Separation Pay Cannot be Awarded to Validly Dismissed EmployeeAtty Elvin
- Separation pay as provided in Articles 298 and 299 of the Labor Code.
- Separation pay in lieu of reinstatement.
- Separation pay as a form of financial assistance pursuant to any agreement, practice or policy of the company.
- Separation pay based on equity or social justice. (See page 346, Guide to Valid Dismissal of Employees, 2nd Edition by Atty. Villanueva)
Separation pay based on equity or social justice is an award given to an employee who is dismissed for cause or grounds under Art. 297 of the Labor Code, as amended. These grounds are serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime or offense against the person of employer or his representative, and analogous cause to the said grounds.
In Bristol Myers Squibb (Phils.) Inc. vs. Baban (594 Phil. 620 (2008)), the employee therein, who held a position of trust and confidence, gave out therein the company’s medical samples as a token of gratitude to the supporters of his father who lost in the May 11, 1998 elections. He was held validly dismissed on the ground of loss of trust and confidence, but the Court granted him separation pay as an equitable relief in consideration of past services rendered, since his dismissal was for a cause other than serious misconduct or those that negatively reflected on his moral character, citing Philippine Long Distance Telephone Company (PLDT) vs. NLRC (247 Phil 641 (1988)).
In said PLDT vs. NLRC case, the Court disallowed the grant of separation pay to the employee therein, a traffic operator of PLDT, who was held validly dismissed for dishonesty because she demanded and received PhP3,800.00 in consideration of her promise to facilitate approval of therein complainants’ applications for telephone installation. The Court thus declared that separation pay should 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.
However, in the 2019 case of Cadavas vs. Court of Appeals (G.R. No. 228765, March 20, 2019), said ruling in the PLDT case has to be taken together with the later ruling of the Court in Central Philippines Bandag Retreaders, Inc. vs. Diasnes (580 Phil. 177 (2008)).
In the Central Philippines case the Court held that the PLDT doctrine was later expanded in Toyota Motors Phils. Corp. Workers Association vs. National Labor Relations Commission (Toyota) wherein it was held that that in addition to serious misconduct, in dismissals based on other grounds under Art. 282 [now Art. 297 in a re-numbered Labor Code], 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.
The ruling in Toyota provides that 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 [now Art. 297] of the Labor Code that sanction dismissals of employees.