Title
Hanford Philippines, Inc. vs. Joseph
Case
G.R. No. 158251
Decision Date
Mar 31, 2005
Employee voluntarily resigned; claimed separation pay under CBA. Courts ruled in her favor, citing CBA provisions and employer’s prior practice, despite Labor Code’s general rule.
separation pay
employee
resignation
A

Case Summary (G.R. No. 158251)

Factual Background

Respondent worked for petitioner for about twenty years and then resigned. After acceptance of her resignation, she sent on November 19, 1998 a letter requesting payment of separation pay under the quoted CBA provision. The CBA stated that regular employees or workers separated by the company due to reduction of personnel, separations without cause, terminations due to suspension, or cessation of operations were entitled to termination pay in accordance with law, and that the company would give termination pay to those who voluntarily resigned due to the reasons earlier stated, subject to specific rates keyed to length of service.

Petitioner denied respondent’s request, insisting that voluntary resignation was not a ground under the Labor Code that justified separation pay. Respondent then filed a complaint with the Office of the Labor Arbiter on December 17, 1998, docketed as NLRC NCR CN. 00-12-10238-98, seeking separation pay against petitioner Hanford and co-petitioner Victor Te.

Labor Arbiter, NLRC, and Court of Appeals Proceedings

On May 20, 1999, the Labor Arbiter rendered a decision granting respondent’s complaint and ordering petitioners to pay P93,820.00, citing the CBA’s Section 1, Article IV. On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter in its Resolution dated April 14, 2000. Petitioners’ motion for reconsideration was denied by the NLRC in its Resolution dated July 24, 2000.

Petitioners then resorted to a petition for certiorari under Rule 65 to the Court of Appeals, assailing the labor authorities’ rulings. On January 23, 2003, the Court of Appeals dismissed the petition. In doing so, the Court of Appeals emphasized that the CBA “clearly provides” that termination pay is to be given not only to employees separated due to reduction of personnel, separation without cause, or terminations due to suspension or cessation of operation, but also to those who voluntarily resign due to such reasons. It characterized respondent’s separation as one “without cause” as contemplated by the CBA because the resignation was voluntary and aligned with the CBA’s contemplated circumstance for entitlement. Petitioners’ motion for reconsideration was denied by the Court of Appeals on April 29, 2003, prompting the present recourse.

The Parties’ Contentions on Review

Petitioners argued that the Court of Appeals erred in holding that a resigned employee was entitled to separation pay under Section 1, Article IV of the CBA. Their position was anchored on the Labor Code rule that voluntary resignation, by itself, does not confer separation pay.

Respondent countered that the Court of Appeals’ decision should stand. She asserted that she worked for petitioner for about twenty years, and she believed she was entitled to separation pay under the CBA because the company’s program covered voluntary resignations due to separation “without cause” as defined in the CBA. She also averred that several former employees—Astor Madamag, Danilo Suplito, Domingo Bobis, Rosita Bobis, Evelyn Cunanan, Fe Viray, Doris Angeles, and Dula Imperia—had been granted separation pay consistent with the CBA and petitioners’ policy and practice, particularly upon their separation through retirement.

Issues Raised

The central issue was whether respondent’s voluntary resignation entitled her to separation pay under Section 1, Article IV, Article IV of the parties’ CBA, despite the Labor Code’s general rule that separation pay is not granted to employees who voluntarily resign.

Legal Basis and Reasoning

The Court recognized that there is no provision in the Labor Code that directly grants separation pay to employees who voluntarily resign. Under the Labor Code, separation pay may be awarded only in specified cases, such as (a) installation of labor saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business operations, (e) disease of an employee prejudicial to self or co-employees, or (f) illegal dismissal when reinstatement is not feasible.

The Court then invoked its earlier rulings, including Hinatuan Mining Corporation and/or the Manager versus National Labor Relations and Margo Batister, where the Court held that while the general rule denies separation pay for voluntary resignation, an exception exists when such payment is stipulated in an employment contract or CBA, or is authorized by the employer’s practice or policy. Consistent with that doctrine, the Court reasoned that the CBA in this case expressly provided termination pay for those who voluntarily resigned under reasons including separation “without cause” as contemplated in the CBA.

The Court further found that the labor tribunals and the Court of Appeals correctly read the CBA to cover the situation presented by respondent. The Court stressed that, according to the CBA’s language, an employee or worker who voluntarily resigns due to separation from the company without cause, such as voluntary resignation within the CBA’s coverage, is entitled to separation pay. In addition, the record showed that petitioners had granted separation pay to previously separated employees mentioned earlier, and that those awards were given upon separation due to retirement, a circumstance the Court noted was also not a statutory ground under the Labor Code.

The Court treated this past practice as relevant to the interpretation and application of the employer’s program. It applied the rationale in Philippine National Construction vs. NLRC, obs

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