In Herma Shipping and Transport Corporation vs. Calvin Jaballa Cordero, the Supreme Court addressed whether an employee validly dismissed for serious misconduct is entitled to separation pay. The Court ruled that separation pay is generally not granted to employees dismissed for just causes, especially those involving serious misconduct or moral turpitude, such as theft. Granting separation pay in such cases would reward wrongdoing rather than upholding justice. This decision reinforces the principle that social justice should not protect those who betray their employer’s trust through dishonest acts.

Theft at Sea: Can a Long-Serving Employee Steal and Still Get Paid?

Calvin Jaballa Cordero, an Able Seaman, had been with Herma Shipping and Transport Corporation (HSTC) for 24 years. HSTC discovered significant losses of oil and petroleum products from its vessel, M/Tkr Angat. An investigation led to Cordero and other crew members being suspected of involvement in the pilferage. Cordero, who served as Helmsman/Watchman, was found to be aware of suspicious activity, including an unknown boat approaching the vessel and the blocking of CCTV cameras, yet he failed to report these irregularities. Consequently, HSTC terminated Cordero’s employment for serious misconduct and breach of trust. Cordero filed a complaint for illegal dismissal, seeking separation pay, among other damages.

The Labor Arbiter (LA) initially ruled in favor of HSTC, finding substantial evidence that Cordero participated in the oil pilferage. The National Labor Relations Commission (NLRC) affirmed the LA’s decision, stating that Cordero’s failure to report the irregularities constituted serious misconduct and a willful breach of trust. The case eventually reached the Court of Appeals (CA), which, while affirming the validity of Cordero’s dismissal, awarded him separation pay. The CA reasoned that after 24 years of service with no prior derogatory record, the penalty of dismissal was too harsh. HSTC disagreed with the CA’s decision to award separation pay, leading to the Supreme Court review.

The Supreme Court emphasized that its jurisdiction in such cases is limited to questions of law. Cordero’s claim that no just cause existed for his dismissal was deemed a factual issue, already settled by the labor tribunals and affirmed by the CA. The Court then addressed the central legal question: whether the CA erred in awarding separation pay to Cordero despite his valid dismissal for a just cause involving serious misconduct.

The Court referenced established jurisprudence, particularly Manila Water Company v. Del Rosario, which states that employees dismissed for just causes under Article 282 of the Labor Code are generally not entitled to separation pay. However, the Court acknowledged exceptions where separation pay might be granted as an act of social justice or on equitable grounds, provided the dismissal was not for serious misconduct or did not reflect on the employee’s moral character. In this case, the Court underscored that Cordero’s actions involved moral turpitude, thus disqualifying him from receiving separation pay.

The Court further cited Philippine Long Distance Telephone Company v. NLRC and Toyota Motor Phils. Corp. Workers Association v. NLRC, reinforcing the principle that separation pay is inappropriate when the dismissal is due to offenses like theft or moral turpitude. These cases highlight that awarding separation pay in such circumstances would reward the employee’s misconduct rather than penalizing it. The Court firmly stated that social justice should not be used to excuse wrongdoing. The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense.

Applying these principles, the Supreme Court found that the CA erred in awarding separation pay to Cordero based on compassionate justice. The Court dismissed the notion that Cordero’s 24 years of service mitigated his offense. It was viewed as an act of ingratitude and a betrayal of the trust placed in him by HSTC, especially considering his role allowed him access to the company’s property. The court found the length of service to be an aggravating factor rather than one that would support an award of separation pay.

To illustrate, the Supreme Court quoted Manila Water Company v. Del Rosario:

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.

The Court also noted that Cordero had prior infractions, negating the CA’s finding that he had a clean record. The Court emphasized that HSTC’s right to discipline and dismiss employees for just cause must be protected. The Supreme Court ultimately reversed the CA’s decision to award separation pay to Cordero, reinforcing the principle that separation pay is not warranted when an employee is validly dismissed for serious misconduct involving moral turpitude, such as theft.

FAQs

What was the key issue in this case?	The central question was whether an employee, validly dismissed for serious misconduct (oil pilferage) after 24 years of service, is entitled to separation pay. The Supreme Court addressed the circumstances under which separation pay can be granted despite a just cause for termination.
What was the Supreme Court’s ruling?	The Supreme Court ruled that the employee, Calvin Jaballa Cordero, was not entitled to separation pay because his dismissal was for a just cause involving serious misconduct and moral turpitude (theft). The Court reversed the Court of Appeals’ decision to grant separation pay.
Why was the employee initially dismissed?	Cordero was dismissed due to his involvement in the pilferage of oil and petroleum products from his employer’s vessel. As Helmsman/Watchman, he failed to report suspicious activities, constituting serious misconduct and breach of trust.
What is the general rule regarding separation pay for employees dismissed for just cause?	Generally, employees dismissed for just causes under Article 282 of the Labor Code are not entitled to separation pay. However, there are exceptions where separation pay may be granted on equitable grounds, but not in cases of serious misconduct or moral turpitude.
What is considered “serious misconduct” in this context?	“Serious misconduct” involves acts of dishonesty, such as theft or pilferage, that betray the employer’s trust and confidence. In this case, Cordero’s failure to report the oil pilferage and his potential involvement constituted serious misconduct.
How did the employee’s length of service factor into the decision?	The Supreme Court determined that the employee’s 24 years of service did not mitigate his offense. Instead, it underscored the severity of his betrayal, given the length of time he had been entrusted with the company’s property.
What legal principle did the Supreme Court emphasize in its decision?	The Supreme Court emphasized that social justice should not be used to reward wrongdoing or excuse acts of dishonesty. It reiterated that social justice aims to protect the deserving, not those who abuse their positions and betray their employer’s trust.
What previous cases influenced the Supreme Court’s ruling?	The Supreme Court referenced cases like Manila Water Company v. Del Rosario, Philippine Long Distance Telephone Company v. NLRC, and Toyota Motor Phils. Corp. Workers Association v. NLRC. These cases support the principle that separation pay is not appropriate when dismissal is due to offenses like theft or moral turpitude.
What is the practical implication of this ruling for employers?	The ruling reinforces the right of employers to dismiss employees for serious misconduct without the obligation to provide separation pay. It highlights the importance of trust and loyalty in the employer-employee relationship.

The Supreme Court’s decision in Herma Shipping and Transport Corporation vs. Calvin Jaballa Cordero clarifies the boundaries of social justice in labor disputes, reinforcing the principle that employees who engage in serious misconduct and betray their employer’s trust are not entitled to separation pay, regardless of their length of service. This ruling serves as a reminder that ethical conduct and loyalty are essential components of the employment relationship.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: HERMA SHIPPING AND TRANSPORT CORPORATION VS. CALVIN JABALLA CORDERO, G.R. No. 244210, January 27, 2020