Villaruel vs. Yeo Han Guan, June 1, 2011

Villaruel filed with the NLRC NCR-Quezon City a Complaint for payment of separation pay against Yuhans Enterprises.
Petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan.
 
Petitioner further alleged that in October 1998, he got sick and was confined in a hospital; In December 1998, he reported for work but was no longer permitted to go back because  of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but respondent refused.
 
On the other hand, respondent averred that petitioner was hired as machine operator from March 1993 until he stopped working sometime in February 1999 on the ground that he was suffering from illness; after his recovery, petitioner was directed to report for work, but he never showed up.  Respondent was later caught by surprise when petitioner filed the instant case for recovery of separation pay. Respondent claimed that he never terminated the services of petitioner and that during their mandatory conference, he even told the latter that he could go back to work anytime but petitioner clearly manifested that he was no longer interested in returning to work and instead asked for separation pay.
 
Issue:
Whether or not Villaruel is entitled to separation pay.

​Held:
YES, but only financial assistance as a measure of social justice.
 
Article 284 of the Labor Code reads:
An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees:
 
Provided, That he is paid separation pay equivalent to at least 1 month salary or to ½ month salary for every year of service whichever is greater, a fraction of at least six months being considered as 1 whole year.
 
A plain reading of the above quoted provision clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties.
 
The Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate Villaruel’s employment: first, the only cause of action in petitioner’s original complaint is that he was “offered a very low separation pay”; second, there was no allegation of illegal dismissal, both in petitioner’s original and amended complaints and position paper; and, third, there was no prayer for reinstatement. This is tantamount to resignation.
 
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment
 
However, 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.
 
Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not entitled to separation pay under the provisions of the Labor Code.