G.R. No.

173189

February 13, 2013

JONATHAN
I.
SANG-AN, Petitioner,
vs.
EQUATOR KNIGHTS DETECTIVE AND SECURITY AGENCY, INC., Respondents.
Jonathan filed a complaint for illegal dismissal
Contrary to the findings of the CA, Jonathan was not merely suspended but was dismissed
from the service. While Jonathan initially filed an action for illegal suspension, the position
papers both parties filed treated the case as one for illegal dismissal. Jonathan alleged in his
position paper that "the [r]espondent illegally SUSPENDED (DISMISSED) the x x x
complainant[,]" and claimed that his dismissal lacked the required due process. 13 Similarly,
Equators position paper states that after the commission of the second offense on May 8,
2001, "[management] made up a decision to dismiss [Jonathan]."14 Even the LA treated the
case before him as "a case for illegal dismissal[.]" 15 In Equators memorandum to this Court,
it admitted that Jonathan was dismissed.16
We also find that Jonathan did not file his complaint for illegal suspension on May 2, 2001.
The records of the case disclose that the receiving date stamped on the complaint is May 24,
2001. The date relied upon by the CA, May 2, 2001, was the date when the complaint was
subscribed and sworn to before a notary public. 17 Due to the second offense committed by
Jonathan on May 8, 2001, Equator decided to dismiss him. Therefore, when the LA tried the
case, Jonathan had already been dismissed.
Equator failed to comply with the procedural due process
In order to validly dismiss an employee, it is fundamental that the employer observe both
substantive and procedural due process the termination of employment must be based on a
just or authorized cause and the dismissal can only be effected, after due notice and hearing.18
This Court finds that Equator complied with the substantive requirements of due process
when Jonathan committed the two offenses.
Article 282(A) of the Labor Code provides that an employee may be dismissed on the ground
of serious misconduct or willful disobedience of the lawful orders of his employer or
representative in connection with his work. Misconduct is improper or wrongful conduct; it is
the transgression of some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error of judgment. The
misconduct, to be serious within the meaning of the Labor Code, must be of such grave and
aggravated character and not merely trivial or unimportant. It is also important that the
misconduct be in connection with the employee's work to constitute just cause for his
separation.19

By losing two firearms and issuing an unlicensed firearm, Jonathan committed serious
misconduct. He did not merely violate a company policy; he violated the law itself
(Presidential Decree No. 1866 or Codifying the Laws on Illegal/Unlawful Possession,
Manufacture, Dealing in, Acquisition or Disposition, of Firearms, Ammunition or Explosives
or Instruments Used in the Manufacture of Firearms, Ammunition or Explosives, and
Imposing Stiffer Penalties for Certain Violations Thereof and for Relevant Purposes),20 and
placed Equator and its employees at risk of being made legally liable. Thus, Equator had a
valid reason that warranted Jonathans dismissal from employment as Assistant Operation
Manager.
The Court, however, finds that Equator failed to observe the proper procedure in terminating
Jonathans services. Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the
Labor Code provides that:
Section 2. Standard of due process: requirements of notice. In all cases of termination of
employment, the following standards of due process shall be substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the Labor
Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance
of counsel if the employee so desires, is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him; and
(c) A written notice [of] termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.21
Jurisprudence has expounded on the guarantee of due process, requiring the employer to
furnish the employee with two written notices before termination of employment can be
effected: a first written notice that informs the employee of the particular acts or omissions
for which his or her dismissal is sought, and a second written noticewhich informs the
employee of the employer's decision to dismiss him. In considering whether the charge in the
first notice is sufficient to warrant dismissal under the second notice, the employer must
afford the employee ample opportunity to be heard.
A review of the records shows that Jonathan was not furnished with any written notice that
informed him of the acts he committed justifying his dismissal from employment. The notice
of suspension given to Jonathan only pertained to the first offense, i.e., the loss of Equators
firearms under Jonathans watch.1wphi1 With respect to his second offense (i.e., the
issuance of an unlicensed firearm to Equators security guard that became the basis for his

dismissal), Jonathan was never given any notice that allowed him to air his side and to avail
of the guaranteed opportunity to be heard. That Equator brought the second offense before the
LA does not serve as notice because by then, Jonathan had already been dismissed.
In order to validly dismiss an employee, the observance of both substantive and procedural
due process by the employer is a condition sine qua non. Procedural due process requires that
the employee be given a notice of the charge against him, an ample opportunity to be heard,
and a notice of termination.22
Since Jonathan had been dismissed in violation of his right to procedural due process but for
a just cause, Equator should pay him nominal damages of P30,000.00, in accordance with
Agabon v. NLRC.23 The decision of the NLRC, although final, was brought to CA on a
petition for certiorari and was eventually nullified for grave abuse of discretion. When the CA
ruled on the case, this Court had abandoned the ruling in Serrano v. NLRC 24 in favor of the
Agabon ruling.

G.R. No. 171023

December 18, 2009

ARSENIO
S.
vs.
MANILA ELECTRIC COMPANY, Respondent.

QUIAMBAO, Petitioner,

The Labor Arbiter, the NLRC and the Court of Appeals found petitioner guilty of gross and
habitual neglect of duty.
The Labor Arbiter and the NLRC are one in holding that petitioners unauthorized absences
and repeated infractions of company rules on employee discipline manifest gross and habitual
neglect of duty that merited the imposition of the supreme penalty of dismissal from work.
The only difference in their ruling is that the NLRC awarded separation pay. The CA, after
reviewing the records of the case, affirmed the findings of the labor tribunals. And, on the
basis of these findings, further concluded that petitioners infractions are worse than
inefficiency; they border on dishonesty constituting serious misconduct.
We have examined the records which indeed show that petitioners unauthorized absences as
well as tardiness are habitual despite having been penalized for past infractions. In Gustilo v.
Wyeth Philippines, Inc.,16 we held that a series of irregularities when put together may
constitute serious misconduct. We also held that gross neglect of duty becomes serious in
character due to frequency of instances.17 Serious misconduct is said to be a transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and indicative of wrongful intent and not mere error of judgment. 18 Oddly,
petitioner never advanced any valid reason to justify his absences. Petitioners intentional and
willful violation of company rules shows his utter disregard of his work and his employers
interest. Indeed, there can be no good faith in intentionally and habitually incurring
unexcusable absences. Thus, the CA did not commit grave abuse of discretion amounting to
lack or excess of jurisdiction in equating petitioners gross neglect of duty to serious
misconduct.

Petitioner is not entitled to separation pay.

Besides, even assuming that the ground for petitioners dismissal is
gross and habitual neglect of duty, still, he is not entitled to severance pay. In Central
Philippines Bandag Retreaders, Inc. v. Diasnes, 19 we discussed the parameters of awarding
separation pay to dismissed employees as a measure of financial assistance, viz:
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 employees 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 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.20 (Emphasis supplied.)

EMPLOYEES PROFILE
A. INFRACTIONS -

Nature

DATE

ACTION TAKEN

FROM

TO

1. Excessive absences

11/11/99

11/24/99

10-day suspension

2. Excessive absences

10/19/99

10/25/99

5-day suspension

3. Excessive absences

07/27/99

07/29/99

3-day suspension

4. Assaulting others with

02/17/99

02/17/99

Reprimand

bodily harm over work

matters

5. Excessive tardiness

02/08/99

02/08/99

Reprimand

6. Excessive tardiness

10/06/97

10/06/97

Reprimand

7. Simple Absence

03/11/97

03/11/97

Reprimand

8. Excessive tardiness

06/14/96

06/14/96

Reprimand

9. Excessive tardiness

09/03/92

09/03/92

Reprimand

B. PERFORMANCE RATING
His merit ratings from 1995 to 1999 are as follows:
YEAR

RATING

1999

Poor

1998

Needs Improvement

1997

Needs Improvement

1996

Satisfactory

1995

Satisfactory5

G.R. No. 80609 August 23, 1988

PHILIPPINE
LONG
DISTANCE
TELEPHONE
COMPANY, Petitioner,
vs. THE
NATIONAL
LABOR
RELATIONS
COMMISSION
and
MARILYN ABUCAY, Respondents.

The rule embodied in the Labor Code is that a

person dismissed for cause as defined therein
is not entitled to separation pay. 13The cases
above cited constitute the exception, based

upon considerations of equity. Equity has been defined as justice outside law, 14being ethical
rather than jural and belonging to the sphere of morals than of law. 15It is grounded on the
precepts of conscience and not on any sanction of positive law. 16 Hence, it cannot prevail
against the expressed provision of the labor laws allowing dismissal of employees for cause
and without any provision for separation pay.chanroblesvirtualawlibrary chanrobles virtual
law library
Strictly speaking, however, it is not correct to say that there is no express justification for the
grant of separation pay to lawfully dismissed employees other than the abstract consideration
of equity. The reason is that our Constitution is replete with positive commands for the
promotion of social justice, and particularly the protection of the rights of the workers. The
enhancement of their welfare is one of the primary concerns of the present charter. In fact,
instead of confining itself to the general commitment to the cause of labor in Article II on the
Declaration of Principles of State Policies, the new Constitution contains a separate article
devoted to the promotion of social justice and human rights with a separate sub- topic for
labor. Article XIII expressly recognizes the vital role of labor, hand in hand with
management, in the advancement of the national economy and the welfare of the people in
general. The categorical mandates in the Constitution for the improvement of the lot of the
workers are more than sufficient basis to justify the award of separation pay in proper cases
even if the dismissal be for cause.chanroblesvirtualawlibrary chanrobles virtual law library
The Court notes, however, that where the exception has been applied, the decisions have not
been consistent as to the justification for the grant of separation pay and the amount or rate of
such award. Thus, the employees dismissed for theft in the Firestone case and for animosities
with fellow workers in the Engineering Equipment case were both awarded separation pay
notnvithstanding that the first cause was certainly more serious than the second. No less
curiously, the employee in the Soco case was allowed only one-half month pay for every year
of his 18 years of service, but in Filipro the award was two months separation pay for 2 years
service. In Firestone, the emplovee was allowed full separation pay corresponding to his 11
years of service, but in Metro, the employee was granted only one-half month separation pay
for every year of her 15year service. It would seem then that length of service is not
necessarily a criterion for the grant of separation pay and neither apparently is the reason for
the dismissal.chanroblesvirtualawlibrary chanrobles virtual law library
The Court feels that distinctions are in order. We note that heretofore the separation pay,
when it was considered warranted, was required regardless of the nature or degree of the
ground proved, be it mere inefficiency or something graver like immorality or dishonesty.
The benediction of compassion was made to cover a multitude of sins, as it were, and to
justify the helping hand to the validly dismissed employee whatever the reason for his
dismissal. This policy should be re-examined. It is time we rationalized the exception, to
make
it
fair
to
both
labor
and
management,
especially
to
labor.chanroblesvirtualawlibrary chanrobles virtual law library

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 has also to
take care of her child may also be removed because of her poor attendance, this being another
authorized ground. It is not the employee's fault if he does not have the necessary aptitude for
his work but on the other hand the company cannot be required to maintain him just the same
at the expense of the efficiency of its operations. He too may be validly replaced. 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.chanroblesvirtualawlibrary chanrobles virtual law library

G.R. No. 106370 September 8, 1994

PHILIPPINE
vs.
NATIONAL LABOR
ALVAREZ, respondents.

GEOTHERMAL,
RELATIONS

COMMISSION

INC., petitioner,
and

EDILBERTO

M.

An employee who earnestly desires to resume his regular duties after recovering from an
injury undoubtedly will not go through the trouble of getting opinions from five (5) different
of getting opinions from five (5) different physicians before going back to work after he has
been certified to be fit to return to his regular duties.
Petitioner has not been shown to be without sympathy or concern for Alvarez. He was given
fifty (50) days work-connected accident (WCA) leave with pay to allow him to recuperate
from his injury without loss of earnings. He was allowed to use his leave credits and was
actually given an additional fifteen (15) days WCA leave to allow him to consult his doctors
and fully recover from his injuries. Moreover, petitioner gave Alvarez several warnings to
report for work, otherwise, he would face disciplinary sanctions. In spite of these warnings,
Alvarez was absent without official leave (AWOL) for eighteen (18) days. Under company
policy, of which Alvarez was made aware, employees who incur without valid reason six (6)
or more absences are subject to dismissal.
Petitioner, in its fourth and last warning letter to Alvarez, was willing to allow him to resume
his work in spite of the eighteen (18) days he went on AWOL. It was made clear, however,
that should private respondent still fail to report for work on 5 March 1990, his employment
would be terminated.
Private respondent failed to report for work on 5 March 1990. Petitioner validly dismissed
him not only for violation of company policy but also for violation of Section 282(c) of the
Labor Code aforecited.
While it is true that compassion and human consideration should guide the disposition of
casses involving termination of employment since it affects one's source or means of
livelihood, it should not be overlooked that the benefits accorded to labor do not include
compelling an employer to retain the services of an employee who has been shown to be a
gross liability to the employer. The law in protecting the rights of the employees authorizes
neither oppression nor self-destruction of the employer. 12 It should be made clear that when
the law tilts the scale of justice in favor of labor, it is but a recognition of the inherent
economic inequality between labor and management. The intent is to balance the scale of
justice; to put the two parties on relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests of management but never should the
scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda
est (Justice is to be denied to none).

In Cando v. National Labor Relations Commission 13 the Court awarded separation pay to an
employee who was terminated for unuathorized absences. We believe that separation pay of
one-half (1/2) month salary for every year of service is adequate in this case.
__________________________---

CENTRAL PHILIPPINES BANDAG G.R. No. 163607

RETREADERS, INC.,
Petitioner,
Present:
QUISUMBING, J.,
Chairperson,
- versus -

PRUDENCIO J. DIASNES,
Respondent.

CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
Promulgated:
July 14, 2008

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 employees fault but due to: (1) the installation of labor
saving devices, (2) redundancy, (3) retrenchment, (4) cessation of employers
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 employees
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 Toyota Motors Phils. Corp.
Workers Association v. National Labor Relations Commission (Toyota), where
we held that:
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
employees 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
familygrounds 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 employers 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 Bandags benevolence and goodwill. It is
unthinkable to award separation pay or financial assistance to an unworthy
employee who exploited and took advantage of his employers past generosity
and accommodation.

G.R. No. 172044

February 06, 2013

CAVITE APPAREL, INCORPORATED and ADRIANO TIMOTEO, Petitioners,

vs.
MICHELLE MARQUEZ, Respondent.
Michelles penalty of dismissal too harsh or not proportionate to the infractions she
commited
Although Michelle was fully aware of the company rules regarding leaves of absence, and her
dismissal might have been in accordance with the rules, it is well to stress that we are not bound
by such rules. In Caltex Refinery Employees Association v. NLRC24 and in the subsequent case
of Gutierrez v. Singer Sewing Machine Company,25we held that "[e]ven when there exist some
rules agreed upon between the employer and employee on the subject of dismissal, x x x the
same cannot preclude the State from inquiring on whether [their] rigid application would work too
harshly on the employee." This Court will not hesitate to disregard a penalty that is manifestly
disproportionate to the infraction committed.
Michelle might have been guilty of violating company rules on leaves of absence and employee
discipline, still we find the penalty of dismissal imposed on her unjustified under the
circumstances. As earlier mentioned, Michelle had been in Cavite Apparels employ for six years,
with no derogatory record other than the four absences without official leave in question, not to
mention that she had already been penalized for the first three absences, the most serious
penalty being a six-day suspension for her third absence on April 27, 2000.
While previous infractions may be used to support an employees dismissal from work in
connection with a subsequent similar offense,26 we cautioned employers in an earlier case that
although they enjoy a wide latitude of discretion in the formulation of work-related policies, rules

and regulations, their directives and the implemtation of their policies must be fair and
reasonable; at the very least, penalties must be commensurate to the offense involved and to the
degree of the infraction.27
As we earlier expressed, we do not consider Michelles dismissal to be commensurate to the four
absences she incurred for her six years of service with the company, even granting that she
failed to submit on time a medical certificate for her May 8, 2000 absence. We note that she
again did not report for work on May 15 to 27, 2000 due to illness. When she reported back for
work, she submitted the necessary medical certificates. The reason for her absence on May 8,
2000 due to illness and not for her personal convenience all the more rendered her dismissal
unreasonable as it is clearly disproportionate to the infraction she committed.
Finally, we find no evidence supporting Cavite Apparels claim that Michelles absences
prejudiced its operations; there is no indication in the records of any damage it sustained
because of Michelles absences. Also, we are not convinced that allowing Michelle to remain in
employment even after her fourth absence or the imposition of a lighter penalty would result in a
breakdown of discipline in the employee ranks. What the company fails to grasp is that, given the
unreasonableness of Michelles dismissal i.e., one made after she had already been penalized
for her three previous absences, with the fourth absence imputed to illness confirming the
validity of her dismissal could possibly have the opposite effect. It could give rise to belief that the
company is heavy-handed and may only give rise to sentiments against it.
1wphi1

In fine, we hold that Cavite Apparel failed to discharge the burden of proving that Michelles
dismissal was for a lawful cause.28 We, therefore, find her to have been illegally dismissed.
As a final point, we reiterate that while we recognize managements prerogative to discipline its
employees, the exercise of this prerogative should at all times be reasonable and should be
tempered with compassion and understanding.29 Dismissal is the ultimate penalty that can be
imposed on an employee. Where a penalty less punitive may suffice, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe for what is at stake is
not merely the employees position but his very livelihood and perhaps the life and subsistence of
his family.30