RESIGNED EMPLOYEE IS NOT ENTITLED TO SEPARATION PAY

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Resigned employee is not entitled to separation according to the recent decision of the Supreme Court.

The SC held that as a general rule, the law does not require employers to pay employees that have resigned any separation pay, unless there is a contract that provides otherwise or there exists a company practice of giving separation pay to resignees.

Italkarat 18, Inc. vs. Juraldine N. Gerasmio
G.R. No. 221411, September 28, 2020

Petition for Certiorari; The fact that a decision of the NLRC is final and executory does not mean that a special civil action for certiorari may not be filed with the CA; Immutability of judgment; the doctrine of immutability of judgment is not violated when a party elevates a matter to the CA which the latter decided in favor of said party; Factual findings of administrative body; Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness.

 Burden of proof in illegal dismissal cases; The burden of proof is on the employer in proving the validity of dismissal; Only then when the dismissal is established that the burden shifts to the employer to prove that the dismissal was for just and/or authorized cause; Disputed fact of dismissal; The fact of dismissal, if disputed, must be duly proven by the complainant; The evidence required to prove the claim of dismissal from employment must be clear, positive and convincing; There can be no question as to the legality or illegality of a dismissal if the employee has not discharged his burden to prove the fact of dismissal by substantial evidence.

Separation pay; The law does not require employers to pay employees that have resigned any separation pay.

Constructive dismissal; An act, to be considered as amounting to constructive dismissal, must be a display of utter discrimination or insensibility on the part of the employer so intense that it becomes unbearable for the employee to continue with his employment

Facts:

Juraldine Gerasmio (Juraldine) alleged that the Company, Italkarat 18, Inc. (Company) hired him on June 1, 1990. In 1993, he was designated as the Maintenance Head and Tool and Die Maker until his dismissal on November 20, 2008 on the ground of serious business losses.

Juraldine claimed that during and prior to the last quarter of 2008, the Company had repeatedly informed its employees of its proposed retrenchment program because it was suffering from serious business losses. In particular, Juraldine claimed that Noel San Pedro (San Pedro), the then Officer-In-Charge (OIC)/Manager of the Company, informed him sometime in November 2008 that the Company was planning to retrench a substantial number of workers in the Maintenance and Tool and Die Section; and that if he opts to retire early, he will be given a sum of P170,000.00.

San Pedro then allegedly cautioned Juraldine that if he will not accept the offer to retire early, the Company would eventually retrench or terminate him from his employment, in which case, he might not even receive anything.

In light of the foregoing, Juraldine executed and signed a resignation letter and quitclaim. He was then informed to return to get his check worth P170,000.00. However, to his dismay, Juraldine was later informed by San Pedro that he would be receiving only the amount of P26,901.34.11 Thus, Juraldine, through his lawyer, sent a letter essentially demanding the amount of P170,000.00 he was allegedly promised earlier. Since the Company did not respond, Juraldine filed the instant complaint for illegal dismissal.

LA Ruling:

The Labor Arbiter (LA) rendered a Decision declaring Juraldine to have been unlawfully dismissed.

LA ruled that Juraldine was only forced to resign because of San Pedro’s misrepresentation that he would be paid P170,000.00 as separation pay. The LA likewise noted that in his quitclaim, Juraldine still asserted his entitlement to the payment of whatever benefits that may be due him. In fine, the LA ruled that Juraldine was illegally dismissed.

The Company appealed the Decision to the NLRC. Juraldine also interposed a partial appeal to the NLRC, questioning the non-inclusion of his separation pay in the LA Decision.

NLRC Ruling:

The NLRC granted the appeal of the Company, set aside and effectively reversed the LA’s Decision. Juraldine filed a motion for reconsideration but the same was denied by the NLRC in a Resolution.

The NLRC found that Juraldine voluntarily resigned from his job. It also noted that San Pedro could not have persuaded Juraldine to resign since the resignation happened on October 20, 2008 while the alleged promise of San Pedro was made on November 20, 2008, or one month after. Also, the NLRC found that Juraldine’s quitclaim was valid and executed for a reasonable consideration.

Aggrieved, Juraldine filed a Petition for Certiorari with the Court of Appeals (CA).

CA Ruling:

The CA granted the Petition for Certiorari and found that the NLRC committed grave abuse of discretion. Thus, the CA reversed the NLRC Decision and reinstated the LA’s Decision.

The CA found that Juraldine’s resignation was not unconditional since he was demanding payment for his separation pay in accordance with the alleged company practice. The CA opined that Juraldine latched on San Pedro’s promise that he would be paid P170,000.00 if he would resign. The appellate court further held that the quitclaim will not serve as a bar for Juraldine to demand the amount of P170,000.00 since he clearly stated therein that he is only executing the quitclaim because he was in need of money.

The Company filed a motion for reconsideration but it was denied by the appellate court. Hence, the Company filed the instant Petition for Review on Certiorari with the Supreme Court (SC).

Issue/s:

Whether or not the CA is precluded from taking cognizance of a petition for certiorari if the NLRC already issued an Entry of Judgment

Whether or not when a party elevates the final and executory decision of the NLRC to the CA it violates the immutability of judgment

Whether or not the employer has the burden of proof in illegal dismissal claim even if the employee has not yet proven the fact of dismissal

Whether or not the CA can review the factual findings of the NLRC

Whether or not an employee who resigned is entitled to separation pay

SC Ruling:

The fact that a decision of the NLRC is final and executory does not mean that a special civil action for certiorari may not be filed with the CA.

The Company insists that the CA should have dismissed Juraldine’s Petition for Certiorari because the NLRC Decision had already become final and executory. In fact, according to the Company, an Entry of Judgment was already issued by the NLRC.

Notwithstanding this, jurisprudence is replete with rulings that final and executory NLRC decisions may be subject of a petition for certiorari. It is precisely this final and executory nature of NLRC decisions that makes a special civil action of certiorari applicable to such decisions, considering that appeals from the NLRC to this Court were eliminated.

In support of its ruling, the SC cited the case of St. Martin Funeral Home vs. National Labor Relations Commission. Further, the SC held that in Panuncillo v. CAP Philippines, Inc. even if the NLRC decision has become final and executory, the adverse party is not precluded from availing of the remedy of certiorari under Rule 65 of the Rules of Court.

In sum, while under the sixth paragraph of Article 223 of the Labor Code, the decision of the NLRC becomes final and executory after the lapse of ten calendar days from receipt thereof by the parties, the adverse party is not precluded from assailing it via Petition for Certiorari under Rule 65 before the Court of Appeals and then to this Court via a Petition for Review under Rule 45.

Indeed, the doctrine of immutability of judgment is not violated when a party elevates a matter to the CA which the latter decided in favor of said party. Parenthetically, petitions for certiorari to the CA are more often than not filed after the assailed NLRC decisions have already become final and executory. It must be noted that under Article 229 of the Labor Code, as amended, a decision of the NLRC already becomes final after ten (10) calendar days from receipt thereof by the parties; on the other hand, the reglementary period with respect to a petition for certiorari under Rule 65 of the Rules of Court is sixty (60) days.

Certainly, given that the special civil action for certiorari was filed within the reglementary period, the CA committed no error and was acting in accordance with the law when it took cognizance of Juraldine’s petition.

Absent any evidence that Juraldine was dismissed, the complaint for illegal dismissal should not have prospered. The circumstances of this case necessitate a re-examination of the facts relating to Juraldine’s alleged dismissal. Juraldine argues that the Company’s present petition should be dismissed for raising questions of fact and not law.

While it is true that this Court is not a trier of facts but a trier of laws, there exist exceptions to such axiom. Particularly in labor cases where, as mentioned earlier, there exists no appeal from the NLRC. In Laya, Jr. v. Philippine Veterans Bank we reiterated that the CA, in the exercise of its certiorari jurisdiction, can review the factual findings or even the legal conclusions of the NLRC. Conformably with such observation made in St. Martin Funeral Homes, we have then later on clarified that the CA, in its exercise of its certiorari jurisdiction, can review the factual findings or even the legal conclusions of the NLRC.

In St. Martin Funeral Homes vs. NLRC, it was held that the special civil action of certiorari is the mode of judicial review of the decisions of the NLRC either by this Court and the Court of Appeals, although the latter court is the appropriate forum for seeking the relief desired “in strict-observance of the doctrine on the hierarchy of courts” and that, in the exercise of its power, the Court of Appeals can review the factual findings or the legal conclusions of the NLRC. The contrary rule in Jamer was thus overruled.

There is now no dispute that the CA can make a determination whether the factual findings by the NLRC or the Labor Arbiter were based on the evidence and in accord with pertinent laws and jurisprudence. The significance of this clarification is that whenever the decision of the CA in a labor case is appealed by petition for review on certiorari, the Court can competently delve into the propriety of the factual review not only by the CA but also by the NLRC. Such ability is still in pursuance to the exercise of our review jurisdiction over administrative findings of fact that we have discoursed on in several rulings, including Aklan Electric Cooperative, Inc. vs. National Labor Relations Commission.

While administrative findings of fact are accorded great respect, and even finality when supported by substantial evidence, nevertheless, when it can be shown that administrative bodies grossly misappreciated evidence of such nature as to compel a contrary conclusion, this Court had not hesitated to reverse their factual findings. Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness. The fact of dismissal must first be proven by Juraldine, especially considering the existence of a resignation letter signed by him.

Indeed, in illegal dismissal cases, the burden of proof is on the employer in proving the validity of dismissal. However, the fact of dismissal, if disputed, must be duly proven by the complainant. We have also clarified that there can be no question as to the legality or illegality of a dismissal if the employee has not discharged his burden to prove the fact of dismissal by substantial evidence, to wit:

It is true that in constructive dismissal cases, the employer is charged with the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. However, it is likewise true that in constructive dismissal cases, the employee has the burden to prove first the fact of dismissal by substantial evidence. Only then when the dismissal is established that the burden shifts to the employer to prove that the dismissal was for just and/or authorized cause. The logic is simple — if there is no dismissal, there can be no question as to its legality or illegality.

Applying the abovementioned principles in the present case, Juraldine clearly has the burden of proving that he was dismissed by the Company, in light of the Company’s allegation that he resigned voluntarily and was not dismissed. Hence, Juraldine must first prove that he was actually dismissed by the Company before the legality of such dismissal can even be raised as an issue.

It is a well-settled rule, however, that before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence.

In the instant case, the records are bereft of substantial evidence that will unmistakably establish a case of constructive dismissal. An act, to be considered as amounting to constructive dismissal, must be a display of utter discrimination or insensibility on the part of the employer so intense that it becomes unbearable for the employee to continue with his employment. Here, the circumstances relayed by Gemina were not clear-cut indications of bad faith or some malicious design on the part of Bankwise to make his working environment insufferable.

As a general rule, the law does not require employers to pay employees that have resigned any separation pay, unless there is a contract that provides otherwise or there exists a company practice of giving separation pay to resignees.

Juraldine failed to prove that a contract exists between him and the Company. In our jurisdiction, a contract is defined in Article 1305 of the Civil Code as a meeting of the minds. This means that a contract may exist in any mode, whether written or not. In this case, however, Juraldine utterly failed to show that he has a perfected contract with the Company regarding his separation pay.

To prove that the Company owed him separation pay, Juraldine primarily relied on his resignation letter and the subsequent demand letter written by his lawyer. The CA incorrectly appreciated the resignation letter as one demanding for separation pay. The contents of the said resignation letter would reveal that Juraldine merely believed that he was entitled to separation pay and was not even demanding for a certain amount. In short, his resignation was irrevocable and is patently unconditional.

Juraldine did not prove that there exists a Company practice wherein resignees were given separation pay. Aside from contract, Juraldine alternatively argued that it was a company practice to give resignees separation pay. To prove his allegations, Juraldine relied on affidavits of two former employees of the Company. The Company, on the other hand, also presented affidavits of its own, accompanied with the final payslips of former employees who have resigned.

We have ruled that a company’s practice of paying separation pay to resignees must be proven to exist as this is an exception to the general rule that employees who voluntarily resign are not entitled to separation pay.

In this case, we agree with the NLRC’s findings that there was no company practice. The evidence would show that the affidavits presented by Juraldine were made by former employees who were not in the same department or job position as him. While we cannot hastily conclude that the affiants are perjuring themselves (it may be possible that they were indeed given separation pay), these affidavits are not sufficient in proving that the Company gives separation pay as a matter of practice especially given the evidence presented by the Company, which paints a different picture.

We are inclined to give more weight to the Company’s affidavits as these were accompanied by the final payslips of former employees who have resigned, especially considering that at the time of resignation of one of these former employees, Gaylord Nebril, occupied the same job position as Juraldine when the latter resigned, which is maintenance director. This is compared to the job positions of Accountant and worker at the Lacquering and Wax Department.

In conclusion, considering that there was no dismissal involved in this case as Juraldine voluntarily resigned from work, his claims arising from his complaint for illegal dismissal must be denied. This includes his claim for separation pay as he failed to prove his entitlement thereto, either via contract or company practice.