PETITIONER Gil Sambu Jarabelo was the booking salesman for respondent Household Goods Patrons Inc. He was the subject of several disciplinary proceedings because of unaccounted amounts, low sales output, unremitted collections, poor performance rating during evaluation for failing to meet sales target, and late remittance of sales proceeds. He claims that on Aug. 29, 2013 respondent Susan Dulalia directed him to report to her office but to his surprise he was instructed to submit a letter of resignation. Thus, he filed a complaint for illegal dismissal.

Respondents, on the other hand, claim that Jarabelo was not dismissed. Dulalia talked to him about his shortages and poor performance. He was informed that the shortages are considered as theft, which is a valid ground for immediate termination. But considering his prior good sales performance and the stigma of being terminated from employment, Dulalia offered the option for Jarabelo to just resign and no criminal charges will be filed against him. After this, Jarabelo never returned to work.

The Labor Arbiter (LA) ruled that Jarabelo was illegally dismissed. He was granted among others, separation pay in lieu of reinstatement. The National Labor Relations Commission (NLRC) found that he was not illegally dismissed and ordered the award of separation pay deleted. The Court of Appeals (CA) affirmed the decision of the NLRC.

Is Jarabelo entitled to separation pay?

Ruling: Yes.

The CA was correct in ruling that giving the option to gracefully exit considering his prior good sales performance and out of compassion did not constitute dismissal, legal or illegal. Jarabelo, however, did not resign and take the separation pay offered to him, but neither did Household Goods initiate disciplinary proceedings to terminate his employment.

Given the foregoing, generally, when there is no dismissal, ‘’the Court merely declares that the employee may go back to his work and the employer must then accept him because the employment relationship between them was never actually severed.”

There have been instances, however, where the Court directed the payment of separation pay even if there was no dismissal of the employee instead of a directive for the employee to return to work and for the employer to accept him.

In Nightowl Watchman & Security Agency Inc. v. Lumahan, G.R. 212096, Oct. 14, 2015, 772 SCRA 638 (Nightowl), the Court directed the payment of separation pay even if it found that no dismissal took place considering that more than 10 years had already passed since the employee stopped reporting for work. In Dee Jay’s Inn and Cafe v. Raneses, G.R. 191823, Oct. 5, 2016, 805 SCRA 143 (Dee Jay’s Inn), the Court likewise found that the employee was not dismissed nor did she abandon her work, but citing Nightowl, and also considering the more than 10 years that had passed since the employee reported for work, the Court directed the payment of separation pay. Also, in Doctor v. NII Enterprises, G.R. 194001, Nov. 22, 2017, 846 SCRA 53, the Court found that there was no dismissal and no abandonment but instead of directing the return to work of the employee, the Court, citing Dee Jay’s Inn, awarded separation pay considering that more than 10 years had also passed since the employee reported for work and the manifestation of the employer that the employee no longer had any place in the business due to reduced workforce. In these cases, separation pay was computed at one month salary for every year of service.

Here, considering that Household Goods had from the outset offered to pay separation pay to Jarabelo, and which even Jarabelo himself does not dispute, and that more than seven years had passed since Jarabelo reported for work on Sept. 1, 2013, the Court deems it just to award separation pay in lieu of the directive for him to return to work and for Household Goods to accept him (Gil Sambu Jarabelo vs. Household Goods Patrons Inc.,, G.R. 223163, Dec. 2, 2020).