G.R. No. 85497 - Eastern Paper Mills, Inc. vs. National Labor Relations Commission

Eastern Paper Mills, Inc., the petitioner, employed Eduardo Malabanan as an accounts payable clerk.
On January 10, 1983, after due notice, investigation, and a hearing, Malabanan was summarily dismissed by his employer.
The dismissal was necessitated by Malabanan’s physical assault and verbal abuse of his superior, Mariano Lopingco, the personnel and administrative manager.
The assault occurred in full view and hearing of other employees, demonstrating a blatant disregard for workplace discipline.
The motive behind the assault was attributed to Malabanan’s resentment over being suspected of stealing an ash tray from Lopingco’s office and being questioned about it by the security office.

Following his dismissal, Malabanan filed a complaint for illegal dismissal with the Ministry (now the Department) of Labor and Employment, under NLRC-NCR-Case No. 1-191-83.
After trial, the Labor Arbiter rendered a decision on December 29, 1987, dismissing Malabanan’s complaint and affirming that his dismissal was for a just and valid cause.
Despite confirming the just cause, the Labor Arbiter awarded Malabanan financial assistance amounting to P10,000.
On appeal, the National Labor Relations Commission (NLRC) modified the decision on August 31, 1988, awarding separation/termination pay totaling P10,780 in lieu of the financial assistance.

Eastern Paper Mills elevated the case to the Supreme Court through a petition for certiorari, challenging the NLRC’s award of separation pay.
The petitioner charged the NLRC with grave abuse of discretion in awarding a benefit (separation pay) to an employee who was lawfully dismissed for a valid cause.

The Court referenced its earlier decisions where separation pay or financial assistance was granted on compassionate grounds even upon lawful dismissal.
The ruling in Philippine Long Distance Telephone Company vs. NLRC (G.R. No. 80609, August 23, 1988) was revisited, which clarified that separation pay is not warranted when dismissal is due to serious misconduct or offenses involving moral turpitude.
The decision reaffirmed that separation pay as a social justice measure should not reward wrongful conduct but should instead respect the punitive nature of dismissal for serious misconduct.

The Court highlighted Rule 1, Sec. 7, Book VI of the Omnibus Rules Implementing the Labor Code, which states that an employee dismissed for just cause is not entitled to termination pay except as provided by specific arrangements or employer policies.
The Labor Code Articles 283 and 284 were also mentioned as delineating the specific instances where separation pay should be rendered, namely:

Installation of labor-saving devices
Redundancy
Retrenchment
Cessation of the employer’s business
When an employee is unable to continue working due to a disease, as prescribed by law or for the protection of health.

Is an employee who is lawfully dismissed for serious misconduct entitled to separation pay or financial assistance as a measure of social justice?
Should separation pay be awarded in cases where the dismissal arises from an offense reflecting on the employee’s moral character?

Did the NLRC commit grave abuse of discretion in awarding Malabanan separation/termination pay despite his dismissal being based on a valid cause?
Can the award of separation pay in the context of serious misconduct be justified under existing labor laws and jurisprudence?

Does the NLRC’s decision contravene the ruling in Philippine Long Distance Telephone Company vs. NLRC regarding the limitation of separation pay awards?
How should Rule 1, Sec. 7 of the Omnibus Rules Implementing the Labor Code and the relevant articles of the Labor Code be interpreted in relation to dismissals for serious misconduct?