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RETIREMENT FROM THE SERVICE DELFIN A.

BRION, petitioner,
vs.
ART. 302. Retirement – Any employee may be retired upon reaching the retirement age established in the SOUTH PHILIPPINE UNION MISSION OF THE SEVENTH DAY ADVENTIST CHURCH, represented by PASTORS
collective bargaining agreement or other applicable employment contract. PATERNO DIAZ, ULYSSES CAMAGAY, MANUEL DONATO and WENDELL SERRANO, respondents.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he Facts: Petitioner Delfin A. Brion became a member of respondent South Philippine Union Mission of the
may have earned under existing laws and any collective bargaining agreement and other agreement. Seventh Day Adventist Church (hereafter SDA) sometime in 1949 where he worked until he retired in 1983
Provided, however, That an employee’s retirement benefits under any collective bargaining and other (53 years). As was the practice of the SDA, petitioner was provided a monthly amount as a retirement
agreements shall not be less than those provided herein. benefit. He got into an argument with Samuel, another pastor, which resulted to his establishment of
“Home Church”. Because of his actions, petitioner was excommunicated by the SDA and, on July 3, 1993, his
name was dropped from the Church Record Book. As a consequence of his "disfellowship," petitioner's
In the absence of a retirement plan or agreement providing for retirement benefits of
monthly retirement benefit was discontinued by the SDA.
employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty-five (65) which is hereby declared the compulsory retirement age, who has served at least
SDA Argument: The right to a pension never really vests in an employee, there being no fixed period for
five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at
eligibility for retirement. The SDA insists that an employee must "devote his life to the work of the Seventh-
least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being
day Adventist Church" even after retirement to continue enjoying retirement benefits. There is, thus, no
considered as one whole year.
definite length of service provided as the SDA can withdraw retirement benefits at any time after
"retirement," if it determines that a "retired employee" is not devoting his life to the work of the church.
Unless the parties provided for broader inclusions, the term one-half (1/2) month salary shall Furthermore, the SDA's eligibility requirement as to length of service is even more stringent than that
mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of the not required by law.
more than five (5) days of service incentive leaves.

An underground mining employee upon reaching the age of fifty (50) years or more, but not Issue: Must the conditions for eligibility for retirement be met only at the time retirement?
beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine
workers, who has served at least five (5) years as underground mine worker may retire and shall be Ruling: Yes. We rule that the conditions of eligibility for retirement must be met at the time of retirement at
entitled to all retirement benefits provided for in this Article. which juncture the right to retirement benefits or pension, if the employee is eligible, vests in him.

Retail, services and agricultural establishments or operations employing not more than ten (10) Retirement has been defined as a withdrawal from office, public station, business, occupation, or public
employees or workers are exempted from the coverage of this provision. duty. It is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees and/or consents to sever his employment
Violation of this provision is hereby declared unlawful and subject to penal provisions provided with the former. In this connection, the modern socio-economic climate has fostered the practice of setting
under Article 288 of this Code. up pension and retirement plans for private employees, initially through their voluntary adoption by
employers, and lately, established by legislation. Pension schemes, while initially humanitarian in nature,
now concomitantly serve to secure loyalty and efficiency on the part of employees, and to increase
Nothing in this Article shall deprive any employee of benefits to which he may be entitled under continuity of service and decrease the labor turnover, by giving to the employees some assurance of
existing laws or company policies or practices. security as they approach and reach the age at which earning ability and earnings are materially impaired or
at an end.
x----------------------------------------x
It must be noted, however, that the nature of the rights conferred by a retirement or pension plan depends
G.R. No. 135136 May 19, 1999 in large measure upon the provisions of such particular plan.
From the above, it can be gleaned that employer and employee are free to stipulate on retirement benefits, manager. In a Position Paper he filed in support of his complaint, Mr. Alviar claimed entitlement to, among
as long as these do not fall below the floor limits provided by law. other things, ECOLA underpayments as well as "retirement benefits," computed at one-half month's pay for
every year of service.
Again, it has been held that "pension and retirement plans create a contractual obligation in which the
promise to pay benefits is made in consideration of the continued faithful service of the employee for the Petitioner alleged that all of the employment benefits claimed by private respondent Alviar had already
requisite period. 9 In other words, before a right to retirement benefits or pension vests in an employee, he been fully paid. On the matter of retirement benefits, it was contended that Mr. Alviar had not been
must have met the stated conditions of eligibility with respect to the nature of employment, age, and length dismissed by Llora Motors, private respondent abandoned his work since April 1985 and never reported to
of service. This is a condition precedent to his acquisition of rights thereunder. work again. Neither had Mr. Alviar been retired, petitioners claimed, "for the simple reason that respondent
corporation does not have any retirement plan ... [or] any collective bargaining agreement with the
employees for no union exists within the company because the employees, drivers included, received more
While it is true that "upon the expulsion of a priest or minister from a pastorate, all right to further salary
than the standard benefits for their labor." Petitioners contended further that "records will show that
cases," 13 this presupposes that the priest or minister is still on "active duty," so to speak. Here, petitioner
complainant had received retirement benefits from the Social Security System when he retired therefrom in
has already retired. Hence, he already had a vested right to receive retirement benefits, a right which could
1983."
not be taken away from him by expulsion or excommunication, this not being a ground for termination of
retirement benefits under the SDA's retirement plan. In fact, under paragraph Z1025 of the SDA's General
Labor Arbiter rendered a Decision awarding Alviar retirement benefits for 17 years.
Conference Working Policy, retirement benefits terminate only with the decease of the beneficiary, an
event which has not yet transpired here. The SDA must, thus, pay petitioner his retirement benefits despite
his establishment of a rival church and his excommunication.
Issue: Whether or not private respondent Alviar is legally entitled to receive retirement benefits from
petitioner's, his former employers.
x----------------------------------------x
Held: No. Our Labor Code has only one article that deals with the subject of "retirement from the service."
PREVIOUS LAW AND AMENDMENTS BY R.A. NO. 7641 (1993) AND R.A. NO. 8558 (1993) Article 287 of the Code reads as follows:

G.R. No. 82895 November 7, 1989 Article 287. Retirement. — Any employee may be retired upon reaching the retirement
age established in the Collective Bargaining Agreement or other applicable employment
LLORA MOTORS, INC. and/or CONSTANTINO CARLOTA, JR., petitioners, contract.
vs.
HON. FRANKLIN DRILON in his capacity as the Secretary of the Department of Labor and Employment, In case of retirement, the employee shall be entitled to receive such retirement benefits
HON. DANIEL M. LUCAS, DOMINGO H. ZAPANTA and OSCAR N. ABELLA, in their capacity as as he may have earned under existing laws and any collective bargaining or other
Commissioners of the National Labor Relations Commission (NLRC) Manila, Second Division, HON. agreement. (Emphasis supplied)
RICARDO N. OLAIREZ, in his capacity as the Labor Arbiter of the Regional Arbitration Branch No. I, San
Fernando, La Union and PRIMITIVO ALVIAR, respondents. Examination of Article 287 above shows that entitlement to retirement benefits may accrue either (a) under
existing laws or (b) under a collective bargaining agreement or other employment contract. It is at once
Facts: Sometime in September of 1968, private respondent Primitivo V. Alviar began his employment with apparent that Article 287 does not itself purport to impose any obligation upon employers to set up a
petitioner Llora Motors, Inc. As a truck driver, Mr. Alviar rendered services to the company eight (8) hours a retirement scheme for their employees over and above that already established under existing laws. In
day (exluding overtime) seven days a week, and for his labor received a salary computed on a per trip basis other words, Article 287 recognizes that existing laws already provide for a scheme by which retirement
plus emergency cost of living allowance (ECOLA). At the time he stopped working on 19 April 1985, Mr. benefits may be earned or accrue in favor of employees, as part of a broader social security system that
Alviar was 65 Years of age. provides not only for retirement benefits but also death and funeral benefits, permanent disability benefits,
sickness benefits and maternity leave benefits. 12 As is commonplace knowledge, the Social Security Act
On 28 October 1985, private respondent Alviar filed with NLRC a complaint for "Separation Pay and Non- provides for retirement benefits which essentially consist of the right to receive a monthly pension for the
Payment of Daily Wages" against petitioners Llora Motors and Constantino Carlota, Jr., the company rest of the covered employee's life provided that: (1) such employee had paid at least one hundred twenty
(120) monthly contributions prior to retirement; and (2) has reached the age of sixty (60) years (if his salary
is less than P300.00 a month) or 65 years. The retirement scheme here 'established is compulsory and x----------------------------------------------x
contributory in character on the part of both the employer and the employee, backed up by criminal
sanctions and administered by a large and elaborate bureaucracy.
G.R. No. 110861 November 14, 1994
Article 287 of the Labor Code recognizes that employers and employees may, by a colective bargaining or
other agreement, set up a retirement plan in addition to that stablished by the Social Security law, but ORO ENTERPRISES, INC., petitioner,
prescribes at the same time that such consensual additional retirement plan cannot be substituted for or vs.
reduce the retirement benefits available under the compulsory scheme established by the Social Security NATIONAL LABOR RELATIONS COMMISSION and LORETO L. CECILIO, respondents.
law. Such is the thrust of the second paragraph of Article 287 which directs that the employee shall be
entitled to receive retirement benefits earned "under existing laws and any collective bargaining or other
Facts: In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the 22nd March 1993 decision
agreement."
and 29th May 1993 order of respondent National Labor Relations Commission (NLRC) directing petitioner to
pay private respondent Loreto Cecilio retirement pay in the amount of P61,500.00.
That there was some confusion in the mind of the Labor Arbiter in the case at bar between "termination
pay" and "retirement benefits" would seem entirely possible: private respondent Alviar initially asked for
Private respondent was first employed by petitioner in August of 1949. After working continuously with the
"separation pay" and the Labor Arbiter awarded him "retirement benefits." It is important to keep the two
company for forty one (41) years, private respondent manifested, on 03 September 1990, her intention to
(2) concepts of "termination pay" and "retirement benefits" separate and distinct from each other.
retire from work by filing with petitioner a "Claim for Retirement Pay."
Termination pay or separation pay is required to be paid by an employer in particular situations Identified
by the Labor Code itself or by Implementing rule I. 13 Termination pay where properly due and payable
On 15 September 1990, petitioner wrote private respondent, informing her that it was in no financial
under some applicable provision of the Labor Code or under Section 4 (b) of Implementing Rule 1, must be
position to give her any retirement benefit apart from the retirement pay she was already receiving from
paid whether or not an additional retirement plan has been set up under an agreement with the employer
the Social Security System ("SSS"). Nonetheless, she was offered a house and lot located in San Jose, del
or under an "established employer policy."
Monte, Bulacan, in accordance with a "plan" which was then still being conceived by the company president
for retiring employees. The offer did not materialize, nor did the proposed company plan come into being,
Section 14 of Implementing Rule I may be seen to be saying is that where termination pay
for one reason or another.
is otherwise payable to an employee under an applicable provision of the Labor Code, and an additional or
consensual retirement plan exists, then payments under such retirement plan may be credited against the
In the instant petition, Oro Enterprises ascribes grave abuse of discretion on the part of the NLRC in
termination pay that is due, subject, however, to certain conditions. These conditions are: (a) that payments
applying R.A. No. 7641. Petitioner argues that the law, which became effective only on 07 January 1993,
under the additional retirement plan cannot have the effect of reducing the amount of termination pay due
cannot be given any such retroactive effect as to cover private respondent who, at the age of 65 years,
and payable to less than one-half (1/2) month's salary for every year of service; and (b) the employee
retired from employment with petitioner on 03 September 1990.
cannot be made to contribute to the termination pay that he is entitled to receive under some provision of
the Labor Code; in other words, the employee is entitled to the full amount of his termination pay plus at
Issue: Whether or not R.A. 7641 can favorably apply to private respondent's case?
least the return of his own contributions to the additional retirement plan.
Held: RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure
Clearly, there was in the instant case no consensual basis fro the required payment of additional retirement
and as a curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary
benefits. The Labor Arbiter and the NLRC had not declared private respondent Alviar to have been illegally
grant from, an employer — can respond, in part at least, to the financial well-being of workers during their
dismissed by petitioners. neither was there any pretense on the part of private respondent Alviar that labor-
twilight years soon following their life of labor. There should be little doubt about the fact that the law can
saving devices had been installed, or that redundancy or retrenchment or cessation of operations had
apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be
occurred in Llora Motors or that he was afflicted by some disabling disease, or that, being entitled to
reckoned not only from the date of the law's enactment but retroactively to the time said employment
reinstatement, he could not be reinstated to this old position. Under these circumstances, the portion of
contracts have started.
the Labor Arbiter's award which required petitioners to pay an amount equivalent to a half month's pay for
every year of service of Mr. Alviar cannot be justified either as (additional) retirement benefits or as
termination pay and hence constituted an act without or in excess of jurisdiction.
it in his well-known definition of social justice in Calalang v. Williams, decided the same year. Thus: "Social JOSE T. CAPILI, petitioner,
justice is "neither communism, nor despositism, nor atomism, nor anarchy," but the humanization of laws vs.
and the equalization of social and economic forces by the State so that justice in its rational and objectively NATIONAL LABOR RELATIONS COMMISSION, and UNIVERSITY OF MINDANAO, respondents.
secular conception may at least be approximated. Social justice means the promotion of the welfare of all
the people, the adoption by the Government of measures calculated to insure economic stability of all the Facts: Petitioner Jose T. Capili, Jr., was employed by private respondent University of Mindanao (hereafter,
component elements of society, through the maintenance of a proper economic and social equilibrium in UM) as a college instructor in November 1982. On 2 July 1993, the private respondent informed the
the interrelations of the members of the community, constitutionally, through the adoption of measures petitioner that under the law and UM's retirement program he would be eligible for retirement when he
legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all would reach the age of 60 years on 18 August 1993. In his answer of 5 August 1993, the petitioner informed
governments on the time-honored principle of salus populi est suprema lex." The present Civil Code, which UM that pursuant to Section 4, Rule II, Book VI of the Rules Implementing the Labor Code, the that he was
took effect on August 13, 1950, has a chapter on labor contracts, the first article of which recognizes that not opting to retire but would continue to serve until he reaches the compulsory retirement age of 65. In its
the relations between capital and labor "are not merely contractual. They are so impressed with public reply of 10 August 1993 to the petitioner, UM reiterated its position that under the university's retirement
interest that labor contracts must yield to the common good." plan, it could retire him. It argued that under Section 4 cited by the petitioner, the employee has the option
only in the absence of a retirement plan.
Given the above findings, which must be accorded due respect, we cannot see our way clear to attributing
to NLRC grave abuse of discretion in concluding thereby that private respondent's claim for retirement
Perceiving the school's insistence as constructive dismissal the petitioner filed a complaint1 for illegal
benefits should accordingly be held to fall within the ambit of Republic Act No. 7641. Grave abuse of
dismissal. He sought his reinstatement to his former position without loss of seniority rights with full back
discretion, albeit an elastic phrase, has always been understood as a capricious and whimsical exercise of
wages, wage differential, 13th month differential, moral and exemplary damages, and attorney's fees.
judgment as is equivalent to lack of jurisdiction, such as, to exemplify, "where the power is exercised in an
arbitrary or despotic manner.
x-------------------------------------------------x The petitioner maintained that private respondent's retirement plan applies only to members thereof,
pursuant to Articles II and III of its Rules and Regulations, 5 and that since he is not a member of the Plan, he
COVERAGE is not covered by it. He further contended that Policy Instruction No. 25, issued on 1 June 1977, was
abrogated by Republic Act No. 7641, which took effect on 7 January 1993; and that pursuant to the new
The retirement pay law applies to private sector employees. It covers either full-time or part-time Rule II, Book VI of the Omnibus Rules Implementing the Labor Code, which also took effect on 7 January
employees, regular or non-regular. 1993, he has the option whether or not to retire upon attaining the age of 60 years.
It does not cover government employees and employees or retail, service and agricultural establishments or
operations that regularly employ not more than ten (10) employees. Issues: 1. Whether an instructor of a private educational institution may be compelled to retire at the age of
x--------------------------------------------------x sixty (60) years.
CONDITIONS FOR ENTITLEMENT 2. Whether his subsequent acceptance of retirement benefits would estop him from pursuing his complaint
questioning the validity of his forced retirement.
Please refer to the case above >>> Brion vs South Philippine Union Mission of the Seventh Day of Adventist
Church. Held: (1) No. (2) Yes.
The applicable law on the matter is Article 287 of the Labor Code of the Philippines, as amended by R.A. No.
x--------------------------------------------------x 7641, which took effect on 7 January 1993. 17 As amended, the Article reads as follows:
TWO KINDS OF RETIREMENT
Art. 287. Retirement. —
1. Compulsory
2. Optional
Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

G.R. No. 120802 June 17, 1997


In case of retirement, the employee shall be entitled to receive such retirement benefits but was denied thereof without justifiable reason. This could only mean that he has already acceded to his
as he may have earned under existing laws and any collective bargaining agreement and retirement, effective on such date — when he reached the age of 60 years.
other agreements: Provided, however, That an employee's retirement benefits under
any collective bargaining agreement and other agreements shall not be less than those WHEREFORE, the 31 March 1995 and 31 May 1995 Resolutions of the National Labor Relations Commission
provided herein. in NLRC CA No. M-002096-94 are AFFIRMED subject to the modification that the petitioner is hereby
declared to be not covered by respondent University of Mindanao's Retirement Plan but is, nevertheless,
In the absence of a retirement plan or agreement providing for retirement benefits of deemed to have opted to retire when he reached the age of sixty years, pursuant to Article 287 of the Labor
employees in the establishment, an employee upon reaching the age of sixty (60) years Code, as amended by R.A. No. 7641.
or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may x----------------------------------x
retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as
one whole year. G.R. No. 118743 October 12, 1998

The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age ERNESTO E. MARTINEZ, petitioner,
65, while the second is primarily determined by the collective bargaining agreement or other employment vs.
contract or employer's retirement plan. In the absence of any provision on optional retirement in a NATIONAL LABOR RELATIONS COMMISSION, GMCR, INC. (Formerly GLOBE MACKAY CABLE & RADIO
collective bargaining agreement, other employment contract, or employer's retirement plan, an employee CORP.), and MARK ANTHONY JAVIER, respondents.
may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has
served at least five years in the establishment concerned. That prerogative is exclusively lodged in the
Facts: That on June 10, 1977, respondent GMCR, Inc. employed petitioner as assistant credit and collection
employee.
manager. At the inception of petitioner's employment, respondent company made it clear that employees
who were not eligible for membership in the bargaining unit and, therefore, not entitled to the benefits
The option to retire at age 60 could be exercised by either the employee or the employer for private under the collective bargaining agreement, would be paid benefits which were at least equivalent to, if not
educational institutions. This power of the employer no longer exists under R.A. No. 7641, which higher than, those provided in the collective bargaining agreement. On September 22, 1981, respondent
unequivocally provides that the option to retire upon reaching the age of 60 years or more but not beyond company promoted petitioner to credit and collection manager, a position he held until the day of his
65 is the exclusive prerogative of the employee if there is no provision on retirement in a collective retirement.
bargaining agreement or any other agreement or if the employer has no retirement plan.
In the course of his employment, petitioner received annual salary increases based on merit and/or
Nothing could be clearer from the provisions of the Plan than that it is not applicable to all employees of
performance. Although the annual salary increases were not given on the exact due dates, they were
UM and its associated enterprises. It applies only to those who opted to become members thereof.
retroactively applied to the start of the evaluation period. However, much to his surprise, petitioner
Contracts take effect only between the parties thereto.
received no salary increase for the period immediately prior to his retirement. Petitioner applied for
optional retirement benefits under the collective bargaining agreement. He stated that since he would have
been in the service of the company for fifteen years on June 10, 1992, he wished to retire effective July 16,
By his acceptance of retirement benefits the petitioner is deemed to have opted to retire under the third 1992, on which date "the long term sick leave availment as per advice by the company's physician shall have
paragraph of Article 287 of the Labor Code, as amended by R.A. No. 7641. Thereunder he could choose to expired.
retire upon reaching the age of 60 years, provided it is before reaching 65 years, which is the compulsory
age of retirement. Issues: (1) Whether petitioner, who is a managerial employee, can claim retirement benefits under the
collective bargaining agreement
Also worth noting is his statement that he "had long and unjustly been denied of his retirement benefits (2) Whether petitioner is barred from instituting this action on the ground of estoppel, having signed a
since August 18, 1993." Elsewise stated, he was entitled to retirement benefits as early as 18 August 1993 document entitled "Release, Waiver and Quitclaim" in favor of respondent company.
Held: (1) Yes. Accordingly, managerial employees cannot, in the absence of an agreement to the contrary,
be allowed to share in the concessions obtained by the labor union through collective negotiation. The Secretary issued the assailed order upholding PALs action of unilaterally retiring Captain Collantes and
Otherwise, they would be exposed to the temptation of colluding with the union during the negotiations to recognizing the same as a valid exercise of its option under Section 2, Article VII, of the 1967 PAL-ALPAP
the detriment of the employer. Retirement Plan. The Secretary further ordered that the basis of the computation of
Captain Collantes retirement benefits should be Article 287 of the Labor Code (as amended by Republic Act
However, there is nothing to prevent the employer from granting benefits to managerial employees equal No. 7641) and not Section 2, Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in the
to or higher than those afforded to union members. There can be no conflict of interest where the exercise of its option to retire pilots, PAL should first consult the pilot concerned before implementing his
employer himself voluntarily agrees to grant such benefits to managerial employees. In the case at bar, at retirement.
the beginning of petitioner's employment, he was told that those who are not covered by the CBA would
nevertheless be entitled to benefits which would be, if not higher, at least equivalent to those provided in Issue: Whether petitioner should consult the pilot concerned before exercising its option to retire pilots
the CBA. That private respondents made such a promise to petitioner is not denied by them.
Held: No. Surely, the requirement to consult the pilots prior to their retirement defeats the exercise by
management of its option to retire the said employees. It gives the pilot concerned an undue prerogative to
Thus, respondent company's agreement to extend the benefits of the CBA to petitioner constitutes the
assail the decision of management. Due process only requires that notice be given to the pilot of petitioners
"applicable employment contract" under this provision of the Labor Code, pursuant to which petitioner may
decision to retire him. Hence, the Secretary of Labor overstepped the boundaries of reason and fairness
claim retirement benefits.
when he imposed on petitioner the additional requirement of consulting each pilot prior to retiring him.
(2) No. This document is an invalid waiver and cannot bar petitioner from bringing the present action.
Unlike petitioner's waiver of the original date of his retirement, the consideration for which is the advance
Furthermore, when the Secretary of Labor and Employment imposed the added requirement that petitioner
on his retirement benefits, the "Release, Waiver and Quitclaim" does not purport to have been made by
should consult its pilots prior to retirement, he resolved a question which was outside of the issues raised,
petitioner for valuable consideration. Petitioner was, as a matter of right, entitled to his retirement
thereby depriving petitioner an opportunity to be heard on this point.
benefits. Private respondents cannot condition their release to a quitclaim executed by petitioner.
x----------------------------------x
x------------------------------------x
EMPLOYER’S OPTION

G.R. No. 95940 July 24, 1996

PANTRANCO NORTH EXPRESS, INC., petitioner,


[G.R. No. 143686. January 15, 2002] vs.
NATIONAL LABOR RELATIONS COMMISSION and URBANO SUÑIGA, respondents.

Facts: Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the
PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent. Pantranco Employees Association-PTGWO. He continued the petitioner's employ until August 12, 1989,
when he was retired at the age of fifty-two (52) after having rendered twenty five years' service. The basis
Facts: The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and respondent Airline of his retirement was the compulsory retirement provision of the collective bargaining agreement between
Pilots Association of the Philippines (ALPAP), the exclusive bargaining representative of all commercial the petitioner and the aforenamed union.
airline pilots of petitioner, stemmed from petitioner's act of unilaterally retiring airline pilot Captain
Albino Collantes under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement On February 15, 1990, private respondent filed a complaint4 for illegal dismissal against petitioner with the
Plan. Contending, inter alia, that the retirement of Captain Collantes constituted illegal dismissal and union Sub-Regional Arbitration Branch of the respondent Commission in Dagupan City. The complaint was
busting, ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE). Pursuant to consolidated with two other cases of illegal dismissal5 having similar facts and issues, filed by the other
Article 263 (g) of the Labor Code, the Secretary of the DOLE (hereafter referred to as Secretary) assumed employees, non-union members.
jurisdiction over the labor dispute.
Issue: Is a Collective Bargaining Agreement provision allowing compulsory retirement before age 60 but must yield to the common good. As such, it must be construed liberally rather than narrowly and
after twenty five years of service legal and enforceable? Who has jurisdiction over a case involving such a technically, and the courts must place a practical and realistic construction upon it, giving due consideration
question — the labor arbiter or arbitrators authorized by such CBA? to the context in which it is negotiated and purpose which it is intended to serve.

Held: LA has jurisdiction. Applying the case of Sanyo Philippines, this Court ruled: Being a product of negotiation, the CBA between the petitioner and the union intended the provision on
In the instant case, both the union and the company are united or have come to an agreement compulsory retirement to be beneficial to the employees-union members, including herein private
regarding the dismissal of private respondents. No grievance between them exists which could be respondent. When private respondent ratified the CBA with the union, he not only agreed to the CBA but
brought to a grievance machinery. The problem or dispute in the present case is between the also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed
union and the company on the one hand and some union and non-union members who were when the CBA provision on compulsory retirement was applied to his case.
dismissed, on the other hand. The dispute has to be settled before an impartial body. The
grievance machinery with members designated by the union and the company cannot be expected x-------------------------x
to be impartial against the dismissed employees. Due process demands that the dismissed workers
grievances be ventilated before an impartial body. Since there has already been an actual G.R. No. 138826 October 30, 2000
termination, the matter falls within the jurisdiction of the Labor Arbiter.
Applying the same rationale to the case at the bar, it cannot be said that the "dispute" is between the union
PROGRESSIVE DEVELOPMENT CORPORATION and/or MRS. JUDY A. ROXAS and DANTE P.
and petitioner company because both have previously agreed upon the provision on "compulsory
VERAYO, petitioners,
retirement" as embodied in the CBA. Also, it was only private respondent on his own who questioned the
vs.
compulsory retirement. Thus, the case is properly denominated as a "termination dispute" which comes
NATIONAL LABOR RELATIONS COMMISSION, RHOLANDA ANDRES and ROY ROMANO, respondents.
under the jurisdiction of labor arbiters.

We agree with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits Facts: Progressive Development Corporation (PDC) is a corporation organized and existing under the laws of
employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for the Philippines and its co-petitioners Judy A. Roxas and Dante P. Verayo are its Senior Vice President and
early retirement does not constitute diminution of benefits. In almost all countries today, early former Manager of its Human Resources Division, respectively.
retirement, i.e., before age 60, is considered a reward for services rendered since it enables an employee to
reap the fruits of his labor — particularly retirement benefits, whether lump-sum or otherwise — at an In 1980 PDC implemented its Employees' Non-Contributory Retirement Plan (The Plan) which took effect on
earlier age, when said employee, in presumably better physical and mental condition, can enjoy them 1 April 1980.
better and longer. As a matter of fact, one of the advantages of early retirement is that the corresponding
retirement benefits, usually consisting of a substantial cash windfall, can early on be put to productive and On 28 November 1994 PDC notified its employees who had rendered more than twenty (20) years of service
profitable uses by way of income-generating investments, thereby affording a more significant measure of in the Company of its decision to retire them effective 31 December 1994. On 7 December 1994, Jose Riego
financial security and independence for the retiree who, up till then, had to contend with life's vicissitudes and private respondent Rholanda Andres, two (2) of those who were retired, filed a complaint for illegal
within the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBA's with such retirement and unfair labor practices against petitioners.
early retirement provisions. And the same cannot be considered a diminution of employment benefits.
Private respondent Andres was Chairman of the Board of Directors of PDW-LIKHA, a union of rank-and-file
It is also further argued that, being a union member, private respondent is bound by the CBA because its employees of PDC, while private respondent Romano was a member of the union. They contended that
terms and conditions constitute the law between the parties. The parties are bound not only to the their retirement from PDC was done by the latter as a retaliatory measure for their union activities. They
fulfillment of what has been expressly stipulated but also to all the consequences which, according to their assailed the validity of The Plan under which they were retired claiming lack of knowledge thereof absent
nature, may be in keeping with good faith, usage and law. any collective bargaining agreement and any applicable employment contract.
A CBA incorporates the agreement reached after negotiations between employer and bargaining agent with
respect to terms and conditions of employment. A CBA is not an ordinary contract. "(A)s a labor contract
within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations Issue: Whether private respondents were illegally retired rests upon the determination of whether the
between labor and capital, (it) is not merely contractual in nature but impressed with public interest, thus it retirement program of petitioner company is valid.
Held: The retirement plan under which private respondents were retired is valid for it forms part of the On 8 November 1993, the Union struck and picketed the School’s entrances.
employment contract of petitioner company. Director Augusto G. Sanchez of the Bureau of Working
Conditions of the DOLE recognized and affirmed the validity of The Plan. Thus - On 27 July 1994, the Union filed a complaint for unfair labor practice before the NLRC docketed as NLRC
Case No. RAB-IV-7-6827-94-R, entitled, "Cainta Catholic School Employees Union v. Cainta Catholic School,
Considering therefore the fact that your client's retirement plan now forms part of the employment et. al.," before Arbitration Branch IV. Upon motion, then Labor Arbiter Oswald Lorenzo ordered the
contract since it is made known to the employees and accepted by them, and such plan has an express consolidation of this unfair labor practice case with the above-certified case.
provision that the company has the choice to retire an employee regardless of age, with twenty (20) years
of service, said policy is within the bounds contemplated by the Labor Code. Moreover, the manner of Issue: (1) whether the retirement of Llagas and Javier is legal; (2) whether the School is guilty of unfair labor
computation of retirement benefits depends on the stipulation provided in the company retirement plan practice; and (3) whether the strike is legal.

This pronouncement made by no less than the DOLE must be given substantial weight, as what the Labor Held: Jurisprudence has answered the question in the affirmative a number of times and our duty calls for
Arbiter did, in the absence of any contrary evidence. Moreover, the undisputed fact that a number of the application of the principle of stare decisis. As a consequence, we grant the petition and reverse the
employees of petitioner company had availed of The Plan since its effectivity only confirms that The Plan Court of Appeals.
has already been part of the employment contract of petitioner company for a long time. Private
respondents, particularly Andres, may not now feign ignorance of The Plan considering that she was the We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment
chairman of the union of rank-and-file employees of petitioner company and, as such, was considered to be of Llagas and Javier, arising as it did from a management prerogative granted by the mutually-negotiated
familiar with the policies of the company. CBA between the School and the Union.

Pursuant to the existing CBA, the School has the option to retire an employee upon reaching the age limit of
x-------------------------------------------x
sixty (60) or after having rendered at least twenty (20) years of service to the School, the last three (3) years
of which must be continuous. Retirement is a different specie of termination of employment from dismissal
G.R. No. 151021 May 4, 2006 for just or authorized causes under Articles 282 and 283 of the Labor Code. While in all three cases, the
employee to be terminated may be unwilling to part from service, there are eminently higher standards to
CAINTA CATHOLIC SCHOOL and MSGR. MARIANO T. BALBAGO, Petitioners, be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. In those
vs. two instances, it is indispensable that the employer establish the existence of just or authorized causes for
CAINTA CATHOLIC SCHOOL EMPLOYEES UNION (CCSEU), Respondent. dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the result of a bilateral act of
the parties, a voluntary agreement between the employer and the employee whereby the latter after
Facts: On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic reaching a certain age agrees and/or consents to sever his employment with the former.
School (School) and the Cainta Catholic School Employees Union (Union) effective 1 January 1986 to 31 May
1989.
Article 287 of the Labor Code, as amended, governs retirement of employees, stating:
On 15 October 1993, the School retired Llagas and Javier, who had rendered more than twenty (20) years of
continuous service, pursuant to Section 2, Article X of the CBA, to wit: Any employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
An employee may be retired, either upon application by the employee himself or by the decision of the
Director of the School, upon reaching the age of sixty (60) or after having rendered at least twenty (20) In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
years of service to the School the last three (3) years of which must be continuous. earned under existing laws and any collective bargaining agreement and other agreements: Provided,
however, That an employee’s retirement benefits under any collective bargaining agreement and other
Three (3) days later, the Union filed a notice of strike with the National Conciliation and Mediation Board agreements shall not be less than those provided herein.
(NCMB) docketed as NCMB-RB-12-NS-10-124-93.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the determination of just or authorized cause is rarely a simplistic question, but involves facts highly prone to
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five dispute and subjective interpretation.
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half On the other hand, the exercise by management of its retirement prerogative is less susceptible to
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one dubitability as to the question whether an employee could be validly retired. The only factual matter to
whole year. consider then is whether the employee concerned had attained the requisite age or number of years in
service pursuant to the CBA or employment agreement, or if none, pursuant to Article 287 of the Labor
The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not alleged that Code. In fact, the question of the amount of retirement benefits is more likely to be questioned than the
either Javier or Llagas had reached the compulsory retirement age of 60 years, but instead that they had retirement itself. Evidently, it more clearly emerges in the case of retirement that management would
rendered at least 20 years of service in the School, the last three (3) years continuous. Clearly, the CBA anyway have the right to retire an employee, no matter the degree of involvement of said employee in
provision allows the employee to be retired by the School even before reaching the age of 60, provided that union activities.
he/she had rendered 20 years of service. Would such a stipulation be valid? Jurisprudence affirms the
position of the School. We can thus can comfortably uphold the principle, as reiterated in Philippine Airlines, that the exercise by
the employer of a valid and duly established prerogative to retire an employee does not constitute unfair
By their acceptance of the CBA, the Union and its members are obliged to abide by the commitments and labor practice.
limitations they had agreed to cede to management. The questioned retirement provisions cannot be
deemed as an imposition foisted on the Union, which very well had the right to have refused to agree to x---------------------------------x
allowing management to retire retire employees with at least 20 years of service.
NEW RETIREMENT LAW GIVEN RETROACTIVE EFFECT
It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond
the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature Please refer to the case of Oro Enterprise, Inc. vs NLRC
but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public
morals, or public policy, such provisions may very well be voided. Certainly, a CBA provision or employment x----------------------------------x
contract that would allow management to subvert security of tenure and allow it to unilaterally "retire" AMOUNT OF RETIREMENT PAY
employees after one month of service cannot be upheld. Neither will the Court sustain a retirement clause
that entitles the retiring employee to benefits less than what is guaranteed under Article 287 of the Labor
Code, pursuant to the provision’s express proviso thereto in the provision.
[G.R. No. 143686. January 15, 2002]

The law and this Court frowns upon unfair labor practices by management, including so-called union-
busting. Such illegal practices will not be sustained by the Court, even if guised under ostensibly legal
premises. But with respect to an active unionized employee who claims having lost his/her job for union PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent.
activities, there are different considerations presented if the termination is justified under just or
authorized cause under the Labor Code; and if separation from service is effected through the exercise of a
Facts: Please refer to the digest above.
duly accorded management prerogative to retire an employee. There is perhaps a greater imperative to
recognize the management prerogative on retirement than the prerogative to dismiss employees for just or
authorized causes. For one, there is a greater subjectivity, not to mention factual dispute, attached to the SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal
concepts of just or authorized cause than retirement which normally contemplates merely the attainment retirement date may retire either at his option or at the option of the Company and when so retired he shall
of a certain age or a certain number of years in the service. It would be easier for management desirous to be entitled either (a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a
eliminate pesky union members to abuse the prerogative of termination for such purpose since the pilot, or (b) to such termination pay benefits to which he may be entitled under existing laws, whichever is
the greater amount.
UNIVERSITY OF THE EAST, petitioner,
vs.
Held: The PAL Pilots Retirement Benefit Plan[11] is a retirement fund raised from contributions HON. MINISTER OF LABOR AND U.E. FACULTY ASSOCIATION, respondents.
exclusively from petitioner of amounts equivalent to 20% of each pilots gross monthly pay.Upon retirement,
each pilot stands to receive the full amount of the contribution. In sum, therefore, the pilot gets an amount Facts: On April 23, 1983 and May 4, 1983, the then president of the University of the East (UE) announced
equivalent to 240% of his gross monthly income for every year of service he rendered to petitioner. This is the phase-out of the College of Secretarial Education and the High School Department respectively, starting
in addition to the amount of not less than P100,000.00 that he shall receive under the 1967 Retirement with the school year 1983-1984 on the grounds of lack of economic viability and financial losses.
Plan.

On the other hand, Article 287 of the Labor Code: The respondent UE Faculty Association opposed the phase-out, contending that such action contravened
the law because it constitutes union busting. The association also emphasized the alleged failure of the
petitioner to present evidence substantiating the alleged losses.
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
The parties tried to find a solution for the problems attending the phase-out but were unsuccessful. Hence,
the private respondent filed a notice of strike with the Bureau of Labor Relations (BLR) on August 4, 1983,
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have The BLR conducted several conciliation proceedings but when no amicable settlement was reached by the
earned under existing laws and any collective bargaining agreement and other agreements: provided, parties, the respondent Minister issued an order assuming jurisdiction over the case and directing the BLR
however, That an employees retirement benefits under any collective bargaining and other agreements to receive evidence in connection with the dispute. Finally, the respondent Minister ruled that the accrued
shall not be less than those provided herein. benefits under the collective bargaining agreement (CBA) are not affected by the phase-out of the two
departments. Hence, the petitioner is liable for the payment of separation pay in addition to the payment of
In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the retirement benefits to those entitled under the CBA.
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared as the compulsory retirement age, who has served at least five (5) years Petitioner whether or not the respondent Minister of Labor and Employment committed grave abuse of
in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half discretion amounting to lack of jurisdiction in awarding both retirement benefits and separation pay to the
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one faculty members affected by the phase-out.
whole year.
The public respondent argues that the faculty members affected by the phase-out were awarded separation
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen pay because the petitioner failed to show that their separation from employment was due to a valid or
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) authorized cause; while the award for retirement benefits was by virtue of the provisions of the CBA,
days of service incentive leaves. xxx xxx xxx. regardless of the cause of separation.

Issue: Whether or not the respondent Minister of Labor and Employment committed grave abuse of
In short, the retirement benefits that a pilot would get under the provisions of the above-quoted
discretion amounting to lack of jurisdiction in awarding both retirement benefits and separation pay to the
Article 287 of the Labor Code are less than those that he would get under the applicable retirement plans of
faculty members affected by the phase-out.
petitioner.

x-------------------------------x
Held: Yes. Under Article 284 of the Labor Code, the termination of employment of any employee arising
from retrenchment to prevent losses shall entitle the employee affected thereby to separation pay
RETIREMENT BENEFITS ASIDE FROM SEPARATION PAY equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. (Columbia Development Corporation v. Minister of Labor and Employment, 146 SCRA 421, 429).
G.R. No. 74007 July 31, 1987
The respondent Minister found that the petitioner failed to present evidence as to the university's actual invoking the Retirement Plan of the respondent company which they said was contractual rather than
losses and what caused them. It, therefore, failed to satisfy the burden under Article 278(b) of the Labor statutory.
Code of proving that the termination of employees was for a valid or authorized cause, in this case to The petitioners were employees of private respondent Otis Elevator Company when they were informed of
prevent losses. No evidence was presented to show that it was the operation of the two departments which the termination of their employment in line with the need of the company "to streamline its operations,
resulted in financial losses. A complete statement of the university's finances was not submitted. The consolidate certain functions, reduce its manpower and cut non-essential spending."
Minister of Labor further ruled that the private respondents concerned were entitled to separation pay and
one-month pay in lieu of the required notice which the petitioner likewise failed to give. The employees
were thus deprived of the opportunity to look for other employment.1avvphi1 Accordingly, petitioners were paid their separation pay based on Section 4, Article VII of the Collective
Bargaining Agreement between the company and its employees providing thus:
The petitioner, however, takes exception to the respondent Minister's order that in addition to separation
benefits, retirement benefits may also be awarded to the private respondent pursuant to the CBA. It All employees in the bargaining unit separated without cause shall be granted
maintains that the award of separation pay pursuant to the Termination Pay Law necessarily excludes separation pay of not less than one (1) month's latest basic rate for every year of service
retirement benefits. subject to the existing provisions of the Retirement Plan.

If there is no provision contained in the collective bargaining agreement to the effect that benefits received The respondent company argued that separation pay and retirement benefits were mutually exclusive;
under the Termination Pay Law shall preclude the employee from receiving other benefits from the hence, the petitioners could no longer claim the latter after having received the former.
agreement, then said employee is entitled to the benefits embodied in the agreement in addition to
whatever benefits are mandated by statute. In the case at bar, there is no such provision. We cannot Issue: Having received the separation pay, were the petitioners still entitled to the retirement benefits?
presume that it forms an implicit part of either the CBA or the law. Separation pay arising from a forced
termination of employment and benefits given as a contractual right due to many years of faithful service
are not necessarily antagonistic to each other, especially where there are strong equitable considerations as
Held: Yes. It is important at the outset to note the distinction between separation pay and retirement
in this case.
benefits.
Clearly, the only situation contemplated in the CBA wherein an employee shall be precluded from receiving
retirement benefits is when said employee is not separated from service but transferred instead from one Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code, which include
college or department to another. There is no provision to the effect that teachers who are forcibly retrenchment, and is computed at at least one month salary or at the rate of one-half month salary for
dismissed are not entitled to retirement benefits if the MOLE awards them separation pay. Furthermore, every year of service, whichever is higher. We have held that it is a statutory right designed to provide the
since the above provision has become in effect part of the petitioner's policy, the same should be enforced employee with the wherewithal during the period that he is looking for another employment
separately from the provisions of the Termination Pay Law.
Retirement benefits, where not mandated by law, may be granted by agreement of the employees and
x--------------------------x their employer or as a voluntary act on the part of the employer. Retirement benefits are intended to help
the employee enjoy the remaining years of his life, lessening the burden of worrying for his financial
G.R. No. 87653 February 11, 1992 support, and are a form of reward for his loyalty and service to the employer.

It is on the basis of these distinctions that the petitioners claim to be entitled not only to the separation pay
CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A. GASPAN and NICARDO P.
they have already received but also to the retirement benefits provided for in the Retirement Plan of the
BLANQUISCO, petitioners,
respondent company.
vs.
NATIONAL LABOR RELATIONS COMMISSION AND OTIS ELEVATOR COMPANY, respondents.
The petitioners are covered by the Retirement Plan because they have contributed to the retirement fund,
have been separated by reason of the retrenchment, and have served the company for more than the
Facts: The petitioners' services were terminated on the ground of retrenchment, and they received prescribed minimum period of ten years.
separation pay double that required by the Labor Code. Thereafter, they demanded retirement benefits,
Surprisingly, petitioners filed with the Labor Arbiter a complaint for payment of retirement benefits,
In arriving at our conclusion, we are guided by the principle that any doubt concerning the rights of labor damages and attorney’s fees against respondent, docketed as NLRC NCR Case No. 00-06-05153-98. They
should be resolved in its favor, pursuant to the social justice policy. The Court feels that if the private alleged that what each received was a separation pay, not retirement benefits.
respondent really intended to make the separation pay and the retirement benefits mutually exclusive, it
should have sought inclusion of the corresponding provision in the Retirement Plan and the Collective Issue: Whether the grant of ‘retirement benefits’ to petitioners as shown in their quitclaims precludes their
Bargaining Agreement so as to remove all possible ambiguity regarding this matter. availment of retirement benefits pursuant to their Collective Bargaining Agreement.

x--------------------------------x Held: Yes. While it is axiomatic that retirement laws are liberally construed in favor of the persons intended
to be benefited, however, such interpretation cannot be made in this case in light of the clear lack of
consensual and statutory basis of the grant of retirement benefits to petitioner.
G.R. No. 156317. April 26, 2005
As prescribed by the parties’ CBA, are entitled only to either the separation pay, if they are terminated for
CARLOS F. SALOMON, STEPHEN L. BATHAN, NICOLAS E. CAMARA, EMMANUEL B. DELA TORRE, LEONILO C. cause, or optional retirement benefits, if they rendered at least 15 years of continuous services.
DONATO, SEGUNDO E. FERRER, JESUS L. GUELA, JR., AMADO P. LIONGSON, DEOGRACIAS C.
MANALANZAN, GERUNDIO A. NATANAUAN, RICARDO D. PARZA, RICARDO R. SAMANIEGO, VALENTIN R. Here, petitioners were separated from the service for cause. Consequently, pursuant to the CBA, what each
URREA, JR., FRANCISCO H. VILLANUEVA, Petitioners, actually received is a separation pay. Accordingly and considering their Releases and Quitclaims, they are no
vs. longer entitled to retirement benefits.
ASSOCIATE OF INTERNATIONAL SHIPPING LINES, INC., Respondents.
It bears stressing that as held by the Labor Arbiter, the NLRC and the Court of Appeals, there is no provision
Facts: The Association of International Shipping Lines, Inc., respondent, is a corporation engaged in the in the parties’ CBA authorizing the grant to petitioners of retirement benefits in addition to their
principal business of shipping and container and/or cargo services. As a result of a decline in the volume of retrenchment pay; and that there is no indication that they were forced by respondent to sign the Releases
cargo measuring activities and shipping transactions, respondent suffered substantial financial losses. and Quitclaims.

With this development, respondent adopted an organizational streamlining program that resulted in the x-------------------------------x
closure of its Measuring Department and retrenchment or termination from the service of seventeen (17)
workers. Among them were Carlos F. Salomon, Stephen L. Bathan, Nicolas E. Camara, Emmanuel B. Dela
UNJUSTIFIED DENIAL OF RETIREMENT BENEFITS
Torre, Leonilo C. Donato, Segundo E. Ferrer, Jesus L. Guela, Jr., Amado P. Liongson, Deogracias C.
Manalanzan, Gerundio A. Natanauan, Ricardo D. Parza, Ricardo R. Samaniego, Jr., Valentin R. Urrea, Jr., and
Francisco H. Villanueva, herein petitioners who occupied booking coordinator and measurer positions. G.R. No. 80502 May 7, 1990

Aggrieved, petitioners filed with the National Conciliation and Mediation Board (NCMB) a complaint for ENRIQUE RAZON, JR. and METROPORT SERVICES, INC., petitioners,
illegal dismissal and payment of retirement benefits against respondent. vs.
NATIONAL LABOR RELATIONS COMMISSION and NICOLAS S. GARZOTA, respondents
During the conciliation proceedings, respondent paid petitioners their retirement pay at the rate of 1
month salary per year of service. Additionally, they received their leave credits, and pro-rated 13th month Facts: Since 1966, private respondent had been employed by petitioner company then known as E. Razon,
pay. And after having been paid their retirement pay, they executed and signed separate Releases and Inc. Sometime in 1979, Alfredo Romualdez, the youngest brother of the then First Lady, Imelda R. Marcos,
Quitclaims. Consequently, the above case was considered closed and terminated. acquired control of E. Razon, Inc. and renamed it Metroport Services, Inc.

On February 26, 1986, after the February Revolution, petitioners regained control of the company.
On February 28, 1986, because of failing health and having qualified for compulsory retirement at age 65, In the case at bar, petitioners' rejection of the subject claim cannot be justifiably sustained. The reported
private respondent, then the company's chief accountant, submitted a letter request for retirement. loss of confidence was due to the disappearance of certain books of account which petitioners directly
Petitioners withheld action on said request pending completion of the audit of company books undertaken attributed to private respondent. Petitioners were convinced that simply because private respondent could
by the accounting firm of Sycip, Gorres and Velayo. not produce the needed books on demand, he was no longer worthy of their trust and confidence. They
abruptly dismissed him without giving him a chance to explain his side. In short, there was not the slightest
In the course of such audit, petitioners discovered that the following books of account allegedly in the pretense at fair play. Had petitioners been less hasty and conducted an investigation, they would have
custody of private respondent as chief accountant were missing. As a consequence thereof, petitioner found out that on November 30, 1982, a fire gutted the western portion of petitioners' warehouse in front
Enrique Razon, Jr. issued on March 19, 1986 a memorandum terminating the services of private respondent of Pier 5, destroying records, books, vouchers and general ledgers. The circumstances surrounding the fire
on the ground of loss of trust and confidence. NLRC rendered a decision in favor of Nicolas. were duly investigated and reported to the Commissioner of Internal Revenue. But whatever documents
might have been salvaged from that conflagration were subsequently lost during the flood on July 25, 1985
Petitioners contend that the NLRC gravely abused its discretion when it sustained the grant of retirement
Thus, the resulting dismissal of private respondent was in itself marked by arbitrariness and lack of due
benefits to private respondent and held Enrique Razon, Jr. solidarily liable with Metroport Services, Inc. for
process. Petitioners cannot now be allowed to use that as their legal excuse for denying the employee's
the payment thereof.
legitimate claim for retirement pay.
x------------------------------------x
It is the perception of petitioners that management is vested with discretion to approve or disapprove an
employee's claim for retirement benefits. They anchor this view of Article II (B) of the Retirement Plan EXTENSION OF SERVICE OF RETIREE
which states that "(a)ny official and employee who is 65 years old, and upon discretion of
management, shall be qualified or subject to compulsory retirement from the company with benefits as
provided in this plan." Thus, when petitioners discovered the loss of vital books of account while in private
G.R. No. 89885 August 6, 1990
respondent's custody and found him "guilty of breach of trust as chief accountant", they claim to have a
valid ground to terminate private respondent's services and as a consequence to deny his claim for
retirement pay. UST FACULTY UNION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, UNIVERSITY OF SANTO TOMAS NORBERTO CASTILLO,
Issue: Whether the termination of private respondent's services is a valid ground to deny his claim for
NORMA LERMA, TERESITA CENDANA and DIONISIO CABEZON respondents.
retirement pay.

Facts: On May 17, 1986, the UST Faculty Union (Union for short) and the University of Sto. Tomas (UST for
short) entered into a collective bargaining agreement. On July 6, 1986, Tranquilina J. Mariño, a faculty
Held: No. It must be stressed that the words "upon the discretion of management" are not synonymous
member of the Faculty of Pharmacy, reached the retirement age of 65. She was allowed to continue her
with absolute or unlimited discretion. In other words, management discretion may not be exercised
teaching stint until the end of schoolyear 1986-1987 and was further-allowed an extension of tenure for the
arbitrarily or capriciously especially with regards to the implementation of the retirement plan. We believe
schoolyear 1987-1988. However, she was denied extension of tenure for the schoolyear 1988-1989.
that upon acceptance of employment, a contractual relationship was established giving private respondent
an enforceable vested interest in the retirement fund. Verily, the retirement scheme became an integral
In the same school year (1988-1989), Professor Francisco Bonifacio of the College of Education was denied
part of his employment package and the benefits to be derived therefrom constituted as it were a
extension of tenure after he reached the age of 65. Several faculty members of the Department of Civil Law
continuing consideration for services rendered, as well as an effective inducement for remaining with the
were allegedly similarly denied extension of tenure.
firm.
A complaint for unfair labor practice was lodged by the Union with the arbitration branch of the public
Having rendered twenty years of service with Metroport Services, Inc., it can be said that private respondent National Labor Relations Commission (NLRC). A decision was rendered by Labor Arbiter
respondent has already acquired a vested right to the retirement fund, a right which can only be withheld Bienvenido V. Hermogenes on December 15, 1988 dismissing the case for lack of merit.
upon a clear showing of good and compelling reasons.
Issue: Whether or not a union has a right to intervene in the extension of the service of a retired employee.
Held: No. A reading of the aforesaid Section 1, Article XII of the Collective Bargaining Agreement shows the
following: (1) that the compulsory age for retirement for a faculty member is 65 years; (2) upon having
reached the age of 65 years they may be granted an extension of tenure unless they are manifestly
inefficient or incompetent or are otherwise removed for cause; (3) that they shall continue to enjoy the
usual benefits and privileges until the extension of their tenure is validly denied by the university in
consultation with the Union or until they are validly separated from the service; and (4) that the period of
extended service shall not be credited for purposes of retirement.

It is important to state that upon the compulsory retirement of an employee or official in the public or
private service his employment is deemed terminated. The matter of extension of service of such employee
or official is addressed to the sound discretion of the employer. It is a privilege only the employer can grant.

Under the foregoing rules, for a retiree to be granted extension, he must apply in writing to the Dean of the
college to which he or she is affiliated. His application is subject to the decision of the Dean and Faculty
Council en banc, a majority of the vote of which is required for a recommendation of the extension of the
applicant to the Council of Regents and Academic Senate. The Council of Regents and Academic Senate will
then meet separately and make the decision subject to the approval of the Father Rector.

When the decision is for a denial of the extension of tenure of a retiree the decision should be made in
consultation with the Union. However, such consultation is not necessary when the retiree is validly
separated from the service.

The Court agrees with the position of the UST that the required consultation with the Union as provided in
the CBA should be interpreted to mean as one which is advisory in character and as such, the opinion of the
Union is not binding on the UST authorities. The final say as to the denial of extension of a retiree still rests
with the employer, the UST.

Moreover, it appears that there are two (2) reasons why extension was not granted to Prof. Mariño namely:
(1) she did not apply for an extension so no recommendation for her extension could have been granted;
and (2) the subjects assigned to her do not require specialized knowledge and may be adequately handled
by non-extendee regular faculty members.