G.R. No. L-26710 September 30, 1971
RAFAEL LABASANO, plaintiff-appellee, vs. SO HAN SHUI, defendant-appellant.

FACTS

Rafael Labasano was employed by So Han Shui for 16 years. In 1963, Labasano was diagnosed with congestive heart failure and was medically advised to rest for 3 to 5 years, as resuming work as a driver would gravely endanger his life. He consequently went on an indefinite leave. He received compensation from the Workmen’s Compensation Commission and was declared totally and permanently disabled by the Social Security System (SSS). In 1964, Labasano sought reinstatement. So Han Shui, in a letter from his counsel, refused reinstatement unless Labasano presented a government medical certificate of cure, expressing apprehension that Labasano’s sudden death at work would subject the business to liability, and deeming it “inhuman and risky” to allow him to work given his permanent disability.
Labasano then filed a suit in the City Court of Manila for separation pay and damages, which was initially dismissed. On appeal, the Court of First Instance of Manila ruled in his favor, awarding separation pay, attorney’s fees, and exemplary damages. So Han Shui appealed to the Supreme Court, arguing that the Termination Pay Law (R.A. 1052, as amended) did not apply as there was no formal termination, only a temporary cessation due to disability, and contesting the amounts awarded.

ISSUE

Whether the defendant-appellant, So Han Shui, is liable to pay separation pay, attorney’s fees, and exemplary damages to the plaintiff-appellee, Rafael Labasano, under the Termination Pay Law.

RULING

Yes, the Supreme Court affirmed the lower court’s decision. The Court held that the refusal to reinstate Labasano, explicitly based on the permanent and dangerous nature of his disability, constituted a termination of employment for a cause not attributable to the employee’s fault. The Termination Pay Law requires an employer to either give one month’s notice or pay separation pay when terminating an employee for an authorized cause not due to the employee’s serious misconduct or neglect. Here, the employer’s act of refusing reinstatement due to the employee’s permanent disability, while perhaps motivated by concern, effectively laid off the employee. This situation fell under the law’s “other causes analogous” to the authorized causes for termination, necessitating separation pay.
The Court computed the separation pay as one-half month’s pay for every year of service, amounting to P1,778.40, based on the stipulated daily wage. The awards for attorney’s fees and exemplary damages were also upheld. Following precedent, attorney’s fees were justified as the employee was forced to litigate to enforce a clear right. Exemplary damages were warranted to serve as a public correction, as the employer had no plausible reason to resist the valid claim for severance pay after effectively terminating the employment. The judgment was affirmed in its entirety.