Serious offenses

In exceptional cases, the court may grant separation pay to employees dismissed for a just cause as an act of “social justice” or on “equitable grounds.” But not in this case of Rina. Let us find out why.

Rina was employed by a company engaged in the production, manufacture, sale and distribution of various food, home and personal care products. She had been working with the company for 14 years and primarily tasked with managing the sales, distribution and promotional activities of an area in Mindanao as well as the supervision of a third party (VLI) service provider for the company’s activation projects.

In a random audit conducted by the company’s internal auditor, it was found out that there were fictitious billings and fabricated receipts supposedly from VLI amounting to P11,200,000. It was also found out that some funds were diverted from the original intended projects. Upon further verification, VLI reported that the fund deviations were upon instructions of Rina.

Since the company enforces a strict policy that every trade activity must be accompanied by a Trade Development Program and that the allocated budget for a specific activity must be used for such activity only, it issued a show cause notice to Rina asking her to explain the following charges: a) Conversion and Misappropriation of Resources; b) Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity Issues.

Responding through email, Rina admitted the fund diversions, but explained that such actions were resourceful utilization of budget because of the difficulty of procuring funds from the head office. She pointed out that the diverted funds were all utilized in the company’s promotional ventures in her area of coverage.

But the company nevertheless found Rina guilty of serious breach of its Code of Business Principles and thus sent a letter to Rina terminating her services. Rina asked for reconsideration and requested the company to pay her retirement benefits having served them for 14 years. But the company refused.

So Rina filed a complaint for illegal dismissal and other monetary claims against the company. The Labor Arbiter however found that she was legally dismissed and denied her claim for retirement benefits but ordered the company to pay a proportionate 13th month pay and the corresponding cash equivalent of her unused leave credits.

On appeal to the NLRC, the latter also found that Rina was legally dismissed but she was awarded retirement benefits and nominal damages of P20,000 because of the company’s violation of the twin notice requirement in the dismissal of employees.

On further appeal, the Court of Appeals (CA) modified the NLRC decision by deleting the award of retirement benefits since under the company’s retirement plan a validly dismissed employee is not entitled to retirement pay regardless her length of service. The CA however affirmed the payment of the nominal damages and the proportionate 13th month pay and unused leave credits. Furthermore, the CA also awarded Rina her separation pay equivalent to at least ½ half month for every year of service because there was no proof that she personally gained any pecuniary benefit from her infractions, as her instructions were aimed at increasing the sales efficiency of the company and competing in the local market. Was the CA correct in awarding separation pay?

No. Separation pay may be granted to a validly dismissed employee as an act of social justice or on equitable grounds only if the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the employee. In this case Rina was dismissed from work because she intentionally circumvented a strict company policy, manipulated another entity to carry out her instructions without the company’s knowledge and approval, and directed the diversion of funds under the guise of shortening the laborious process of securing funds from the head office for promotional activities. These transgressions were serious offenses that warranted her dismissal from employment and denial of the separation pay (Unilever Phil. Inc. vs. Rivera, G.R. 201701, June 5, 2013, 697 SCRA, 136). –Jose C. Sison (The Philippine Star)