Security Bank Savings Corporation v. Singson G.R. No. 214230, February 10, 2016

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Security Bank Savings Corporation v. Singson

G.R. No. 214230, February 10, 2016

FIRST DIVISION, PERLAS-BERNABE, J.

 

Separation pay a form of Financial Assistance 

A separation pay may be awarded as a form of financial assistance based given in light of social justice be allowed only when the dismissal: (a) was not for serious misconduct; and (b) does not reflect on the moral character of the employee or would involve moral turpitude.

 

Charles M. Singson was employed by Security Bank Savings Corporation (formerly Premiere Development Bank) for over 23 years, rising to the position of Customer Service Operations Head (CSOH) at the Quezon Avenue Branch. He was responsible for the safekeeping of checkbooks and other bank forms. In 2008, he was charged with violating the bank’s Code of Conduct after mishandling 41 pre-encoded checkbooks, allowing his Branch Manager to take them out of the bank without authorization. Despite his claims that this was a marketing strategy, the bank found him grossly negligent and dismissed him for habitual neglect of duty. 

Singson challenged his dismissal, and while the Labor Arbiter (LA) upheld the validity of his termination, it still awarded him separation pay as financial assistance. The NLRC and Court of Appeals (CA) affirmed, ruling that his dismissal was not due to serious misconduct or moral turpitude, and thus, he was entitled to separation pay under social justice principles. The bank contested this, arguing that gross negligence is a serious offense that disqualifies an employee from separation pay. 

 

Whether an employee dismissed for gross neglect of duty is entitled to separation pay as financial assistance under social justice principles. 

No. The Supreme Court ruled in favor of the bank, holding that Singson was not entitled to separation pay because his dismissal was due to gross and habitual neglect of duty, a just cause under Article 297 (formerly Article 282) of the Labor Code. The Court emphasized:

1. Separation pay is generally not awarded when dismissal is due to the employee’s fault – Employees dismissed for serious misconduct, willful disobedience, gross neglect, fraud, or crimes against the employer are not entitled to separation pay, as this would reward wrongful conduct.
2. Exception under social justice principles – Separation pay may be granted only if the dismissal was for reasons other than serious misconduct or moral turpitude. However, habitual neglect of duty is a serious offense that reflects poor moral character and a disregard for responsibilities, thus disqualifying Singson from receiving financial assistance.
3. Banks require extraordinary diligence – Given the fiduciary nature of banking, employees like Singson—who are entrusted with sensitive financial documents—must exercise the highest degree of care. His failure to safeguard checkbooks and repeated violations posed a risk to the bank’s credibility, justifying his dismissal without separation pay.

 

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San Miguel Corp. v. Teodosio G.R. No. 163033 | October 2, 2009

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San Miguel Corp. v. Teodosio

G.R. No. 163033 | October 2, 2009

THIRD DIVISION, PERALTA, J.

 

When Reinstatement is No Longer Possible 

Although the instant case calls for the reinstatement of the respondent to his former position as forklift operator or any equivalent position, the fact that his former position was already given to another regular employee; the length of time that this case has been pending; and the likely possibility that the protracted litigation may have seriously marred the relationship of the parties beyond reconciliation, may well have rendered reinstatement impossible. Accordingly, petitioner shall be awarded separation pay in lieu of reinstatement, if the latter is no longer possible. 

Eduardo L. Teodosio was hired by San Miguel Corporation (SMC) in 1991 as a forklift operator under multiple short-term contracts until he signed an Employment with a Fixed Period contract in 1993. Despite working continuously for four years, he was transferred to the bottling section in 1995 and later terminated, with his position as forklift operator given to another regular employee. He challenged his dismissal, arguing he had attained regular status and that his termination was illegal. The Labor Arbiter and NLRC ruled in favor of SMC, but the Court of Appeals (CA) reversed the decision, ordering Teodosio’s reinstatement with full backwages and benefits.

 

Whether an illegally dismissed employee should be reinstated if his former position has been permanently filled and no substantially equivalent position is available. 

No. The Supreme Court ruled that reinstatement was no longer possible and awarded separation pay instead, holding that, Teodosio was a regular employee – his repeated short-term contracts were a ploy to circumvent security of tenure, and he was engaged in an essential and continuous role in SMC’s business. But, reinstatement was not feasible. His former position had already been taken over by another regular employee, and no substantially equivalent position was available. Thus, separation pay was the proper remedy. In cases where reinstatement is impossible, separation pay must be awarded in addition to full backwages.

 


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Planters’ Products, Inc. vs. NLRC G.R. No. 78524, January 20, 1989.

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Planters’ Products, Inc. vs. NLRC  

G.R. No. 78524, January 20, 1989.

THIRD DIVISION, GUTIERREZ, JR., J.

 

Inclusion of Regular Allowances in Separation Pay Computation 

The salary base properly used in computing the separation pay should include not just the basic salary but also the regular allowances that an employee has been receiving.

 

Planters Products, Inc. (PPI) implemented a Retirement and Pension Plan (RPP) in 1984, which was approved by the Bureau of Internal Revenue. In 1985, PPI retrenched several employees due to operational downsizing, providing them with separation benefits calculated based on their basic salary, excluding regular allowances. The retrenched employees contested this computation, arguing that their separation pay should include regular allowances, and filed a complaint before the Labor Arbiter. The Labor Arbiter ruled in favor of the employees, a decision later affirmed by the National Labor Relations Commission (NLRC). PPI challenged this ruling, asserting that the computation was correct and that the NLRC lacked jurisdiction over the case.

 

Whether the computation of separation pay should include regular allowances in addition to the basic salary. 

Yes. The Supreme Court upheld the Labor Arbiter and NLRC’s decision, ruling that separation pay must be computed based on both basic salary and regular allowances. It held that the salary base for computing separation pay should not be limited to basic salary alone but must include all regular allowances an employee has been receiving. The Court also affirmed that the Labor Arbiter and NLRC had proper jurisdiction over the case, as it arose from an employer-employee relationship. Consequently, PPI was ordered to recompute the retrenched employees' separation pay to include regular allowances.

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Gaco vs. The Hon. NLRC G. R. No. 104690, Feb. 23, 1994

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Gaco vs. The Hon. NLRC

G. R. No. 104690, Feb. 23, 1994

SECOND, NOCON, J.

 

Separation pay awarded due to impossibility of reinstatenent 

Unjustified demotion, in effect, constitutes constructive dismissal, which is illegal, and which would entitle complainant to reinstatement and payment of backwages. However, where reinstatement is no longer viable due to strained relations, separation pay shall be granted in lieu of reinstatement, computed at one (1) month salary for every year of service.

 

Petitioner Zenaida Gaco was hired by Orient Leaf Tobacco Corporation in 1974 as a Picker and was later promoted to Production Recorder in 1975. She held this position for 14 years until the end of the 1989 working season. When she reported back to work in April 1990, she discovered that her position had been given to another employee, and she was demoted to a Picker without due process. 

Believing that her demotion was constructive dismissal, she refused the position and filed a complaint seeking separation pay. The Labor Arbiter ruled in her favor, declaring her demotion unjustified and awarding backwages and separation pay. However, on appeal, the NLRC modified the ruling, removing backwages and reducing separation pay to one-half month’s pay per year of service instead of the one-month rate awarded by the Labor Arbiter. 

Gaco challenged the NLRC ruling before the Supreme Court.

 

Whether separation pay is warranted when reinstatement is impossible due to constructive dismissal, and how it should be computed. 

Yes. The Supreme Court ruled in favor of Gaco, ordering full separation pay and backwages, affirming that when reinstatement is no longer possible, separation pay must be computed at the standard rate of one month per year of service. 

The Supreme Court reinstated the Labor Arbiter’s decision, ruling that:

1. Gaco was constructively dismissed – The demotion was unjustified and amounted to a forced resignation, making reinstatement no longer a viable option.
2. Separation pay was properly awarded – Since reinstatement was impossible due to strained relations, separation pay must be granted instead of reinstatement.
3. Computation of separation pay – The NLRC’s reduction of separation pay to one-half month’s pay per year of service was incorrect. The Court reinstated the Labor Arbiter’s ruling, granting one (1) month’s pay per year of service, which is the standard computation in cases of illegal dismissal.
4. Backwages entitlement – The Court held that Gaco was entitled to backwages from April 1990 until the finality of the decision, since she was illegally terminated through unjust demotion.

 

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Bani Rural Bank Inc. v. De Guzman G.R. No.170904, November 13, 2013

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Bani Rural Bank Inc. v. De Guzman

G.R. No.170904, November 13, 2013

SECOND, NOCON, J.

 

Separation pay awarded due to impossibility of reinstatement

 By jurisprudence derived from this provision, separation pay may [also] be awarded to an illegally dismissed employee in lieu of reinstatement." Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides the following instances when the award of separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper: (a) when reinstatement is no longer possible, in cases where the dismissed employee’s position is no longer available; (b) the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; and (c) 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.

 

Respondents Teresa De Guzman and Edgar C. Tan were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II. They were dismissed from their employment and subsequently filed a complaint for illegal dismissal. Initially, the Labor Arbiter dismissed their complaint, but the National Labor Relations Commission (NLRC) reversed the ruling, finding that they were illegally dismissed. 

In its March 17, 1995 decision, the NLRC ordered their reinstatement with backwages. However, during the execution phase, neither party took active steps to implement the reinstatement order. The NLRC Sheriff reported that respondents, through a representative, indicated that they were only interested in the monetary award and not reinstatement. In a July 31, 1998 decision, the NLRC modified its ruling, awarding separation pay in lieu of reinstatement, citing strained relations between the parties. This decision became final and executory on January 29, 1999. 

Despite this, the petitioners challenged the computation of backwages, arguing that it should only be computed until August 25, 1995, when the respondents allegedly waived reinstatement. The NLRC ruled otherwise, holding that backwages should be computed until January 29, 1999, the finality of the decision awarding separation pay. The Court of Appeals affirmed the NLRC’s ruling, prompting petitioners to elevate the case to the Supreme Court.

 

 

Whether separation pay is warranted when reinstatement is impossible due to strained relations, and how it should be computed. 

Yes. The Supreme Court upheld the CA and NLRC’s ruling, affirming that respondents were entitled to separation pay, as their termination was involuntary and not due to their fault. The Court emphasized:

1. Reinstatement was no longer feasible due to strained relations – The prolonged delay in execution and the lack of efforts from both parties to enforce reinstatement indicated that resuming employment would be impractical and detrimental to both sides.
2. Separation pay was properly awarded – Since reinstatement was no longer viable, separation pay must be granted instead. The Court ruled that the computation should follow the standard rate of one (1) month’s salary per year of service, as awarded by the NLRC in its final decision.
3. Backwages must be computed until the finality of the decision awarding separation pay – The petitioners’ claim that backwages should stop at August 25, 1995, when respondents allegedly waived reinstatement, was rejected. The Court held that since reinstatement was replaced with separation pay, backwages continued to accrue until January 29, 1999, when the decision granting separation pay became final.
4. Legal interest applies – The total monetary award, including backwages and separation pay, shall accrue a 6% legal interest per annum from January 29, 1999, until fully satisfied.

 

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