RESPONDENT Ma. Realiza S. Tanguin, a billing supervisor, filed a complaint against petitioners Claudia’s Kitchen, Inc. and Enzo Squillantini questioning her preventive suspension for allegedly forcing her co-employees to buy silver jewelry from her during office hours and inside the company premises. She alleged she was barred by a security guard from entering the company premises.
The Labor Arbiter (LA) ruled that her preventive suspension was justified and that she was not illegally dismissed. The petitioners were, however, ordered to pay her unpaid salary.
The National Labor Relations Commission (NLRC) affirmed the LA decision but directed petitioners to reinstate respondent to her former position but without backwages.
The Court of Appeals (CA) modified the decision of the NLRC ruling out entitlement to reinstatement in view of the strained relationship between respondent and petitioners. It awarded respondent separation pay as a measure of social justice.
Can the award be justified?
Ruling: No.
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. x x x.
As an exception, case law allows the grant of separation pay or financial assistance to a legally-dismissed employee as a measure of social justice or on grounds of equity. In Philippine Long Distance Telephone Co. v. NLRC (PLDT), 247 Phil. 641 (1988), the Court allowed the grant when the employee was validly dismissed for causes other than serious misconduct or those reflecting on his moral character.
The payment of separation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed. To award separation pay in lieu of reinstatement to an employee who was never dismissed by his employer would only give imprimatur to the unacceptable act of an employee who is facing charges related to his employment, but instead of addressing the complaint against him, he opted to file an illegal dismissal case against his employer.
In sum, separation pay is only awarded to a dismissed employee in the following instances: 1) in case of closure of establishment under Article 298 [formerly Article 283] of the Labor Code; 2) in case of termination due to disease or sickness under Article 299 [formerly Article 284] of the Labor Code; 3) as a measure of social justice in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character; 4) where the dismissed employee’s position is no longer available; 5) when the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; or 6) when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved.
In all of these cases, the grant of separation pay presupposes that the employee to whom it was given was dismissed from employment, whether legally or illegally. In fine, as a general rule, separation pay in lieu of reinstatement could not be awarded to an employee whose employment was not terminated by his employer.
There were cases, however, wherein the Court awarded separation pay in lieu of reinstatement to the employee even after a finding that there was neither dismissal nor abandonment.
In Nightowl Watchman & Security Agency, Inc. v. Lumahan (Nightowl), G.R. No. 212096, October 14, 2015, the Court awarded separation pay in view of the findings of the NLRC that respondent stopped reporting for work for more than 10 years and never returned, based on the documentary evidence of petitioner.
The circumstances in this case, however, do not warrant an application of the exception. Thus, the general rule that no separation pay may be awarded to an employee who was not dismissed obtains in this case. In this regard, it is only proper for Tanguin to report back to work and for the petitioners to accept her, without prejudice to the ongoing investigation against her. (Mendoza, J., SC 2nd Division, Claudia’s Kitchen, Inc. and Enzo Squillantini v. Ma. Realiza S. Tanguin, G.R. No. 221096, June 28, 2017).