EASTERN PAPER MILLS, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND EDUARDO MALABANAN, RESPONDENTS.

On January 10, 1983, the petitioner, after due notice, investigation, and hearing, dismissed the private
respondent Eduardo Malabanan, an accounts payable clerk, for having
physically assaulted and verbally abused, within full view and hearing of the
other employees, a superior officer, Mariano Lopingco,
who was then the personnel and administrative manager of the company.  The reason for the assault was private
respondent’s resentment at being suspected of having stolen an ash tray from Lopingco’s office and being questioned about the matter by the security office.

Private respondent filed
a complaint for illegal dismissal (Annex “A”) in the
Ministry (now Department) of Labor and Employment (NLRC-NCR-Case No. 1-191-83).

After trial, the Labor Arbiter rendered a decision on December 29, 1987, dismissing Malabanan’s complaint and finding that his dismissal from
employment was for just and valid cause. 
However, the Labor Arbiter awarded him P10,000
“financial assistance” (Annex “C”).

On appeal by the
petitioner to the NLRC, the Commission on August 31, 1988 affirmed the Labor Arbiter’s decision with
modification. It awarded Malabanan separation or termination pay amounting to P10,780, in lieu of financial assistance.  (Annex “E”).

Charging grave abuse of discretion on the part of the NLRC, the
company elevated the case to this Court on a petition for certiorari.

The petition is meritorious. 
Earlier decisions of this Court which, in the name of compassionate
justice, awarded separation pay or financial
assistance to employees who were lawfully dismissed for cause,
were re-examined and abandoned in the recent case of Philippine Long Distance
Telephone Company vs. NLRC, G.R.
No. 80609, August 23, 1988,
where We ruled:

“Separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly
dismissed for cause 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 have the effect of rewarding rather
than punishing the erring employee for his offense.  And We do not agree
that the punishment is his dismissal only and that the separation pay has
nothing to do with the wrong he has committed.”

An award of separation
pay to an employee who was dismissed for a valid cause (in this case, for
serious misconduct) is legally indefensible. 
It contravenes Rule 1, Sec. 7, Book VI of the Omnibus Rules Implementing
the Labor Code which provides that:

“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 this 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.”

The only cases when
separation pay shall be paid, although the employee was lawfully
dismissed, are when the cause of
termination was not attributable to the employee’s fault but due to: (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.  (Articles 283 and 284,
Labor Code.) Other than these cases, an employee who is dismissed for a just and lawful cause is not entitled to separation pay
even if the award were to be
called by another name.

WHEREFORE, the petition for certiorari is
granted.  The decision of the National
Labor Relations Commission dismissing the private respondent’s complaint for
illegal dismissal is affirmed, but the award of separation pay or financial
assistance to him is hereby set aside for lack of legal basis.

SO ORDERED.

Narvasa, (Chairman), Cruz, Gancayco, and Medialdea, JJ., concur.