Republic of the Philippines In its challenged resolution of September 22, 1987, the NLRC said:

SUPREME COURT
… Anent the award of separation pay as financial assistance in complainant’s favor,
Manila
We find the same to be equitable, taking into consideration her long years of service
EN BANC to the company whereby she had undoubtedly contributed to the success of
respondent. While we do not in any way approve of complainants (private
G.R. No. 80609 August 23, 1988
respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is for
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner, reasons of equity and compassion that we resolve to uphold the award of financial
assistance in her favor. 5
vs.
The position of the petitioner is simply stated: It is conceded that an employee
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN
illegally dismissed is entitled to reinstatement and backwages as required by the
ABUCAY, respondents.
labor laws. However, an employee dismissed for cause is entitled to neither
Nicanor G. Nuevas for petitioner. reinstatement nor backwages and is not allowed any relief at all because his dismissal
is in accordance with law. In the case of the private respondent, she has been
awarded financial assistance equivalent to ten months pay corresponding to her 10
DECISION year service in the company despite her removal for cause. She is, therefore, in effect
rewarded rather than punished for her dishonesty, and without any legal
CRUZ, J.:
authorization or justification. The award is made on the ground of equity and
The only issue presented in the case at bar is the legality of the award of financial compassion, which cannot be a substitute for law. Moreover, such award puts a
assistance to an employee who had been dismissed for cause as found by the public premium on dishonesty and encourages instead of deterring corruption.
respondent.
For its part, the public respondent claims that the employee is sufficiently punished
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone with her dismissal. The grant of financial assistance is not intended as a reward for
Company, was accused by two complainants of having demanded and received from her offense but merely to help her for the loss of her employment after working
them the total amount of P3,800.00 in consideration of her promise to facilitate faithfully with the company for ten years. In support of this position, the Solicitor
approval of their applications for telephone installation. 1 Investigated and heard, General cites the cases of Firestone Tire and Rubber Company of the Philippines v.
she was found guilty as charged and accordingly separated from the service. 2 She Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where the employees were
went to the Ministry of Labor and Employment claiming she had been illegally dismissed for cause but were nevertheless allowed separation pay on grounds of
removed. After consideration of the evidence and arguments of the parties, the social and compassionate justice. As the Court put it in the Firestone case:
company was sustained and the complaint was dismissed for lack of merit.
In view of the foregoing, We rule that Firestone had valid grounds to dispense with
Nevertheless, the dispositive portion of labor arbiter’s decision declared:
the services of Lariosa and that the NLRC acted with grave abuse of discretion in
WHEREFORE, the instant complaint is dismissed for lack of merit. ordering his reinstatement. However, considering that Lariosa had worked with the
company for eleven years with no known previous bad record, the ends of social and
Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally
compassionate justice would be served if he is paid full separation pay but not
blameless in the light of the fact that the deal happened outside the premises of
reinstatement without backwages by the NLRC.
respondent company and that their act of giving P3,800.00 without any receipt is
tantamount to corruption of public officers, complainant must be given one month In the said case, the employee was validly dismissed for theft but the NLRC
pay for every year of service as financial assistance. 3 nevertheless awarded him full separation pay for his 11 years of service with the
company. In Soco, the employee was also legally separated for unauthorized use of a
Both the petitioner and the private respondent appealed to the National Labor
company vehicle and refusal to attend the grievance proceedings but he was just the
Relations Board, which upheld the said decision in toto and dismissed the
same granted one-half month separation pay for every year of his 18-year service.
appeals. 4 The private respondent took no further action, thereby impliedly accepting
the validity of her dismissal. The petitioner, however, is now before us to question Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly
the affirmance of the above- quoted award as having been made with grave abuse of dismissed for preferring certain dealers in violation of company policy but was
discretion. allowed separation pay for his 2 years of service. In Metro Drug Corporation v.
NLRC, 9 the employee was validly removed for loss of confidence because of her service, but in Filipro the award was two months separation pay for 2 years service.
failure to account for certain funds but she was awarded separation pay equivalent In Firestone, the employee was allowed full separation pay corresponding to his 11
to one-half month’s salary for every year of her service of 15 years. In Engineering years of service, but in Metro, the employee was granted only one-half month
Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he separation pay for every year of her 15 year service. It would seem then that length
had instigated labor unrest among the workers and had serious differences with of service is not necessarily a criterion for the grant of separation pay and neither
them, among other grounds, but he was still granted three months separation pay apparently is the reason for the dismissal.
corresponding to his 3-year service. In New Frontier Mines, Inc. v. NLRC, 11 the
The Court feels that distinctions are in order. We note that heretofore the separation
employee’s 3- year service was held validly terminated for lack of confidence and
pay, when it was considered warranted, was required regardless of the nature or
abandonment of work but he was nonetheless granted three months separation pay.
degree of the ground proved, be it mere inefficiency or something graver like
And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et
immorality or dishonesty. The benediction of compassion was made to cover a
al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also
multitude of sins, as it were, and to justify the helping hand to the validly dismissed
allowed three employees who had been dismissed after they were found guilty of
employee whatever the reason for his dismissal. This policy should be re-examined.
misappropriating company funds.
It is time we rationalized the exception, to make it fair to both labor and
The rule embodied in the Labor Code is that a person dismissed for cause as defined management, especially to labor.
therein is not entitled to separation pay. 13 The cases above cited constitute the
There should be no question that where it comes to such valid but not iniquitous
exception, based upon considerations of equity. Equity has been defined as justice
causes as failure to comply with work standards, the grant of separation pay to the
outside law, 14 being ethical rather than jural and belonging to the sphere of morals
dismissed employee may be both just and compassionate, particularly if he has
than of law. 15 It is grounded on the precepts of conscience and not on any sanction
worked for some time with the company. For example, a subordinate who has
of positive law. 16 Hence, it cannot prevail against the expressed provision of the labor
irreconcilable policy or personal differences with his employer may be validly
laws allowing dismissal of employees for cause and without any provision for
dismissed for demonstrated loss of confidence, which is an allowable ground. A
separation pay.
working mother who has to be frequently absent because she has also to take care
Strictly speaking, however, it is not correct to say that there is no express justification of her child may also be removed because of her poor attendance, this being another
for the grant of separation pay to lawfully dismissed employees other than the authorized ground. It is not the employee’s fault if he does not have the necessary
abstract consideration of equity. The reason is that our Constitution is replete with aptitude for his work but on the other hand the company cannot be required to
positive commands for the promotion of social justice, and particularly the protection maintain him just the same at the expense of the efficiency of its operations. He too
of the rights of the workers. The enhancement of their welfare is one of the primary may be validly replaced. Under these and similar circumstances, however, the award
concerns of the present charter. In fact, instead of confining itself to the general to the employee of separation pay would be sustainable under the social justice
commitment to the cause of labor in Article II on the Declaration of Principles of State policy even if the separation is for cause.
Policies, the new Constitution contains a separate article devoted to the promotion
But where the cause of the separation is more serious than mere inefficiency, the
of social justice and human rights with a separate sub- topic for labor. Article XIII
generosity of the law must be more discerning. There is no doubt it is compassionate
expressly recognizes the vital role of labor, hand in hand with management, in the
to give separation pay to a salesman if he is dismissed for his inability to fill his quota
advancement of the national economy and the welfare of the people in general. The
but surely he does not deserve such generosity if his offense is misappropriation of
categorical mandates in the Constitution for the improvement of the lot of the
the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A
workers are more than sufficient basis to justify the award of separation pay in proper
security guard found sleeping on the job is doubtless subject to dismissal but may be
cases even if the dismissal be for cause.
allowed separation pay since his conduct, while inept, is not depraved. But if he was
The Court notes, however, that where the exception has been applied, the decisions in fact not really sleeping but sleeping with a prostitute during his tour of duty and in
have not been consistent as to the justification for the grant of separation pay and the company premises, the situation is changed completely. This is not only
the amount or rate of such award. Thus, the employees dismissed for theft in inefficiency but immorality and the grant of separation pay would be entirely
the Firestone case and for animosities with fellow workers in the Engineering unjustified.
Equipmentcase were both awarded separation pay notwithstanding that the first
We hold that henceforth separation pay shall be allowed as a measure of social
cause was certainly more serious than the second. No less curiously, the employee in
justice only in those instances where the employee is validly dismissed for causes
the Soco case was allowed only one-half month pay for every year of his 18 years of
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 WHEREFORE, the petition is GRANTED. The challenged resolution of September
involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the 22,1987, is AFFIRMED in toto except for the grant of separation pay in the form of
employer may not be required to give the dismissed employee separation pay, or financial assistance, which is hereby DISALLOWED. The temporary restraining order
financial assistance, or whatever other name it is called, on the ground of social dated March 23, 1988, is LIFTED. It is SO ORDERED.
justice.
Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin,
A contrary rule would, as the petitioner correctly argues, have the effect, of Sarmiento, Cortes and Medialdea, JJ., concur.
rewarding rather than punishing the erring employee for his offense. And we do not
agree that the punishment is his dismissal only and that the separation pay has
nothing to do with the wrong he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted separation pay even as he is
validly dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is again found out.
This kind of misplaced compassion is not going to do labor in general any good as it
will encourage the infiltration of its ranks by those who do not deserve the protection
and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best it may mitigate the penalty
but it certainly will not condone the offense. Compassion for the poor is an
imperative of every humane society but only when the recipient is not a rascal
claiming an undeserved privilege. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the punishment of the
guilty. Those who invoke social justice may do so only if their hands are clean and
their motives blameless and not simply because they happen to be poor. This great
policy of our Constitution is not meant for the protection of those who have proved
they are not worthy of it, like the workers who have tainted the cause of labor with
the blemishes of their own character.
Applying the above considerations, we hold that the grant of separation pay in the
case at bar is unjustified. The private respondent has been dismissed for dishonesty,
as found by the labor arbiter and affirmed by the NLRC and as she herself has
impliedly admitted. The fact that she has worked with the PLDT for more than a
decade, if it is to be considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened instead of betraying
during all of her 10 years of service with the company. If regarded as a justification
for moderating the penalty of dismissal, it will actually become a prize for disloyalty,
perverting the meaning of social justice and undermining the efforts of labor to
cleanse its ranks of all undesirables.
The Court also rules that the separation pay, if found due under the circumstances of
each case, should be computed at the rate of one month salary for every year of
service, assuming the length of such service is deemed material. This is without
prejudice to the application of special agreements between the employer and the
employee stipulating a higher rate of computation and providing for more benefits
to the discharged employee. 17