G.R. No. 115884 July 20, 1995
CJC TRADING, INC. and/or MS. CELIA J. CARLOS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, RICARDO AUSAN, JR. and ERNESTO ALANAN, respondents.

FACTS

Private respondents Ricardo Ausan, Jr. and Ernesto Alanan, employed as truck drivers by petitioner CJC Trading, Inc., filed complaints for illegal dismissal and non-payment of various labor standard benefits. The Labor Arbiter dismissed the complaints, finding that Ausan, Jr. quit after a non-work-related injury, and Alanan voluntarily resigned due to old age. The NLRC initially affirmed this decision. However, upon the private respondents’ motion for reconsideration, which invoked equitable grounds and prayed for “termination pay,” the NLRC, while denying reconsideration, awarded them separation pay equivalent to one-half month’s salary per year of service. Petitioner challenged this award via certiorari, arguing no legal basis existed for separation pay in a case of voluntary resignation.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in awarding separation pay to employees who voluntarily resigned from their employment.

RULING

Yes, the NLRC committed grave abuse of discretion. The Supreme Court granted the petition and set aside the award of separation pay. The legal logic is anchored on the statutory and jurisprudential bases for separation pay. Separation pay is authorized under Articles 283 and 284 of the Labor Code for authorized causes like retrenchment or redundancy, and under the Implementing Rules for cases of illegal dismissal where reinstatement is not feasible. By way of equitable exception, separation pay may also be granted as a measure of social justice in valid dismissal cases not involving serious misconduct. The factual findings of the NLRC, which are binding absent grave abuse, established that private respondents voluntarily quit their jobs. Voluntary resignation is not a legal ground for separation pay under the Labor Code, unless provided by contract, collective bargaining agreement, or established employer practice, none of which were present here. The Court construed the prayer for “termination pay” in the motion for reconsideration as potentially one for retirement benefits, given the employees’ age and service. However, the applicable law, Article 287 of the Labor Code, requires a minimum age of sixty years and five years of service to claim retirement pay in the absence of a plan. The records did not sufficiently establish these prerequisites. Consequently, the NLRC’s award, lacking any legal foundation, was rendered with grave abuse of discretion. The petition was filed on time under Rule 65, as it was submitted within three months from receipt of the assailed resolution.