GR 151966; (July, 2005) (Digest)
G.R. No. 151966 July 8, 2005
JPL MARKETING PROMOTIONS, Petitioner, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT, Respondents.
FACTS
Petitioner JPL Marketing and Promotions, a recruitment and placement agency, employed private respondents as merchandisers assigned to a client, California Marketing Corporation (CMC). On August 13, 1996, JPL notified respondents that CMC was ceasing its operations in their region and advised them to wait for reassignment to other clients. Before the lapse of a six-month period for redeployment, respondents Gonzales and Abesa filed complaints for illegal dismissal, with Aninipot filing a similar case later. The Labor Arbiter dismissed the complaints, finding no illegal dismissal as respondents had secured other employment before the redeployment period lapsed.
The National Labor Relations Commission (NLRC) affirmed there was no illegal dismissal but awarded separation pay, service incentive leave pay, and 13th month pay, reasoning that JPL ultimately failed to reassign respondents. The Court of Appeals affirmed the NLRC’s award, justifying separation pay on grounds of equity and social justice despite the absence of illegal dismissal.
ISSUE
Whether private respondents are entitled to separation pay, service incentive leave pay, and 13th month pay.
RULING
The Supreme Court modified the assailed decision. It held that separation pay is not warranted. The termination resulted from the cessation of the client’s operations, a cause not attributable to the employer under Article 283 of the Labor Code. The award based solely on equity was erroneous, as equity cannot supplant law. The legal logic is clear: separation pay is a statutory benefit payable only in specific instances enumerated by law, such as retrenchment, redundancy, or closure of business. The cessation of a client’s operations, which leads to the termination of a project employee’s assignment, is not one of these instances. Therefore, the grant of separation pay was without legal basis.
However, the Court upheld the award of service incentive leave pay and 13th month pay. JPL’s claim that its payment of salaries above the minimum wage already included these benefits was rejected. Compliance with the 13th month pay mandate under Presidential Decree No. 851 is compulsory, and JPL failed to prove any exemption. For service incentive leave, the employer bears the burden of proving it has an existing company policy or practice granting this benefit; JPL failed to discharge this burden. The computation of these benefits was adjusted to cover only the period up to August 15, 1996, the date the client’s operations ceased, and service incentive leave pay was reckoned from each employee’s second year of service as required by law.