SEPARATION PAY

Article 283 of the Labor Code provides only the required minimum amount of separation pay, which employees dismissed for any of the authorized causes are entitled to receive. Employers, therefore, have the right to create plans, providing for separation pay in an amount over and above what is imposed by Article 283. There is nothing therein that prohibits employers and employees from contracting on the terms of employment, or from entering into agreements on employee benefits, so long as they do not violate the Labor Code or any other law, and are not contrary to morals, good customs, public order, or public policy. (MA. CORINA C. JIAO, ET Al. v. NATIONAL LABOR RELATIONS COMMISSION, et al., G.R. No. 182331, 18 April 2012)

The language of Article 279 of the Labor Code is pregnant with the implication that a legally dismissed employee is not entitled to separation pay. However, in exceptional cases, the Supreme Court (SC) has granted separation pay to a legally dismissed employee as an act of "social justice" or based on "equity." In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee or would involve moral turpitude. The grant of separation pay as a matter of equity to a validly dismissed employee is not contingent on whether the ground for dismissal is expressly under Article 282(a) but whether the ground relied upon is akin to serious misconduct or involves willful or wrongful intent on the part of the employee. (PHILIPPINE AIRLINES, INC. v. NATIONAL LABOR RELATIONS COMMISSION and AIDA M. QUIJANO, G.R. No. 123294, October 20, 2010)

In the recent case of Reno Foods v. NLM, this Court reiterated the Toyota ruling and maintained that labor adjudicatory officials and the Court of Appeals must demur the award of separation pay based on social justice when an employee’s dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family – grounds under Art. 282 of the Labor Code that sanction dismissals of employees. (BANK OF THE PHILIPPINE ISLANDS AND BPI FAMILY BANK v. HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION) AND MA. ROSARIO N. ARAMBULO, G.R. No. 179801, June 18, 2010)

Separation pay is only warranted when the cause for termination is not attributable to the employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct.The award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who despite their economic difficulties, strive to maintain good values and moral conduct. (JULIET G. APACIBLE v. MULTIMED INDUSTRIES INCORPORATED and THE BOARD OF DIRECTORS OF MULTIMED INDUSTRIES, The President MR. JOSELITO TAMBUNTING, Managers MARLENE L. OROZCO, VERONICA C. TIMOG, OLGA F. MARINO and MA. LUZ B. YAN, G.R. No. 178903, 30 May 2011)

The grant of separation pay or some other financial assistance to an employee dismissed for just causes is based on equity. In Phil. Long Distance Telephone Co. v. NLRC, we ruled that severance compensation, or whatever name it is called, on the ground of social justice shall be allowed only when the cause of the dismissal is other than serious misconduct or for causes which reflect adversely on the employee’s moral character. Caragdag’s dismissal being due to serious misconduct, it follows that he should not be entitled to financial assistance. To rule otherwise would be to reward him for the grave misconduct he committed. The Supreme Court emphasized that social justice is extended only to those who deserve its compassion. (SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN) v. HON. VOLUNTARY ARBITRATOR BUENAVENTURA C. MAGSALIN and HOTEL ENTERPRISES OF THE PHILIPPINES, INC., G.R. No. 16493, 6 June 2011; and SAMAHAN NG MGA MANGGAGAWA SA HYATT (SAMASAH-NUWHRAIN) v. HOTEL ENTERPRISES OF THE PHILIPPINES, INC., G.R. No. 172303)

There is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. 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 established employer practice or policy. (ROMEO VILLARUEL v. Y EO HAN GUAN, doing business under the name and style YUHANS ENTERPRISES, G.R. No. 169191, 1 June 2011)

The SC, in a number of cases, has granted financial assistance to separated employees as a measure of social and compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present case, the SC found that petitioner is entitled to this kind of assistance. (ROMEO VILLARUEL v. Y EO HAN GUAN, doing business under the name and style YUHANS ENTERPRISES, G.R. No. 169191, 1 June 2011)

Taking into consideration the provisions of both RA 1616 and MC No. 26-96, the separation benefit due to the affected employees should be the balance received in MC No. 26-96 and the retirement benefit received in RA 1616. Hence, those who have rendered at least 20 but less than 30 years of service should receive 1 month salary for every year of service; and those who have rendered more than 30 years should receive 1.5 month salary for every year of service. (METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM v. GABRIEL ADVINCULA, et al., G.R. No. 179217, February 2, 2011)

One who pleads payment has the burden of proving it, and even where the employees must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employees to prove non-payment. (HEIRS OF MANUEL H. RIDAD, et al. v. GREGORIO ARANETA UNIVERSITY FOUNDATION, G.R. No. 188659, 13 February 2013)

Neil Christian

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