SEPARATION PAY IS NOT PROPER FOR VALIDLY DISMISSED EMPLOYEE PURSUANT TO TOYOTA DOCTRINE

Security Bank Savings Corporation (Formerly Premiere Development Bank) vs. Singson

G.R. No. 214230, February 10, 2016

Facts:

Respondent was initially employed by petitioner Premiere Development Bank (now Security Bank Savings Corporation [SBSC]) as messenger until his promotion as loans processor at its Sangandaan Branch. Thereafter, he was appointed as Acting Branch Accountant and later, as Acting Branch Manager. He was assigned to its Quezon Avenue Branch under the supervision of Branch Manager Corazon Pinero (Pinero) and held the position of Customer Service Operations Head (CSOH) tasked with the safekeeping of its checkbooks and other bank forms.

Respondent received a show cause memorandum from head of West Regional Operations, charging him of violating the bank’s Code of Conduct when he mishandled various checkbooks under his custody. The matter was referred to SBSC’s Investigation Committee which discovered, among others, that as of July 11, 2008, forty-one (41) pre-encoded checkbooks of the Quezon Avenue Branch were missing. At the scheduled conference before the Investigating Committee, respondent readily admitted having allowed the Branch Manager (i.e., Pinero) to bring out of the bank’s premises the missing checkbooks and other bank forms on the justification that the latter was a senior officer with lengthy tenure and good reputation. He claimed that it was part of Pinero’s marketing strategy to procure more clients for the bank and that he did not receive any consideration for consenting to such practice. He added that the reported missing checkbooks had been returned by Pinero to his custody after the inventory.

Pending investigation, respondent was transferred to SBSC’s Pedro Gil Branch. He was again issued a memorandum directing him to explain his inaccurate reporting of some Returned Checks and Other Cash Items (RCOCI) which amounted to P46,279.33. The said uncovered amount was treated as an account receivable for his account. A month thereafter, respondent was again transferred and reassigned to another branch in Sampaloc, Manila. Dismayed by his frequent transfer to different branches, respondent tendered his resignation effective thirty (30) days from submission. However, SBSC rejected the same in view of its decision to terminate his employment on November 11, 2008 on the ground of habitual neglect of duties.

Respondent instituted a complaint for illegal dismissal, among others. Petitioners maintained that respondent was validly dismissed for cause on the ground of gross negligence in the performance of his duties when he repeatedly allowed Pinero to bring outside the bank premises its pre-encoded checks and accountable forms in flagrant violation of the bank’s policies and procedures, and in failing to call Pinero’s attention on the matter which was tantamount to complicity and consent to the commission of said irregularity.

LA Ruling:

The Labor Arbiter (LA) dismissed the complaint and accordingly, declared respondent to have been terminated from employment for a valid cause. The LA found that respondent not only committed a violation of SBSC’s Code of Conduct but also gross and habitual neglect of duties when he repeatedly allowed Pinero to bring outside the bank premises the checkbooks and bank forms despite knowledge of the bank’s prohibition on the matter. According to the LA, the fact that SBSC suffered no actual loss or damage did not in any way affect the validity of his termination. This notwithstanding, the LA awarded respondent separation pay by way of financial assistance in the amount of P218,500.00.

Aggrieved, petitioners appealed to the NLRC.

NLRC Ruling:

The NLRC affirmed the LA decision, ruling that the grant of separation pay was justified on equitable grounds such as respondent’s length of service, and that the cause of his dismissal was not due to gross misconduct or that reflecting on his moral character but rather, a weakness of disposition and grievous error in judgment. It likewise observed that respondent never repeated the act complained of when he was transferred to other branches. Thus, it found the award of separation pay to be reasonable. Petitioners moved for reconsideration which was likewise denied prompting them to file petition for certiorari.

CA Ruling:

The CA denied the petition pointing out that separation pay may be allowed as a measure of social justice where an employee was validly dismissed for causes other than serious misconduct or those reflecting on his moral character. It held that since respondent’s infractions involved violations of company policy and habitual neglect of duties and not serious misconduct, and that his dismissal from work was not reflective of his moral character, the NLRC committed no grave abuse of discretion in sustaining the award of separation pay by way of financial assistance. It further concluded that respondent did not commit a dishonest act since he readily admitted to the petitioners that he allowed the Branch Manager to bring out the subject checkbooks. Moreover, it ruled that while respondent acquiesced to the latter’s marketing strategy that was contrary to the bank’s rules and regulations, there was no showing that his conduct was perpetrated with self-interest or for an unlawful purpose. Hence, the petition.

Issue/s:

Whether or not the award of separation pay is proper despite validity of dismissal

SC Ruling:

The SC found the petition meritorious.

Separation pay is warranted when the cause for termination is not attributable to the employee’s fault, such as those provided in Articles 298 and 299 of the Labor Code, as well as in cases of illegal dismissal where reinstatement is no longer feasible. On the other hand, an employee dismissed for any of the just causes enumerated under Article 297 of the same Code, being causes attributable to the employee’s fault, is not, as a general rule, entitled to separation pay. The non-grant of such right to separation pay is premised on the reason that an erring employee should not benefit from their wrongful acts. Under Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code, such dismissed employee is nonetheless entitled to whatever rights, benefits, and privileges he may have under the applicable individual or collective agreement with the employer or voluntary employer policy or practice. As an exception, case law instructs that in certain circumstances, the grant of separation pay or financial assistance to a legally dismissed employee has been allowed as a measure of social justice or on grounds of equity.

In Philippine Long Distance Telephone Co. v. NLRC (PLDT), the Court laid down the parameters in awarding separation pay to dismissed employees based on social justice. The grant of separation pay as financial assistance given in light of social justice be allowed only when the dismissal: (a) was not for serious misconduct; and (b) does not reflect on the moral character of the employee or would involve moral turpitude.

However, in the later case of Toyota Motor Philippines Corporation Workers Association v. NLRC (Toyota), the Court further excluded from the grant of separation  pay based on social justice the other instances listed under Article 282 (now 296). But with respect to analogous cases for termination likeinefficiency, drug use, and others, the social justice exception could be made to apply depending on certain considerations, such as the length of service of the employee, the amount involved, whether the act is thefirst offense, the performance of the employee, and the like. The Court finds the CA to have erred in awarding separation pay.

Notably, respondent’s long years of service and clean employment record will not justify the award of separation pay in view of the gravity of the foregoing infractions. Length of service is not a bargaining chip that can simply be stacked against the employer. ll told, the Court finds that the award of separation pay to respondent as a measure of social justice is riot warranted in this case. A contrary ruling would effectively reward respondent for his negligent acts instead of punishing him for his offense, in observation of the principle of equity.