Social, not legal justice

Today is Labor Day. So our case is about the workingman particularly a machine operator whom we shall call Cardo. The issue here is whether he is entitled to separation pay if he resigns.

Cardo was originally employed in June 1963 by GMC, a company engaged in the business of manufacturing and selling PVC pipes owned and managed by Charlie Yu. Over a period of 20 years, the company changed its name four times. Starting in 1993 it was already operating under the name of YCH. Despite changes in the company name, Cardo remained in the employ of Mr. Yu’s company.

On October 5, 1998, Cardo got sick and was confined at the hospital. After his recovery and because of his failing health, Cardo asked Mr. Yu that he be assigned to a lighter kind of work. Mr Yu however just told him to return to work. But instead of returning back, Cardo opted to resign and asked for his separation pay for the period from 1963 to 1999. But Yu offered him the sum of P15,000 corresponding to the period between 1993 and 1999 only when he worked with YCH. So Cardo just filed a complaint for payment of separation pay computed from his first day of employment in June 1963. He also asked for the payment of his service incentive leave for three years plus attorney’s fees. 

The Labor Arbiter (LA) rendered judgment in favor of Cardo, granting him separation benefits of one-half month salary for every year of service from June, 1963 to October 1998 or a total of P91,445 plus incentive leave in the amount of P3,015. This was affirmed by the National Labor Relations Commission (NLRC). Were the LA and the NLRC correct?

No. An employee is entitled to separation pay pursuant to Article 284 of the Labor Code if the employer terminates the services of an employee found to be suffering from any disease and whose continued employment is prohibited by law or prejudicial to his health as well as the health of the co-employees. Under Article 283, separation pay may also be given to the employee where there is illegal dismissal and reinstatement is no longer feasible. So it is the employer who terminates the services. It does not contemplate a situation where it is the employee who voluntarily resigns or severs his/her employment ties. In fact the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay except when it is stipulated in the employment contract or CBA or it is sanctioned by employer practice or policy or when the court allows separation pay as a measure of social justice.

In this case it was Cardo the employee who initiated the severance of his employment with Mr. Yu. The latter did not terminate the employment of Cardo. In fact he rejected Yu’s offer for him to return to work which is tantamount to resignation. So he is not entitled to separation pay under the provisions of the Labor Code.

However taking into consideration the factual circumstances obtaining in the present case, Cardo is entitled to some kind of financial assistance as a matter of social and compassionate justice. He has been in the employ of Yu for more than 35 years. While, the name of the company has changed four times, the present company YCH is not distinct from its predecessors but in fact merely continued their operation under the same owner and the same business venture. Hence Cardo should be paid P50,000 as financial assistance (Villaruel vs. Yeo Han Guan etc. R.R. 169191, June 1, 2011).

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