Quiambao vs. Manila Electric Company

Separation pay, whether claimed as a statutory right or invoked as an act of compassion under the policy of social justice, may not be awarded to an employee validly dismissed for any of the just causes under Article 282 of the Labor Code — including serious misconduct and gross and habitual neglect of duty. The constitutional policy of providing full protection to labor is not an instrument to oppress employers, and labor adjudicatory officials and the Court of Appeals must demur to awards of separation pay based on social justice when the dismissal is grounded on serious misconduct or willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, or the commission of a crime against the person of the employer or his immediate family.

Arsenio S. Quiambao was employed by the Manila Electric Company (MERALCO) as a branch teller at its Mandaluyong office beginning July 16, 1986, and was responsible for handling and processing payments made by the company's customers. MERALCO is a public utility engaged in the distribution of electricity within its franchise area, a service the Court of Appeals characterized as vital and of the utmost necessity to the lives of its customers. The company maintained a Company Code of Employee Discipline which gave primacy to the maintenance of discipline as a matter of fundamental importance, and which supplied the contractual and disciplinary framework against which the petitioner's conduct was measured.

On July 16, 1986, the Manila Electric Company hired Arsenio S. Quiambao as a branch teller at its Mandaluyong office, where he was responsible for handling and processing payments made by the company's customers. His employment records, however, disclosed a pattern of repeated violations of the Company Code of Employee Discipline and deteriorating performance in the latter part of his employment.

Between 1992 and 1999, Quiambao was penalized nine times. He served a ten-day suspension for excessive absences from November 11 to 24, 1999; a five-day suspension for excessive absences from October 19 to 25, 1999; and a three-day suspension for excessive absences from July 27 to 29, 1999. He was reprimanded for assaulting another person with bodily harm over work matters on February 17, 1999; for excessive tardiness on February 8, 1999 and on October 6, 1997; for simple absence on March 11, 1997; and for excessive tardiness on June 14, 1996 and September 3, 1992. His merit ratings declined from "Satisfactory" in 1995 and 1996, to "Needs Improvement" in 1997 and 1998, and to "Poor" in 1999.

On March 10, 2000, a Notice of Investigation was served on Quiambao for unauthorized and unexcused absences on November 10, 25, 26 and 29, 1999; December 1, 2, 14, 15, 16, 17, 20, 21 and 22, 2000; and from February 17, 2000 up to the date of the notice. The notice required him to appear at the investigation and to present evidence in support of his defense, but he did not participate. In a Memorandum dated March 21, 2000, the legal department recommended his dismissal for excessive, unauthorized and unexcused absences, which constituted abandonment of work under the Company Code of Employee Discipline and gross and habitual neglect of duty under Article 282 of the Labor Code. By Notice of Dismissal dated March 28, 2000, his employment was terminated effective March 29, 2000.

On July 3, 2001, Quiambao filed a complaint before the Arbitration Branch of the NLRC assailing the legality of his dismissal. He did not dispute his absences but averred that they had been incurred with corresponding approved applications for leave of absence, and he further claimed that he had been denied due process. The Labor Arbiter dismissed the complaint for lack of merit, finding no evidence that the absences were authorized and holding that his habitual absenteeism without leave justified termination for gross and habitual neglect of duties under Article 282(b) of the Labor Code. The NLRC affirmed the legality of the dismissal for habitual absenteeism but awarded him separation pay of ₱126,875.00, computed as ₱18,125.00 multiplied by fourteen years and divided by two, relying on Philippine Geothermal, Inc. vs. National Labor Relations Commission.

On certiorari, the Court of Appeals nullified the NLRC's award and reinstated the Labor Arbiter's dismissal of the complaint. It found the award of separation pay capricious, whimsical and unwarranted, there being neither factual nor legal basis for it, and characterized Quiambao's unexcused and habitual absences as worse than inefficiency — a gross and habitual neglect of duty bordering on dishonesty that merited no consideration or compassion, particularly because MERALCO is a public utility whose distribution of electricity is a service of the utmost necessity to its customers. The appellate court likewise noted that the responsibility required of the company's employees had been given primacy in its Company Code on Employee Discipline.

• Erroneous Finding of Serious Misconduct: Petitioner contended that the Court of Appeals grievously erred in concluding that he was guilty of serious misconduct and in deleting the award of separation pay, insisting that his infractions did not reflect on his moral character, did not create imminent or substantial injury to the company's operations or to the consuming public, and were not committed for self-interest or an unlawful purpose but on account of domestic and marital problems.
• Finality of NLRC Findings: Petitioner argued that the NLRC, whose findings are entitled to great respect and finality, regarded his unauthorized absences as gross and habitual neglect of duty only, and not as serious misconduct.
• Reliance on Philippine Geothermal: Petitioner maintained that under Philippine Geothermal, Inc. vs. National Labor Relations Commission, an employee terminated on the similar ground of gross and habitual neglect of duties because of continued and unexplained absences was nonetheless granted separation pay, and that the same accommodation should be extended to him.
• Social Justice and Equity: Invoking the principles of social justice and equity, and citing his fourteen years of service in the company, petitioner claimed entitlement to separation pay.

• Entitlement of a Validly Dismissed Employee to Separation Pay: Whether a validly dismissed employee may be entitled to separation pay.

• Entitlement of a Validly Dismissed Employee to Separation Pay: No. Separation pay may not be awarded on the basis of social justice where the dismissal is grounded on serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, or the commission of a crime against the person of the employer or his immediate family — the just causes under Article 282 of the Labor Code.

• Entitlement of a Validly Dismissed Employee to Separation Pay: The Labor Arbiter, the NLRC and the Court of Appeals were uniform in finding petitioner guilty of gross and habitual neglect of duty; the only divergence was the NLRC's award of separation pay, which the Court of Appeals struck down after reviewing the records. The records showed that petitioner's unauthorized absences and tardiness were habitual despite his having been penalized for past infractions. Under Gustilo vs. Wyeth Philippines, Inc., a series of irregularities when put together may constitute serious misconduct, and gross neglect of duty becomes serious in character due to the frequency of instances. Serious misconduct was defined as 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. Petitioner never advanced any valid reason to justify his absences, and his intentional and willful violation of company rules showed his utter disregard of his work and of his employer's interest; there can be no good faith in intentionally and habitually incurring unexcusable absences. The Court of Appeals therefore did not commit grave abuse of discretion in equating petitioner's gross neglect of duty to serious misconduct. Even assuming that the ground for dismissal was gross and habitual neglect of duty, petitioner would still not be entitled to severance pay. In Central Philippines Bandag Retreaders, Inc. vs. Diasnes, the Court laid down the parameters for awarding separation pay as a measure of financial assistance: labor adjudicatory officials and the Court of Appeals must demur to 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 the commission of a crime against the person of the employer or his immediate family — grounds under Article 282 of the Labor Code that sanction dismissals. They must be most judicious and circumspect in awarding separation pay or financial assistance, since the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress employers, and the Court's commitment to the cause of labor should not embarrass it from sustaining employers when they are right. Accordingly, the Court declared itself more cautious in awarding financial assistance to the undeserving and those unworthy of the liberality of the law.

• Separation Pay as Financial Assistance Limited by Article 282 Just Causes — Although the policy of social justice has in several instances compelled the Court to accord financial assistance in the form of separation pay to a legally terminated employee, that liberality is not without limitations. Labor adjudicatory officials and the Court of Appeals must demur to the award of separation pay based on social justice when the employee's dismissal is based on (a) serious misconduct or willful disobedience; (b) gross and habitual neglect of duty; (c) fraud or willful breach of trust; or (d) commission of a crime against the person of the employer or his immediate family — the grounds under Article 282 of the Labor Code that sanction dismissals. In this case, the petitioner's dismissal rested on gross and habitual neglect of duty, and the award of separation pay was accordingly deleted.
• Serious Misconduct — Serious misconduct is 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. A series of irregularities, when put together, may constitute serious misconduct. The Court of Appeals did not commit grave abuse of discretion in equating the petitioner's gross neglect of duty to serious misconduct, given his intentional and willful violation of company rules and his utter disregard of his work and his employer's interest.
• Gross and Habitual Neglect of Duty Aggravated by Frequency — Gross neglect of duty becomes serious in character due to the frequency of instances. The petitioner's unauthorized absences and tardiness were habitual notwithstanding the penalties previously imposed on him, and his intentional and habitual incurrence of unexcusable absences negated good faith. Even on the assumption that the ground for dismissal was gross and habitual neglect of duty rather than serious misconduct, the petitioner would still not be entitled to severance pay.
• Social Justice as Shield, Not Sword — The constitutional policy to provide full protection to labor is not meant to be an instrument to oppress employers; the Court's commitment to the cause of labor should not prevent it from sustaining employers when they are right. The liberality of the law can never be extended to the unworthy and undeserving, and where the manner and circumstances by which the employee committed the act constituting the ground for dismissal show his perversity or depravity, no sympathy or mercy of the law can be invoked.

• "The liberality of the law can never be extended to the unworthy and undeserving." — The opening pronouncement of the decision, which frames the entire ratio: the policy of social justice that has sometimes justified awards of separation pay to legally terminated employees is subject to limits, and cannot be invoked where the dismissal is attended by perversity or depravity.
• "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." — The canonical formulation of serious misconduct adopted by the Court, drawn from Philippine Long Distance Company vs. The Late Romeo F. Bolso, and applied to sustain the Court of Appeals' equation of the petitioner's gross neglect of duty with serious misconduct.
• "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 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 of the Labor Code that sanction dismissals of employees." — The controlling statement of the rule, quoted from Central Philippines Bandag Retreaders, Inc. vs. Diasnes, enumerating the Article 282 grounds that bar an award of separation pay on social justice.
• "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 closing rationale of the quoted passage from Central Philippines Bandag Retreaders, Inc. vs. Diasnes, which the Court adopted to justify the deletion of the separation pay awarded by the NLRC.

• Philippine Geothermal, Inc. vs. National Labor Relations Commission, G.R. No. 106370, September 8, 1994, 236 SCRA 371 — Cited by the petitioner for the proposition that an employee whose dismissal was found justified by unauthorized absences may nonetheless recover separation pay equivalent to one-half month pay for every year of service; the Court declined to extend the accommodation to the petitioner.
• Central Philippines Bandag Retreaders, Inc. vs. Diasnes, G.R. No. 163607, July 14, 2008, 558 SCRA 194 — The controlling precedent, quoted at length, which sets out the parameters for awarding separation pay as a measure of financial assistance and enumerates the Article 282 grounds that preclude such an award on social justice.
• Gustilo vs. Wyeth Philippines, Inc., 483 Phil. 69, 78 (2004) — Followed for the rule that a series of irregularities, when put together, may constitute serious misconduct.
• Piedad vs. Lanao del Norte Electric Cooperative, Inc., 237 Phil. 481, 488 (1987) — Cited in Gustilo as authority for the principle that a series of irregularities may amount to serious misconduct.
• Divina Luz P. Aquino-Simbulan vs. Nicasio Bartolome, A.M. No. MTJ-05-1588, June 5, 2009 — Cited for the rule that gross neglect of duty becomes serious in character due to the frequency of instances.
• Philippine Long Distance Company vs. The Late Romeo F. Bolso, G.R. No. 159701, August 17, 2007, 530 SCRA 550, 560 — Source of the definition of serious misconduct as 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.

• Article 282, Labor Code of the Philippines — Enumerates the just causes for termination of employment by the employer, including serious misconduct and willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and the commission of a crime against the person of the employer or his immediate family. The provision supplies both the ground for the petitioner's valid dismissal and the legal bar to the award of separation pay on social justice.
• Article 282(b), Labor Code of the Philippines — The specific ground of gross and habitual neglect of duty invoked by the company's legal department and found by the Labor Arbiter to justify the petitioner's termination; the Court held that even on this ground, the petitioner would still not be entitled to severance pay.
• Section 13, Article VIII, 1987 Constitution — Cited in the certification accompanying the decision, attesting that the conclusions of the Court had been reached in consultation before the case was assigned to the writer of the opinion of the Division.

Antonio T. Carpio (Chairperson), Teresita J. Leonardo-De Castro, Arturo D. Brion, and Roberto A. Abad concurred in the decision. Justice Carpio attested that the conclusions of the Court had been reached in consultation before the case was assigned to the writer of the opinion of the Division, and Chief Justice Reynato S. Puno certified the same pursuant to Section 13, Article VIII of the Constitution.