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Separation Pay- Not Proper in Cases of Dismissal for Just Cause

May an employee who was dismissed for just cause be awarded with separation pay by reason of length of service?
In Immaculate Conception Academy vs. Camilon (G.R. No. 188035, July 02, 2014), the Supreme Court ruled in the negative.

In the case, the respondent was the Chief Accountant of ICA.  She was dismissed from the service by reason of gross and habitual negligence resulting in the loss of over one million worth of tuition fees.  

The NLRC found that the respondent was negligent in the performance of her duties and responsibilities as petitioner’s Chief Accountant and as the immediate supervisor of the cashier.  The respondent’s negligence was underscored by the fact that the school records were manipulated and destroyed, official receipts of  the school were lost, and the amount of P1,167,181.45 worth of tuition fees paid for by 186 students in an eleven-month period were lost and misappropriated by the cashier.  The NLRC held that these anomalies would not have happened if only the respondent did her job to supervise all personnel in the accounting department, to check and verify students’ payments, to audit the cashier’s report, and to act as custodian of official receipts.

The Court of Appeals, while upholding the legality of the dismissal, awarded the respondent with separation pay taking note of her 12 years in service. 

On appeal by petitioner ICA, the Supreme Court ruled that “labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an employee’s dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family grounds under Art. 282 of the Labor Code that sanction dismissals of employees.”   The High Court also declared: “Pursuant to the aforementioned rulings, respondent is clearly not entitled to separation pay. Respondent was holding a position which involves a high degree of responsibility requiring trust and confidence as it involves the financial interests of the school.  However, respondent proved to be unfit for the position when she failed to exercise the necessary diligence in the performance of her duties and responsibilities as Chief Accountant, thus justifying her dismissal from service.  Respondent was guilty of gross and habitual negligence when she failed to regularly pre-audit the report of the school cashier, check the entries therein and keep custody of the petty cash fund.  Had respondent been assiduously doing her job, the unaccounted school funds would have been discovered right away.  Respondent’s dereliction in her duties spanned a period of 11 months thus enabling the school cashier to misappropriate tuition fee payments, manipulate the school records and destroy official receipts, in the total amount of P1,167,181.45 to the prejudice of petitioners. Hence, she should not be granted separation pay.  To rule otherwise would be to reward respondent for her negligent acts instead of punishing her for her offense.”

As to whether the employee’s length of service justifies the award of separation pay, the High Court ruled: “Respondent’s 12 years of service and clean employment record cannot simply erase her gross and habitual negligence in her duties. Length of service is not a bargaining chip that can simply be stacked against the employer.”

(Note: Atty. Selva represented the Immaculate Conception Academy in this labor case.)