Doctrines on Grant of Separation Pay

PLDT v. NLRC and Marilyn Abucay (G.R. No. L-80609, Aug. 23, 1988)

Under this doctrine, separation pay as a measure of social justice shall be allowed only if the employee is validly dismissed:

[1] for causes other than serious misconduct; or
[2] for causes that do not reflect on his moral character.

Toyota Workers [TMPCWA] v. NLRC; G.R. Nos. 158786 and 158789, Oct. 19, 2007

The Toyota doctrine has expanded the coverage of excepted cases. Thus, the commission of any of the grounds in Article 282 of the Labor Code, except analogous causes, would not merit payment of financial assistance.

In the following cases, the Toyota doctrine was applied; hence, no financial assistance was awarded because the grounds invoked are in accordance with Article 282:

Reno Foods v. Nagkakaisang Lakas (NLM)

It was maintained that labor adjudicatory officials and the Court of Appeals 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 Article 282 of the Labor Code that sanction dismissals of employees.

Equitable PCI Bank v. Dompor, Moya v. First Solid Rubber Industries, Inc.

Unilever Philippines, Inc. v. Rivera, 

The infractions committed by the respondent constituted serious misconduct or willful disobedience resulting in loss of trust and confidence.

Central Philippines Bandag Retreaders, Inc. v. Diasnes

Quiambao v. Manila Electric Company

This case involved gross and habitual neglect of duties due to respondent’s repeated and continuous absences without prior leave and frequent tardiness.
PAL v. NLRC; G.R. No. 123294, October 20, 2010

This 2010 doctrine enunciates a reversion to PLDT doctrine’s equity and social justice exception. While the Toyota case clarified that the grant of separation pay may still be precluded even if the ground for the employee’s dismissal is not serious misconduct under Article 282(a) of the Labor Code but other just causes under the same article and/or other authorized causes provided for under the Labor Code, however, Toyota still recognized the social justice exception prescribed in PLDT v. NLRC and Abucay.

In other words, under the present jurisprudential framework, the grant of separation pay as a matter of equity to a validly dismissed employee is not contingent on whether the ground for dismissal is expressly provided under Article 282(a) but whether the ground relied upon is akinto serious misconduct or involves willful or wrongful intent on the part of the employee. Consequently, there is a need to examine in every case if the special circumstances described in PLDT are present to determine whether the validly dismissed employee is entitled to separation pay.

In the case at bar, there were uncontroverted special circumstances which justify the grant of separation pay to private respondent onequitable considerations. The transgressions imputed to private respondent have never been firmly established as deliberate and willful acts clearly directed at making petitioner lose millions of pesos. At the very most, they can only be characterized as unintentional, albeit major, lapses in professional judgment. Likewise, the same cannot be described as morally reprehensible actions. Thus, private respondent may be granted separation pay on the ground of equity which is defined as “justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application where there is law.”

Solidbank v. NLRC; G.R. No. 165951, March 30, 2010

Under this 2010 doctrine, as distinguished from just cause termination, employees terminated due to authorized cause are not entitled to be paid additional separation pay by way of financial assistance.

The reason is that the employer is only required under the law to pay his employees separation pay in accordance with Article 283 of the Labor Code. That is all that the law requires. The Court should refrain from adding more than what the law requires, as the same is within the realm of the legislature.

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