Travelaire and Tours Corporation vs National Labor Relations Commission

G.R. No. 131523 – 355 Phil. 932 – 294 SCRA 505 – Labor Law – Labor Standards – Separation Pay – When Available

In April 1994, Nenita Medelyn resigned as chief accountant for Travelaire and Tours Corporation.

In January 1995, she filed a labor case against Travelaire for the latter’s refusal to pay her, among other benefits, separation pay. Travelaire insists that Medelyn is not entitled to receive separation pay because she resigned voluntarily.

ISSUE: Whether or not Nenita Medelyn is entitled to receive separation pay.

HELD: Yes. As a rule, separation pay is not available to employees who voluntarily resigned except when the contrary is agreed upon in the employment contract, a CBA (collective bargaining agreement), or if it is an established company practice or policy.

In this case, Medelyn was able to establish that the payment of separation pay is an established company practice when she presented evidence that from 1991 to 1996, three employees who also voluntarily resigned were given each a separation pay. This evidence was uncontroverted by Travelaire.

It is of no moment that the separation pay given to the three other employees was denominated as “ex gratia” payments or out of the generosity of the corporation. What is undeniable is the fact that upon resignation from Travelaire, the said three other employees were given certain sums of money occasioned by their separation from the company.

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