G.R. No. 75413. August 10, 1989.
JOSE P. DEL CASTILLO, JR., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MARIWASA HONDA, INC., KAZUE ITO & ROGELIO P. ANTALAN, respondents.

FACTS

Petitioner Jose P. Del Castillo, Jr., the Credit and Collection Manager of Mariwasa Honda, Inc., was dismissed effective April 1, 1981, for dishonesty, grave abuse of discretion, and gross negligence. His duties included filing collection suits against defaulting dealers. In a case against Anchor Fishing and Trading Supply owned by Henry Samar, a judgment by compromise was secured. Upon Samar’s failure to comply, a writ of execution was issued, leading to a levy on twelve parcels of his land. However, the public auction was aborted because Del Castillo facilitated a Deed of Sale of ten parcels to Mariwasa and, crucially, arranged the sale of the remaining two parcels to himself.
Upon learning of the transaction, the company suspended Del Castillo indefinitely on March 13, 1981, and initiated an investigation. The petitioner initially offered to resign with benefits but withdrew this offer after the company circulated memos to branches and dealers stating he was no longer connected with the firm. Subsequently, he was formally terminated for loss of trust and confidence. He filed a complaint for illegal dismissal with the NLRC.

ISSUE

Whether the dismissal of Jose P. Del Castillo, Jr., was valid, and if so, whether he was entitled to separation pay.

RULING

The Supreme Court affirmed the validity of the dismissal but set aside the award of separation pay. The Labor Arbiter and the NLRC correctly found that the dismissal was for a just cause. Del Castillo, as Credit and Collection Manager, betrayed the trust reposed in him by acquiring for himself two parcels of land that were part of the levied properties intended to satisfy his employer’s judgment claim. This act constituted dishonesty and a clear conflict of interest, prostituting his office for personal gain at the company’s expense. Loss of trust and confidence is a valid ground for dismissing a managerial employee.
However, the Court held that the award of separation pay was erroneous. Applying the precedent set in PLDT vs. NLRC, separation pay as a measure of social justice is not warranted when an employee is dismissed for serious misconduct or causes reflecting on moral character, such as dishonesty. The Court distinguished between dismissals for causes like inefficiency or policy differences, where separation pay may be granted, and dismissals for serious offenses like dishonesty or moral turpitude, where it is not justified. Since Del Castillo’s dismissal was based on dishonesty, he did not deserve such an award. Nonetheless, for the employer’s failure to observe due process in the termination, the Court, citing Wenphil Corp. vs. NLRC, ordered Mariwasa to pay the petitioner the nominal amount of P1,000.00 as damages. The petition was dismissed.