G.R. No. L-48926 December 14, 1987
MANUEL SOSITO, petitioner, vs. AGUINALDO DEVELOPMENT CORPORATION, respondent.

FACTS

Petitioner Manuel Sosito was employed by Aguinaldo Development Corporation, a logging company, in 1964. On January 16, 1976, he voluntarily went on indefinite leave with the company’s consent. Subsequently, on July 20, 1976, the respondent corporation, due to severe financial losses, announced a retrenchment program. The program offered separation pay equivalent to one-half month’s basic salary per year of service to employees who were in active service as of June 30, 1976, provided they submitted their resignations by July 31, 1976.
Sosito submitted his resignation on July 29, 1976, to avail himself of the promised gratuity benefits. However, the company did not act on his resignation and refused to grant him separation pay. Sosito filed a complaint with the Department of Labor. The labor arbiter ruled in his favor, but the National Labor Relations Commission (NLRC) reversed the decision, holding that Sosito was not covered by the retrenchment program.

ISSUE

Whether or not petitioner Manuel Sosito is entitled to separation pay under the company’s retrenchment program.

RULING

The Supreme Court ruled that Sosito is not entitled to separation pay. The legal logic hinges on the clear and specific terms of the retrenchment program memorandum. The offer of separation benefits was explicitly extended only to employees “in the active service as of June 30, 1976.” The Court emphasized that being on indefinite leave, while technically still an employee, means one is not in “active service.” Active service implies actual performance of work and receipt of corresponding salary and benefits.
The Court found that Sosito, having voluntarily taken indefinite leave, was not rendering active service as of the critical date specified in the company’s offer. He could not claim benefits designed for active employees facing retrenchment while simultaneously insulating himself from the company’s operational difficulties. The Court noted that under the Labor Code then in force (Article 272[a]), the company could have legally retrenched employees due to serious business reverses without any obligation to pay separation benefits. Its offer was a voluntary, compassionate gesture, but its terms were clear and restrictive. The policy of social justice does not permit awarding benefits to those who do not meet the expressly stated qualifications of a voluntary company program. Therefore, the NLRC decision was affirmed.