The Supreme Court has affirmed with modification the ruling of the National Labor Relations Commission (NLRC) ordering Philippine Airlines, Inc. (PAL) to award separation pay to a dismissed employee on the ground of equity.

The Court, through Justice Teresita J. Leonardo-De Castro, upheld the decision by the NLRC which found that while PAL’s dismissal of Aida M. Quijano was valid on the grounds of loss of confidence and acts inimical to the interest of the company, Quijano was nonetheless held entitled to separation pay for she meets the qualifications for such an exemption established by jurisprudence.  As the Court held earlier in PLDT v. NLRC, a legally dismissed employee may be entitled to separation pay as an act of “social justice” or based on “equity” provided that the dismissal was not for serious misconduct and does not reflect on the moral character of the employee or would involve moral turpitude.

The Court found that the acts of Quijano, who was found by PAL, and later by the labor arbiter and NLRC, guilty of gross incompetence as manager for failing to detect irregularities that resulted in huge financial losses for PAL, were not deliberate and willful acts clearly directed at making PAL lose millions of pesos. At most, her acts can only be characterized as “unintentional, albeit major, lapses in professional judgment,” the Court said. Thus Quijano may be granted separation pay on the ground of equity, defined as “justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law” and grounded “on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application where there is law,” stressed the Court.

The Court, however, modified NLRC’s ruling that the separation pay was to be awarded in accordance with PAL’s Retirement and Separation Program, as Quijano was not separated from PAL due to mandatory or optional retirement but by termination of employment for a just cause. Neither did the Court find basis for the awarding of attorney’s fees as such can only be granted in illegal dismissals made in bad faith. Instead, the Court ruled that, as held in Yrasuegui v. PAL, the proper amount of separation pay to be awarded to Quijano should be equivalent to one-half month’s pay for every year of her service, including regular allowances. (GR No. 123294, PAL v. NLRC and Quijano, October 20, 2010)