Case Digest: Universal Robina v. Castillo

G.R. No. 189686 : JULY 10, 2013




Respondent Wilfredo Castillo (Castillo) was hired by petitioner Universal Robina Corporation (URC) as a truck salesman on March 23, 1983 with a monthly salary of P4,000. He rose from ranks and became a Regional Sales Manager until his dismissal on January 12, 2006. The area of Castillos responsibility covered some parts of Laguna, including Lianas Supermart (Liana) in Laguna.

On August 19, 2005, URCs Credit and Collection Department (CCD) Analyst noted an outright deduction in the amount of P72,000 tagged as Gift Certificate (GC). This finding prompted URCs Corporate Internal Audit (CIA) to conduct a routine audit of the unresolved accounts of Lianas account receivables. The CIA suspected that respondent might have committed an act of fraud against the company and Lianas for his personal gain. Lianas Vice President for Marketing confirmed the receipt of the GCs by respondent. Hence, respondent was asked to explain in writing why the company should not institute the appropriate disciplinary action against him. Respondent denied accepting any GC.

On May 30, 2006, respondent filed a complaint for illegal dismissal against petitioners URC and its President and Chief Operating Officer (COO) Lance Gokongwei.

The LA ruled that respondent was illegally dismissed and ordered the payment of backwages and separation pay. The NLRC reversed the decision of the LA, finding that URC had more sufficient proof that respondent violated its trust. The CA upheld respondents dismissal but awarded him separation pay as a form of equitable relief.

ISSUE: Whether or not respondent is entitled to separation pay?

HELD: Respondent is not entitled to separation pay.


The leading case of Philippine Long Distance Telephone Co. v. NLRC enunciated the ruling that separation pay as a measure of social justice is allowed in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. The case of Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. NLRC expanded the doctrine laid down in PLDT by adding dismissals other than those under Art. 282 of the Labor Code, like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family which would preclude award of separation pay.

As the rule now stands, the award of separation pay is authorized in the situations dealt with in Article 283 and 284 of the Labor Code, but not in terminations of employment based on instances enumerated in Article 282.

Central Philippies Bandag Retreaders, Inc. cautioned labor tribunals in indiscriminately awarding separation pay as a measure of social justice.

Indeed, respondent has committed acts constituting willful breach of trust and confidence reposed on him by URC.

In Bank of the Philippine Islands v. NLRC and Arambulo, we ruled that an employee who has been dismissed for a just cause under Article 282 of the Labor Code is not entitled to separation pay.