Whether or not Respondents are liable for separation pay

Herma Shipping and Transport Corporation and Herminio Esguerra vs. Calvin
Cordero, G.R. No. 244144, 27 January 2020

Accordingly, in view of the existence of a just cause for termination, Cordero's dismissal
was valid and his petition in G.R. No. 244210 is denied for lack of merit.

That being said, the Court now determines whether or not the CA correctly
awarded separation pay in favor of Cordero "as a measure of compassionate justice" in
the exercise of its "equity jurisdiction," which is the issue in G.R. No. 244144.

In Manila Water Company v. Del Rosario (Manila Water Company), the Court succinctly
explained:

As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a  separation pay.
Section 7, Rule I, Book VI of the Omnibus Rules implementing the Labor Code 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.

In exceptional cases, however, the Court has granted  separation pay to a legally

Hence, in the cases of Philippine Long Distance Telephone Company v. NLRC and
subsequently, Toyota Motor Phils. Corp. Workers Association v. NLRC, the Court
stressed that "separation pay shall be allowed as a measure of social justice only in the
instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character." As the Court declared:

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 not
agree that the punishment is his dismissal only and that the separation pay has nothing to
do with the wrong he has 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

1
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.

Applying the foregoing principles, the Court, in the case of Daabay v. Coca-Cola
Bottlers Phils., Inc., disallowed the grant of separation pay to an employee who was
found guilty of stealing the company's property. Likewise, in Manila Water Company,
the Court similarly denied the award of separation pay to the employee who was found
responsible for the loss of the water meters in flagrant violation of the company's policy.
Indeed, equity as an exceptional extenuating circumstance does not favor, nor may it be
used to reward, the indolent or the wrongdoer for that matter. This Court will not
allow a party, in guise of equity, to benefit from his own fault.

Considering the foregoing, the CA erred in awarding separation pay to Cordero "as a

That Cordero had been employed with HSTC for twenty-four (24) years does not serve to
mitigate his offense nor should it be considered in meting out the appropriate penalty
therefor. In fact, it may be reasonably argued that the infraction that he committed against
HSTC, i.e., theft of invaluable company property, demonstrates the highest degree of
ingratitude to an institution that has been the source of his livelihood for twenty-four (24)
years, constitutive of disloyalty and betrayal of the trust and confidence reposed upon
him. Indeed, HSTC's full trust and confidence in him, coupled with the fact that he
occupied a position that allowed him full access to HSTC's property, aggravated the
offense. In Manila Water Company, the Court refused to take into account the errant
employee's length of service of more than twenty (20) years, considering that his
violation reflects "a regrettable lack of loyalty and worse, betrayal of the company," viz.:

Although long years of service might generally be considered for the award
of separation benefits or some form of financial assistance to mitigate the effects of
termination, this case is not the appropriate instance for generosity under the Labor Code
nor under our prior decisions. The fact that private respondent served petitioner for more
than twenty years with no negative record prior to his dismissal, in our view of this case,
does not call for such award of benefits, since his violation reflects a regrettable lack of
loyalty and worse, betrayal of the company. If an employee's length of service is to be
regarded as a justification for moderating the penalty of dismissal, such gesture will
actually become a prize for disloyalty, distorting the meaning of social justice and
undermining the efforts of labor to cleanse its ranks of undesirables.

Further, it would appear that the offense for which Cordero was validly dismissed in
2016 was not his first offense, thereby negating the CA's finding that he had no previous
derogatory record. The fact that Cordero had been given Notices to Explain in 2003 and
another in 2013 for entirely different offenses only proves that he had committed
infractions against HSTC even prior to the present incident of oil pilferage. Moreover,
while it is true that Cordero remained in the employ of HSTC until his dismissal in 2016,
HSTC's right as an employer to call out, investigate, and eventually, dismiss him for just
cause must still be recognized. On this score, it must be pointed out that the last offense
that Cordero committed against HSTC constitutes Serious Misconduct, which resulted in
the latter's loss of trust and confidence in him. Hence, the penalty of dismissal cannot be
considered as "too harsh" under the circumstances.

2
Having established that Cordero's employment was terminated for just cause and
that he was therefore validly dismissed, as well as the fact that the infractions he
committed against HSTC involve moral turpitude and constitute Serious
Misconduct, the award of separation pay in his favor is devoid of basis in fact and in
law. Accordingly, the same must be deleted.