TERMINATION BY EMPLOYEE DOES NOT ENTITLE HIM TO SEPARATION PAY

Perez vs. Comparts Industries, Inc.
G.R. No. 197557. October 5, 2016

Facts:

[Perez] started her employment with [CII] on 16 July 1988. On 10 January 2009 she resigned from her work. [CII] has a retirement program for its managerial employees or officers. Included therein are provisions relating to optional or early retirement and optional retirement benefits.

Prior to her resignation, [Perez] manifested to [CII] her intention to avail of the optional retirement program since she was already qualified to retire under it. Her application was denied. She again filed an application for optional retirement to take advantage of a job offered to her in the US. Still, her application was denied.

[CII] justified its denial of [Perez’s] application saying that, under the Retirement Plan, it has the option to grant or deny her application for optional retirement and considering that it is experiencing financial crisis, it has no choice but to disallow her intention. [Perez] asked for reconsideration of the denial of her application for optional retirement. She also requested to be included in the retrenchment that [CII] was planning to implement. Again, her application declined and she was not one of those employees who were retrenched.

In December 2008, [Perez] needed to go to the USA to attend to her 1inother who suffered a mild stroke. Thus, she applied for optional retirement again to be effective on 10 January 2009. She also claimed the benefits concomitant to it as provided by the Retirement Plan. In response, [Perez] was informed by [CII] that it could only give her Php100,000.00 as gratuity for her twenty years of service as this was the only amount it could afford. [Perez] refused the offer. [Perez] received a letter from [CII] which contained the acceptance of her resignation effective 10 January 2009. The letter contained [CII’s] denial of [Perez’s] claim for optional retirement benefits or separation pay for the following reasons: 1) [CII] has no policy or rules on optional retirement benefits; 2) [CII] has been so affected by the global crisis and has been suffering financial losses; 3) there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees; and 4) [Perez] cannot invoke the provisions of ,the Collective Bargaining Agreement (CBA) on optional retirement because the CBA is for rank-and-file employees.

Perez asked CII to reconsider its stand and she cited names of former employees who were allowed to optionally retire and who were given separation pays even if they were managerial employees. Still, [CII] was not convinced.

Perez filed a complaint with the NLRC for discrimination, moral damages and attomey’s fees against and praying for separation pay in the form of optional retirement benefits, either under the Retirement Plan for CII officers or under the Collective Bargaining Agreement (CBA) for rank-and-file employees. On the whole, Perez asked for payment of separation pay under all circumstances of severance of employment, including separation pay due to a retrenchment.

LA Ruling:

LA ruled that Perez is entitled to optional retirement benefits under the CII Retirement Plan having rendered service to CII for more than twenty (20) years 2. Seven (7) CII managerial/middle employees with accompanying affidavits attached to Perez’s Position Paper have received separation pay and/or benefits either pursuant to optional retirement or retrenchment. CII then forthwith appealed.

NLRC Ruling:

The NLRC reversed and set aside the ruling on the following grounds: 1. Four (4) out of the five (5} employees received optional retirement benefits prior to the effectivity of the Retirement Plan in 1999, as amended in 2001. At their instance, these managerial/middle management employees were actually allowed optional retirement benefits pursuant to the CBA 2. Under the Retirement Plan for CII Officers, CII has the option to allow or disallow the application of a member-employee for optional retirement. While Perez may be qualified to elect optional retirement with her years of service to en beyond the 15-year service period minimum requirement, the provision in the Retirement Plan is prefaced by a qualifier· that the election is done “[w]ith the consent of [CII]”; 3. Both the Retirement Plan for the Officers and the CBA for the rank-and-file employees require the consent and approval of CII before any payment of optional retirement benefits to qualified employees-members is made; 4. The receipt by employees of optional retirement benefits as stated in the affidavits of retired managerial/middle management employees did not ripen into voluntary company practice. These managerial employees had to request, and obtain consent from, en to elect optional retirement as provided under the CBA; 5. The circumstances obtaining in the years 1995, 1997, 1998, and 2005, when certain employees were allowed to avail of optional retirement under the CBA, were far different from the circumstances obtaining in 2008 . when the global financial crisis specifically hit the exporting business of en and the latter had to undertake a retrenchment program where two (2) managerial employees who likewise executed affidavits received separation pay thereunder. Thus, CII validly disallowed Perez’s application for optional retirement based thereon; and 6. Lastly, to further demonstrate the absence of established company practice in the grant of optional retirement benefits to managerial employees, in 2008, when CII was already incurring net losses, it denied two (2) other employees’ application for payment of optional retirement benefits.

Nonetheless, the NLRC ordered CII to pay Perez the amount of Php100,000.00 as gratuity, CII having previously offered such in consideration for past services. Perez filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals alleging grave abuse of discretion in the NLRC.

CA Ruling:

The CA dismissed the petition and sustained the rulings of the NLRC. Perez

Issue/s:

Whether or not Perez is entitled to separation pay:
(1) primarily through the optional retirement program under the Retirement Plan having rendered more than twenty (20) years of service to CII, (2) through a similar optional retirement program under the CBA which has been likewise extended to other managerial/middle management employees in several instances, or (3) a retrenchment program undertaken by en because of the global financial crisis.

SC Ruling:

Perez is not entitled to optional retirement benefits without the consent thereto of CII to the grant under the Retirement Plan; (2) neither is she entitled to the same benefits under the CBA where there is no established company practice on such benefit; and (3) Perez is likewise not entitled to separation pay due to a retrenchment of personnel.

Termination by employee does not entitle him to separation pay

Termination of employment by the employee does not entitle the employee to separation pay. Separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment and is recoverable only in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible.

Company practice

Citing Metropolitan Bank and Trust Company vs. NLRC, the SC held that to be considered a company practice, the giving of the benefits should have been done over a long period of time, and must be shown to be consistent and deliberate. The test or rational of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof.

There is no element of consistency or pattern in the employees granted optional retirement benefits by CII in the years prior to the effectivity of the Retirement Plan. In addition, CII did not voluntarily grant the benefits and only did so upon application and request of the employee, unlike in Metrobank where the bank itself issued the Memoranda and specifically included managerial employees and bank officers in the coverage of the CBA. On the contrary, no company practice can be gleaned from a single managerial employee availing of optional retirement benefits under the CBA after effectivity of the Retirement Plan for CII Officers.

Option to undertake retrenchment is an employer prerogative

The option to undertake the retrenchment is the employer’s prerogative to serve the interest of the establishment. It is not for the benefit of an employee who has opted to sever the employment relations.