ZENCO SALES, INC. AND/OR ZENCO FOOTSTEP, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, CAGAYAN DE ORO CITY, AND ANASTACIO C. YAP, RESPONDENTS.

This is a special civil action under Rule 65 to nullify the
resolution^[1]
of the public respondent of 12 May 1993 in NLRC CA No. M-001029-92 which
affirmed, with modification, the decision^[2] of
the Executive Labor Arbiter, Hon. Benjamin Pelaez, of 26 August 1992 in NLRC
RABX Case No. 10-06-00351-91, entitled “Anastacio C. Yap vs. Zenco
Sales, Inc. and/or Zenco Footstep.” The Labor Arbiter had dismissed
the private respondent’s complaint for illegal dismissal, profit sharing,
commission for 1990, and damages. The
public respondent affirmed the decision of the Labor Arbiter but awarded
“separation pay based on social justice.”

In dismissing the complaint, the Labor Arbiter noted and held:

“Anent the issue of illegal dismissal, We find for
Respondent. The Internal Audit Report
clearly established Complainant’s misfeasance and malfeasance in the
performance of his duty as Branch Manager which resulted to a loss of
substantial amount of money and an act inimical to the interest of Respondent
corporation. Complainant is guilty of
misfeasance for his failure to closely monitor and control the sales
transactions of salesman Chua and malfeasance because he used Respondent
corporation’s properties, equipments and personnel in connection with his
personal business of buy and sell of used sacks. These acts of Complainant constitute gross neglect in the
performance of duty and serious misconduct resulting to loss of trust and
confidence which under Article 292 [should be 282] of the Labor Code, as
amended, are ground [sic] to terminate an employment.

We further noted that Complainant failed to dispute the findings of
the Internal Auditors of Respondent corporation. However, he contended lack of due process in effecting the
termination of employment. On the
contrary, We find otherwise. Complainant was duly confronted by the findings of the auditors during
the investigation conducted by Mr. Lino Sy, Assistant Vice-President for Sales
in Mindanao, at De Luxe Hotel on 1 April 1991.”^[3]

In its resolution of 12 May 1993, the public respondent, acting
on the complainant’s appeal from the aforesaid decision, found the appeal
“devoid of merit,” declared that the Labor Arbiter’s findings that
the private respondent “is guilty of misfeasance and malfeasance is
substantially supported by the facts and evidence on record,” and
sustained the Labor Arbiter’s conclusion that the complainant was validly
dismissed for cause. It specifically
stated that the acts of the private respondent “constitute gross neglect
in the performance of duty and serious misconduct resulting to loss of trust
and confidence which under Article 292 [sic] of the Labor Code, as amended, are
ground [sic] to terminate an employment.” Nevertheless, it modified the
decision by granting the complainant separation pay at the rate of one month’s
salary for every year of service. Its
justification therefor reads:

“Considering, however, that the infractions of complainant
which involved violations of company policies does not constitute a depraved
act or those reflecting on his moral character and taking into further account
his ten (10) years of unblemished service, except for the instant case, We find
justifiable basis it awarding his separation pay based on social justice fixed
at the rate of one (1) month salary for every year 4 of service (See PLDT vs. NLRC, 164 SCRA
671 [1988]).”^[4]

Its motion to reconsider the modification having been denied by
the public respondent in the resolution of 17 June 1993,^[5] the
petitioner filed this special civil action imputing upon the public respondent
“patent abuse of discretion amounting to lack of jurisdiction and/or
excess of jurisdiction in modifying the decision . . . of the Labor
Arbiter.” It maintains that giving the complainant (private respondent)
separation pay “in the interest of social justice as an act of compassion
is unwarranted under the given set of facts” and his ten years of service
“cannot be given any premium to justify the award.”^[6]

In his comment posted on 28 September 1993, the private
respondent defends the modification because the same finds justification under
the Constitutional provision “for the improvement of the lot of the
workers” and the ruling in Philippine Long Distance Telephone Co. vs.
National Labor Relations
Commission,^[7] and asserts that the infraction he committed
did not, as correctly held by the public respondent, involve a depraved act or
those reflecting on his moral character.^[8] It
was, he claims, the petitioner’s saleswoman, Ms. Chua, who was directly
responsible for the losses it sustained.”

In its Manifestation in Lieu of Comment,^[9] the
Office of the Solicitor General submits “that there is merit in
petitioner’s contention that since, as found by the Labor Arbiter and the NLRC,
private respondent was guilty of committing acts which constitute gross neglect
in the performance of duty and serious misconduct ‘resulting to loss of trust
and confidence,’ the award of separation pay to private respondent was
improper,” and legally indefensible for it contravenes Section 7, Rule 1,
Book VI of the Omnibus Rules Implementing the Labor Code. It argues that the only cases where
separation pay shall be granted although the employee was lawfully dismissed
are when the cause of termination was not attributable to the employee’s fault
but due to the following reasons: (1)
the installation of labor-saving devices, (2) redundancy, (3) retrenchment, (4)
cessation of the employer’s business, or (5) when the employee is suffering
from a disease and his continued employment is prohibited by law or is
prejudicial to his health and to
the health of his co­-employees.^[10] It
cites this Court’s decisions in Eastern Paper Mills, Inc. vs. NLRC,^[11]
Philippine Long Distance Telephone Co. vs. NLRC,^[12]
and Baguio Country Club Corp. vs. NLRC.^[13]

The Office of the Solicitor General then concludes that from the
established facts in this case, “it is clear that private respondent was validly dismissed not only because
he committed neglect in the
performance of his duties and serious misconduct but that his acts of using
petitioner’s equipment and personnel for his personal use and benefit
constitutes an offense involving dishonesty.”

In the resolution of 1 December 1993,^[14]
copy of which was received by the public respondent on 20 December 1993, this
Court granted the prayer of the Office of the Solicitor General to give the
public respondent a new period to file its own comment. Despite three extensions of thirty days
each, the last of which, with warning, expired on 20 June 1994, the public respondent
did not file the required comment.

The Court then resolved to decide this case on the merits without
the public respondent’s comment.

We rule for the petitioner.

The public respondent affirmed the findings of the Labor Arbiter
that the private respondent “is guilty of misfeasance for his failure to
closely monitor and control the sales transactions of salesman Chua and
malfeasance because he used respondent corporation’s properties, equipments and
personnel in connection with his personal business of buy and sale of used
sacks,” which, when brought within the ambit of Article 282 (not Article
292) of the Labor Code “constitute gross neglect in the performance of
duty and serious misconduct resulting to loss of trust and confidence.”

A reading of Articles 279 and 282 of the Labor Code and Section
7, Rule I, Book VI. of the Omnibus Rules Implementing the Labor Code^[15]
reveals that an employee who is dismissed for cause under Article 282 after
appropriate proceedings in compliance with the due process requirements^[16]
is not entitled to an award of separation pay. Under Articles 283 and 284 of the Labor Code, separation pay is
authorized only in cases of dismissals due to the following reasons: (a) the installation of labor-saving
devices, (b) redundancy, (c) retrenchment, (d) cessation of the employer’s
business, and (e) when the employee is suffering from a disease and his continued employment is prohibited by law or
is prejudicial to his health and to the health of his co?employees.^[17]

In the 23 August 1988 Decision in Philippine Long Distance Telephone Co. vs. NLRC,^[18]
however, this Court, speaking through Mr. Justice Isagani A. Cruz, recognized
an exception.

“Strictly speaking, however, it is not correct to say that
there is no express justification for the grant of separation pay to lawfully
dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is
replete with positive commands for the promotion of social justice, and
particularly the protection of the rights of the workers. The enhancement of their welfare is one of
the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the
cause of labor in Article II on the Declaration of Principles and State Policies,
the new Constitution contains a separate article devoted to the promotion of
social justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital
role of labor, hand in hand with management, in the advancement of the national
economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement
of the lot of the workers are more than sufficient basis to justify the award
of separation pay in proper cases even if the dismissal be for cause.”^[19]

Nevertheless, the Court re-examined the
previous cases which granted separation pay in cases of dismissals for cause in
the light of their lack of consistency as to the justification for the grant
thereof and the amount or rate of such award, and, thereafter, laid down the following doctrine and its rationale:

“We hold that henceforth separation pay shall be allowed as a
measure of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his
moral character. Where the reason for
the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow
worker, the employer may not be required to give the dismissed employee
separation pay, or financial, assistance, or whatever other name it is called,
on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the
effect, of rewarding rather than punishing the erring employee for his
offense. And we do dot agree that the
punishment is his dismissal only and that the separation pay has nothing to do
with the wrong he had committed. Of
course it has. Indeed, if the employee
who steals from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is again found
out. This kind of misplaced compassion
is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.

The policy of social justice is not intended to countenance
wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but
only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be
refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who
invoke social justice may do so only if their hands are clean and their motives
blameless and not simply because they happen to be poor. This great policy of our Constitution is not
meant for the protection of those who have proved they are not worthy of it,
like the workers who have tainted the cause of labor with the blemishes of their
own character.”^[20]

In the instant case, the private respondent was found guilty of
gross misconduct for having used his employer’s (petitioner’s)
“properties, equipments and personnel in connection with his personal
business of buy and sale of used sacks.” His acts involve gross dishonesty
deliberately done for his personal advantage. The doctrine laid down in Philippine
Long Distance Telephone Co. that separation pay, as a measure of
social justice, shall be allowed
only where the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character is applicable.

The public respondent acted with grave abuse of discretion in
awarding the private respondent separation pay despite its affirmance in toto of the
findings and conclusions of the Labor Arbiter.

WHEREFORE, the petition is GRANTED. The challenged
resolution of public respondent National Labor Relations Commission of 12 May 1993 in NLRC CA No. M-001029-92 (Case No.
RAB-10-06-00351-91) is MODIFIED by deleting the award of separation pay.

No pronouncement
as to costs.

SO ORDERED.

Cruz, (Chairman), Quiason, and
Kapunan, JJ., concur.

Bellosillo, J., on official
leave.

^[1]
Annex “G” of Petition; Rollo, 95-100.

^[2]
Annex “D”; Id., 68-79.

^[3]
Rollo, 76-77.

^[4]
Rollo, 99-100.

^[5]
Annex “I” of Petition; Id.,
107-112.

^[6]
Id., 11.

^[7]
164 SCRA 671 [1988].

^[8]
Rollo, 124.

^[9]
Id., 129-137.

^[10]
Articles 283 and 284, Labor Code.

^[11]
170 SCRA 595 [1989].

^[12]
Supra note 7.

^[13]
213 SCRA 664 [1992].

^[14]
Rollo, 139.

^[15]
Articles 279 and 282 of the Labor Code, as amended, and Section 7, Rule I, Book VI of the Omnibus
Rules Implementing the Labor Code read as follows:

“ART. 279. Security
of Tenure. — In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when
authorized by this Title. An employee
who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of
his actual reinstatement.

* * *

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 duly authorized representative; and

(e)        Other causes analogous
to the foregoing.

* * *

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 bargaining
agreement with the employer or voluntary employer policy or practice.”

^[16]
Rule XIV, Book V, Omnibus Rules Implementing the Labor Code.

^[17]
See Eastern Paper Mills, Inc. vs. NLRC, supra note 11.

^[18]
164 SCRA 671 [1988]. See also Eastern Paper Mills, Inc. vs.
NLRC, supra note 11.

^[19]
Id., at 680.

^[20]
Id., at 682-683.