Dear PAO,

I am an employee of a bank in Manila. Due to personal reasons, I was forced to move back to my hometown, so I decided to resign from my job. I have been an employee of that bank for several years now, and all the previous employees who resigned were given a separation pay in the amount of Twenty Thousand Pesos (Php 20,000.00). However, when I inquired as to my entitlement thereto, the management said that the payment of separation pay to resigned employees is part of management prerogative, and that they decided not to extend the same benefit to me. I’d like to know if this practice is valid.

Christa

Dear Christa,

Please be informed that Article 100 of Presidential Decree No. 442, as amended, otherwise known as the “Labor Code of the Philippines,” provides:

“Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.”

Relatedly, the Honorable Supreme Court ruled in the case of Italkarat 18, Inc. v. Juraldine N. Gerasmio (G.R. No. 221411, September 28, 2020, Ponente: Honorable Associate Justice Ramon Paul Hernando) that:

“As a general rule, the law does not require employers to pay employees that have resigned any separation pay, unless there is a contract that provides otherwise or there exists a company practice of giving separation pay to resignees.

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“We have ruled that a company’s practice of paying separation pay to resignees must be proven to exist as this is an exception to the general rule that employees who voluntarily resign are not entitled to separation pay.” (Emphasis supplied)

Further, in the case of Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc. (G.R. No. 176985, April 1, 2013, Ponente: Honorable Chief Justice Diosdado M. Peralta), the Honorable Supreme Court ruled that:

“To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.” (Emphasis supplied)

Pursuant to the aforementioned provisions of the law and the pertinent decisions of the Honorable Supreme Court, a company or employer cannot reduce the benefits provided to their employees. However, the benefits contemplated under the law must stem from an express policy, written contract, or company practice.

Thus, considering that you voluntarily resigned from work, you are not entitled to the payment of separation pay, unless such benefit was expressly provided in your employment contract, or if the practice of paying separation pay to resigned employees is supported either by an express policy of the company or is a proven company practice. In all cases, it is incumbent upon a resigned employee claiming such benefit to prove entitlement thereto, considering that, as a general rule, the payment of separation pay is not afforded to a voluntarily resigned employee. As you mentioned that all the resigned employees in your company were given separation benefits, you have to prove this fact as a company practice. If you are able to do so, then you can claim separation pay from your previous employer.

We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated on.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net