ASM TRADING CENTER CORP. AND/OR ALLAN MACASAET, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) AND NESTOR V. LUCES, RESPONDENTS.

ASM Trading Center versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by ASM Trading Center Corporation and its president against the National Labor Relations Commission and its dismissed employee, Nestor Luces. The company does not dispute that Luces was validly dismissed; it attacks only the award of separation pay that the Commission granted him as financial assistance despite the lawfulness of his dismissal. The case matters because it draws a hard line on a favorite labor tribunal habit: granting separation pay out of compassion to an employee dismissed for serious misconduct. The Supreme Court here says equity cannot be used to reward the erring worker, and that long service, far from helping the dismissed employee, counts against him.

Procedural History

Luces filed a complaint for illegal dismissal and separation pay before the labor arbiter. The labor arbiter dismissed the complaint, exonerating the company from the charge of illegal dismissal and denying the money claims. On appeal, the National Labor Relations Commission affirmed the finding that Luces was validly dismissed for serious misconduct, but modified the decision by awarding him separation pay equivalent to one half month pay for every year of service, or 122,358 pesos and 78 centavos, by way of financial assistance. The company moved for partial reconsideration of the award, and the Commission denied the motion. The company then came to the Supreme Court on a petition for certiorari, imputing grave abuse of discretion to the Commission for awarding separation pay notwithstanding the legality of the dismissal. Luces failed to file his comment, and the case was submitted for decision.

Facts

ASM Trading Center Corporation is engaged in the printing business. It hired Nestor Luces as a Platemaker in July 1993, and at the time of his separation he was receiving a monthly salary of 13,595 pesos and 42 centavos.

On the second of May 2011, Luces reported for work under the influence of liquor and was also found sleeping during working hours. Acting on the incident report of its security guard, the company issued him a Notice to Explain. Luces submitted a written explanation admitting that he had come from a drinking spree and asking for management's forgiveness, claiming it was unintentional. At an administrative hearing he acknowledged that he knew of the company rule prohibiting employees from reporting to work under the influence of liquor and its corresponding penalty, and he admitted violating it. A second Notice to Explain was issued for sleeping during working hours on the same date, and again Luces replied and owned up to his wrongdoing, once more seeking forgiveness.

On the twenty-seventh of June 2011, the company issued a Notice of Termination for violation of company rules and regulations. Luces then filed a complaint for illegal dismissal and separation pay, arguing that while he was indeed under the influence of liquor, he did not deserve the supreme penalty of dismissal given his eighteen years of service and his untarnished employment record, that he had no malicious intent, and that the company suffered no actual damage. The company answered that he was dismissed for cause, having been charged under Section 5, Rule IV, on reporting for work while drunk, and Section 4, Rule VII, on sleeping during working hours, and that having admitted his infractions, the company had no choice but to impose the penalty ordained by its rules.

Issues

• Whether or not the National Labor Relations Commission gravely abused its discretion in awarding separation pay, by way of financial assistance, to an employee validly dismissed for serious misconduct.
• Whether or not the employee's long years of service and clean record justify an award of separation pay on equitable grounds despite a dismissal for a just cause under Article 282 of the Labor Code.

Applicable Provisions

Article 282 of the Labor Code, as quoted in the decision, provides:

ART. 282. Termination by employer. – An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and (e) Other causes analogous to the foregoing.

This is the pivotal provision, because the Court holds that an employee dismissed for any of these just causes is not entitled to separation pay.

Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code, quoted in the decision, provides:

Sec. 7. Termination of employment by employer. — The just causes for terminating the services of an employee shall be those provided in Article 282 of the Code. The separation from work of an employee for a just cause does not entitle him to the termination pay provided in the Code, without prejudice, however, to whatever rights, benefits and privileges he may have under the applicable individual or collective agreement with the employer or voluntary employer policy or practice.

This implementing rule confirms that a dismissal for just cause carries no termination pay as a matter of right.

Ruling

On the first issue, the Court granted the petition and held that the Commission gravely abused its discretion. As the rule now stands, an employee is not entitled to separation pay if he has been dismissed for any of the just causes under Article 282, and such an award is authorized only in the situations contemplated in Articles 283 and 284 of the same Code. Luces was dismissed for serious misconduct, one of the grounds under Article 282, and so he is plainly not entitled to separation pay.

On the second issue, the Court held that the rule applies with equal force where the validly dismissed employee has rendered long service. Such fact should not be taken in favor of the worker but rather against him, because betrayal by a long-time employee is more insulting and odious for a fair employer. The Court recalled its earlier doctrine that separation pay may be granted as a measure of social justice only where the dismissal was not for serious misconduct and did not reflect on the employee's moral character, and it reiterated its caveat that labor tribunals must be most judicious and circumspect, since the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress employers.

Doctrine

An employee validly dismissed for any just cause under Article 282 of the Labor Code is not entitled to separation pay. Separation pay is warranted only in the situations contemplated in Articles 283 and 284, and in cases of illegal dismissal where reinstatement is no longer feasible; it is not allowed when an employee is dismissed for just cause.

The exception of social justice or equity is narrow. Separation pay may be granted as financial assistance only if the dismissal was not for serious misconduct and did not reflect on the employee's moral character. Where the cause is serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, or a crime against the employer or his family, no separation pay may be awarded.

Length of service is not a bargaining chip to be stacked against the employer. Long service does not soften the rule; it aggravates the betrayal and cannot justify an award of separation pay to an employee dismissed for serious misconduct.

Disposition

The petition was granted, and the award of separation pay in favor of Nestor Luces was deleted.

Remember This

Memorize this line: separation pay as social justice is allowed only where the dismissal was not for serious misconduct and did not reflect on the employee's moral character, and long service counts against, not for, the erring worker. Examiners use this case to test the limits of social justice and equity in labor awards, especially where a labor tribunal grants financial assistance to an employee validly dismissed for serious misconduct.