter disregard for
his employment and his employer’s interest. Diasnes’ character is also put into
question if we take into consideration that he should have been dismissed as
early as January 1996, if not for Bandag’s benevolence and goodwill. It is
unthinkable to award separation pay or financial assistance to an unworthy
employee who exploited and took advantage of his employer’s past generosity and
accommodation.
WHEREFORE, the
assailed Decision dated June 18, 2003 of the CA in CA-G.R. SP No. 58916 is
hereby REVERSED and SET ASIDE and the Resolution dated
October 29, 1999 of the NLRC is hereby REINSTATED.
No costs.
SO ORDERED.
PRESBITERO
J. VELASCO, JR.
Associate Justice
WE
CONCUR:
Associate Justice
Chairperson
Associate
Justice Associate Justice
ARTURO D. BRION
Associate
Justice
I attest that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.
Pursuant to Section 13,
Article VIII of the Constitution, and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo, p. 38.
[2]
[3]
[4]
[5]
[6]
[7] G.R. No. 148837, August 13, 2004, 436 SCRA 514, 519-520.
[8] G.R. Nos. 143136-37, July 11, 2002, 384 SCRA 504, 509-510.
[9] (a) Serious misconduct or willful disobedience of the lawful orders of the employer in connection with the employee’s work; (b) Gross and habitual neglect; (c) Fraud or willful breach; (d) Commission of a crime by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other analogous cases.
[10] G.R. No. 85497, February 24, 1989, 170 SCRA 595, 597-598.
[11] Gabuay v. Oversea Paper Supply, Inc.,
G.R. No. 148837, August 13, 2004, 436 SCRA 514, 520.
[12] No. L-80609, August 23, 1988, 164 SCRA 671, 681-682.