Almirante: Separation pay absent illegal dismissal and abandonment

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RESPONDENT Leyte Lumber Yard and Hardware Inc. (Leyte Lumber), a construction supply and hardware store, hired petitioner Fernando C. Gososo (Gososo) as a sales representative. On Oct. 13, 2008, Gososo filed a complaint against Leyte Lumber for illegal constructive dismissal and money claims including separation pay, moral damages and attorney’s fees.

Leyte Lumber invoked the defense that Gososo abandoned his job. The Supreme Court found that there is no illegal dismissal nor did Gososo abandon his job.

Is Gososo entitled to separation?

Ruling: Yes.

Where the employee fails to prove the fact of his or her illegal dismissal, and the employer has also not demonstrated that the employee abandoned his or her work, the case usually ends with the employee’s reinstatement without the payment of backwages. Should reinstatement be rendered impossible by strained relations of the parties, become unreasonable with the passage of time since the legal controversy, or otherwise attained impossibility or impracticability due to the present prevailing circumstances, equity impels the Court to award the petitioner separation pay equivalent to one-month salary for every year of service, computed up to the time he stopped working for respondents.

The Court has had occasion to withhold the grant of separation pay where there was no dismissal, no abandonment, and reinstatement was no longer feasible. In the earlier cases with factual backgrounds similar hereto, it had been ruled that the parties shall bear their respective losses and are placed on equal footing.

A slew of more recent and analogous cases, however, dictated the trend favoring such award of separation pay. In AIP Construction v. Marquina, G.R. 229225, Sept. 11, 2019, respondents were initially directed to be reinstated to their former work. Considering, however, the length of time that had passed and the impossibility and unreasonableness of an order of reinstatement, the Court instead awarded them separation pay of one-month salary for every year of service up to the time respondents stopped working.

A similar directive was issued in Doctor. The Court considered the respondent employers’ own allegations that they had already reduced their workforce and that the petitioning employees had no more place in the company.

In Dee Jay’s Inn and Cafe v. Raneses, 796 Phil. 574 (2016), it was emphasized that where the employee was neither found to have been dismissed nor to have abandoned work, the general course of action is for the tribunals to dismiss the complaint, direct the employee to return to work, and order the employer to re-accept the employee. Citing Nightowl Watchman & Security Agency Inc. v. Lumahan, 771 Phil. 391 (2015), if a considerable length of time had already passed, 10 years in the case of Dee Jays Inn, and reinstatement of the dismissed employee is rendered impossible, an award of separation pay is proper in lieu of reinstatement. The separation pay is equivalent to one-month salary per year of service up to the time the employee stopped working. (Fernando C. Gososo vs. Leyte Lumber Yard and Hardware Inc. and Ruben L. Yu, G.R. 205257, Jan. 13, 2021).

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