Lack of moral depravity

When is separation pay to an employee proper despite the finding of lawful dismissal? This is answered once more in this case of Tony.

Tony started working for a bank (EPCIB) on December 3, 1973. He rose from the ranks and became a Senior Assistant Manager (Sales) of a branch with a monthly salary of P36, 358.52.

On March 13,1998 he received a Memorandum from the bank regarding the irregular clearing of an out of town check of the bank’s valued client by validating it as a local clearing check. In his answer Tony categorically denied having instructed his subordinates to make such validation. But during the course of the investigation by a Fact Finding Committee several other transactions violative of the Bank’s Policies and Rules were uncovered placing the bank at risk in the amount of P23,044,527.88. Said transactions were consummated only within a span of one month, from February 2 to March 2, 1998.

Consequently, the Fact Finding Officer issued another Memorandum asking Tony to explain the newly discovered irregularities. Tony’s explanation was found unsatisfactory. So after almost 25 years of employment he received another memorandum terminating his services effective immediately.

On September 7, 1998, Tony instituted a Complaint for Illegal Dismissal With Non Payment of Overtime Pay, Premium Pay for Holiday and rest day, Separation Pay, Retirement Benefits, Damages and Attorney’s fees.

After submission of position papers, the Labor Arbiter declared the dismissal of Tony legal but ordered the Bank to pay P10,000 for failure to fully comply with the requirements of due process. The NLRC affirmed this ruling with a modification requiring the Bank to pay Tony’s proportionate 13th month pay of P21, 209.31. The Court of Appeals (CA), on further appeal by Tony sustained the findings of the Labor Arbiter and the NLRC that Tony’s dismissal was valid. But it awarded separation pay equivalent to 1/2 month for every year of service in accordance with the social justice policy in favor of the working class. The Bank questioned this award for being contrary to law and jurisprudence. The bank contended that since Tony deliberately violated its policies, the dismissal was legal and so separation pay should not have been awarded. Was the Bank correct?

No. As a general rule, the award of separation pay is required for dismissals due to closure of establishment and reduction of personnel (Article 283 Labor Code) or due to an employee’s disease which is detrimental to his health or to that of his co-employees (Article 284) as well as for illegal dismissals in which reinstatement is no longer feasible. On the other hand, an employee dismissed for any of the just causes under Article 282 of the Labor Code is not, as a rule, entitled to separation pay.

As an exception, allowing the grant of separation pay or some other financial assistance to an employee dismissed for just causes is based on equity and as a measure of social justice. Separation pay may be awarded provided the dismissal for just causes does not fall under either of two circumstances: (1) there was serious misconduct or (2) the dismissal reflected the employee’s moral character. The dismissal in this case was due to loss of trust and confidence, not serious misconduct. While he violated the Bank’s policy, rules and regulations, there were no indications that his actions were perpetrated for his self-interest or for an unlawful purpose. On the contrary, his actions were motivated by a desire to accommodate a valued client of the bank. The ground for dismissal does not likewise reflect on the employee’s moral character. Furthermore separation pay is likewise granted considering the long years of employment. Accordingly, Tony’s employment of 25 years with only one other infraction that the Bank failed to elaborate on, also supports the award of separation pay (PCIB vs. Abad, G.R. 158045, February 28, 2005 452 SCRA 579)

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