G.R. No. 192297 , August 03, 2016
SUPRA MULTI-SERVICES, INC., JESUS TAMBUNTING, JR., AND RITA CLAIRE T. DABU, PETITIONERS, VS. LANIE M. LABITIGAN, RESPONDENT.

FACTS

Petitioner Supra Multi-Services, Inc. (SMSI) is a domestic corporation engaged in manpower services, with petitioners Jesus Tambunting, Jr. and Rita Claire T. Dabu as its President and Vice-President for Administration, respectively. Respondent Lanie M. Labitigan was hired by SMSI on March 13, 1994, and was holding the position of Accounting Supervisor with a monthly salary of P13,000.00 at the time of her termination on December 21, 2005. Respondent admitted she was responsible for preparing the company payroll. She granted herself a pro-rated Emergency Cost of Living Allowance (ECOLA) under Wage Order Nos. NCR-09 and NCR-10, arguing these applied not only to minimum wage earners but also to those like her whose salaries would suffer wage distortion. She claimed this was with petitioners’ knowledge and conformity, as petitioner Tambunting approved and signed the payroll. On August 22, 2005, SMSI issued a Notice of Personnel Action noting an error in granting the proportionate ECOLA and cancelling it. Respondent claimed she took exception and Tambunting promised to look into it, and she continued to receive the allowance for the next four months without protest from management. On December 12, 2005, SMSI issued a memo directing respondent to explain within 24 hours why no administrative action should be taken against her for insubordination (for continuing to give herself the ECOLA despite its cancellation) and dishonesty (for being aware that only minimum wage earners and those with wage distortion were entitled). Respondent refused to receive the memo. She was placed on preventive suspension and an administrative hearing was held on December 19, 2005. On December 20, 2005, SMSI issued a Notice of Termination citing willful disobedience of lawful orders and willful breach of trust, and terminated her effective December 21, 2005. Respondent filed a complaint for illegal dismissal. The Labor Arbiter ruled the dismissal was illegal, ordering reinstatement with full backwages. The NLRC reversed, finding the dismissal valid for breach of trust and willful disobedience. The Court of Appeals affirmed the NLRC’s finding of a breach of trust but modified the decision by awarding separation pay in lieu of reinstatement, holding that while respondent committed a breach of trust, the penalty of dismissal was too harsh.

ISSUE

Whether the Court of Appeals erred in awarding separation pay to respondent despite finding that she committed a breach of trust and confidence, which is a just cause for dismissal under Article 282(c) of the Labor Code.

RULING

The Supreme Court granted the petition and set aside the Court of Appeals’ award of separation pay. The Court held that breach of trust and confidence is a valid ground for termination under Article 282(c) of the Labor Code. As an Accounting Supervisor, respondent held a position of trust and confidence, with duties including managing accounting functions, checking and approving payroll entries, and handling cash. Her act of continuously granting herself an allowance she knew she was not entitled to, even after its official cancellation, constituted willful breach of that trust. The Court ruled that when an employee is dismissed for a just cause, such as breach of trust, she is not entitled to separation pay. The award of separation pay is justified only in instances of termination due to authorized causes under Article 283 and 284, or in cases of illegal dismissal where reinstatement is not feasible. Since respondent was validly dismissed for a just cause, no separation pay is warranted. The Court reinstated the NLRC decision declaring the dismissal valid and deleting the award of separation pay.