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G.R. No.

82895 November 7, 1989

LLORA MOTORS, INC. and/or CONSTANTINO CARLOTA, JR., petitioners,


vs.
HON. FRANKLIN DRILON in his capacity as the Secretary of the Department of Labor and Employment, HON.
DANIEL M. LUCAS, DOMINGO H. ZAPANTA and OSCAR N. ABELLA, in their capacity as Commissioners of the
National Labor Relations Commission (NLRC) Manila, Second Division, HON. 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.

Yabes & Associates Law office for petitioners.

Francisco T. Gualberto and Humberto M. Tutaan, Sr. counsel and Tupas ROI Representatives for Alviar.

FELICIANO, J.:

The subject of the present Petition for certiorari with Preliminary Injunction is the Resolution 1 dated 20 January
1988 of the public respondent National Labor Relations Commission (NLRC) in NLRC Case No. RAB-1-0096-85
(entitled "Primitivo V. Alviar, complainant. versus Llora Motors Inc., and/or Constatino Carlota, respondents").

Sometime in September of 1968, private respondent Primitivo V. Alviar began his employment with petitioner
Llora Motors, Inc. As a truck driver, Mr. Alviar rendered services to the company eight (8) hours a day (exluding
overtime) seven days a week, and for his labor received a salary computed on a per trip basis plus emergency cost
of living allowance (ECOLA). At the time he stopped working on 19 April 1985, Mr. Alviar was 65 Years of age.

On 28 October 1985, private respondent Alviar filed with NLRC Regional Arbitration Branch No. I (San Fernando, La
Union) a complaint 2 (docketed as NLRC Case No. RAB-I-0096-85) for "Separation Pay and Non-Payment of Daily
Wages" against petitioners Llora Motors and Constantino Carlota, Jr., the company manager. In a Position Paper 3
he filed in support of his complaint, Mr. Alviar claimed entitlement to, among other things, ECOLA underpayments
from November 1982 up to April 1985 in the amount of P4,709.54 as well as "retirement benefits," computed at
one-half month's pay for every year of service.

The complaint was opposed by petitioners who, in their own Position Paper, 4 alleged that all of the employment
benefits claimed by private respondent Alviar had already been fully paid. On the matter of retirement benefits, it
was contended that Mr. Alviar had not been dismissed by Llora Motors, but that "[s]ometime in the early part of
1985, [Alviar] showed utter lack of interest in his work [and] would be absent for no apparent reason; "that "[i]n
the meantime, Truck No. 802, assigned to complainant, laid Idle and because of non-use for sometime, it
deteriorated so seriously;" that in the last week of April of 1985, Mr. Alviar reported for work and was then
informed that "while Truck 802 has not been rehabilitated as yet, he could act as relief driver;" that "complainant
did not like to be a relief driver in the meantime for since then he did not report for work;" and that "it was
complainant who abandoned his work since the last week of April 1985 and never reported since then." 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 than the standard benefits for their labor."
Petitioners contended further that "records will show that complainant had received retirement benefits from the
Social Security System when he retired therefrom in 1983."
Mr. Alviar, in his pleadings submitted before the Labor Arbiter, did not controvert petitioner's allegations of
abandonment and non-dismissal. Mr. Alviar there simply alleged that in April of 1985, he "retired from the service
due to his old age of 65 years."

On 27 January 1987, the respondent Labor Arbiter rendered a Decision, 5 the dispositive portion of which read:

WHEREFORE, premises all considered, we hereby order the respondents to pay complainants
Primitivo Alviar, as follows:

1. P4,709.54 — Unpaid ECOLA differentials


2. 9,985.80 — Retirement benefits(for 17 years)
P14,695.34

3. 1,469.53 — 10% attorney's fees


P16,164.87 — Total award

and to pay complainant legal interest on the total award to be compounded annually after ten
(10) days from receipt of this decision.

Respondents are finally ordered to pay complainant through this Regional Arbitration Branch
Office or present proof of compliance with this order within ten (10) days from receipt hereof

SO ORDERED.

An appeal was subsequently interposed with public respondent NLRC, petitioners there claiming that they had
been denied due process by the Labor Arbiter, who had rendered judgment in NLRC Case No. RAB-1-0096-85
without first conducting formal hearings therein. In addition, petitioners, reiterating that private respondent Alviar
had neither been dismissed nor retired by the company, questioned the propriety of the P9,985.80 award of
retirement benefits.

On 20 January 1988, public respondent NLRC issued the disputed Resolution, affirming the decision of the Labor
6
Arbiter and ordering dismissal of the appeal. A Motion for Reconsideration was denied on 28 March 1988.

The Petition at bar raises two (2) principal issues: (1) whether or not petitioners had been denied due process of
law by the Labor Arbiter; and (2) whether or not private respondent Alviar is legally entitled to receive retirement
benefits from petitioner's, his former employers.

With respect to the first issue, petitioners allege that failure by the Labor Arbiter to conduct a formal hearing, prior
to rendition of judgment. resulted in violation of their constitutional right to due process. We do not agree. This
Court has held in the past that a formal or trial-type hearing is not at all times and in all instances essential to due
process, 7 the requirements of which are satisfied where parties are afforded fair and reasonable opportunity to
explain their side of the controversy at hand.8 Such opportunity had not here been withheld from petitioners. The
record shows that in response to private respondent Alviar's complaint below and before the Labor Arbiter
rendered his decision of 27 January 1987, petitioners submitted on 21 January 1987, petitioners submitted on 21
January 1986 a Position Paper, complete with annexes, 9 where they had set out and argued the factual as well as
the legal bases of their position. Petitioners do not claim that their submissions there were ignored or disregarded
altogether by the Labor Arbiter. The record moreover shows that petitioners were given additional opportunity to
argue their case on appeal before public respondent NLRC, in a Memorandum, 10 and Motion for Reconsideration,
11
which pleadings were likewise considered by that labor agency in the course of resolving the case. All told, the
due process argument put forward by petitioners must fail.
In respect of the second and principal issue, it is urged by petitioners that the award of retirement benefits to
private respondent Alviar is improper, there being no contractual or statutory basis for such award.

Our Labor Code has only one article that deals with the subject of "retirement from the service." Article 287 of the
Code reads as follows:

Article 287. Retirement. — Any employee may be retired upon reaching the retirement age
established in the Collective Bargaining Agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining or other agreement.
(Emphasis supplied)

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 apparent
that Article 287 does not itself purport to impose any obligation upon employers to set up a retirement scheme for
their employees over and above that already established under existing laws. In other words, Article 287
recognizes that existing laws already provide for a scheme by which retirement benefits may be earned or accrue
in favor of employees, as part of a broader social security system that 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 provides for retirement benefits which essentially consist of
the right to receive a monthly pension for the 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 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.

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 prescribes at the
same time that such consensual additional retirement plan cannot be substituted for or reduce the retirement
benefits available under the compulsory scheme established by the Social Security 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 agreement."

It is also important here to examine Section 13 and 14 of Rule, I, book VI of the Rules and Regulations
Implementing the Labor Code (hereafter, "Implementing rule I"). Implementing Rule I deals with both termination
of services and retirement, being entitled "Termination of Employment and Retirement." But Sections 13 and 14 of
Implementing Rule I are the only provisions which deal with retirement matters. Under Section 13 which provides
as follows:

Sec. 13. Retirement. — In the absence of any collective bargaining agreement or other applicable
agreement concerning terms and conditions of employment which provides for retirement at an
older age, an employee may be retired upon reaching the age of sixty (60) years. (Emphasis
supplied)

where an additional retirement plan has been established by a collective bargaining agreement, or other
applicable agreement (or, under Section 14, an "established employer policy"), but such plan fails to specify
another, older, age of retirement, an employee may retire, and may in turn be retired by his employer, upon
reaching age sixty (60).
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 "separation pay"
and the Labor Arbiter awarded him "retirement benefits." That confusion was perhaps due to the Labor Arbiter's
citing Section 14 of Implementing Rule I, which reads as follows:

Sec. 14. Retirement benefits. — (a) An employee who is retired pursuant to a bona-fide
retirement plan or a in accordance with the applicable individual or collective agreement or
established employer policy shall be entitled to all the retirement benefits provided therein or to
termination pay equivalent at least one-half month salary for every year of service, whichever is
higher, a fraction of at least six (6) months being considered as one whole year.

(b) Where both the employer and the employee contribute to the retirement plan, agreement or
policy, the employer's total contribution thereto shall not be less than the total termination pay
to which the employee would have been entitled had there been no such retirement fund. In
case the employer's contribution is less than the termination pay the employee is entitled to
receive, the employer shall pay the deficiency upon the retirement of the employee.

(c) This Section shall apply where the employee retires at the age of sixty (60) years or older.
(Emphasis supplied)

Section 14 (a) refers to "termination pay equivalent to at least one-half (1/2) month for every year of service"
while Section 14 (b) mentions "termination pay to which the employee would have been entitled had there been
no such retirement fund" as well as "termination pay the employee is entitled to receive." It should be recalled
that Sections 13 and 14 are found in Implementing rule I which deals with both "termination of employment" and
"retirement." It is important to keep the two (2) concepts of "termination pay" and "retirement benefits" separate
and distinct from each other. 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 under some applicable provision of the Labor Code or under Section 4 (b) of Implementing Rule 1, must be
paid whether or not an additional retirement plan has been set up under an agreement with the employer or
under an "established employer policy."

What needs to be stressed, however, is that Section 14 of Implementing Rule 1, like Article 287 of the Labor Code,
does not purport to require "termination pay" to be paid to an employee who may want to retire but for whom no
additional retirement plan had been set tip by prior agreement with the employer. Thus, Section 14 itself speaks of
an employee "who is retired pursuant to a bona-fide retirement plan or in accordance with the applicable
individual or collective agreement or established employer policy." What Section 14 of Implementing Rule I may be
seen to be saying is that where termination pay 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 termination pay that is due, subject, however, to certain conditions. These
conditions are: (a) that payments under the additional retirement plan cannot have the effect of reducing the
amount of termination pay due and payable to less than one-half (1/2) month's salary for every year of service;
and (b) the employee 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 least the return of his own contributions to the additional retirement plan.

The respondents, in defending the award of retirement benefits granted by the Labor Arbiter and affirmed by the
NLRC, invoke Allied Investigation Bureau, Inc. v. Ople.14 Examination, however, of Allied shows that respondents'
reliance thereon is quite misplaced. In Allied, Victoriano Velasquez had been an employee of the Allied
Investigation Bureau, Inc., a security guard agency, since 1953. In 1976, having reached the age of sixty (60) years,
Velasquez submitted to Allied an application for retirement benefits, which application was subsequently approved
by Allied, although there was then no collective bargaining agreement or employer policy establishing an
additional retirement plan for employees of the agency. A controversy arose in respect of the method adopted by
Allied in computing the amount of retirement benefits it had undertaken to pay to Velasquez. Instead of basing
that amount upon Velasquez's actual period of employment with the agency (i.e., from 1953 to 1976), Allied
computed such amount as starting from the date of effectivity of the Labor Code (i.e., 1 November 1974 to 1976).
Acting on the complaint for retirement benefits, the Labor Arbiter ordered Allied to pay Velasquez on amount
computed on the basis of the latter's twenty- three (23) years of service with the agency. On a Petition for
Certiorari, the Court upheld the Labor Arbiter's computation of retirement benefits in favor of Velasquez. The
Court, speaking through then Mr. Justice Fernando, said:

1. There is no question that petitioner had agreed to grant retirement benefits to private
respondent. It would, however, limit such retirement benefits only from the date of the effectivity
of the Labor Code. That is its contention. The refutation given in the Comment of Solicitor
General Estelito P. Mendoza is persuasive. As was pointed out,"in the computation thereof,
public respondents acted judiciously in reckoning the retirement pay from the time private
respondent started working with petitioner since respondent employee's application for
retirement benefits and the company's approval of the same make express mention of Sections
13 and 14, rule I, Book VI of the Implementing Rules and Regulations of the Labor Code as the
basis for retirement pay. Section 14 (a) of said rule provides that an employee who is retired
pursuant to a bona-fide retirement plan or in accordance with the applicable individual or
collective agreement or established employer policy shall be entitled to all the retirement
benefits provided therein or to termination pay equivalent to at least one-half month salary for
every year of service, whichever is higher, a fraction of at least six (6) months being considered as
one whole year." Further it was stated: 'This position taken by public respondents squares with
the principle that social legislation should be interpreted in favor of workers in the light of the
Constitutional mandate that the State shall afford protection to labor. 15 (Emphasis supplied)

Because Allied had agreed to pay retirement benefits to Velasquez, the mode of computation adopted by the
Labor Arbiter — which is the generally accepted mode of computation in retirement plans — could hardly be
regarded as merely arbitrary or capricious. Thus, while Allied had no collective bargaining agreement or similar
employment contract establishing a plan under which employees could retire, its approval of Velasquez's
application, although unilateral and possibly ad hoc, supplied the necessary consensual basis. In the instant case,
Llora Motors consistently resisted the demand for separation pay or retirement benefits by private respondent
Alviar, precisely pointing to the fact that there was no collective bargaining agreement or other contractual basis
or any "established employer policy" that contemplated the grant of such retirement benefits.

Clearly, there was in the instant case no consensual basis fro the required payment of additional retirement
benefits. 16 The Labor Arbiter and the NLRC had not declared private respondent Alviar to have been illegally
dismissed by petitioners. neither was there any pretense on the part of private respondent Alviar that labor-saving
devices had been installed, or that redundancy or retrenchment or cessation of operations had occurred in Llora
Motors or that he was afflicted by some disabling disease, or that, being entitled to reinstatement, he could not be
reinstated to this old position. Under these circumstances, the portion of 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.

WHEREFORE, the Decision of the Labor Arbiter dated 27 January 1987 and the Resolution of the National Labor
Relations Commission dated 20 January 1988 in NLRC Case No. RAB-I-0096-85 are hereby SET ASIDE and a new
decision shall be entered REQUIRING petitioners to pay private respondent Primitivo Alviar the amount of
P4,709.54 for unpaid ECOLA differentials, plus ten percent (10%) thereof as attorney's fees and to pay private
respondent legal interest on the total award, compounded annually, from the date of petitioners' receipt of the
original (now vacated) decision of the Labor Arbiter, and until full payment of the amount here awarded. No
pronouncement as to costs.
[G.R. No. 141673. October 17, 2001]

MANUEL L. QUEZON UNIVERSITY/AUGUSTO B. SUNICO, President, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION (Third Division), NOEMI B. JUAT and EDILBERTO AZURIN, respondents.

DECISION
PARDO, J.:
The Case
The case is an appeal via certiorari from the decision[1] of the Court of Appeals affirming the resolutions of the
National Labor Relations Commission ruling that respondents retiring faculty members of petitioner Manuel L.
Quezon University were entitled to retirement benefits under Republic Act No. 7641, even if petitioner had an
existing valid retirement plan.
The Facts
The facts, as found by the Court of Appeals, are as follows:

Petitioner Manuel L. Quezon University (MLQU) is a private educational institution which established a retirement
plan for its employees as early as June 26, 1967. The Retirement Plan which was duly approved by the Bureau of
Internal Revenue for tax purposes provides as follows:

xxx

ARTICLE I PURPOSE

The Board of Regents of the Manuel L. Quezon Educational Institution, Inc., recognizing the value of long and loyal
service and desiring to reward those who remain in its employ continuously for a substantial number of years,
approves this Retirement Plan to assist financially its officers, faculty members and administrative personnel by
providing for their retirement. (Underscoring supplied)

xxxxxxxxx

ARTICLE III

PERSONS ENTITLED TO RETIREMENT PRIVILEGES

(a) All faculty members and employees who attain the age of 65 years while employed with the Manuel L. Quezon
Educational Institution, Inc., provided that they have rendered at least ten (10) years of continuous service.
(Underscoring supplied)

(b) Those who have not attained the age of 65 years, but who have rendered at least 20 years of continuous service
to the Manuel L. Quezon Educational Institution, Inc. at the date of retirement. (Underscoring supplied)

(c) This plan does not apply to members of the Board of Regents, the President, the Executive Officer, and the
Treasurer, whose retirement shall be determined by the Board of Regents without prejudice to their retirement
under this plan as members of the faculty.

ARTICLE IV

COMPULSORY NATURE OF RETIREMENT


(a) Upon fulfillment of the conditions set forth in paragraphs (a) and (b) of Article III, retirement of faculty
members and employees concerned shall be compulsory, unless the Board of Regents expressly and in writing
decides to defer their retirement on a year to year basis or for a definite period.

ARTICLE V

THE RETIREMENT PLAN

(a) Every faculty member or employee is entitled to receive as retirement compensation an amount equivalent to
one month pay for every year of service. The one month shall be computed as specified in paragraph (b) below.
(Underscoring supplied)

(b) In determining the one month salary to which a retiree is entitled, all salaries, bonuses and other amounts
received by him as a faculty member or employee during the entire period of his employment shall be added and
the same shall be divided by the number of years that he has been employed; service exceeding six (6) months
shall be considered as service for one year. The quotient shall then be divided by twelve (12), in case of retirees
rendering services throughout the year, that is, during a period of twelve (12) months, and in the case of retirees,
not rendering service throughout the year, such as faculty members not receiving monthly compensations, the
quotient shall then be divided by the number of months determined as follows: (1) if they taught for only one
semester during the year, four and one half (4 & 1/2) months; (2) if for two semesters, nine (9) months; (3) if for
one semester and summer, 6 months. This last quotient shall be considered for the purpose of this retirement
plan.

However, any sums paid to the employee by reason of his membership in the Social Security System and any sums
paid to him as compensation under the Workmens Compensation Act shall be excluded, that is, it shall not be
considered as part of his gross income for the purpose of computing his retirement pay.

If the retiree is an employee and a faculty member at the same time, his earnings received from the Manuel L.
Quezon Educational Institution, Inc. in both categories shall be added for the purpose of determining his
retirement pay.

(c) The faculty member or employee who is on an extended leave of absence may, at the discretion of the Board of
Regents, be considered in the service continuously until the end of his extended leave for the purpose of
determining the twenty (20) years service requirement. Hereafter, no extended leave of absence shall be granted
for a longer period than one year unless, in special cases, the Board of Regents decides otherwise. Extended leave
of absence heretofore granted shall continue only for a period of two years from the approval of this plan by the
Board of Regents, unless in special cases, the Board decides otherwise.

xxxxxxxxx

Noemi B. Juat, now 68 years of age, worked for almost twenty nine (29) years and started as a part-time instructor
of the petitioner, Manuel L. Quezon University (MLQU), from June 16, 1965 until her compulsory retirement on
March 31, 1994.

x x x On January 14, 1993, then MLQU President Amado Dizon informed in writing private respondent Juat that she
was eligible for retirement under Article III, Section I of the MLQU Retirement Plan as cited in the Revised Faculty
Manual of June 13, 1990. The retirement of private respondent was deferred because she was still given teaching
load for school year 1993-1994. On February 1, 1994 she received another letter from President Dizon informing
her that she was considered compulsorily retired effective at the end of second semester of school year 1993-1994
pursuant to the Retirement Plan. On February 3, 1994, private respondent Juat received a third letter from Dean
Leticia L. Lava of petitioner Universitys School of Arts and Science informing her of the approval by the Board of
Regents considering her as compulsorily retired. On November 17, 1992, a letter was sent by private respondent to
petition inquiring the amount of retirement benefits due to her and in response petitioner provided her with a
computation of the retirement benefits through a letter dated July 29, 1994. On the same day private respondent
Juat received, under protest, the two installments of her retirement pay in the total amount of P71,674.91, as
evidenced by the general voucher, when the alleged correct amount should be P149, 401.62.

Believing that she was entitled to a higher amount of retirement benefits, private respondent engaged the services
of the University of the Philippines, Office of Legal Aid to prosecute her claim for deficiency. On September 20,
1996 private respondent through counsel sent a letter of demand to MLQU President August Sunico, demanding
the payment of the deficiency plus interest at the rate of 12% a year from the date of retirement. On October 3,
1996, petitioner replied, alleging that private respondent was not entitled to receive retirement benefits as she
was only a part-time employee of MLQU, much less to the payment of deficiency. In the same letter it expressed
its willingness to settle the matter amicably but to no avail as no amicable settlement was reached. On March 25,
1997, private respondent filed a complaint before the National Labor Relations Commission (NLRC) to recover the
balance of her retirement benefits under Republic Act No. 7641.

Edilberto D. Azurin is a Certified Public Accountant (CPA) and was hired as a teacher/instructor, on a full-time basis,
of the petitioner (MLQU) for twenty-five (25) years, from September 1969 until June 7, 1994. As member of the
faculty of the School of Commerce, private respondent taught accounting subjects in semestral and summer
classes and was likewise given teaching assignments in other colleges of petitioner university. He received monthly
compensation, the last and highest of which was P11,100.50, payable every thirtieth day of every month.

On June 7, 1994, a letter was received by private respondent Azurin, informing him that he was being retired
under Article III, Section (a) of the MLQU Retirement Plan. As stated in said letter, he will receive the amount of
P34,282.02 which amount he received under protest, as evidenced formally requested for reconsideration and
recomputation of his retirement of his retirement gratuity, stating that under R.A. 7641, he should have received
the total amount of P150,215.75 based on the last salary and benefits received by him. Despite receipt of said
demand letter, petitioner failed and refused and continuously refuse to heed complainants demand for the
payment of his valid claim, prompting private respondent to institute a complaint against petitioner asking for the
payment of deficiency of retirement benefits and attorneys fee. This was assigned to Honorable Labor Arbiter
Jovencio Mayor. However, upon motion for reconsideration by herein petitioners, the complaint was consolidated
with private respondent Juats complaint filed with the Honorable Labor Arbiter Manuel R. Caday. After the parties
failed to reach an amicable settlement during the conciliatory proceedings of the cases, they were required to
submit their respective position papers. On June 24, 1998, Labor Arbiter Manuel R. Caday rendered a decision for
petitioners, disposing thus:

WHEREFORE, premises considered, the instant complaints should be, as they are hereby DISMISSED for lack of
merit and want of legal and factual bases.

SO ORDERED.

Believing that the decision of Labor Arbityer Caday was erroneous private respondents Azurin and Juat filed their
Memorandum of Appeal on July 27, 1998 and July 30, 1998, respectively, with the NLRC.

On October 28, 1998, the Third Division of the NLRC came out with the questioned resolution, reversing the ruling
of the Labor Arbiter, and disposing thus:

WHEREFORE, premises considered, the twin Appeals are hereby GRANTED except with regard to the claims for
actual damages and ten percent (10%) attorneys fees. Accordingly, the Decision appealed from is hereby
REVERSED and SET ASIDE and a new one entered directing respondent University to pay complainants Juat and
Azurin their retirement differential pay of P77,726.72 and P115,933.73, respectively, plus legal interest of six
percent (6%) per annum from the date of filing of their complaints on March 27, 1997 up to actual payment.

SO ORDERED.

On January 18, 1999, a motion for reconsideration was filed by petitioner which was outrightly denied in a
resolution dated March 17, 1999. Dissatisfied with the aforesaid decision, petitioner found its way to this Court via
the petition under consideration, contending that the NLRC gravely abused its discretion in reversing the decision
of the Labor Arbiter and awarding retirement benefits to private respondents Juat and Azurin by giving retroactive
application to the provision of R. A. 7641.[2]

On September 3, 1999, the Court of Appeals promulgated a decision[3] affirming the resolutions of the NLRC
as set out in the opening paragraph of this decision.
On October 14, 1999, petitioners filed a motion for reconsideration of the NLRC resolution.[4]
On January 18, 2000, the Court of Appeals denied petitioners motion for reconsideration.[5]
Hence, this appeal.[6]
The Issue
The issue raised is whether respondents are entitled to the retirement benefits provided for under Republic
Act No. 7641, even if the petitioner has an existing valid retirement plan.
The Courts Ruling
We affirm the decision of the Court of Appeals. The law, Republic Act No. 7641, intends to give the minimum
retirement benefits to employees not entitled thereto under collective bargaining and other agreements. Its
coverage applies to establishments with existing collective bargaining or other agreements or voluntary retirement
plans whose benefits are less than those prescribed under the proviso in question.
Republic Act No. 7641 is a curative social legislation.[7] By their nature, curative statutes may be given
retroactive effect, unless it will impair vested rights.[8] Republic Act No. 7641 has retroactive effect to include in its
coverage the employees services to an employer rendered prior to its effectivity.[9] It applies to employees in the
employ of employers at the time the law took effect and who are eligible to benefits under that statute

[G.R. No. 143686. January 15, 2002]

PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent.

DECISION

YNARES-SANTIAGO, J.:

This is a petition for review on certiorari seeking to annul and set aside the March 2, 2000 Decisioni and the June
19, 2000 Resolutionii of the Court of Appealsiii in CA-G.R. SP No. 54403 which affirmed the Orderiv dated June 13,
1998 and Resolutionv dated June 1, 1991 of the Secretary of Labor and Employment in NCMB-NCR-N.S. 12-514-97.

The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and respondent Airline Pilots
Association of the Philippines (ALPAP), the exclusive bargaining representative of all commercial 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 Plan. Contending, inter alia, that the retirement of Captain
Collantes constituted illegal dismissal and union busting, ALPAP filed a Notice of Strike with the Department of
Labor and Employment (DOLE). Pursuant to Article 263 (g) of the Labor Code, the Secretary of the DOLE (hereafter
referred to as Secretary) assumed jurisdiction over the labor dispute.
On June 13, 1998, the Secretary issued the assailed order upholding PALs action of unilaterally retiring Captain
Collantes and recognizing the same as a valid exercise of its option under Section 2, Article VII, of the 1967 PAL-
ALPAP 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 No. 7641) and not
Section 2, Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in the exercise of its option to
retire pilots, PAL should first consult the pilot concerned before implementing his retirement. The dispositive
portion of the said order reads:

WHEREFORE, premises considered, this Office hereby issues the following resolutions:

(1) PALs action on Captain Albino Collantes is hereby recognized as a valid exercise of its option under
Sections 1 and 2, Article VII of the 1976 Retirement Plan. However, the retirement benefits provided under Section
2 shall be adjusted to comply with Section 5, of Republic Act No. 7641.

(2) Said 1967 Retirement Plan which was incorporated as Article XXVII of the PAL-ALPAP Collective Bargaining
Agreement, is hereby sustained. In the interest of justice, however, this Office holds that whenever PAL exercises
its option under Section 2, it shall consult the pilot involved before the retirement is implemented.

(3) PAL is not guilty of gross violation of the CBA insofar as the Wet Lease Agreement is concerned; and

(4) The coverage of Section 6, Article 1 of the PAL-ALPAP Collective Bargaining Agreement is limited only to
union dues and other fees and assessments which are rightfully remitted to and are due ALPAP.

The above dispositions shall be without prejudice to the parties arriving at a voluntary settlement of the dispute,
especially in connection with employer-employee relations in PAL. Accordingly, the National Conciliation and
Mediation Board (NCMB) is hereby directed to continue assisting the parties in arriving at such a settlement.

The department takes notice of the Ex-parte Manifestation filed by PAL on June 10, 1998.

SO ORDERED.vi

A motion for reconsideration of the foregoing order was denied by the Secretary on June 1, 1991.

On September 24, 1999, PAL filed with the Court of Appeals a petition for certiorari with prayer for injunction and
temporary restraining order. On March 2, 2000, and June 19, 2000, however, the Court of Appeals denied the
petition and the motion for reconsideration of petitioner, respectively. Hence, PAL appealed to this Court,
contending that:

THE QUESTION OF WHETHER OR NOT THE AMOUNT OF RETIREMENT PAY TO BE PAID UNDER SECTION 2,
ARTICLE VII OF THE PAL-ALPAP RETIREMENT PLAN OF 1967 SHOULD BE INCREASED WAS NOT IN NCMB-NCR
CASE NO. 12514-97.

II

A JUDGMENT THAT GOES BEYOND THE ISSUES AND PURPORTS TO ADJUDICATE SOMETHING UPON WHICH
THE PARTIES WERE NOT HEARD IS IRREGULAR AND INVALID SINCE IT AMOUNTS TO A DENIAL OF DUE
PROCESS.
III

THE LAW GRANTS TO THE CONTRACTING PARTIES THE EXCLUSIVE RIGHT TO DETERMINE FOR THEMSELVES
THE PROVISIONS OF A COLLECTIVE BARGAINING AGREEMENT.

IV

THE SECRETARY OF LABOR AND EMPLOYMENT CANNOT AMEND THE CBA AND THE PAL-ALPAP RETIREMENT
PLAN OF 1967 WITHOUT VIOLATING THE PROSCRIPTION AGAINST THE IMPAIRMENT OF CONTRACTS.

ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND EMPLOYMENT MAY AMEND THE CBA AND THE
PAL-ALPAP RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT AND INIQUITOUS TO COMPEL PETITIONER
TO PAY RETIREMENT PAY IN ACCORDANCE WITH ARTICLE 287 OF THE LABOR CODE.

VI

ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND EMPLOYMENT MAY AMEND THE CBA AND THE
PAL-ALPAP RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT TO COMPEL PETITIONER TO CONSULT THE
PILOT CONCERNED BEFORE RETIREMENT IS IMPLEMENTED.vii

The Court of Appeals, applying the second paragraph of Article 287 of the Labor Code, held that an employees
retirement benefits under any collective bargaining and other agreement shall not be less than those provided in
the Labor Code.viii Hence, Article 287 of the Labor Code and not the 1967 PAL-ALPAP Retirement Plan, should
govern the computation of the benefits to be awarded to Captain Collantes.

The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:

SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a pilot for PAL or
has flown 20,000 hours for PAL shall be eligible for normal retirement. The normal retirement date is the date on
which he completes twenty (20) years of service, or on which he logs his 20,000 hours as a pilot for PAL. The
member who retires on his normal retirement shall be entitled to either (a) a lump sum payment of P100,000.00
or (b) to such termination pay benefits to which he may be entitled to under existing laws, whichever is the greater
amount.

SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal retirement
date may retire either at his option or at the option of the Company and when so retired he shall be entitled either
(a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to such
termination pay benefits to which he may be entitled under existing laws, whichever is the greater amount.ix

A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime of his life
and at the peak of his career, compared to one who retires at the age of 60 years old. Based on this peculiar
circumstance that PAL pilots are in, the parties provided for a special scheme of retirement different from that
contemplated in the Labor Code. Conversely, the provisions of Article 287 of the Labor Code could not have
contemplated the situation of PALs pilots. Rather, it was intended for those who have no more plans of
employment after retirement, and are thus in need of financial assistance and reward for the years that they have
rendered service.
In any event, petitioner contends that its pilots who retire below the retirement age of 60 years not only receive
the benefits under the 1967 PAL-ALPAP Retirement Plan but also an equity of the retirement fund under the PAL
Pilots Retirement Benefit Plan,x entered into between petitioner and respondent on May 30, 1972.

The PAL Pilots Retirement Benefit Planxi is a retirement fund raised from contributions 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 equivalent to 240% of his gross
monthly income for every year of service he rendered to petitioner. This is in addition to the amount of not less
than P100,000.00 that he shall receive under the 1967 Retirement Plan.

On the other hand, Article 287 of the Labor Code:

Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements: provided, however, That an
employees retirement benefits under any collective bargaining and other agreements shall not be less than those
provided herein.

In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the
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 in the said
establishment, may 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.

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves. xxx xxx xxx.

In short, the retirement benefits that a pilot would get under the provisions of the above-quoted Article 287 of the
Labor Code are less than those that he would get under the applicable retirement plans of petitioner.

Finally, on the issue of whether petitioner should consult the pilot concerned before exercising its option to retire
pilots, we rule that this added requirement, in effect, amended the terms of Article VII, Section 2 of the 1976 PAL-
ALPAP Retirement Plan. The option of an employer to retire its employees is recognized as valid.xii In the earlier
case of Bulletin Publishing Corp. v. Sanchez,xiii this Court held:

The aforestated sections explicitly declare, in no uncertain terms, that retirement of an employee may be done
upon initiative and option of the management. And where there are cases of voluntary retirement, the same is
effective only upon the approval of management. The fact that there are some supervisory employees who have
not yet been retired after 25 years with the company or have reached the age of sixty merely confirms that it is the
singular prerogative of management, at its option, to retire supervisors or rank-and-file members when it deems
fit. There should be no unfair labor practice committed by management if the retirement of private respondents
were made in accord with the agreed option. That there were numerous instances wherein management exercised
its option to retire employees pursuant to the aforementioned provisions, appears to be a fact which private
respondents have not controverted. It seems only now when the question of the legality of a supervisors union has
arisen that private respondents attempt to inject the dubious theory that the private respondents are entitled to
form a union or go on strike because there is allegedly no retirement policy provided for their benefit. As above
noted, this assertion does not appear to have any factual basis.xiv
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 assail the decision of
management. Due process only requires that notice be given to the pilot of petitioners decision to retire him.
Hence, the Secretary of Labor overstepped the boundaries of reason and fairness when he imposed on petitioner
the additional requirement of consulting each pilot prior to retiring him.

Furthermore, when the Secretary of Labor and Employment imposed the added requirement that petitioner
should consult its pilots prior to retirement, he resolved a question which was outside of the issues raised, thereby
depriving petitioner an opportunity to be heard on this point.xv

WHEREFORE, in view of all the foregoing, the petition is GRANTED. The March 2, 2000 Decision and the June 19,
2000 Resolution of the Court of Appeals in CA-G.R. SP No. 54403 are REVERSED and SET ASIDE. The Order of the
Secretary of Labor in NCMB-NCR-N.S. 12-514-97, dated June 13, 1998, is MODIFIED as follows: The retirement
benefits to be awarded to Captain Albino Collantes shall be based on the 1967 PAL-ALPAP Retirement Plan and the
PAL Pilots Retirement Benefit Plan. The directive contained in subparagraph (2) of the dispositive portion thereof,
which required petitioner to consult the pilot involved before exercising its option to retire him, is DELETED. The
said Order is AFFIRMED in all other respects.

SO ORDERED.

DR. PERLA A. POSTIGO, FRANCISCO F. ALMACEN, NARCISO G.R. No. 155146


M. ALMENDRAL, NENA E. BASTO, JUANITO M.
BERNARDINO, ADELFA B. CRESCINI, MARCIAL R. DE JESUS,
DR. PEDRO LOPEZ DE LEON, PREMIA M. DUMLAO, DAVID F.
ESTACIO, LINA G. ESTRELLA, GENOVEVA V. HERNANDEZ,
PEDRO A. PARIL, PEDRO H. SINGSON, ALBERTO A. TUDIO, Present:
MARIETTA B. ULIT, LOURDES C. LEGASPI, PEDRO PEROCHO,
LANI CORTEZ, GUADALUPE B. MACATANGAY, DOLORES C. Quisumbing, J.,
FERNANDEZ, LUMINOSA G. REYNO, ESTRELLA P. SURATOS, (Chairman),
LYDIA E. DE BOSCH, ZENAIDA C. CARRIEDO, DR. FINAFLOR C. Carpio,
TAN, Carpio Morales, and
Petitioners, Tinga, JJ.

- versus -

PHILIPPINE TUBERCULOSIS SOCIETY, INC., Promulgated:


Respondent.
January 24, 2006_
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

QUISUMBING, J.:

This petition assails the Decision [1] dated June 13, 2002 of the Court of Appeals in CA-G.R. SP No.

59597, which set aside the Resolution [2] dated January 31, 2000 of the National Labor Relations Commission

(NLRC) in NLRC NCR CN 00-02-02148-99. The NLRC had dismissed the respondents appeal from the Decision of the

Labor Arbiter, who ordered the payment of retirement benefits under Republic Act No. 7641 to petitioners. This
petition likewise assails the Resolution[3] dated September 3, 2002 of the Court of Appeals denying petitioners

motion for reconsideration.

The antecedent facts, as summarized by the Court of Appeals and borne by the records, are as follows:

Petitioners Dr. Perla A. Postigo, et al., were regular employees of the respondent Philippine Tuberculosis

Society, Inc. (PTSI). They retired on various dates from 1996 to 1998. Upon retirement from service, some of the

petitioners who were compulsory members of the Government Service Insurance System (GSIS) obtained

retirement benefits from the GSIS.

At the time the petitioners retired, Article 287 of the Labor Code had been amended by Republic Act No.

7641.[4] Rep. Act No. 7641 granted retirement pay to qualified employees in the private sector, in the absence of

any retirement plan or agreement with the company. As the respondent did not have a retirement plan for its

employees, aside from its contribution to the GSIS, petitioners claimed from the respondent their retirement

benefits under Rep. Act No. 7641. The respondent denied their claims on the ground that the accommodation

extended by the GSIS to the petitioners removed them from the coverage of the law.

The petitioners then sought the opinion of the Bureau of Working Conditions (BWC) of the Department of

Labor and Employment regarding their entitlement to the retirement benefits provided in Rep. Act No. 7641. [5] The

BWC confirmed their entitlement.[6] The same opinion was rendered and submitted by the respondents legal

counsel, Atty. Rene V. Sarmiento, to its Board of Directors. [7] Despite this, respondent PTSI refused to pay the

petitioners their retirement benefits.

The petitioners then filed a complaint before the Labor Arbiter.

In a Decision[8] dated June 30, 1999, the Labor Arbiter declared petitioners entitled to retirement benefits

under Rep. Act No. 7641. However, one petitioner, Dr. Finaflor C. Tan who was awarded her terminal leave pay,

was not included in the award of retirement benefits.


Aggrieved, respondent PTSI appealed to the NLRC. Instead of posting the required cash or surety bond

equivalent to the amount of the award, the respondent filed a Motion to Reduce Bond on the ground that the

amount awarded by the Labor Arbiter was erroneous. On January 31, 2000, the NLRC dismissed the appeal for

failure to post the required cash or surety bond.

Undaunted, the respondent elevated the matter to the Court of Appeals. On June 13, 2002, the CA

reversed the NLRCs decision in this wise:

Indeed, in several occasions, the Supreme Court has cautioned the NLRC to give Article
223 of the Labor Code, as amended, particularly the provisions on requiring a bond on appeals
involving monetary awards, a liberal interpretation in line with the desired objective of resolving
controversies on the merits.

Hence, considering the timeliness of the filing of the motion to reduce the appeal bond
and the meritorious ground upon which it relies, We believe and so hold that the legal
requirement of posting an appeal bond has been substantially satisfied. Public respondent acted
with grave abuse of discretion in dismissing the appeal without passing upon the motion to
reduce the appeal bond.

WHEREFORE, the petition is hereby GRANTED. Resolutions dated 31 January 2000 and
24 May 2000 in NLRC-NCR CN 00-02-02148-99 of public respondent National Labor Relations
Commission are hereby SET ASIDE. The NLRC is directed to act on the Motion to Reduce Bond
and to give due course to the Appeal.

SO ORDERED.[9]

The petitioners now submit the following issues for our consideration:

I. Whether or not the remand of the case to the NLRC would only further delay the
resolution of this case.

II. Whether or not the Honorable Court of Appeals decided the instant case in
accordance with law and applicable jurisprudence and based on the evidence on record
for having failed to apply the jurisprudential precepts that:

a. errors in the computation of the monetary award are properly a subject of


appeal and should be ventilated at the appropriate time, not in a mere
motion to reduce bond; and

b. the posting of a bond is an indispensable requirement to perfect an


employers appeal.

III. Whether or not Petitioners are entitled to the benefits of the Retirement Pay Law.

IV. Whether or not Petitioners are entitled to interest on their retirement benefits for the
unjustified withholding thereof.
V. Whether or not Petitioner Dr. Tan should be made similarly entitled to her retirement
pay, which was inadvertently excluded by the Labor Arbiter, pursuant to the timely
motion to render judgment nunc pro tunc she filed before the Labor Arbiter and which
was consistently raised all the way up to this Honorable Court, in order to effect a
complete disposition of the instant case.[10]

In short, petitioners raise for our resolution these issues: (1) Did the Court of Appeals err in granting the

petition and directing the NLRC to act on the Motion to Reduce Bond and to give due course to the appeal? and (2)

Are the petitioners entitled to benefits under Rep. Act No. 7641?

On the first issue, petitioners contend that (1) errors in the computation of the monetary award are

properly a subject of appeal and should be ventilated at the appropriate time, not in a mere motion to reduce

bond; and (2) the posting of a bond is an indispensable requirement to perfect an employers appeal.

Respondent counters that in case the monetary award is being disputed, an appeal may still be filed

without the appeal bond, provided that a motion to reduce bond is filed within the reglementary period.

We think that the Court of Appeals did not err in granting the petition and holding that there was

substantial compliance in the posting of a cash or surety bond. We likewise find Nationwide Security and Allied

Services, Inc. v. NLRC[11] and Rosewood Processing, Inc. v. NLRC[12] inapplicable to this case.

In Nationwide Security, the petitioners therein filed a motion to reduce bond instead of an appeal or

surety bond. The NLRC denied the motion on the grounds that petitioners alleged inability to post the bond was

without basis, and to grant the motion on the grounds stated therein would be tantamount to ruling on the merits.

In affirming the decision of the NLRC, the Court noted that petitioners had funds from its other businesses to post

the required bond. Further, the errors raised in the motion dealt with matters that would go into the merits of the

case and were thus more appropriate in an appeal.

In this case, respondent deferred the posting of the surety bond in view of the alleged erroneous

computation by the Labor Arbiter of the monetary award. While the Labor Arbiter awarded P5,480,484.25[13] as

retirement benefits, only P5,072,277.73,[14] according to the respondents computation was due and owing to the
petitioners. Since the motion raised a pure mathematical error, the same may be resolved without going into the

merits of the case.

In Rosewood, the petitioner therein filed a motion to reduce the bond with the appeal bond, albeit not in

the amount equivalent to the monetary award in the judgment appealed from. The Court held that the NLRC

gravely abused its discretion in dismissing the appeal since a consideration of the merits appearing in the appeal as

well as the filing of the appeal bond show that there was substantial compliance with the rules governing appeal.

Here, aside from the fact that the filing of the motion was justified, the respondent immediately

submitted a supersedeas bond[15] with its motion for reconsideration of the NLRC resolution dismissing its appeal.

In Ong v. Court of Appeals,[16] we ruled that the aggrieved party may file the appeal bond within the ten-day

reglementary period following the receipt of the resolution of the NLRC to forestall the finality of such

resolution.[17] Hence, while the appeal of a decision involving a monetary award in labor cases may be perfected

only upon the posting of a cash or surety bond and the posting of the bond is an indispensable requirement to

perfect such an appeal, a relaxation of the appeal bond requirement could be justified by substantial compliance

with the rule.

Article 223 of the Labor Code provides that an appeal from a decision of the Labor Arbiter must be made

within ten calendar days from receipt of a copy of the decision by the aggrieved party; and if the decision involves

a monetary award, an appeal by the aggrieved party may be perfected only upon the posting of a cash or surety

bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the

monetary award. In addition, Section 6, Rule VI of the New Rules of Procedure of the NLRC provides that the

Commission may, in justifiable cases and upon motion of the aggrieved party, reduce the amount of the bond.

Further, the filing of the motion to reduce bond does not stop the running of the period to perfect appeal.

Time and again, this Court has ruled that while the above-mentioned rule treats the filing of a cash or

surety bond in the amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional

requirement to perfect an appeal, the bond requirement on appeals involving awards is sometimes given a liberal

interpretation in line with the desired objective of resolving controversies on the merits. [18]
The special circumstances in this case, upon which the motion to reduce the bond was predicated, justify

the relaxation of the appeal bond requirement. However, considering that the claim for retirement benefits was

made sometime in 1999 to support the petitioners during the twilight years of their lives, there is no doubt that a

remand of the case to the NLRC will only unduly delay the determination of their entitlement to such benefits.

Moreover, since the case calls for the resolution of a question of law, we consider it more appropriate to resolve

the appeal at this juncture, rather than remand the case to the NLRC.

We come now to the second issue. The petitioners contend that despite their compulsory membership in

the GSIS, they are still covered by Rep. Act No. 7641 for the following reasons: (1) the respondent is registered

with the Securities and Exchange Commission as a non-stock and non-profit corporation; hence, it is a private

entity and its employees are employees in the private sector; and (2) the petitioners are not included in the

exemptions from coverage of Rep. Act No. 7641.

Respondent PTSI counters that as an employer in the public sector, it is not covered by Rep. Act No. 7641

which applies only to employees in the private sector. It relies on Section 3, Rule I of the Amended Rules

Implementing Title II, Book IV of the Labor Code, to wit:

SEC. 3. Employer(a) The term shall mean any person natural or juridical, domestic or
foreign, who carries on in the Philippines any trade, business, industry, undertaking or activity of
any kind and uses the services of another person who is under his orders as regards the
employment.
(b) An employer shall belong to either:
(1) The public sector covered by the GSIS, comprising the National
Government, including government-owned or controlled corporations,
the Philippine Tuberculosis Society, the Philippine National Red Cross, and
the Philippine Veterans Bank; or
(2) The private sector covered by the SSS, comprising all employers other than
those defined in the immediately preceding paragraph.

Respondents reliance on the afore-quoted rules is unfounded. The definition of a public sector employer

as quoted above is relevant only for purposes of coverage under the Employees Compensation and State Insurance

Fund. Instead, it is the implementing rules of Title II, Book VI of the Labor Code, which provides for the coverage

and exemptions of retirement benefits. Thus:

SECTION 1. General Statement on Coverage. This Rule shall apply to all employees in
the private sector, regardless of their position, designation or status and irrespective of the
method by which their wages are paid, except to those specifically exempted under Section 2
hereof. As used herein, the term Act shall refer to Republic Act No. 7641 which took effect on
January 7, 1993.

SEC. 2. Exemption. This Rule shall not apply to the following employees:
2.1 Employees of the National Government and its political subdivisions,
including Government-owned and/or controlled corporations, if
they are covered by the Civil Service Law and its regulations.

...

Having determined the applicable implementing rules, we now proceed to resolve whether the

respondent is a private corporation or a public corporation; and consequently, whether the petitioners are

employees in the private sector or in the public sector.

On this score, the case of Feliciano v. Commission on Audit,[19] finds strong relevance. Although with

different factual circumstances, the Court discussed therein the two classes of corporations recognized by the

1987 Constitution. The first refers to private corporations created under a general law; the second refers to

government-owned or controlled corporations created by special charters. We also reiterated that under Section

14 of the Corporation Code, [a]ll corporations organized under this Code shall file with the Securities and Exchange

Commission articles of incorporation

The respondent was incorporated on March 11, 1960 as a non-profit, benevolent and non-stock

corporation under the Corporation Code. [20] Having been created under the general corporation law instead of a

special charter, we hold that the respondent is a private and not a governmental corporation. More so, Section

2(1), Article IX(B) of the 1987 Constitution provides:

SECTION 2. (1) The civil service embraces all branches, subdivisions, instrumentalities,
and agencies of the Government, including government-owned or controlled corporations with
original charters.

Extant on the records is the respondents admission that although its employees are compulsory members of the

GSIS, said employees are not governed by the Civil Service Law. If the respondent is truly a government-owned or

controlled corporation, and petitioners are employees in the public sector, then, they should have been covered
by said law. The truth, however, is that, the respondent is a non-profit but private corporation organized under the

Corporation Code, and the petitioners are covered by the Labor Code and not by the Civil Service Law.

From the foregoing, it is clear to us that the petitioners are employees in the private sector, hence

entitled to the benefits of Rep. Act No. 7641.

Even assuming that by virtue of their compulsory inclusion in the GSIS, the petitioners became employees

in the public sector, they are still entitled to the benefits of Rep. Act No. 7641 since they are not covered by the

Civil Service Law and its regulations. This much is certain upon reading the implementing rules of Title II, Book VI of

the Labor Code as afore-cited as well as the Labor Advisory on Retirement Pay Law. [21] Under the said advisory, the

coverage of, as well as the exclusion from, Rep. Act No. 7641 has been delineated as follows:

RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector,
regardless of their position, designation or status and irrespective of the method by which their
wages are paid. They shall include part-time employees, employees of service and other job
contractors and domestic helpers or persons in the personal service of another.

The law does not cover employees of retail, service and agricultural establishments or
operations employing not more than (10) employees or workers and employees of the National
Government and its political subdivisions, including Government-owned and/or controlled
corporations, if they are covered by the Civil Service Law and its regulations. (Underscoring ours.)

Neither do we find merit in the respondents argument that the rationale behind the enactment of Rep.

Act No. 7641 justifies the exclusion of employees in the public sector, who are already enjoying retirement

benefits under the GSIS law, from the New Retirement Law.

We direct the respondents attention to Section 2 of Rep. Act No. 7641, to wit:

SEC. 2. Nothing in this Act shall deprive any employee of benefits to which he may be
entitled under existing laws or company policies or practices.

In addition, Rule II of the Rules Implementing Book VI of the Labor Code provides as follows:

SEC. 8. Relation to agreements and regulations. Nothing in this Rule shall justify an
employer from withdrawing or reducing any benefits, supplements or payments as provided in
existing laws, individual or collective agreements or employment practices or policies.

...
In Juco v. NLRC,[22] we clarified that employees of government-owned and controlled corporations with

special charters are covered under the Civil Service. On the other hand, employees of government-owned and

controlled corporations under the Corporation Code are governed by the provisions of the Labor Code.

The Philippine Tuberculosis Society, Inc. (PTSI) belongs to the latter category and, therefore, covered by

Rep. Act No. 7641 which is an amendment to the Labor Code. The accommodation under Rep. Act No. 1820

extending GSIS coverage to PTSI employees did not take away from petitioners the beneficial coverage afforded by

Rep. Act No. 7641. Hence, the retirement pay payable under Article 287 of the Labor Code as amended by Rep. Act

No. 7641 should be considered apart from the retirement benefit claimable by the petitioners under the social

security law or, as in this case, the GSIS law.

As to the alleged prolonged refusal by the respondent to pay the petitioners their retirement benefits, we do not

think that the respondents stance was entirely in bad faith. The respondent harbored the honest belief that their

compulsory coverage in the GSIS converted it into a public corporation excluded from the coverage of Rep. Act No.

7641. As noted by this Court, the respondent even filed a supersedeas bond, albeit belatedly, with its motion for

reconsideration of the NLRC resolution dismissing its appeal. Such act only demonstrates that the respondent filed

the appeal in good faith. We could not speculate and say that respondent did not intend to pay the petitioners

their retirement benefits in case the appeal is dismissed.

On the matter of petitioner Dr. Finaflor C. Tan, records show she has two causes of action: (1) non-payment of

terminal leave pay; and (2) non-payment of retirement benefits.[23] While the Labor Arbiter ruled that she is

entitled to the commutation into cash of her unused leave credits which is the equivalent of her terminal leave

pay, the former did not include her in the award of retirement benefits. This was properly raised in the Motion to

Render Judgment Nunc Pro Tunc[24] filed by the petitioners on October 29, 1999 before the NLRC. We see no

cogent reason why she should be excluded from the over-all award of retirement benefits considering that she has

participated in the proceedings before the Labor Arbiter.

G.R. No. 80502 May 7, 1990


ENRIQUE RAZON, JR. and METROPORT SERVICES, INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and NICOLAS S. GARZOTA, respondents.

Nicanor B. Jimeno for petitioners.

Apolo P. Geminde for private respondent.

FERNAN, C.J.:

In this petition for certiorari, petitioners Enrique Razon, Jr. and Metroport Services, Inc. seek to set aside the
resolution dated August 28, 1987 of the National Labor Relations Commission affirming the decision of the Labor
Arbiter which ordered petitioners to pay private respondent Nicolas S. Garzota his retirement pay, loyalty bonus
and cash conversion of accrued vacation leave in the total amount of P131,400.00.

Since 1966, private respondent had been employed by petitioner company then known as E. Razon, Inc. Sometime
in 1979, Alfredo Romualdez, the youngest brother of the then First Lady, Imelda R. Marcos, acquired control of E.
Razon, Inc. and renamed it Metroport Services, Inc. 1

On February 26, 1986, after the February Revolution, petitioners regained control of the company. 2

On February 28, 1986, because of failing health and having qualified for compulsory retirement at age 65, private
respondent, then the company's chief accountant, submitted a letter request for retirement. Petitioners withheld
action on said request pending completion of the audit of company books undertaken by the accounting firm of
Sycip, Gorres and Velayo. 3

In the course of such audit, petitioners discovered that the following books of account allegedly in the custody of
private respondent as chief accountant were missing: [a] general ledgers for the years l981 and l983; [b] cash
disbursement books for 1981 to 1983; [c] cash receipt books for 1981 to 1983; [d] bills register for 1981 to 1983;
4
[e] cash vouchers for 1981 to 1984; [f] journal vouchers for 1981 to 1984; and [g] sales register for 1983 to 1984.

As a consequence thereof, petitioner Enrique Razon, Jr. issued on March 19, 1986 a memorandum terminating the
services of private respondent on the ground of loss of trust and confidence.

Meanwhile, the Philippine Ports Authority awarded the management and operation of the arrastre services at the
South Harbor to a new company, the Marina Port Services, Inc., which hired private respondent. The latter has
since been connected with said firm.

Acting on private respondent's complaint for illegal dismissal and unpaid retirement benefits, the Labor Arbiter on
January 30, 1987, rendered the following decision:

WHEREFORE, premises considered, respondent Metro Port Services, Inc. or Enrique Razon, Jr., in
case of the company's failure to pay, is hereby ordered to pay complainant Nicolas S. Gartoza the
foIlowing amounts:

P 60,000.00 — for retirement pay

P 60,000.00—for loyalty bonus


P 11,400.00 —cash conversion of accrued vacation leave, or a

total of P 131,400.00. 5

On appeal, the National Labor Relations Commissions sustained the Labor Arbiter in its resolution of August 28,
1987. 6 Hence, the instant petition.

Petitioners contend that the NLRC gravely abused its discretion when it sustained the grant of retirement benefits
to private respondent and held Enrique Razon, Jr. solidarily liable with Metroport Services, Inc. for the payment
thereof.

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 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 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. 7

It must be stressed that the words "upon the discretion of management" are not synonymous with absolute or
unlimited discretion. In other words, management discretion may not be exercised arbitrarily or capriciously
especially with regards to the implementation of the retirement plan. We believe 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 part of his employment package and the
benefits to be derived therefrom constituted as it were a continuing consideration for services rendered, as well as
an effective inducement for remaining with the firm. 8

Having rendered twenty years of service with Metroport Services, Inc., it can be said that private respondent has
already acquired a vested right to the retirement fund, a right which can only be withheld upon a clear showing of
good and compelling reasons.

In the case at bar, petitioners' rejection of the subject claim cannot be justifiably sustained. The reported loss of
confidence was due to the disappearance of certain books of account which petitioners directly attributed to
private respondent. Petitioners were convinced that simply because private respondent could 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 pretense at fair play. Had
petitioners been less hasty and conducted an investigation, they would have found out that on November 30,
1982, a fire gutted the western portion of petitioners' warehouse in front of Pier 5, destroying records, books,
vouchers and general ledgers. The circumstances surrounding the fire 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. 9

Thus, the resulting dismissal of private respondent was in itself marked by arbitrariness and lack of due process.
Petitioners cannot now be allowed to use that as their legal excuse for denying the employee's legitimate claim for
retirement pay.

In further support of their refusal to give private respondent his retirement benefits, petitioners argued that the
discharged employee impliedly withdrew his intention to retire when he joined Marina Port Services, Inc. 10

The fact that private respondent sought employment elsewhere should not hinder him from claiming his
retirement benefits. It is an inexorable fact that at 65 years, he reached the mandatory age for retirement and,
therefore, qualified to retire. We have here an ironic situation where instead of enjoying the fruits of his
retirement, private respondent was forced to seek reemployment for his survival. Surely, private respondent does
not deserve such a pathetic end to his long and faithful service with petitioners.

As to the issue of whether petitioner Enrique Razon, Jr. in his capacity as president and majority stockholder
should be held solidarily liable with co- petitioner Metroport Services, Inc. for the payment of the disputed
retirement claim, we rule in the affirmative.

Under Sec. 31 of the Corporation Code, "directors or trustees who willfully and knowingly vote for or assent to
patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith in directing the affairs
of the corporation . . . shall be liable jointly and severally for all damages resulting therefrom suffered by the
corporation, its stockholders or members or other persons." The manner of dismissal of private respondent by
petitioner Enrique Razon, Jr. smacks of high-handedness, caprice and arbitrariness. No regard was given to private
respondent's long and faithful service to the corporation, nor opportunity afforded him to explain the loss imputed
to him through a properly-conducted investigation. The willingness and alacrity on the part of petitioner Enrique
Razon, Jr. to terminate the services of private respondent without taking into consideration private respondent's
service to the company and without affording him his right to due process, to our mind, suffice to taint the act
complained of with bad faith.

WHEREFORE, the assailed resolution of the National Labor Relations Commission dated August 20, 1987 is hereby
AFFIRMED in toto. Costs against petitioners.

[G.R. No. 120802. June 17, 1997]

JOSE T. CAPILI, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, and UNIVERSITY OF MINDANAO,
respondents.

DECISION
DAVIDE, JR., J.:

The pivotal issue in this petition is whether an instructor of a private educational institution may be
compelled to retire at the age of sixty years. A corollary issue is whether his subsequent acceptance of retirement
benefits would estop him from pursuing his complaint questioning the validity of his forced retirement.
Petitioner Jose T. Capili, Jr., was employed by private respondent University of Mindanao (hereafter, UM) as a
college instructor in November 1982. On 2 July 1993, the private respondent informed the petitioner that under
the law and UM's retirement program he would be eligible for retirement when he would reach the age of 60
years on 18 August 1993. In his answer of 5 August 1993, the petitioner informed UM that pursuant to Section 4,
Rule II, Book VI of the Rules Implementing the Labor Code, the that he was not opting to retire but would continue
to serve until he reaches the compulsory retirement age of 65. In its reply of 10 August 1993 to the petitioner, UM
reiterated its position that under the universitys retirement 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.
Perceiving the schools insistence as constructive dismissal, and recalling at least four other faculty members
who were allowed to teach beyond their sixtieth birth anniversary, the petitioner filed a complaint xvi for illegal
dismissal before the Regional Arbitration Branch No. XI of the NLRC in Davao City. He sought his reinstatement to
his former position without loss of seniority rights with full back wages, wage differential, 13th month differential,
moral and exemplary damages, and attorneys fees.xvii
In its position paper,xviii UM invoked Article 287 of the Labor Code which provides that any employee may be
retired upon reaching the retirement age established in the collective bargaining agreement or other applicable
employment contract. It contended that it has a retirement plan, known as the University of Mindanao &
Associated Enterprises Retirement Plan, under which it could retire the petitioner upon his reaching the age of 60.
UM also cited Policy Instruction No. 25 issued by the Secretary of Labor, which provides that in the absence of a
retirement plan any teacher or other employee in a private educational institution may retire or be retired from
the service upon reaching the age of 60 years.
In his position paperxix the petitioner maintained that private respondents retirement plan applies only to
members thereof, pursuant to Articles II and III of its Rules and Regulations, xx and that since he is not a member of
the Plan, he 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 Rule II,
Book VI of the Omnibus Rules Implementing the Labor Code, xxi which also took effect on 7 January 1993, he has
the option whether or not to retire upon attaining the age of 60 years.
On 18 April 1994,xxii Labor Arbiter Newton Sancho held for UM and dismissed the complaint. He ruled:
There is no question that UM [University of Mindanao] has an existing retirement plan which fixed
60 years as an age for normal retirement. It applies to all its employees and that of its associated
enterprises, including the non-members thereof as a matter of school policy. As such, the option to
retire complainant lies on the administration of UM.
Complainants reliance on R.A. No. 7641 is evidently misplaced. It only provides for retirement pay
to qualified private sector employees in the absence of any retirement plan of the establishment. Given
UMs retirement plan or school policy of retiring its teachers upon reaching the age of 60, said law does
not clearly operate in his favor.
That at least four (4) teachers had been allowed to work beyond their 60th birthday does not make
them an exception to UMs policy on the matter. They did so on a case-to-case and semestral basis to
which UM consented in the exercise of its management prerogative.
The charge that he was discriminated against through "forced" retirement because of his
propensity to question certain school policies or regulations cannot be given credence. For want of
corroborative evidence, it is simply self-serving!
Ditto his money claims. UM has proofs that he had been fully paid thereof.
The petitioner appealedxxiii from the decision to the respondent Commission on 10 May 1994, or thirteen
days after he received the Labor Arbiters decision. He argued that the Labor Arbiter erred in ruling that private
respondents retirement plan applies to all its employees and that he had been fully paid his monetary claims.
The private respondent moved to dismiss the appealxxiv for having been filed out of time, as the same should
have been filed within ten days from petitioners receipt of the Arbiters decision, or, at the latest, on 7 May 1994.
On 21 November 1994, the private respondent filed a Manifestation with Motion xxv alleging that on 6 October
1994, the petitioner received his retirement pay and other accrued benefits due from the private respondent, thus
making the appeal moot and academic. The petitioner filed a Counter-Manifestationxxvi wherein he alleged that his
partial acceptance of retirement benefits did not render the case moot and academic, and that having "long and
unjustly been denied of his retirement benefits since August 18, 1993 [he could not] be expected to remain idle."
On 19 January 1995, the respondent NLRC dismissed the appeal for having been filed out of time, it appearing
that since the petitioner received a copy of the assailed decision on 27 April 1994, he had only until 7 May 1994 to
file his appeal; however, considering that 7 May 1994 was a Saturday, he had until 9 May 1994, the next working
day, to file the appeal. He filed the appeal only on 10 May 1994. xxvii
xxviii
The petitioner moved for the reconsideration of the order, alleging that he could not have filed his appeal
on 9 May 1994 which was a non-working holiday, as the barangay elections were held on the said date.
In its resolution of 31 March 1995, xxix the NLRC reconsidered the order of 19 January 1995 and decided the
case on its merits. In disposing of the appeal, it made the following observations and conclusions:
After a careful review of the respective arguments of the parties, We find no serious inconsistency
between the company retirement plan of the university and the provision of Article 287 of the Labor
Code, as amended by R.A. 7641. Both speak of fixing the normal retirement age at 60 in the absence of
a retirement plan or agreement. The retirement plan of the university allows retirement at a later or
beyond 60 by mutual assent and on a case-to-case basis. Whereas, R.A. 7641, has fixed 65 as the
compulsory retirement date.
Except therefore for the fixing of a maximum retirement age of 65 or the compulsory retirement
date, Section 14, Rule I, Book VI of the Implementing Rules of Article 287 prior to its amendment by R.A.
7641, has equally fixed the retirement benefit to at least one-half (1/2) month for every year of service.
The contention of complainant that respondent's retirement plan is inapplicable for being a non-
member is beside the point. Respondent has expressly assented to the extension of the retirement plan
to complainant thereby serving as the "consensual basis" for the applicability of the retirement plan to
complainant. (See Llora Motors, Inc. vs. Drilon, 179 SCRA 176, November 7, 1989, citing Allied
Investigation Bureau, Inc. vs. Ople, 91 SCRA 265).
The ultimate question, however, is that will complainant be forced by the respondent to retire at
age 60 or on his 60th birthday if he refuses to accept the same.
It is Our well discerned view that respondent may not force complainant to retire at age 60, unless
there are other justifiable reason to compel complainant to accept the same. This is so because the law
(R.A. 7641) has fixed age 65 as the compulsory age of retirement.
It, however, appears that this particular issue has become moot and academic. During the
pendency of the case, complainant has accepted and received from respondent university his
retirement benefits (Annex "1" to Respondent's Manifestation).
Complainant's counter-manifestation that this was only "partial acceptance" of his retirement
benefits is belied by the computation of his retirement benefits based on his length of service in the sum
of P67,344.42, plus other fringe benefits or in the total sum of P75,338.10. Deducting therefrom the
sum of P60,015.45 which was partially released to him, he received the balance of his retirement
benefits in the sum of P15,322.65 as shown by his signature appearing on the Journal Voucher dated
October 4, 1994 (Annex "2", ibid).
Except for the notation on the exclusion of incremental proceeds of his benefits which is still
subject of conciliation, there is nothing on Annex "1" indicating that complainant only received partial
payment of his retirement benefits or a reservation that receipt of the balance of his retirement was
without prejudice to his claims in the instant case.
Complainant therefore by his own act of accepting the proceeds of his retirement benefits as
originally offered to him by respondent is now estopped from further pursuing his claims in the instant
case. Besides, the main cause of action of complainant in suing respondent is the charge of illegal or
constructive dismissal. There being no concrete and convincing proof that complainant was illegally
dismissed, the present action must equally fail. Thus, the issue as to whether or not complainant was
forced to prematurely retire by respondent is now moot and academic in view of the subsequent
acceptance by complainant of his retirement benefits from respondent.
It then dismissed the appeal for lack of merit and affirmed the Labor Arbiters decision, subject to the
foregoing modification.
xxx
Petitioners motion for reconsideration of the above resolution having been denied in the
resolutionxxxi of 31 May 1995, the petitioner filed this petition. He alleges that the respondent
Commission committed grave abuse of discretion amounting to excess or lack of jurisdiction
(i) ... WHEN IT RENDERED ITS RESOLUTIONS IN A MANNER VIOLATIVE OF SUBSTANTIAL DUE PROCESS.
(ii) ...WHEN IT RENDERED THE QUESTIONED RESOLUTION... DISMISSING THE APPEAL IN
CONTRAVENTION TO THE RULING OF THE SUPREME COURT IN THE CASE OF ZURBANO, SR. VS.
NLRC (229 SCRA 563) AND OTHERS.
(iii) ...IN HOLDING THAT THE PETITIONER BY ACCEPTING THE PROCEEDS OF HIS RETIREMENT BENEFITS IS
ESTOPPED FROM PURSUING HIS CLAIMS.
The first assigned error consists of the last two errors, which boil down to the issue of whether the petitioner,
by his acceptance of retirement benefits, is estopped from pursuing his claim of illegal dismissal arising from his
forced retirement before the age of 65.
In its comment, the Office of the Solicitor General agrees with the petitioner that the latters acceptance of
retirement benefits does not amount to estoppel or render the appeal moot and academic, and hence, the NLRC
committed reversible error and grave abuse of discretion in perfunctorily dismissing petitioners appeal solely on
the ground of estoppel. It nevertheless disagreed with the NLRCs conclusion that the petitioner could not be
forced to retire at age 60. It is of the view that petitioners forced retirement at the age of 60 is valid and that
petitioners not being a member of the retirement plan is of no moment, since all employees of UM are covered by
it. These notwithstanding, the OSG concurred in the dispositive portion of the NLRCs resolution.
On the other hand, the private respondent submits that the NLRC was correct in holding that petitioners
voluntarily acceptance of his retirement benefits amounted to a waiver of his claims, and that his retirement was
in accordance with UMs retirement policy.
We resolved to give due course to the petition and required the parties to submit their respective
memoranda. Only the petitioner and private respondent submitted their memoranda. The OSG manifested that it
be excused from filing a memorandum and that its comment be treated as its memorandum.
The applicable law on the matter is Article 287 of the Labor Code of the Philippines, as amended by R.A. No.
7641, which took effect on 7 January 1993. xxxii As amended, the Article reads as follows:
ART. 287. Retirement. --
Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any collective bargaining agreement and other agreements:
Provided, however, That an employees retirement benefits under any collective bargaining agreement
and other agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees
in the establishment, an employee upon reaching the age of sixty (60) years 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 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.
The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age
65, while the second is primarily determined by the collective bargaining agreement or other employment contract
or employers retirement plan. In the absence of any provision on optional retirement in a collective bargaining
agreement, other employment contract, or employers retirement plan, an employee 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 employee.
It may be noted that before the effectivity of R.A. No. 7641, Article 287 of the Labor Code did not specifically
provide for the retirable age of employees in the private sector, thus:
ART. 287. Retirement. -- Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and other collective bargaining or other agreement.
Section 13, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code provided:
Sec. 13. In the absence of any collective bargaining agreement or other applicable agreement
concerning terms and conditions of employment which provides for retirement at an older age, an
employee may retire upon reaching the age of sixty (60) years.
Notably, the option to retire at 60 years was the employees prerogative. However, the Department of Labor and
Employment had provided a separate rule for employees of private educational institutions. Policy Instruction No.
25 promulgated on 1 June 1977 by the Secretary of Labor provided as follows:
For purposes of applying the retirement provisions of the Labor Code in private educational
institutions, and in consideration of the unique characteristics and peculiar problems and work
situations of such institutions, the following rules are hereby issued for the information and guidance of
all concerned:
I - If there is a retirement plan under a collective agreement or employer policy in private
educational institutions, any teacher and/or employee who retires or is retired from the service
pursuant to the same shall be entitled to all the retirement benefits provided therein.
II - In the absence of any such company policy or collective agreement providing for a retirement
plan for teachers and other employees in private educational institutions, any teacher and/or employee
may retire or be retired from the service upon reaching the age of sixty (60) years and shall be paid the
equivalent of at least one month salary or one-half month salary for every year of service, whichever is
higher, a fraction of at least six (6) months being considered as one whole year.
It is clear therefrom that in the absence of a collective bargaining agreement or company policy providing for a
retirement plan, the option to retire at age 60 could be exercised by either the employee or the employer. This
power of the employer no longer exists under R.A. No. 7641, which unequivocally provides that the option to retire
upon reaching the age of 60 years or more but not beyond 65 is the exclusive prerogative of the employee if there
is no provision on retirement in a collective bargaining agreement or any other agreement or if the employer has
no retirement plan.
The foregoing brings us to the next point of inquiry, viz., whether private respondent UM has a retirement
plan or collective bargaining agreement or other agreement vesting upon UM the prerogative to retire an
employee who reaches 60 years. UM insists that it has a retirement plan under the title University of Mindanao &
Associated Enterprises Retirement Plan,xxxiii which became effective on 1 July 1968, and that the petitioner is
covered by it. On the other hand, the petitioner contends that the Plan covers only those who opted to become
members thereof.
We agree with the petitioner. Indeed, under UMs Retirement Plan only members are covered by it. It defines
Member as
an employee, as herein defined, who chooses to contribute to the Fund as provided for in Article IV,
Section 1 hereof. Only Members shall be entitled to any of the benefits provided for under this Plan and
to any of the Companys contributions as provided for in Articles IV and V hereof. xxxiv
As to eligibility for membership therein of employees hired after the effectivity of the Plan, it explicitly provides as
follows:
[A]ny employee hired after the effective date may become a Member of the Plan on the date he
becomes a permanent full-time employee if he chooses to contribute to the Fund in accordance with
Article IV, Section 1, hereof. xxxv
Nothing could be clearer from the above provisions of the Plan than that it is not applicable to all employees
of UM and its associated enterprises. It applies only to those who opted to become members thereof. Contracts
take effect only between the parties thereto.xxxvi Since the Plan was prepared and approved only by the
responsible officials of UM and its associated enterprises, namely, the Presidents of UM, Mt. Apo Science
Foundation, and Davao Savings and Loan Association, xxxvii the Plan may thus be described as a contract of adhesion.
Hence, the above provisions on requirements of membership and eligibility must be strictly construed against UM
and its associated enterprises.xxxviii UM cannot now be heard to claim that the plan applies to all its employees or to
those who did not even opt to become members thereof.
The validity then of UMs retirement of the petitioner upon the latters 60th birth anniversary on 18 August
1993 could only be based on proof that the petitioner became a member of its Retirement Plan at any time after
his employment in 1982 but before 18 August 1993. The burden to prove such a fact was on UM, but the record
fails to show that UM has discharged that burden.
UMs belated attempt to prove that it is a school policy to retire employees who reach the age of 60, pursuant
to UMs Retirement Policies dated 16 December 1990 xxxix and Updated Retirement Policy dated 3 August 1993,xl
cannot sway this Court in UMs favor. These documents are mere scraps of paper, they being only xerox copies.
They have not been certified to be true copies or offered in evidence before the Labor Arbiter and the NLRC.
Neither have they even been referred to in UMs comment in this case.
The foregoing notwithstanding, a supervening event worked against the petitioner. On 30 April 1994, after
receiving the Labor Arbiters decision but before filing his appeal from that decision, the petitioner received partial
payment of his retirement pay and other accrued benefits from respondent UM. xli During the pendency of his
appeal with the NLRC, specifically, on 6 October 1994, he received full payment of his retirement benefits. In his
Counter-Manifestationxlii he declared:
COMPLAINANT-APPELLANT ... most respectfully maintains that the partial acceptance of the retirement
benefits does not render the instant case moot and academic. The complainant-appellant who had long
and unjustly been denied of his retirement benefits since August 18, 1993 cannot be expected to
remain idle.
By his acceptance of retirement benefits the petitioner is deemed to have opted to retire under the third
paragraph of Article 287 of the Labor Code, as amended by R.A. No. 7641. Thereunder he could choose to retire
upon reaching the age of 60 years, provided it is before reaching 65 years, which is the compulsory age of
retirement.
Also worth noting is his statement that he had long and unjustly been denied of his retirement benefits since
August 18, 1993. Elsewise stated, he was entitled to retirement benefits as early as 18 August 1993 but was denied
thereof without justifiable reason. This could only mean that he has already acceded to his retirement, effective on
such date - when he reached the age of 60 years.
WHEREFORE, the 31 March 1995 and 31 May 1995 Resolutions of the National Labor Relations Commission
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 Mindanaos Retirement Plan but is, nevertheless, deemed to have
opted to retire when he reached the age of sixty years, pursuant to Article 287 of the Labor Code, as amended by
R.A. No. 7641.
No pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., (Chairman), Melo, and Panganiban, JJ., concur.
Francisco, J., on leave.

G.R. No. 156934 March 16, 2007


ALPHA C. JACULBE, Petitioner,
vs.
SILLIMAN UNIVERSITY,Respondent.

DECISION

CORONA, J.:

Petitioner comes to us via this petition for review on certiorari1 to challenge a decision2 of the Court of Appeals
(CA) and the resolution3 affirming it.

Sometime in 1958, petitioner began working for respondent’s university medical center as a nurse. 4

In a letter dated December 3, 1992,5 respondent, through its Human Resources Development Office, informed
petitioner that she was approaching her 35th year of service with the university and was due for automatic
retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s
retirement plan for its employees which provided that its members could be automatically retired "upon reaching
the age of 65 or after 35 years of uninterrupted service to the university." 6 Respondent required certain
documents in connection with petitioner’s impending retirement.

A brief exchange of letters7 between petitioner and respondent followed. Petitioner emphatically insisted that the
compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed
to work until the age of 60 because this was the minimum age at which she could qualify for SSS 8 pension. But
respondent stood pat on its decision to retire her, citing "company policy."

On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for
"termination of service with preliminary injunction and/or restraining order." 9 On November 18, 1993, respondent
compulsorily retired petitioner.

After the parties submitted their position papers, the labor arbiter rendered a decision finding respondent guilty of
illegal dismissal and ordered that petitioner be reinstated and paid full backwages. 10 On appeal, however, the NLRC
11
reversed the labor arbiter’s decision and dismissed the complaint for lack of merit. The NLRC likewise denied
12
petitioner’s motion for reconsideration. In the assailed decision and resolution, the CA affirmed the NLRC.

Hence, this petition.

The issues for our consideration are:

1) did respondent’s retirement plan imposing automatic retirement after 35 years of service contravene
the security of tenure clause in the 1987 Constitution and the Labor Code?

2) did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its
retirement plan?

Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65
are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor Code
provides:

ART. 287. Retirement - Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract. xxx
By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at
below 60 years.13

However, after reviewing the assailed decision together with the rules and regulations of respondent’s retirement
plan, we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII,
also known as the provision on Social Justice and Human Rights.

The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntary
participation therein:

The petitioner in this case may, however, argue that the Pantranco case is not applicable in the case at bar as the
controversy in the said case involves a compulsory retirement on the basis of the length of service rendered by the
employee as agreed in an existing CBA, whereas in the present case, the private respondent compulsorily retired
the petitioner not based on a CBA but on the retirement scheme provided for in the private respondent’s
retirement plan. Nonetheless, this argument must fail. The contract fixing for retirement age as allowed under
Article 287 of the Labor Code does not exclusively refer to CBA which provides for an agreed retirement age. The
said provision explicitly allows, as well, other applicable employment contract to fix retirement age.

The records disclose that the private respondent’s Retirement Plan has been in effect for more than 30 years. The
said plan is deemed integrated into the employment contract between private respondent and its employees as
evidenced by the latter’s voluntary contribution through monthly salary deductions. Previous retirees have
already enjoyed the benefits of the retirement plan, and ever since the said plan was effected, no questions or
disagreement have been raised, until the same was made to apply to the petitioner. xxx 14 (emphasis ours)

The problem with this line of reasoning is that a perusal of the rules and regulations of the plan shows that
participation therein was not voluntary at all.

Rule III of the plan, on membership, stated:

SECTION 1 – MEMBERSHIP

All full-time Filipino employees of the University will automatically become members of the Plan, provided,
however, that those who have retired from the University, even if rehired, are no longer eligible for membership in
the Plan. A member who continues to serve the University cannot withdraw from the Plan.

xxx xxx xxx

SECTION 2 – EFFECTIVITY OF MEMBERSHIP

Membership in the Plan starts on the day a person is hired on a full-time basis by the University.

SECTION 3 – TERMINATION OF MEMBERSHIP

Termination of membership in the Plan shall be upon the death of the member, resignation or termination of
employee’s contract by the University, or retirement from the University.15 (emphasis ours).

Rule IV, on contributions, stated:

The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the basic salaries of the
faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff.
A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave
without pay should pay his contributions to the Plan. However, a member, who has been on leave without pay
should pay his contributions based on his salary plus the University’s contributions while on leave or the full
amount within one month immediately after the date of his reinstatement. Provided[,] further that if a member
has no sufficient source of income while on leave may pay within six months after his reinstatement. 16

From the language of the foregoing retirement plan rules, the compulsory nature of both membership in and
contribution to the plan debunked the CA’s theory that petitioner’s "voluntary contributions" were evidence of her
willing participation therein. It was through no voluntary act of her own that petitioner became a member of the
plan. In fact, the only way she could have ceased to be a member thereof was if she stopped working for
respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word "shall" ineluctably
pointed to the conclusion that employees had no choice but to contribute to the plan (even when they were on
leave).

According to the assailed decision, respondent’s retirement plan "ha(d) been in effect for more than 30 years." 17
What was not pointed out, however, was that the retirement plan came into being in 197018 or 12 years after
petitioner started working for respondent. In short, it was not part of the terms of employment to which petitioner
agreed when she started working for respondent. Neither did it become part of those terms shortly thereafter, as
the CA would have us believe.

Retirement 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 to sever his or her employment with the
former.19 In Pantranco North Express, Inc. v. NLRC,20 to which both the CA and respondent refer, the imposition of
a retirement age below the compulsory age of 65 was deemed acceptable because this was part of the CBA
between the employer and the employees. The consent of the employees, as represented by their bargaining unit,
to be retired even before the statutory retirement age of 65 was laid out clearly in black and white and was
therefore in accord with Article 287.

In this case, neither the CA nor the respondent cited any agreement, collective or otherwise, to justify the latter’s
imposition of the early retirement age in its retirement plan, opting instead to harp on petitioner’s alleged
"voluntary" contributions to the plan, which was simply untrue. The truth was that petitioner had no choice but to
participate in the plan, given that the only way she could refrain from doing so was to resign or lose her job. It is
axiomatic that employer and employee do not stand on equal footing,21 a situation which often causes an
employee to act out of need instead of any genuine acquiescence to the employer. This was clearly just such an
instance.

Not only was petitioner still a good eight years away from the compulsory retirement age but she was also still
fully capable of discharging her duties as shown by the fact that respondent’s board of trustees seriously
considered rehiring her after the effectivity of her "compulsory retirement." 22

As already stated, an employer is free to impose a retirement age less than 65 for as long as it has the employees’
consent. Stated conversely, employees are free to accept the employer’s offer to lower the retirement age if they
feel they can get a better deal with the retirement plan presented by the employer. Thus, having terminated
petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her,
respondent was guilty of illegal dismissal.

At this point, reinstatement is out of the question.1awphi1.nét Petitioner is now 71 years old and therefore well
over the statutory compulsory retirement age. For this reason, we grant her separation pay in lieu of
reinstatement. It is also for this reason that we modify the award of backwages in her favor, to be computed from
the time of her illegal dismissal on November 18, 1993 up to her compulsory retirement age.
WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 50445 is
REVERSED and SET ASIDE. The October 25, 1994 decision of the labor arbiter finding respondent guilty of illegal
dismissal is REINSTATED, with the MODIFICATION that, in lieu of reinstatement, petitioner is awarded separation
pay, the award of backwages to be computed from the time of her illegal dismissal up to her compulsory
retirement age
LOURDES A. CERCADO, G.R. No. 188154

Petitioner,

Present:

VELASCO, JR., J.,*

NACHURA,**

Acting Chairperson,

- versus - LEONARDO-DE CASTRO,***

BRION,**** and

MENDOZA, JJ.

Promulgated:

UNIPROM, INC.,

Respondent. October 13, 2010

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:
Assailed in this Petition for Review on Certiorarixxxvii are the July 31,
2007 Decisionxxxvii and the May 26, 2009 Resolutionxxxvii of the Court of
Appeals (CA) in CA-G.R. SP No. 87508, declaring as valid the unilateral
retirement of petitioner by respondent.

The Facts

Petitioner Lourdes A. Cercado (Cercado) started working for respondent


UNIPROM, Inc. (UNIPROM) on December 15, 1978 as a ticket seller assigned at
Fiesta Carnival, Araneta Center, Quezon City. Later on, she was promoted as
cashier and then as clerk typist.

On April 1, 1980, UNIPROM instituted an Employees Non-Contributory


Retirement Planxxxvii which provides that any participant with twenty (20) years
of service, regardless of age, may be retired at his option or at the option of the
company.

On January 1, 2001, UNIPROM amended the retirement plan in compliance


with Republic Act (R.A.) No. 7641.xxxvii Under the revised retirement plan,xxxvii
UNIPROM reserved the option to retire employees who were qualified to retire
under the program.
Sometime in December 2000, UNIPROM implemented a company-wide
early retirement program for its 41 employees, including herein petitioner, who, at
that time, was 47 years old, with 22 years of continuous service to the company.
She was offered an early retirement package amounting to P171,982.90, but she
rejected the same.

UNIPROM exercised its option under the retirement plan, and decided to
retire Cercado effective at the end of business hours on February 15, 2001. A
check of even date in the amount of P100,811.70, representing her retirement
benefits under the regular retirement package, was issued to her. Cercado refused
to accept the check.

UNIPROM nonetheless pursued its decision and Cercado was no longer


given any work assignment after February 15, 2001. This prompted Cercado to file
a complaint for illegal dismissal before the Labor Arbiter (LA), alleging, among
others, that UNIPROM did not have a bona fide retirement plan, and that even if
there was, she did not consent thereto.

For its part, respondent UNIPROM averred that Cercado was automatically
covered by the retirement plan when she agreed to the companys rules and
regulations, and that her retirement from service was a valid exercise of a
management prerogative.
After submission of the parties position papers, the LA rendered a
decisionxxxvii finding petitioner to be illegally dismissed. Respondent company
was ordered to reinstate her with payment of full backwages.

The National Labor Relations Commission (NLRC) affirmed the LAs


decision, adding that there was no evidence that Cercado consented to the alleged
retirement plan of UNIPROM or that she was notified thereof.xxxvii

On certiorari, the CA set aside the decisions of the LA and the NLRC. The
decretal portion of the Decision reads:

WHEREFORE, the petition is GRANTED. The Decision of the Labor


Arbiter and the assailed Resolutions of the NLRC are NULLIFIED and SET
ASIDE. Judgment is hereby rendered declaring respondents retirement as valid
and legal being in conformity with petitioners Retirement Plan.xxxvii

The CA ruled that UNIPROMs retirement plan was consistent with Article
287 of the Labor Code, which provides that any employee may be retired upon
reaching the retirement age established in the collective bargaining agreement or
other applicable employment contract. The CA applied the doctrine laid down in
Progressive Development Corporation v. NLRCxxxvii wherein the phrase may be
retired in Article 287 of the Labor Code was interpreted to mean that an option is
given to an employer to retire an employee, and such option is within the discretion
of the employer to exercise.

The CA further noted that Cercado cannot feign ignorance of the retirement
plan considering that she was already working with the company when it took
effect in 1980.

Cercado moved for reconsideration, but the same was denied.xxxvii Hence,
the instant recourse raising the following issues: 1) whether UNIPROM has a bona
fide retirement plan; and 2) whether petitioner was validly retired pursuant thereto.

The petition is meritorious.

Retirement 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 to sever his or her employment with the
former.xxxvii

Article 287 of the Labor Code, as amended by R.A. No. 7641,xxxvii pegs
the age for compulsory retirement at 65 years, while the minimum age for optional
retirement is set at 60 years. An employer is, however, free to impose a retirement
age earlier than the foregoing mandates. This has been upheld in numerous
casesxxxvii as a valid exercise of management prerogative.

In this case, petitioner was retired by UNIPROM at the age of 47, after
having served the company for 22 years, pursuant to UNIPROMs Employees Non-
Contributory Retirement Plan,xxxvii which provides that employees who have
rendered at least 20 years of service may be retired at the option of the company.
At first blush, respondents retirement plan can be expediently stamped with
validity and justified under the all encompassing phrase management prerogative,
which is what the CA did. But the attendant circumstances in this case, vis--vis the
factual milieu of the string of jurisprudence on this matter, impel us to take a
deeper look.

In Pantranco North Express, Inc. v. NLRC,xxxvii the Court upheld the


retirement of private respondent pursuant to a Collective Bargaining Agreement
(CBA) allowing Pantranco to compulsorily retire employees upon completing 25
years of service to the company. Interpreting Article 287, the Court ruled that the
Labor Code permits employers and employees to fix the applicable retirement age
lower than 60 years of age. The Court also held that there was no illegal dismissal
involved, since it was the CBA itself that incorporated the agreement between the
employer and the bargaining agent with respect to the terms and conditions of
employment. Hence, when the private respondent ratified the CBA, he
concurrently agreed to conform to and abide by its provisions. Thus, the Court
stressed, "[p]roviding in a CBA for compulsory retirement of employees after
twenty-five (25) years of service is legal and enforceable so long as the parties
agree to be governed by such CBA."

Similarly, in Philippine Airlines, Inc. (PAL) v. Airline Pilots Association of


the Philippines (APAP),xxxvii the retirement plan contained in the CBA between
PAL and APAP was declared valid. The Court explained that by their acceptance
of the CBA, APAP and its members are obliged to abide by the commitments and
limitations they had agreed to cede to management.

The foregoing pronouncements served as guiding principles in the recent


Cainta Catholic School v. Cainta Catholic School Employees Union
(CCSEU),xxxvii wherein the compulsory retirement of two teachers was upheld as
valid and consistent with the CBA provision allowing an employee to be retired by
the school even before reaching the age of 60, provided that he/she had rendered
20 years of service.

In Progressive Development Corporation v. NLRC,xxxvii although the


retirement plan was not embodied in a CBA, its provisions were made known to
the employees union. The validity of the retirement plan was sustained on the basis
of the finding of the Director of the Bureau of Working Conditions of the
Department of Labor and Employment that it was expressly made known to the
employees and accepted by them.
It is axiomatic that a retirement plan giving the employer the option to retire
its employees below the ages provided by law must be assented to and accepted by
the latter, otherwise, its adhesive imposition will amount to a deprivation of
property without due process of law.

In the above-discussed cases, the retirement plans in issue were the result of
negotiations and eventual agreement between the employer and the employees.
The plan was either embodied in a CBA, or established after consultations and
negotiations with the employees bargaining representative. The consent of the
employees to be retired even before the statutory retirement age of 65 years was
thus clear and unequivocal.

Unfortunately, no similar situation obtains in the present case. In fact, not


even an iota of voluntary acquiescence to UNIPROMs early retirement age option
is attributable to petitioner.

The assailed retirement plan of UNIPROM is not embodied in a CBA or in


any employment contract or agreement assented to by petitioner and her co-
employees. On the contrary, UNIPROMs Employees Non-Contributory Retirement
Plan was unilaterally and compulsorily imposed on them. This is evident in the
following provisions of the 1980 retirement plan and its amended version in 2000:
ARTICLE III
ELIGIBILITY FOR PARTICIPATION
Section 1. Any regular employee, as of the Effective Date, shall
automatically become a Participant in the Plan, provided the Employee was hired
below age 60.

Verily, petitioner was forced to participate in the plan, and the only way she
could have rejected the same was to resign or lose her job. The assailed CA
Decision did not really make a finding that petitioner actually accepted and
consented to the plan. The CA simply declared that petitioner was deemed aware
of the retirement plan on account of the length of her employment with respondent.
Implied knowledge, regardless of duration, cannot equate to the voluntary
acceptance required by law in granting an early retirement age option to an
employer. The law demands more than a passive acquiescence on the part of
employees, considering that an employers early retirement age option involves a
concession of the formers constitutional right to security of tenure.

We reiterate the well-established meaning of retirement in this jurisdiction:


Retirement 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 to sever his or her employment with the former.xxxvii

Acceptance by the employees of an early retirement age option must be


explicit, voluntary, free, and uncompelled. While an employer may unilaterally
retire an employee earlier than the legally permissible ages under the Labor Code,
this prerogative must be exercised pursuant to a mutually instituted early
retirement plan. In other words, only the implementation and execution of the
option may be unilateral, but not the adoption and institution of the retirement plan
containing such option. For the option to be valid, the retirement plan containing it
must be voluntarily assented to by the employees or at least by a majority of them
through a bargaining representative.

The following pronouncements in Jaculbe v. Silliman Universityxxxvii are


elucidating:

[A]n employer is free to impose a retirement age less than 65 for as long as it has
the employees consent. Stated conversely, employees are free to accept the
employers offer to lower the retirement age if they feel they can get a better deal
with the retirement plan presented by the employer.

We disagree with the CAs conclusion that the retirement plan is part of
petitioners employment contract with respondent. It must be underscored that
petitioner was hired in 1978 or 2 years before the institution of UNIPROMs
retirement plan in 1980. Logically, her employment contract did not include the
retirement plan, much less the early retirement age option contained therein.
We also cannot subscribe to respondents submission that petitioners consent
to the retirement plan may be inferred from her signature in the personnel action
formsxxxvii containing the phrase: Employee hereby expressly acknowledges
receipt of and undertakes to abide by the provisions of his/her Job Description,
Company Code of Conduct and such other policies, guidelines, rules and
regulations the company may prescribe.

It should be noted that the personnel action forms relate to the increase in
petitioners salary at various periodic intervals. To conclude that her acceptance of
the salary increases was also, simultaneously, a concurrence to the retirement plan
would be tantamount to compelling her to agree to the latter. Moreover, voluntary
and equivocal acceptance by an employee of an early retirement age option in a
retirement plan necessarily connotes that her consent specifically refers to the plan
or that she has at least read the same when she affixed her conformity thereto.

Hence, consistent with the Courts ruling in Jaculbe,xxxvii having terminated


petitioner merely on the basis of a provision in the retirement plan which was not
freely assented to by her, UNIPROM is guilty of illegal dismissal. Petitioner is thus
entitled to reinstatement without loss of seniority rights and to full backwages
computed from the time of her illegal dismissal in February 16, 2001 until the
actual date of her reinstatement. If reinstatement is no longer possible because the
position that petitioner held no longer exists, UNIPROM shall pay backwages as
computed above, plus, in lieu of reinstatement, separation pay equivalent to one-
month pay for every year of service. This is consistent with the preponderance of
jurisprudencexxxvii relative to the award of separation pay in case reinstatement is
no longer feasible.

WHEREFORE, the petition is GRANTED. The July 31, 2007 Decision


and the May 26, 2009 Resolution of the Court of Appeals in CA- G.R. SP No.
87508 are hereby REVERSED and SET ASIDE. The October 30, 2002 Decision
of the Labor Arbiter is REINSTATED, with the MODIFICATION that the
award of backwages shall be computed from the time of her illegal dismissal until
the actual date of her reinstatement. If reinstatement is no longer possible because
the position that petitioner held no longer exists, respondent UNIPROM shall pay
backwages as computed above, plus, in lieu of reinstatement, separation pay
equivalent to one-month pay for every year of service.

CAINTA CATHOLIC SCHOOL G.R. No. 151021

and MSGR. MARIANO

T. BALBAGO,

Petitioners, Present:

QUISUMBING, J.,

Chairperson,

- versus - CARPIO,

CARPIO-MORALES,
TINGA, and

VELASCO, JR., JJ.

CAINTA CATHOLIC SCHOOL

EMPLOYEES UNION Promulgated:

(CCSEU),

Respondent. May 4, 2006

x------------------------------------------------------------------------------------x

DECISION

TINGA, J.:

The main issue for resolution hinges on the validity of a stipulation in a


Collective Bargaining Agreement (CBA) that allows management to retire an
employee in its employ for a predetermined lengthy period but who has not yet
reached the minimum compulsory retirement age provided in the Labor Code.
Jurisprudence has answered the question in the affirmative a number of times
and our duty calls for the application of the principle of stare decisis. As a
consequence, we grant the petition and reverse the Court of Appeals.

Before us is a petition for review on certiorari under Rule 45 of the Rules of


Court, assailing the Decisionxxxvii dated 20 August 2001 of the Court of Appeals in
CA-G.R. SP No. 50851, which reversed the Resolutions dated 31 January 1997, xxxvii
and 30 April 1997xxxvii of the National Labor Relations Commission (NLRC), Third
Division in NLRC NCR CC No. L-000028-93 (NLRC RAB-IV-7-6827-94-R), as well as
the Resolutionxxxvii dated 6 December 2001.

The antecedent facts follow:

On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered


into between Cainta Catholic School (School) and the Cainta Catholic School
Employees Union (Union) effective 1 January 1986 to 31 May 1989. This CBA
provided, among others, that:

ARTICLE IX

DURATION OF AGREEMENT
This Collective Bargaining Agreement shall become effective and binding upon
the parties from January 1, 1986 up to May 31, 1989. At least sixty (60) days before the
expiration of this Agreement, the parties hereto shall submit written proposals which
shall be made the basis of negotiations for the execution of a new agreement.

If no new agreement is reached by the parties at the expiration of this


agreement, all the provisions of this Agreement shall remain full force and in effect, up
to the time a new Agreement shall be executed. xxxvii

Msgr. Mariano Balbago (Balbago) was appointed School Director in April


1987. From this time, the Union became inactive.

It was only in 10 September 1993 that the Union held an election of


officers, with Mrs. Rosalina Llagas (Llagas) being elected as President; Paz Javier
(Javier), Vice-President; Fe Villegas (Villegas), Treasurer; and Maria Luisa Santos
(Santos), Secretary. Llagas was then the Dean of the Student Affairs while Villegas
and Santos were Year-Level Chairmen. The other elected officers were Rizalina
Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer; Gilda Galange and
Jimmy del Rosario, auditors; Filomeno Dacanay and Adelina Andres, P.R.O.s; and
Danilo Amigo and Arturo Guevarra, business managers.xxxvii
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:

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) years of service to the School the last three (3) years of which must be
continuous.xxxvii

Three (3) days later, the Union filed a notice of strike with the National
Conciliation and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-
93.

On 8 November 1993, the Union struck and picketed the Schools entrances.
On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor
issued an Order certifying the labor dispute to the National Labor Relations
Commission (NLRC). The dispositive portion reads:

WHEREFORE, PREMISES CONSIDERED, this Office hereby certifies the labor


dispute at the Cainta Catholic School to the National Labor Relations Commission for
compulsory arbitration, pursuant to Article 263(g) of the Labor Code as amended.

Accordingly, all striking teachers and employees are directed to return to work
within 24 hours from receipt of this Order and the School Administrator to accept all
returning employees under the same terms and conditions prevailing prior to the
strike.

Furthermore, the effects of the termination of Ms. Rosalinda Llagas and Paz A.
Javier are hereby suspended. In line with this Order, the School Administration is
ordered to reinstate them to their former positions without loss of seniority rights and
privileges pending determination of the validity of their dismissal.

Both parties are further directed to cease and desist from committing any acts
that might aggravate the situation.

SO ORDERED.xxxvii
On 20 December 1993, the School filed a petition directly with the NLRC to
declare the strike illegal.

On 27 July 1994, the Union filed a complaintxxxvii 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, et. al., before
Arbitration Branch IV. Upon motion, then Labor Arbiter Oswald Lorenzo ordered
the consolidation of this unfair labor practice case with the above-certified case.

On 31 January 1997, the NLRC rendered a Resolution favoring the School.

Three (3) issues were passed upon by the NLRC, namely: (1) whether the
retirement of Llagas and Javier is legal; (2) whether the School is guilty of unfair
labor practice; and (3) whether the strike is legal.

The NLRC ruled that the retirement of Llagas and Javier is legal as the
School was merely exercising an option given to it under the CBA.xxxvii The NLRC
dismissed the unfair labor practice charge against the School for insufficiency of
evidence. Furthermore, it was found that the strike declared by the Union from 8
to 12 November 1993 is illegal, thereby declaring all union officers to have lost
their employment status.xxxvii

The Union moved for reconsideration but it was denied in a Resolution


dated 30 April 1997.

Hence, on 9 July 1997, the Union filed a petition for certiorari before this
Court docketed as G.R. No. 129548. The Court issued a temporary restraining
order (TRO) against the enforcement of the subject resolutions effective as of 23
July 1997. The School, however, filed a motion for clarification considering that it
had already enforced the 31 January 1997 NLRC Resolution.

On 28 July 1997, ten (10) regular teachers, who were declared to have lost
their employment status under the aforesaid NLRC Resolution reported back to
work but the School refused to accept them by reason of its pending motion for
clarification. This prompted the Union to file a petition for contempt against
Balbago and his agents before this Court, docketed as G.R. No. 130004, which was
later on consolidated with G.R. No. 129548.
Pursuant to the ruling of this Court in St. Martin Funeral Homes v. NLRC,xxxvii
the case was referred to the Court of Appeals and re-docketed as CA-G.R. SP No.
50851.

On 20 August 2001, the Court of Appeals rendered a decision giving due


course and granting the petition to annul and set aside the 31 January 1997 and
30 April 1997 Resolutions of the NLRC; while dismissing the petition for contempt
for lack of merit. The decretal portion of the decision reads:

WHEREFORE, premises considered, the petition to annul and set aside the 31
January 1997 and the 30 April 1997 resolutions of the National Labor Relations
Commission is GRANTED. Judgment is hereby RENDERED directing private respondents:
1) to REINSTATE the terminated union officers, except Rosalinda Llagas, Paz Javier,
Gilda Galange and Ester Amigo, to their former positions without loss of seniority rights
and other privileges with full backwages, inclusive of allowances and other benefits or
their monetary equivalent from 9 June 1997 up to the time of their actual
reinstatement; 2) to pay Rosalinda Llagas: a) separation pay equivalent to one (1)
month pay for every year of service, in lieu of reinstatement, with full backwages,
inclusive of allowances and other benefits or their monetary equivalent from 9 June
1997 up to the time of the finality of this decision; b) moral and exemplary damages in
the amount of ten thousand pesos (P10,000.00) and five thousand (P5,000.00),
respectively; 3) to pay Paz Javier, or her heirs: a) unpaid salaries, inclusive of allowances
and other benefits, including death benefits, or their monetary equivalent from the
time her compensation was withheld from her up to the time of her death; b)
separation pay equivalent to one (1) months salary for every year of service; and c)
moral and exemplary damages in the amount of ten thousand pesos (P10,000.00) and
five thousand pesos (P5,000.00), respectively.

Private respondents are also ordered to pay petitioner union attorneys fees
equivalent to five percent (5%) of the total judgment award.
The petition for contempt, however, is DISMISSED for lack of merit.

No pronouncement as to costs.

SO ORDERED.xxxvii

In reversing the decision of the NLRC, the Court of Appeals construed the
retirement of Llagas and Javier as an act amounting to unfair labor practice when
viewed against the backdrop of the relevant circumstances obtaining in the case.
The appellate court pointed out, thus:

The two happened to be the most vocal, dynamic and influential of all union
officers and members and they held considerable suasion over the other employees.
Rosalinda Llagas objected to the signing of the prepared form distributed by the school,
as a consequence of which, no one accomplished the form, and opposed the formation
of the high school faculty club as the teachers already had sufficient representation
through the union. Paz Javier, on the other hand, demanded that she be given the floor
during the faculty club organizational meeting and went on to win the presidency of the
faculty club, conclusively showing that she enjoyed the support of the high school
teachers. They were therefore a new and different breed of union leaders assertive,
militant and independent the exact opposite of former union president Victor Javier
who seemed to be passive, cooperative and pacific. The school saw the two as threats
which it could not control, and faced with a very uncomfortable situation of having to
contend with an aggressive union which just dominated the high school faculty club
(except for Joel Javeniar, all of the faculty clubs officers were union members; Rollo, p.
418), the school decided to nip in the bud the reactivated union by retiring its most
prominent leaders.

xxxx
It is not difficult to see the anti-union bias of the school. One of the first acts of
private respondent Msgr. Balbago immediately after his assumption of office as school
director was to ask for a moratorium on all union activities. With the union in inactive
status, the school felt secure and comfortable but when the union reactivated, the
school became apprehensive and reacted by retiring the unions two topmost officers by
invoking the provisions of the CBA. When the union furnished the school, through
counsel, a copy of a proposed CBA on 3 November 1993, the school in a cavalier fashion
ignored it on the pretext that the union no longer enjoyed the majority status among
the employees x x x xxxvii

The appellate court concluded that the retirement of the two (2) union
officers was clearly to bust the reactivated union.

Having established that the School committed unfair labor practice, the
Court of Appeals declared that the no-strike, no-lockout clause in the CBA was not
violated when the union members staged a strike from 8 to 12 November
1993.xxxvii It further held that minor disorders or isolated incidents of perceived
coercion attending the strike do not categorize it as illegal:

We studied carefully the available records and found that the existence of force
during the strike was certainly not pervasive and widespread, or consistently and
deliberately resorted to as a matter of policy, so as to stamp the strike with illegality, or
to cause the loss of employment of the guilty party x x x xxxvii
The motion for reconsideration subsequently filed by the School was
denied in a Resolution dated 6 December 2001, save in case of some union
officers where the appellate court modified its ruling granting them separation
pay instead of reinstatement because of their retirement or death.xxxvii

Thereafter, petitioners filed this petition for review on certiorari raising


three main issues, summarized as: (1) whether the Schools decision to retire
Llagas and Javier constitutes unfair labor practice; (2) whether the strike was
legal; and (3) whether some union officers ordered dismissed are entitled to
backwages.xxxvii

The School avers that the retirement of Llagas and Javier was clearly in
accordance with a specific right granted under the CBA. The School justifies its
actions by invoking our rulings in Pantranco North Express, Inc. v. NLRCxxxvii and
Bulletin Publishing Corporation v. Sanchezxxxvii that no unfair labor practice is
committed by management if the retirement was made in accord with
management prerogative or in case of voluntary retirement, upon approval of
management.
The Union, relying on the findings made by the Court of Appeals,xxxvii argues
that the retirement of the two union officers is a mere subterfuge to bust the
union.xxxvii

The NLRC, however, gave another justification to sustain the validity of the
two union officers forcible retirement, viz:

The retirement of Rosalinda Llagas has become inevitable because, being a


managerial employee by reason of her position as Dean of Student Affairs, she accepted
the Union presidency. She lost the trust and confidence on her by the SCHOOL as she
occupied a managerial position as Dean of Student Affairs. . . Being also the union
president, she has allowed her loyalties to be divided between the administration and
the union.

As to Paz Javier, her retirement was decided upon after an evaluation shows
that she was not performing well as her students were complaining about her brusque
attitude and bad language, aside from being habitually absent and late. xxxvii

At the outset, only questions of law are entertained by this Court through a
petition for review on certiorari. There are, however, well-recognized exceptions
such as in this case when the factual findings of the NLRC and the Court of
Appeals are contradictory.xxxvii A re-evaluation of the records of this case is
necessary for its proper resolution.

The key issue remains whether the forced retirement of Llagas and Javier
was a valid exercise of management prerogative. Undoubtedly, the retirement of
the two (2) union officers triggered the declaration of strike by the Union, and the
ruling on whether the strike was legal is highly dependent on whether the
retirement was valid.

We are impelled to reverse the Court of Appeals and affirm the validity of
the termination of employment of Llagas and Javier, arising as it did from a
management prerogative granted by the mutually-negotiated CBA between the
School and the Union.

Pursuant to the existing CBA,xxxvii the School has the option to retire an
employee upon reaching the age limit of 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 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 be
met by the employer validly exercising the prerogative to dismiss for just or
authorized causes. In those two instances, it is indispensable that the employer
establish the existence of just or authorized causes for 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 reaching a certain age agrees and/or consents to sever
his employment with the former.xxxvii

Article 287 of the Labor Code, as amended, governs retirement of


employees, stating:

ART. 287. Retirement.

Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement


benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employees retirement
benefits under any collective bargaining agreement and other agreements shall not be
less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement


benefits of employees in the establishment, an employee upon reaching the age of sixty
(60) years 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 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.

The CBA in the case at bar established 60 as the compulsory retirement


age. However, it is not alleged that either Javier or Llagas had reached the
compulsory retirement age of 60 years, but instead that they had rendered at
least 20 years of service in the School, the last three (3) years continuous. Clearly,
the CBA provision allows the employee to be retired by the School even before
reaching the age of 60, provided that he/she had rendered 20 years of service.
Would such a stipulation be valid? Jurisprudence affirms the position of the
School.

Pantranco North Express, Inc. v. NLRC, cited by petitioners, finds direct


application in this case. The CBA involved in Pantranco allowed the employee to
be compulsorily retired upon reaching the age of 60 or upon completing [25]
years of service to [Pantranco]. On the basis of the CBA, private respondent was
compulsorily retired by Pantranco at the age of 52, after 25 years of service.
Interpreting Article 287, the Court ruled that the Labor Code permitted employers
and employees to fix the applicable retirement age at below 60 years of age.
Moreover, the Court also held that there was no illegal dismissal since it was the
CBA itself that incorporated the agreement reached between the employer and
the bargaining agent with respect to the terms and conditions of employment;
hence, when the private respondent ratified the CBA with his union, he
concurrently agreed to conform to and abide by its provisions. Thus, the Court
asserted, [p]roviding in a CBA for compulsory retirement of employees after
twenty-five (25) years of service is legal and enforceable so long as the parties
agree to be governed by such CBA.xxxvii

A similar set of facts informed our decision in Progressive Development


Corporation v. NLRC.xxxvii The CBA therein stipulated that an employee with [20]
years of service, regardless of age, may be retired at his option or at the option of
the company. The stipulation was used by management to compulsorily retire
two employees with more than 20 years of service, at the ages of 45 and 38. The
Court affirmed the validity of the stipulation on retirement as consistent with
Article 287 of the Labor Code.

Philippine Airlines, Inc. v. Airline Pilots Association of the Phils. xxxvii further
bolsters the Schools position. At contention therein was a provision of the PAL-
ALPAP Retirement Plan, the Plan having subsequently been misquoted in the CBA
mutually negotiated by the parties. The Plan authorized PAL to exercise the
option of retirement over pilots who had chosen not to retire after completing 20
years of service or logging over 20,000 hours for PAL. After PAL exercised such
option over a pilot, ALPAP charged PAL with illegal dismissal and union-busting.
While the Secretary of Labor upheld the unilateral retirement, it nonetheless
ruled that PAL should first consult with the pilot to be retired before it could
exercise such option. The Court struck down that proviso, ruling that the
requirement to consult the pilots prior to their retirement defeats the exercise by
management of its option to retire the said employees, [giving] the pilot
concerned an undue prerogative to assail the decision of management.

By their acceptance of the CBA, the Union and its members are obliged to
abide by the commitments and 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 allowing management to retire retire employees with at least 20 years of
service.

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 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 contract that would allow management to subvert
security of tenure and allow it to unilaterally retire 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 provisions express proviso thereto
in the provision.

Yet the CBA in the case at bar contains no such infirmities which must be
stricken down. There is no essential difference between the CBA provision in this
case and those we affirmed in Pantranco and Progressive. Twenty years is a more
than ideal length of service an employee can render to one employer. Under
ordinary contemplation, a CBA provision entitling an employee to retire after 20
years of service and accordingly collect retirement benefits is 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 earlier age, when said
employee, in presumably better physical and mental condition, can enjoy them
better and longer.xxxvii

We affirm the continued validity of Pantranco and its kindred cases, and
thus reiterate that under Article 287 of the Labor Code, a CBA may validly accord
management the prerogative to optionally retire an employee under the terms
and conditions mutually agreed upon by management and the bargaining union,
even if such agreement allows for retirement at an age lower than the optional
retirement age or the compulsory retirement age. The Court of Appeals gravely
erred in refusing to consider this case from the perspective of Pantranco, or from
the settled doctrine enunciated therein.
What the Court of Appeals did instead was to favorably consider the claim
of the Union that the real purpose behind the retirement of Llagas and Javier was
to bust the union, they being its president and vice-president, respectively. To
that end, the appellate court favorably adopted the citation by the Union of the
American

case of NLRB v. Ace Comb, Co.,xxxvii which in turn was taken from a popular local
labor law textbook. The citation stated that [f]or the purpose of determining
whether or not a discharge is discriminatory, it is necessary that the underlying
reason for the discharge be established. The fact that a lawful cause for discharge
is available is not a defense where the employee is actually discharged because of
his union activities.xxxvii

Reliance on NLRB v. Ace Comb, Co. was grossly inapropos. The case did not
involve an employee sought to be retired, but one who cited for termination from
employment for cause, particularly for violating Section 8(a)(3) of the National
Labor Relations Act, or for insubordination. Moreover, the United States Court of
Appeals Eighth Circuit, which decided the case, ultimately concluded that here the
evidence abounds that there was a justifiable cause for [the employees]
discharge,xxxvii his union activities notwithstanding. Certainly, the Union and the
Court of Appeals would have been better off citing a case wherein the decision
actually concluded that the employee was invalidly dismissed for union activities
despite the ostensible existence of a valid cause for termination.

Nonetheless, the premise warrants considering whether management may be precluded from
retiring an employee whom it is entitled to retire upon a determination that the true cause for
compulsory retirement is the employees union activities.

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 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 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 concepts of just or authorized
cause than retirement which normally contemplates merely the attainment of a
certain age or a certain number of years in the service. It would be easier for
management desirous to eliminate pesky union members to abuse the
prerogative of termination for such purpose since the determination of just or
authorized cause is rarely a simplistic question, but involves facts highly prone to
dispute and subjective interpretation.
On the other hand, the exercise by management of its retirement
prerogative is less susceptible to dubitability as to the question whether an
employee could be validly retired. The only factual matter to 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 Code. In fact, the question of the amount of
retirement benefits is more likely to be questioned than the retirement itself.
Evidently, it more clearly emerges in the case of retirement that management
would anyway have the right to retire an employee, no matter the degree of
involvement of said employee in union activities.

There is another point that militates against the Union. A ruling in its favor
is tantamount to a concession that a validly drawn management prerogative to
retire its employees can be judicially interfered on a showing that the employee in
question is highly valuable to the union. Such a rule would be a source of
mischief, even if narrowly carved out by the Court, for it would imply that an
active union member or officer may be, by reason of his/her importance to the
union, somehow exempted from the normal standards of retirement applicable
to the other, perhaps less vital members of the union. Indeed, our laws protection
of the right to organize labor does not translate into perpetual job security for
union leaders by reason of their leadership role alone. Should we entertain such a
notion, the detriment is ultimately to the union itself, promoting as it would a
stagnating entrenched leadership.

We can thus can comfortably uphold the principle, as reiterated in


Philippine Airlines,xxxvii that the exercise by the employer of a valid and duly
established prerogative to retire an employee does not constitute unfair labor
practice.

There are other arguments raised by petitioners. We need to discuss them


only in brief, as they are no longer central to the resolution of this case.

The School insisted that Llagas and Javier were actually managerial
employees, and it was illegal for the Union to have called a strike on behalf of two
employees who were not legally qualified to be members of the Union in the first
place.xxxvii The Union, on the other hand, maintains that they are rank-and-file
employees.
Article 212(m) of the Labor Code defines a managerial employee as "one
who is vested with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees, or to effectively recommend such managerial actions." The
functions of the Dean of Student Affairs, as occupied by Llagas, are enumerated in
the Faculty Manual. The salient portions are hereby enumerated:

a. Manages the High School Department with the Registrar and Guidance
Counselors (acting as a COLLEGIAL BODY) in the absence of the Director or Principal.

b. Enforces the school rules and regulations governing students to maintain


discipline.

xxxx

g. Plans with the Guidance Counselors student leadership training programs to


encourage dynamic and responsible leadership among the students and submits the
same for the approval of the Principal/Director.

xxxx

i. Studies proposals on extra-curricular or co-curricular activities and projects


proposed by teachers and students and recommends to the Principal/Director the
necessary approval.
j. Implements and supervises activities and projects approved by the
Principal/Director so that the activities and projects follow faithfully the conditions set
forth by the Principal/Director in the approval.

k. Assists in the planning, supervising and evaluating of programs of co-


curricular activities in line with the philosophy and objectives of the School for the total
development of the students.

l. Recommends to the Principal policies and rules to serve as guides to effective


implementation of the student activity program.xxxvii

xxxx

It is fairly obvious from a perusal of the list that the Dean of Student Affairs
exercises managerial functions, thereby classifying Llagas as a managerial
employee.

Javier was occupying the position of Subject Area Coordinator. Her duties
and responsibilities include:

1. Recommends to the principals consideration the appointment of


faculty members in the department, their promotion, discipline and even termination;
2. Recommends advisory responsibilities of faculty members;

3. Recommends to the principal curricular changes, purchase the books


and periodicals, supplies and equipment for the growth of the school;

4. Recommends his/her colleagues and serves as channel between


teachers in the department the principal and/or director.xxxvii

Supervisory employees, as defined in Article 212(m) are those who, in the


interest of the employer, effectively recommend such managerial actions if the
exercise of such authority is not merely routinary or clerical in nature but requires
the use of independent judgment.

In the same vein, a reading of the above functions leads us to conclude that
Javier was a supervisory employee. Verily, Javier made recommendations as to
what actions to take in hiring, termination, disciplinary actions, and management
policies, among others.

We can concede, as the Court of Appeals noted, that such job descriptions
or appellations are meaningless should it be established that the actual duties
performed by the employees concerned are neither managerial nor supervisory in
nature. Yet on this point, we defer to the factual finding of the NLRC, the
proximate trier of facts, that Llagas and Javier were indeed managerial and
supervisory employees, respectively.

Having established that Llagas is a managerial employee, she is proscribed


from joining a labor union,xxxvii more so being elected as union officer. In the case
of Javier, a supervisory employee, she may join a labor union composed only of
supervisory employees.xxxvii Finding both union officers to be employees not
belonging to the rank-and-file, their membership in the Union has become
questionable, rendering the Union inutile to represent their cause.

Since the strike has been declared as illegal based on the foregoing
discussion, we need not dwell on its legality with respect to the means employed
by the Union.

Finally, there is neither legal nor factual justification in awarding backwages


to some union officers who have lost their employment status, in light of our
finding that the strike is illegal. The ruling of the NLRC is thus upheld on this point.
We are also satisfied with the disposition of the NLRC that mandates that Llagas
and Javier (or her heirs) receive their retirement benefits.
WHEREFORE, the petition is GRANTED. The Resolution dated 31 January
1997 of the National Labor Relations Commission in NLRC NCR CC No. L-000028-
93 is REINSTATED.

[G.R. No. 95940. July 24, 1996]

PANTRANCO NORTH EXPRESS, INC., petitioner, vs. NATIONAL


LABOR RELATIONS COMMISSION and URBANO SUIGA,
respondents.

DECISION
PANGANIBAN, J.:

Is a Collective Bargaining Agreement provision allowing compulsory retirement


before age 60 but after twenty five years of service legal and enforceable? Who has
jurisdiction over a case involving such a question -- the labor arbiter or arbitrators
authorized by such CBA?
The foregoing questions are presented in the instant petition for Certiorari seeking
the nullification of the Resolution xxxvii promulgated September 28, 1990 by the National
Labor Relations Commissionxxxvii in an illegal dismissal case brought by private
respondent. In its assailed Resolution, the public respondent affirmed the decision of
Labor Arbiter Ricardo N. Olairez dated March 26, 1990 xxxvii declaring that the
compulsory retirement of private respondent constituted illegal dismissal, ordering his
reinstatement and granting him backwages.

The Antecedent Facts

Private respondent was hired by petitioner in 1964 as a bus conductor. He


eventually joined the Pantranco Employees Association-PTGWO. He continued in
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 of his retirement was the
compulsory retirement provision of the collective bargaining agreement between the
petitioner and the aforenamed union. Private respondent received P49,300.00 as
retirement pay.
On February 15, 1990, private respondent filed a complaint xxxvii for illegal dismissal
against petitioner with the Sub-Regional Arbitration Branch of the respondent
Commission in Dagupan City. The complaint was consolidated with two other cases of
illegal dismissalxxxvii having similar facts and issues, filed by other employees, non-union
members.
After hearings were held and position papers submitted, on March 26, 1990, Labor
Arbiter Olairez rendered his decision, the dispositive portion of which reads:
"WHEREFORE, with all the foregoing considerations, we find the three
complainants illegally and unjustly dismissed and we hereby order the respondent to
reinstate them to their former or substantially equivalent positions without loss of
seniority rights with full backwages and other benefits, computed as follows:
xxx xxx xxx
3. Urbano Suiga
27,375.00 Backwages Aug. 16/89 to March 31/90 (P3,650.00 x 7.5 mos.)
1,368.75 13th month pay for 1989 (P16,425.00 over 12)
P28,743.75
2,874.37 10% attorney's fees
P31,618.12 Total as of March 31/90 plus additional backwages and other
benefits but not to exceed 3 years and the corresponding
attorney's fees.
The amounts already received by complainants shall be considered as advanced
payment of their retirement pay which shall be deducted when they shall actually retire
or (be) separated from the service.
The order of reinstatement is immediately executory even pending appeal."
Petitioner appealed to public respondent, which issued the questioned Resolution
affirming the labor arbiter's decision in toto. Hence, this petition.

The Issues

Petitioner raises the following issues for decision:


"I. The National Labor Relations Commission gravely abused its discretion in
holding that the Labor Arbiter has jurisdiction over the case.
II. Assuming that the Labor Arbiter has jurisdiction over the case, the National
Labor Relations Commission gravely abused its discretion in affirming the Labor
Arbiter's decision that private respondent Urbano Zuiga (sic) was illegally dismissed."
Of course, it is obvious that the underlying and pivotal issue is whether the CBA
stipulation on compulsory retirement after twenty-five years of service is legal and
enforceable. If it is, private respondent has been validly retired. Otherwise, petitioner is
guilty of illegal dismissal. The answer to said question will settle the issue of the validity
of the questioned resolution of the public respondent.

The Court's Ruling

On the key issue, the Court finds the petition meritorious, thus warranting reversal
of the questioned Resolution.

First Issue: Jurisdiction of Labor Arbiter

Petitioner contends that the labor arbiter had no jurisdiction because the dispute
concerns a provision of the CBA and its interpretation. It claims that the case falls under
the jurisdiction of the voluntary arbitrator or panel of arbitrators under Article 261 of the
Labor Code, which provides:
"Article 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators.
-- The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and
exclusive jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel policies referred
to in the immediately preceding Article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances under the
Collective Bargaining Agreement. For purposes of this Article, gross violations of a
Collective Bargaining agreement shall mean flagrant and/or malicious refusal to comply
with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes, grievances or
matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel
of Voluntary Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining
Agreement."
The Labor Arbiter believed otherwise. In his decision xxxvii, he stated:
"In our honest opinion we have Jurisdiction over the complaint on the following
grounds:
First, this is a complaint of illegal dismissal of which original and exclusive
jurisdiction under Article 217 has been conferred to the Labor Arbiters. The
interpretation of the CBA or enforcement of the company policy is only corollary to the
complaint of illegal dismissal. Otherwise, an employee who was on AWOL, or who
committed offenses contrary to the personnel polices (sic) can no longer file a case of
illegal dismissal because the discharge is premised on the interpretation or
enforcement of the company polices (sic).
Second. Respondent voluntarily submitted the case to the jurisdiction of this labor
tribunal. It adduced arguments to the legality of its act, whether such act may be
retirement and/or dismissal, and prayed for reliefs on the merits of the case. A litigant
cannot pray for reliefs on the merits and at the same time attacks (sic) the jurisdiction
of the tribunal. A person cannot have one's cake and eat it too. x x x."
The Court agrees with the public respondent's affirmance of the arbiter's decision in
respect of the question of jurisdiction.
In Sanyo Philippines Workers Union PSSLU vs. Caizares, xxxvii a case cited by the
petitioner, this Court ruled:
x x x Hence, only disputes involving the union and the company shall be referred
to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between them
exists which could be brought to a grievance machinery. The problem or dispute in the
present case is between the union and the company on the one hand and some union
and non-union members who were 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 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 termination, the matter falls within the jurisdiction of the Labor Arbiter."
Applying the same rationale to the case at bar, it cannot be said that the "dispute" is
between the union and petitioner company because both have previously agreed upon
the provision on "compulsory retirement" as embodied in the CBA. Also, it was only
private respondent on his own who questioned the compulsory retirement. Thus, the
case is properly denominated as a "termination dispute" which comes under the
jurisdiction of labor arbiters.
Therefore, public respondent did not commit a grave abuse of discretion in
upholding the jurisdiction of the labor arbiter over this case.

Second Issue: Private Respondent's Compulsory Retirement Is Not Illegal


Dismissal

The bone of contention in this case is the provision on compulsory retirement after
25 years of service. Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining
Agreementxxxvii between petitioner company and the union states:
"Section 1. The COMPANY shall formulate a retirement plan with the following
main features:
xxx xxx xxx
(e) The COMPANY agrees to grant the retirement benefits herein provided to
regular employees who may be separated from the COMPANY for any of the following
reasons:
xxx xxx xxx
(5) Upon reaching the age of sixty (60) years or upon completing
twenty-five (25) years of service to the COMPANY, whichever comes first, and
the employee shall be compulsory retired and paid the retirement benefits
herein provided."
Petitioner contends that the aforequoted provision is valid and in consonance with
Article 287 of the Labor Code. The respondent Commission holds otherwise.
The said Code provides:
"Art. 287. Retirement. -- Any employee may be retired upon reaching the
retirement age established in the Collective Bargaining Agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining or
other agreement."
The Solicitor General, in his Manifestation in Lieu of Comment, xxxvii agrees with
petitioner's contention that the law leaves to the employer and employees the fixing of
the age of retirement. He cites Section 13, Rule I, Book VI of the Omnibus Rule
Implementing the Labor Code, which reads:
"Retirement. -- In the absence of any collective bargaining agreement or other
applicable agreement concerning terms and condition of employment which provides
for retirement at an older age, an employee may be retired upon reaching the age of
sixty (60) years."
Arguing that the law on compulsory retirement age is open-ended, as indicated by the
use of the word "may," the Solicitor General maintains that there is no prohibition
against parties fixing a lower age for retirement. xxxvii
Additionally, the Solicitor General and the petitioner contend that a CBA provision
lowering compulsory retirement age to less than sixty (60) is not contrary to law
because it does not diminish the employee's benefits. Rather, they argue that early
retirement constitutes a reward of employment, and therefore, retirement pursuant to
the CBA provision in question cannot be considered a dismissal following this Court's
ruling in Soberano vs. Clave,10a the relevant portions of which read as follows:
"Retirement and dismissal are entirely different from each other. Retirement is the
result of a bilateral act of the parties, a voluntary agreement between the employer and
the employees whereby the latter after reaching a certain age agrees and/or consents
to severe his employment with the former. On the other hand, dismissal refers to the
unilateral act of the employer in terminating services of an employee with or without
cause. In fine, in the case of dismissal, it is only the employer who decides when to
terminate the services of an employee x x x Moreover, concomitant with the provisions
on retirement in a Labor Agreement is a stipulation regarding retirement benefits
pertaining to a retired employee. Here again, the retirement benefits are subject to
stipulation by the parties unlike in dismissals where separation pay is fixed by law in
cases of dismissals without just cause. Evident, therefore, from the foregoing is that
retirements which are agreed upon by the employer and the employee in their
collective bargaining agreement are not dismissals x x x. To further fortify the aforesaid
conclusion, it is noteworthy that even the New Labor Code recognizes this distinction
when it treats retirement from service under a separate title from that of dismissal or
termination of employment, aside from expressly recognizing the right of the employer
to retire any employee who has reached the retirement age established in the
collective bargaining agreement or other applicable employment contract and the latter
to receive such retirement benefits as he may have earned under existing laws and
any collective bargaining or other agreement (Art. 277, New Labor Code)."
We agree with petitioner and the Solicitor General. Art. 287 of the Labor Code as
worded permits employers and employees to fix the applicable retirement age at below
60 years. Moreover, providing for early retirement does not constitute diminution of
benefits. In almost all countries today, early 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
earlier age, when said employee, in presumably better physical and mental condition,
can enjoy them 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 profitable uses by way
of income-generating investments, thereby affording a more significant measure of
financial security and independence for the retiree who, up till then, had to contend with
life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are
now seeing many CBAs with such early retirement provisions. And the same cannot be
considered a diminution of employment benefits.
It is also further argued that, being a union member, private respondent is bound by
the CBA because its terms and conditions constitute the law between the parties. xxxvii
The parties are bound not only to the fulfillment of what has been expressly stipulated
but also to all the consequences which according to their nature, may be in keeping with
good faith, usage and law.xxxvii It binds not only the union but also its members. xxxvii
Thus, the Solicitor Generalxxxvii said:
"Private respondent cannot therefore claim illegal dismissal when he was
compulsory retired after rendering twenty-five (25) years of service since his retirement
is in accordance with the CBA."
We again concur with the Solicitor General's position. 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 between labor and capital, (it) is not merely
contractual in nature but impressed with public interest, thus it must yield to the
common good. As such, it must be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon it,
giving due consideration to the context in which it is negotiated and purpose which it is
intended to serve."xxxvii
Being a product of negotiation, the CBA between the petitioner and the union
intended the provision on compulsory retirement to be beneficial to the employees-
union members, including herein private respondent. When private respondent ratified
the CBA with the union, he not only agreed to the CBA but also agreed to conform to
and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when
the CBA provision on compulsory retirement was applied to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement
Pay Law," which went into effect on January 7, 1993. Although passed many years after
the compulsory retirement of herein private respondent, nevertheless, the said statute
sheds light on the present discussion when it amended Art. 287 of the Labor Code, to
make it read as follows:
"ART. 7. Retirement. Any employee may be retired upon reaching the
retirement age establish in the collective bargaining agreement or other applicable
employment contract.
xxx xxx xxx
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty (60)
years 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 retire x x x."
The aforequoted provision makes clear the intention and spirit of the law to give
employers and employees a free hand to determine and agree upon the terms and
conditions of retirement. Providing in a CBA for compulsory retirement of employees
after twenty-five (25) years of service is legal and enforceable so long as the parties
agree to be governed by such CBA. The law presumes that employees know what they
want and what is good for them absent any showing that fraud or intimidation was
employed to secure their consent thereto.
On this point then, public respondent committed a grave abuse of discretion in
affirming the decision of the labor arbiter. The compulsory retirement of private
respondent effected in accordance with the CBA is legal and binding.
WHEREFORE, premises considered, the petition is GRANTED and the questioned
Resolution is hereby set aside. No costs.
SO ORDERED.

[G.R. No. 117174. November 13, 1996]

CAPITOL WIRELESS, INC., petitioner, vs. HONORABLE SECRETARY MA. NIEVES R.


CONFESOR and KILUSANG MANGGAGAWA NG CAPWIRE KMC-NAFLU, respondents.

DECISION

BELLOSILLO, J.:
Petitioner Capitol Wireless, Inc., and respondent Kilusang Manggagawa ng Capwire KMC-
NAFLU (Union) entered into a Collective Bargaining Agreement (CBA) on 15 November 1990
covering a period of five (5) years. Towards the end of the third year of their CBA the parties
renegotiated the economic aspects of the agreement. On 18 July 1993 when the negotiations
were on-going petitioner dismissed on the ground of redundancy eight (8) out of its eleven (11)
couriers who were Union members.

As a consequence, respondent Union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB) on the ground of bargaining deadlock and unfair labor practice,
specifically, for illegal dismissal and violations of the CBA. Conciliation proceedings were
conducted by the NCMB but the same yielded negative results. On 20 August 1993 respondent
Union went on strike. On the same day, respondent Secretary assumed jurisdiction over the
controversy.

In the conference held on 14 September 1993 the parties agreed to confine the scope of the
dispute to the following issues: (a) unfair labor practice, consisting of CBA violations and acts
inimical to the workers right to self-organization; (b) redundancy, affecting the dismissed
employees; and (c) CBA deadlock, which includes all items covered by respondent Unions
proposals.

On 2 May 1994 respondents Secretary of Labor resolved the controversy in this manner: (1) the
parties were ordered to modify the fourth and fifth years of their CBA in accordance with the
dispositions she found just and equitablexxxvii the same to be retroactive to 1 July 1993 and
effective until 30 June 1995 or until superseded by a new agreement; (2) all other provisions of
the existing CBA were deemed retained but all new demands of respondent Union that were not
passed upon by her deemed denied; (3) the dismissal of the eight (8) employees on the ground of
redundancy was upheld, but due to defective implementation by petitioner the latter was ordered
to pay each of the former an indemnity equivalent to two (2) months salary based on their
adjusted rate for the fourth year in addition to the separation benefits due them under the law and
the CBA, and if still unpaid, petitioner to pay the same immediately; and (4) the charge of unfair
labor practice was dismissed for lack of merit.xxxvii

On 28 July 1994 the motion for reconsideration of petitioner was denied.xxxvii

Petitioner imputes grave abuse of discretion on respondent Secretary of Labor for holding that it
failed to accord due process to the dismissed employees; in not applying to the letter the ruling in
Wenphil Corp. v. NLRC;xxxvii and, in awarding retirement benefits beyond those granted by R.A.
7641.xxxvii

Petitioner argues that what it implemented was not retrenchment but redundancy program, as
such, respondent Secretary of Labor should not have relied upon Asiaworld Publishing House,
Inc. v. Oplexxxvii in holding that the dismissed employees were not accorded procedural due
process. The additional requirements enumerated in Asiaworld are inapplicable to the present
case because that case involved retrenchment, and petitioners basis in deciding those to be
covered by the redundancy program was the area serviced by the couriers. All areas outside the
vicinity of its head office, which were the areas of delivery of the dismissed employees, were
declared redundant.

Petitioner misses the point. Its violation of due process consists in its failure, as found by
respondent Secretary of Labor, to apprise respondent Union of any fair and reasonable criteria
for implementation of its redundancy program. In Asiaworld we laid down the principle that in
selecting employees to be dismissed a fair and reasonable criteria must be used, such as but not
limited to: (a) less preferred status (e.g., temporary employee), (b) efficiency and (c) seniority.
Although the case of Asiaworld dealt with retrenchment, still the principle is applicable to the
present case because in effecting the dismissals petitioner had to select from among its
employees.

We agree with respondent Secretary of Labor in her observation and conclusion that the
implementation by petitioner of its redundancy program was inconsistent with established
principles of procedural due process. She elaborated on this point in her resolution of the motion
for reconsideration. Thus

Whether it is redundancy or retrenchment, no employee may be dismissed without observance of


the rudiments of good faith. This is the point of our assailed order. If the Company (were) really
convinced of the reasons for dismissal, the least it could have done to the employees affected
was to observe fair play and transparency in implementing the decision to dismiss. To stress, the
redundancy was implemented without the Company so much apprising the Union of any fair and
reasonable criteria for implementation.

As a matter of fact, this office called the parties to a conference on 14 March 1994, at which the
Company was given an opportunity to clarify the criteria it used in effecting redundancy.
Represented by Ms. Ma. Lourdes Mendoza of Mercado and Associates, its counsel of record, the
Company submitted quitclaims which do not contain any amounts purportedly executed by five
of the eight dismissed employees. More importantly, the minutes of the conference show that
within two days thereafter, the Company committed to submit a pleading to explain the criteria it
used in effecting the redundancy; where no such submission is made by 17 March 1994, the case
shall be deemed submitted for resolution. The Company never complied with this commitment.

As has been made clear, even this Office recognized that an authorized cause for dismissal did
exist; what it could not countenance is the means employed by the Company in making the cause
effective. But no matter what kind of justification the Company presents now, this has become
moot, academic and irrelevant. The same should have been communicated to the affected
employees prior to or simultaneously with the implementation of the redundancy, or at the very
least, before the assailed order was rendered.

In any event, the explanation being advanced by the Company now purportedly based on areas of
assignment loses significance from the more compelling viewpoint of efficiency and seniority.
For instance, during the period covered by the Companys own time and motion analysis, Rogelio
Varona delivered 96 messages but was dismissed; Ressurecion Bordeos delivered only an
average of 75 but was retained. In terms of seniority, the Company itself states the Ms. Bordeos
holds the same position/area as Rogelio Varona, however, she was retained because she is more
senior than the latter. The Company should look at its own evidence again. Bordeos had only 16
years of service. Varona had 19, Neves 18, and Valle, Basig and Santos 17, yet all five were
dismissed.

One should also consider that the redundancy was implemented at the height of bargaining
negotiations. The bargaining process could have been the best opportunity for the Company to
apprise the Union of the necessity for redundancy. For unknown reasons, the Company did not
take an advantage of it. Intended or not, the redundancy reinforced the conditions for a deadlock,
giving the Union members the impression that it was being used by the Company to obtain a
bargaining leverage.xxxvii

Petitioner argues next that granting that procedural due process was not afforded the dismissed
employees, still, the award of two (2) months salary for each of them is not in accord with
existing jurisprudence. The Wenphil doctrine teaches, as in other cases, that where the dismissal
of an employee is for a just cause but without due process, the employer must indemnify the
dismissed employee.

Petitioner must have failed to read the full text of Wenphil or simply chose to ignore the sentence
immediately succeeding the P1,000.00 indemnity enunciated therein. The case is explicit that the
measure of the award depends on the facts of each case and the gravity of the omission
committed by the employer. In fact, in the recent case of Reta v. NLRC, xxxvii the Court saw fit to
impose P10,000.00 as penalty for the employers failure to comply with the due process
requirement. The ratiocination of respondent Secretary of Labor should have put petitioners
argument at rest

x x x x Wenphil, however, simply provides the authority to impose the indemnity; it is not meant
to be definitive as to the amount of indemnity applicable in all cases, this being dependent on the
particular circumstances of a case. Indeed, in the later case of Maritime Seahorse v. NLRC, G.R.
No. 84712, 5 May 1989, the Supreme Court applied the Wenphil doctrine but awarded an
indemnity of P5,000.00. Clearly, there is a recognition that the amount of indemnity to be
awarded is subject to the discretion of the agency making the award, considering all attendant
circumstances.xxxvii

Lastly, petitioner argues that the retirement benefits granted by respondent Secretary of Labor
are in excess of what is required of it under the law and what the Union demands. In particular,
R.A. 7641 grants to the employee retirement pay equivalent to 21.82 days per year of service
only but respondent Secretary of Labor granted the equivalent of 22.5 days. To this, six (6) more
days were granted for compulsory retirement and three (3) days for optional retirement. The
existing provisions of the CBA, the respective proposals of the parties, and the award of
respondent Secretary of Labor are reproduced hereunder

EXISTING PROVISIONS OF THE CBA

a. Normal Retirement
compulsory upon reaching 60 years of age or after 35 years of continuous service, whichever
comes first, provided that those who reach 55 or have 10 years of uninterrupted service may be
retired at employees or Compulsory option.

PETITIONER'S PROPOSAL

a. Normal Retirement

60 years old R.A. 7641

b. Optional Retirement

55 years old or 10 years of continuous service months basic salary for every year of continuous
service plus 1 day equivalent pay

UNIONS PROPOSAL

a. Normal Retirement

150 % of basic salary

b. Optional Retirement

50 % of basic salary commencing in the 5th year of service

SECRETARYS AWARD

a. Compulsory Retirement

An employee shall be compulsory retired upon reaching the age of sixty (60), or after thirty-five
(35) years of continuous service, whichever comes first.

An employee shall be entitled to a retirement benefit of month salary plus six (6) days multiplied
by the number of years in service.

b. Optional Retirement

At his option, an employee may retire upon reaching the age of fifty-five (55) or more if he has
served for at least five (5) years;

Provided, however, that any employee who is under fifty-five (55) years old may retire if he has
rendered at least ten (10) years of continuous service.

Such an employee shall be entitled to a retirement benefit of month salary plus three (3) days
multiplied by the number of years in service.
For purposes of computing compulsory sand optional retirement benefits and to align the current
retirement plan with the minimum standards of Art. 287 of the Labor Code, as amended by R.A.
7641, and Sec. 5 (5.2) of its implementing rules, 1/2 month salary means 22.5 days salary,
exclusive of leave conversion benefits.

Article 287 of the Labor Code, as amended by R.A. 7641, provides

Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established
in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any collective bargaining agreement and other agreements:
provided, however, That an employees retirement benefits under any collective bargaining and
other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement plan providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years 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 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.

Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall
mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive leaves x x x x (italics supplied).

The records fail to disclose that petitioner bothered to inform the Court how it arrived at 21.82
days as basis in the computation of the retirement pay. Anyway, it is clear in the law that the
term one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representing one-
twelfth (1/12) of the 13th month pay plus 5 days of service incentive leave. In this regard, there
is no reason for petitioner to complain that the retirement benefits granted by respondent
Secretary of Labor exceeded the requirements of law.

With respect to the additional six (6) days for compulsory retirement and three (3) days for
optional retirement, these may appear in excess of the requirements of the law and the demand of
respondent Union. Yet, it should be noted that the law merely establishes the minimum
retirement benefits as it recognizes that an employee may receive more under existing laws and
any CBA or other agreements. Besides, respondent Secretary of Labor had to break the
bargaining deadlock. After taking into account all the circumstances, public respondent found it
expedient to strike a reasonable middle ground between the parties respective positions. Unless
there are cogent reasons, and we do not find any, this Court will not alter, modify or reverse the
factual findings of the Secretary of Labor because, by reason of her official position, she is
considered to have acquired expertise as her jurisdiction is confined to specific matters.xxxvii
As we perceive it, by design or otherwise, petitioners arguments only scratch the surface, so to
speak. They do not extend beneath, as our studies of jurisprudence and the law disclose.
Otherwise, the baseless of the instant petition and the absence of any of discretion, much less
grave, would have earlier been exposed.

WHEREFORE, the petition is DISMISSED. The Order of 2 May 1994 of respondent Secretary
of Labor and her Resolution of 28 July 1994 are AFFIRMED.

SO ORDERED.

Padilla (Chairman), Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.

FIRST DIVISION

[G.R. No. 155214. February 13, 2004]

R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, petitioners, vs.


AVELINA P. LATAG, representing her deceased husband,
PEDRO M. LATAG, respondents.

DECISION
PANGANIBAN, J.:

Factual issues may be reviewed by the Court of Appeals (CA) when the findings of
fact of the National Labor Relations Commission (NLRC) conflict with those of the labor
arbiter. By the same token, this Court may review factual conclusions of the CA when
they are contrary to those of the NLRC or of the labor arbiter.

The Case

Before us is a Petition for Reviewxxxvii under Rule 45 of the Rules of Court, seeking to
nullify the June 3, 2002 Decisionxxxvii and the August 28, 2002 Resolution xxxvii of the Court
of Appeals in CA-GR SP No. 67998. The appellate court disposed as follows:
WHEREFORE, premises considered, the petition is hereby GRANTED. The
assailed Order of public respondent NLRC is SET ASIDE. The March 14, 2001 xxxvii
[D]ecision of the Labor Arbiter a quo is REINSTATED.xxxvii
The challenged Resolution denied petitioners Motion for Reconsideration.
The Factual Antecedents

The antecedents of the case are narrated by the CA as follows:


Pedro Latag was a regular employee x x x of La Mallorca Taxi since March 1,
1961. When La Mallorca ceased from business operations, [Latag] x x x transferred to
[petitioner] R & E Transport, Inc. x x x. He was receiving an average daily salary of five
hundred pesos (P500.00) as a taxi driver.
[Latag] got sick in January 1995 and was forced to apply for partial disability with
the SSS, which was granted. When he recovered, he reported for work in September
1998 but was no longer allowed to continue working on account of his old age.
Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his
retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December
21, 1998, [Latag] filed a case for payment of his retirement pay before the NLRC.
Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag,
substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of
[Latag], the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering x x x LA
MALLORCA TAXI, R & E TRANSPORT, INC. and their owner/chief executive
officer HONORIO ENRIQUEZ to jointly and severally pay MRS. AVELINA P.
LATAG the sum of P277,500.00 by way of retirement pay for her deceased
husband, PEDRO M. LATAG.
SO ORDERED.
On January 21, 2000, [Respondent Avelina Latag,] with her then counsel[,] was
invited to the office of [petitioners] counsel and was offered the amount of
P38,500.00[,] which she accepted. [Respondent] was also asked to sign an already
prepared quitclaim and release and a joint motion to dismiss the case.
After a day or two, [respondent] received a copy of the January 10, 2000
[D]ecision of the Labor Arbiter.
On January 24, 2000, [petitioners] filed the quitclaim and motion to dismiss.
Thereafter, on May 23, 2000, the Labor Arbiter issued an order, the relevant portion of
which states:
WHEREFORE, the decision stands and the Labor Arbitration Associate of
this Office is directed to prepare the Writ of Execution in due course.
SO ORDERED.
On January 21, 2000, [petitioners] interposed an appeal before the NLRC. On
March 14, 2001, the latter handed down a [D]ecision[,] the decretal portion of which
provides:
WHEREFORE, in view of the foregoing, respondents Appeal is hereby
DISMISSED for failure to post a cash or surety bond, as mandated by law.
SO ORDERED.
On April 10, 2001, [petitioners] filed a motion for reconsideration of the above
resolution. On September 28, 2001, the NLRC came out with the assailed [D]ecision,
which gave due course to the motion for reconsideration.xxxvii (Citations omitted)
Respondent appealed to the CA, contending that under Article 223 of the Labor
Code and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an employers
appeal of a decision involving monetary awards may be perfected only upon the posting
of an adequate cash or surety bond.

Ruling of the Court of Appeals

The CA held that the labor arbiters May 23, 2000 Order had referred to the earlier
January 10, 2000 Decision awarding respondent P277,500 as retirement benefit.
According to the appellate court, because petitioners appeal before the NLRC was
not accompanied by an appropriate cash or surety bond, such appeal was not
perfected. The CA thus ruled that the labor arbiters January 10, 2000 Decision and May
23, 2000 Order had already become final and executory.
Hence, this Petition. xxxvii

Issues

Petitioners submit the following issues for our consideration:


I
Whether or not the Court should respect the findings of fact [of] the NLRC as against
[those] of the labor arbiter.
II
Whether or not, in rendering judgment in favor of petitioners, the NLRC committed
grave abuse of discretion.
III
Whether or not private respondent violated the rule on forum-shopping.
IV
Whether or not the appeal of petitioners from the Order of the labor arbiter to the NLRC
involves [a] monetary award.xxxvii
In short, petitioners raise these issues: (1) whether the CA acted properly when it
overturned the NLRCs factual findings; (2) whether the rule on forum shopping was
violated; and (3) whether the labor arbiters Order of May 23, 2000 involved a monetary
award.
The Courts Ruling

The Petition is partly meritorious.

First Issue:
Factual Findings of the NLRC

Petitioners maintain that the CA erred in disregarding the factual findings of the
NLRC and in deciding to affirm those of the labor arbiter. Allegedly, the NLRC findings
were based on substantial evidence, while those of the labor arbiter were groundless.
Petitioners add that the appellate court should have refrained from tackling issues of
fact and, instead, limited itself to those of jurisdiction or grave abuse of discretion on the
part of the NLRC.
The power of the CA to review NLRC decisions via a Rule 65 petition is now a
settled issue. As early as St. Martin Funeral Homes v. NLRC,xxxvii we have definitively
ruled that the proper remedy to ask for the review of a decision of the NLRC is a special
civil action for certiorari under Rule 65 of the Rules of Court, xxxvii and that such petition
should be filed with the CA in strict observance of the doctrine on the hierarchy of
courts.xxxvii Moreover, it has already been explained that under Section 9 of Batas
Pambansa (BP) 129, as amended by Republic Act 7902, xxxvii the CA -- pursuant to the
exercise of its original jurisdiction over petitions for certiorari -- was specifically given the
power to pass upon the evidence, if and when necessary, to resolve factual issues. xxxvii
Likewise settled is the rule that when supported by substantial evidence, xxxvii factual
findings made by quasi-judicial and administrative bodies are accorded great respect
and even finality by the courts. These findings are not infallible, though; when there is a
showing that they were arrived at arbitrarily or in disregard of the evidence on record,
they may be examined by the courts.xxxvii Hence, when factual findings of the NLRC are
contrary to those of the labor arbiter, the evidentiary facts may be reviewed by the
appellate court.xxxvii Such is the situation in the present case; thus, the doors to a review
are open.xxxvii
The very same reason that behooved the CA to review the factual findings of the
NLRC impels this Court to take its own look at the findings of fact. Normally, the
Supreme Court is not a trier of facts.xxxvii However, since the findings of fact in the present
case are conflicting, xxxvii it waded through the records to find out if there was enough
basis for the appellate courts reversal of the NLRC Decision.

Number of Creditable Years


of Service for Retirement Benefits
Petitioners do not dispute the fact that the late Pedro M. Latag is entitled to
retirement benefits. Rather, the bone of contention is the number of years that he
should be credited with in computing those benefits. On the one hand, we have the
findings of the labor arbiter, xxxvii which the CA affirmed. According to those findings, the
23 years of employment of Pedro with La Mallorca Taxi must be added to his 14 years
with R & E Transport, Inc., for a total of 37 years. On the other, we also have the
findings of the NLRCxxxvii that Pedro must be credited only with his service to R & E
Transport, Inc., because the evidence shows that the aforementioned companies are
two different entities.
After a careful and painstaking review of the evidence on record, we support the
NLRCs findings. The labor arbiters conclusion -- that Mallorca Taxi and R & E
Transport, Inc., are one and the same entity -- is negated by the documentary evidence
presented by petitioners. Their evidencexxxvii sufficiently shows the following facts: 1) R &
E Transport, Inc., was established only in 1978; 2) Honorio Enriquez, its president, was
not a stockholder of La Mallorca Taxi; and 3) none of the stockholders of the latter
company hold stocks in the former. In the face of such evidence, which the NLRC
appreciated in its Decision, it seems that mere surmises and self-serving assertions of
Respondent Avelina Latag formed the bases for the labor arbiters conclusions as
follows:
While [Pedro M. Latag] claims that he worked as taxi driver since March 1961
since the days of the La Mallorca Taxi, which was later renamed R& E Transport, Inc.,
[petitioners] limit the employment period to 14 years.
Resolving this matter, we note [respondents] ID (Annex A, [Latag] position paper),
which appears to bear the signature of Miguel Enriquez on the front portion and the
date February 27, 1961 when [x x x Latag] started with the company. We also note an
SSS document (Annex C) which shows that the date of initial coverage of Pedro Latag,
with SSS No. 03-0772155, is February 1961.
Viewed against [petitioners] non-disclaimer [sic] that La Mallorca preceded R & E
Taxi, Inc.[;] x x x that both entities were/are owned by the Enriquez family, with
[petitioner] Honorio [Enriquez] as the latters President[; and] x x x that La Mallorca was
a different entity (page 2, [petitioners] position paper), we are of the conclusion that
[Latags] stint with the Enriquez family dated back since February 1961 and thus, he
should be entitled to retirement benefits for 37 years, as of the date of the filing of this
case on December 12, 1998.xxxvii
Furthermore, basic is the rule that the corporate veil may be pierced only if it
becomes a shield for fraud, illegality or inequity committed against a third person. xxxvii We
have thus cautioned against the inordinate application of this doctrine. In Philippine
National Bank v. Andrada Electric& Engineering Company,xxxvii we said:
x x x [A]ny application of the doctrine of piercing the corporate veil should be done
with caution. A court should be mindful of the milieu where it is to be applied. It must be
certain that the corporate fiction was misused to such an extent that injustice, fraud, or
crime was committed against another, in disregard of its rights. The wrongdoing must
be clearly and convincingly established; it cannot be presumed. Otherwise, an injustice
that was never unintended may result from an erroneous application.
xxx xxx xxx
The question of whether a corporation is a mere alter ego is one of fact. Piercing
the veil of corporate fiction may be allowed only if the following elements concur: (1)
control -- not mere stock control, but complete domination -- not only of finances, but of
policy and business practice in respect to the transaction attacked, must have been
such that the corporate entity as to this transaction had at the time no separate mind,
will or existence of its own; (2) such control must have been used by the defendant to
commit a fraud or a wrong to perpetuate the violation of a statutory or other positive
legal duty, or a dishonest and an unjust act in contravention of plaintiffs legal right; and
(3) the said control and breach of duty must have proximately caused the injury or
unjust loss complained of.xxxvii
Respondent has not shown by competent evidence that one taxi company had
stock control and complete domination over the other or vice versa. In fact, no evidence
was presented to show the alleged renaming of La Mallorca Taxi to R & E Transport,
Inc. The seven-year gap between the time the former closed shop and the date when
the latter came into being also casts doubt on any alleged intention of petitioners to
commit a wrong or to violate a statutory duty. This lacuna in the evidence compels us to
reverse the Decision of the CA affirming the labor arbiters finding of fact that the basis
for computing Pedros retirement pay should be 37 years, instead of only 14 years.

Validity of the Quitclaim


and Waiver

As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the appellate
court committed no error when it ruled that the document was invalid and could not bar
her from demanding the benefits legally due her husband. This is not say that all
quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate
workers rights and benefits, and look with disfavor upon quitclaims and waivers that
bargain these away.
Courts have stepped in to annul questionable transactions, especially where there
is clear proof that a waiver, for instance, was wangled from an unsuspecting or a gullible
person; or where the agreement or settlement was unconscionable on its face.xxxvii A quitclaim is
ineffective in barring recovery of the full measure of a workers rights, and the acceptance of
benefits therefrom does not amount to estoppel. xxxvii Moreover, a quitclaim in which the
consideration is scandalously low and inequitable cannot be an obstacle to the pursuit
of a workers legitimate claim. xxxvii
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E
Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, xxxvii
provides:
Art. 287. Retirement. - x x x
xxx xxx xxx
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty (60)
years 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 said
establishment, may 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.
Unless the parties provide for broader inclusions, the term one half-month salary
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves.
xxx xxx x x x (Italics supplied)
The rules implementing the New Retirement Law similarly provide the above-
mentioned formula for computing the one-half month salary. xxxvii Since Pedro was paid
according to the boundary system, he is not entitled to the 13 th monthxxxvii and the service
incentive pay;xxxvii hence, his retirement pay should be computed on the sole basis of his
salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those
sums in excess of the boundary or fee they pay to the owners or operators of their
vehicles.xxxvii Thus, the basis for computing their benefits should be the average daily
income. In this case, the CA found that Pedro was earning an average of five hundred
pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x
14 years of service equals P105,000. Compared with this amount, the P38,850 he
received, which represented just over one third of what was legally due him, was
unconscionable.

Second Issue:
Was There Forum Shopping?

Also assailed are the twin appeals that two different lawyers filed for respondent
before the CA. Petitioners argue that instead of accepting her explanation, the appellate
court should have dismissed the appeals outright for violating the rule on forum
shopping.
Forum shopping is the institution of two or more actions or proceedings grounded
on the same cause, on the supposition that one or the other court would render a
favorable disposition.xxxvii Such act is present when there is an identity of parties, rights or
causes of action, and reliefs sought in two or more pending cases. xxxvii It is usually
resorted to by a party against whom an adverse judgment or order has been issued in
one forum, in an attempt to seek and possibly to get a favorable opinion in another
forum, other than by an appeal or a special civil action for certiorari.xxxvii
We find, as the CAxxxvii did, that respondent has adequately explained why she had
filed two appeals before the appellate court. In the August 5, 2002 Affidavit xxxvii that she
attached as Annex A to her Compliance to Show Cause Order with Comment on
petitioners Motion for Reconsideration,xxxvii she averred that she had sought the services
of another counsel to file her Petition for certiorari before the CA. She did so after her
original counsel had asked for an extension of time to file the Petition because of time
constraints and a tremendous workload, only to discover later that the original counsel
had filed a similar Petition.
We cannot fault respondent for her tenacity. Besides, to disallow her appeal would
not be in keeping with the policy of labor laws xxxvii to shun highly technical procedural
laws in the higher interest of justice.

Third Issue:
Monetary Award

Petitioners contention is that the labor arbiters January 10, 2000 Decision was
supplanted by the Compromise Agreement that had preceded the formers official
releasexxxvii to, and receiptxxxvii by, the parties. It appears from the records that they had
entered into an Amicable Settlement on January 21, 2000; that based on that
settlement, respondent filed a Motion to Dismiss on January 24, 2000, before the labor
arbiter who officially released on the same day his Decision dated January 10, 2000;
that upon receipt of a copy thereof, respondent filed a Manifestation and Motion to Set
Aside the Motion to Dismiss; and that the labor arbiter subsequently calendared the
case for conference, held hearings thereon, and required the parties to exchange
positions -- by way of comments, replies and rejoinders -- after which he handed down
his May 23, 2000 Order.
Under the circumstances, the case was in effect reopened by the proceedings held
after respondent had filed her Manifestation and Motion to Set Aside the Motion to
Dismiss. This ruling is in accordance with the fourth paragraph of Section 2, Rule V of
the New Rules of Procedure of the NLRC,xxxvii which therefore correctly held as follows:
x x x Thus, the further hearings conducted thereafter, to determine the validity of
complainants manifestation and motion are but mute confirmation that indeed the 10
January 2000 decision in this case has not as yet attained finality. Finally, the appealed
order of 23 May 2000 itself declaring [that] the decision stands and the Labor
Arbitration Associate of this office is directed to prepare the Writ of Execution in due
course, obviously, is a conclusion that the decision in this case has been supplanted
and rendered functus officio by the herein parties acts. Thus, when the Labor Arbiter a
quo found in his appealed order that the amount of P38,850.00 is unconscionable
viewed against the amount awarded in the decision, the same became appealable
independently of the 10 January 2000 decision, which has not attained finality, in the
first place.xxxvii

We cannot concur, however, in petitioners other contention that the May 23, 2000
Order did not involve a monetary award. If the amicable settlement between the parties
had rendered the January 10, 2000 Decision functus oficio, then it follows that the
monetary award stated therein was reinstated -- by reference -- by the aforementioned
Order. The appeal from the latter should perforce have followed the procedural
requirements under Article 223 of the Labor Code.
As amended, this provision explicitly provides that an appeal from the labor arbiters
decision, award or order must be made within ten (10) calendar days from receipt of a
copy thereof by the party intending to appeal it; and, if the judgment involves a
monetary award, an appeal by the employer may be perfected only upon the posting of
a cash or surety bond. Such cash or bond must have been issued by a reputable
bonding company duly accredited by the NLRC in the amount equivalent to the
monetary award stated in the judgment. Sections 1, 3 and 6 of Rule VI of the New Rules
of Procedure of the NLRC implement this Article.
Indeed, this Court has repeatedly ruled that the perfection of an appeal in the
manner and within the period prescribed by law is not only mandatory but jurisdictional,
and the failure to perfect an appeal has the effect of rendering the judgment final and
executory.xxxvii Nonetheless, procedural lapses may be disregarded because of
fundamental considerations of substantial justice;xxxvii or because of the special
circumstances of the case combined with its legal merits or the amount and the issue
involved.xxxvii
The requirement to post a bond to perfect an appeal has also been relaxed in cases
when the amount of the award has not been included in the decision of the labor
arbiter.xxxvii Besides, substantial justice will be better served in the present case by
allowing petitioners appeal to be threshed out on the merits,xxxvii especially because of
serious errors in the factual conclusions of the labor arbiter as to the award of retirement
benefits.

WHEREFORE, this Petition is partly GRANTED. The Decision of the Court of


Appeals is MODIFIED by crediting Pedro M. Latag with 14 years of service.
Consequently, he is entitled to retirement pay, which is hereby computed at P105,000
less the P38,850 which has already been received by respondent, plus six (6) percent
interest thereon from December 21, 1998 until its full payment. No costs.
SO ORDERED

G.R. No. 74007 July 31, 1987

UNIVERSITY OF THE EAST, petitioner,


vs.
HON. MINISTER OF LABOR AND U.E. FACULTY ASSOCIATION, respondents.

GUTIERREZ, JR., J.:

This petition for certiorari seeks to nullify the order of the Minister of Labor and Employment directing
the University of the East to pay the faculty members concerned retirement benefits in accordance
with their collective bargaining agreement, in addition to the payment of separation pay according to
the Termination Pay Law.
On April 23, 1983 and May 4, 1983, the then president of the University of the East (UE) announced
the phase-out of the College of Secretarial Education and the High School Department respectively,
starting with the school year 1983-1984 on the grounds of lack of economic viability and financial
losses.

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.

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, The BLR conducted several conciliation proceedings but when no amicable
settlement was reached by the parties, the respondent Minister issued an order assuming
jurisdiction over the case and directing the BLR to receive evidence in connection with the dispute.

On September 25, 1985, the respondent Minister issued the questioned order. He ruled that the
phaseout of the two departments was arbitrary. According to the respondent Minister, nowhere in the
submissions of the petitioner was there any evidence or allegation that the departments concerned
had contributed the most to the university's financial losses and neither was there evidence that their
closure would reverse the trend. The public respondent further found violations of Articles 278 and
284 of the Labor Code because the petitioner did not serve the necessary one month termination
notice to the private respondent prior to the phase-out. Finally, the respondent Minister ruled that the
accrued 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 retirement benefits to those entitled under the CBA. The dispositive portion of the
questioned order provides:

WHEREFORE, respondent University of the East is hereby directed to pay all affected
faculty members of the College Secretarial Education and the High School Department a
separation pay of one month or one-half month pay for every year of service whichever is
higher plus one month compensation in addition to said separation pay in lieu of notice.

In addition to the termination pay, the University is likewise directed to pay retirement
benefits to all affected faculty members who, in accordance with the collective bargaining
agreement, are retireable prior to or at the time of the phase-out. (Rollo, p. 59).

The petitioner filed a motion for reconsideration but the same was denied on February 14, 1986.
Hence, it filed this petition raising the sole issue of whether or not the respondent Minister of Labor
and Employment committed grave abuse of discretion amounting to lack of jurisdiction in awarding
both retirement benefits and separation pay to the faculty members affected by the phase-out.

The petitioner maintains that there can only be one mode of termination of employment with respect
to one and the same employee. It argues that the faculty members of the phased out departments
cannot be considered retired and, therefore, entitled to retirement benefits and at the same time
retrenched with the right to separation pay. The petitioner cites the case of Soberano v. Hon.
Secretary of Labor, (99 SCRA 549) where this Court ruled that retirement from service is distinct
from dismissal or termination of employment and that retirements which are agreed upon by the
employer and the employee in their collective bargaining agreement are not dismissals as
contemplated under the termination pay law.
The public respondent argues that the faculty members affected by the phase-out were awarded
separation pay because the petitioner failed to show that their separation from employment was due
to a valid or authorized cause; while the award for retirement benefits was by virtue of the provisions
of the CBA, regardless of the cause of separation.

We rule for the respondents.

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
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).

The respondent Minister found that the petitioner failed to present evidence as to the university's
actual losses and what caused them. It, therefore, failed to satisfy the burden under Article 278(b) of
the Labor Code of proving that the termination of employees was for a valid or authorized cause, in
this case to prevent losses. No evidence was presented to show that it was the operation of the two
departments which resulted in financial losses. A complete statement of the university's finances
was not submitted. The 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

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 maintains that the award of separation pay pursuant to the Termination Pay Law
necessarily excludes retirement benefits.

In the case of Batangas Laguna Tayabas Bus Co. v. Court of Appeals (71 SCRA 470, 482-483) we
ruled:

But petitioner contends that private respondent can only avail himself of either separation
pay or retirement benefits but not both, citing in support thereof, the ruling of this Court in the
case of Cipriano v. San Miguel. (24 SCRA 703) The foregoing ruling cannot be made to
apply to the present suit because in said case it is so expressly provided in the Labor
Agreement that:

Regular employees who are separated from the service of the company for any
reason other than misconduct or voluntary resignation shall be entitled to either
100% of the benefits provided in Section 2, Article VIII hereof regardless of their
length of service in the company or to the severance pay provided by law, whichever
is the greater amount.

Thus in said case the employee was entitled to either the amount prescribed in the plan or
the severance pay provided by law whichever is the greater amount. In the present case,
there is nothing in the labor agreement entered into by petitioner with the Batangas
Transportation Employees Association of which private respondent is a member barring the
latter from recovering whatever benefits he is entitled to under the law in addition to the
gratuity benefits under the labor agreement between him and his employer. Neither is there
any provision in the Termination Pay Law (Republic Act No. 1052, as amended, by Republic
Act No. 1787) that an employee who receives his termination pay upon separation from the
service without cause is precluded from recovering any other benefits agreed upon by him
and his employer. In the absence of any such prohibition, both in the aforesaid Labor
Agreement and the Termination Pay law the private respondent has the right to recover from
the petitioner whatever benefits he is entitled to under the Termination Pay Law in addition to
other benefits conferred upon him by the aforesaid labor agreement.

Therefore, if there is no provision contained in the collective bargaining agreement to the effect that
benefits received under the Termination Pay Law shall preclude the employee from receiving other
benefits from the 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 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 in this case. Article VII-8.2 of the CBA provided:

Art. VIII-8.2. In case of unusual circumstances, such as decrease in enrollment, or the


closure of any College or Department of the University, etc., which may warrant the reduction
of the number of faculty members in any rank, faculty members whose services are
terminated shall be granted the retirement benefits, if they are entitled thereto, provided that
the services of those with less years of service shall be terminated first. Those who have not
yet met the requirements for retirement as to length of service will also be considered as
retired and will be given the retirement pay provided in the Rules on retirement of the
University based on the actual length of their services. This retirement privilege, however,
shall not apply to faculty members who may be transferred from one College or Department
to another of the University. (Rollo, p. 115).

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 college or department to another. There is no provision to the effect that teachers
who are forcibly dismissed are not entitled to retirement benefits if the MOLE awards them
separation pay. Furthermore, since the above provision has become in effect part of the petitioner's
policy, the same should be enforced separately from the provisions of the Termination Pay Law. As
we have ruled in Philippine Overseas Drilling and Oil Development Corporation v. Ministry of Labor,
(1 46 SCRA 79, 89):

Be that as it may, the finding of the respondent Director, that there was a company policy to
grant separation benefit or pay equivalent to one (1) month pay for every year of service to
employees who were similarly situated as private respondent, is supported by substantial
evidence which means "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion." (Ang Tibay v. CIR, 69 Phil. 635; Canete v. Workmen's
Compensation Commission, May 8, 1985, 136 SCRA 302, 208). Documents to this effect
were presented by private respondent at the hearing on January 24, 1980 as Annexes "D"
thru "D-7" of his position paper.

Having found that there was a company policy to that effect, respondent Director correctly
held that private respondent was legally entitled to a separation benefit or pay equivalent to
one (1) month pay for every year of service, notwithstanding the fact that he had voluntarily
resigned. He applied a basic principle permeating the labor Code and its Implementing Rules
and Regulations. (Tiangco v. Leogardo, Jr., May 16, 1983, 122 SCRA 267, 272-273;
Marcopper Mining Corporation v. Ople, June 11, 1981, 105 SCRA 75, 83; Oceanic
Pharmacal Employees Union (FFW) v. Inciong, November 7, 1979, 94 SCRA 270, 275).
After having served petitioner for ten years, private respondent deserved his separation
benefit or pay.

The case of Soberano v. Clave, supra, cited by herein petitioner does not apply to the case at bar. In
Soberano, the employees concerned either voluntarily retired or were retired upon reaching the age
of sixty pursuant to their collective bargaining agreement. We, thus, ruled that voluntary or
compulsory retirement under such an agreement cannot in any sense be deemed a dismissal
without cause as to justify the application of the Termination Pay Law. In the present case, the
herein faculty members were "retired" or considered "as retired" not because of the mutual
agreement of the employer and employee pursuant to the collective bargaining agreement but
against the employees' will and over their vehement charges of discrimination. It was the unilateral
act of the employer, petitioner herein, which "retired" then because they were supposed to be
responsible for the university' continued hemorrhaging. In the former case, the employees voluntarily
retired with benefits while in the latter, the faculty members were actually dismissed against their will
and on the basis of unproved causes. Both law and equity are on the side of the teachers.

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby DISMISSED for lack of merit.
The temporary restraining order issued on June 18, 1986 is LIFTED.

SO ORDERED.

FIRST DIVISION

[G.R. No. 87653. February 11, 1992.]

CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A. GASPAN and NICARDO P.


BLANQUISCO, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION AND OTIS ELEVATOR
COMPANY, Respondents.

Alejandro P. Ruiz, Jr., for Petitioners.

Abad, Leano & Associates for Private Respondent.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; SEPARATION PAY; DISTINGUISHED FROM RETIREMENT BENEFITS. —
Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code, which include
retrenchment, and is computed at least one month salary or at the rate of one-half month salary for every
year of service, whichever is higher. We have held that it is as statutory right designed to provide the
employee with the wherewithal during the period that he is looking for another employment. Retirement
benefits, where not mandated by law, may be granted by agreement of the employees and 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 support, and are a
form of reward for his loyalty and service to the employer.

2. ID.; ID.; IN THE ABSENCE OF PROHIBITION, EMPLOYEE WHO RECEIVED THEREOF MAY STILL RECEIVE
OTHER BENEFITS PROVIDED IN THEIR COLLECTIVE BARGAINING AGREEMENT; BLTB V. CA (71 SCRA 470)
CITED. — In Batangas Laguna Tayabas Bus Co. v. Court of Appeals, Justice Martin started his ponencia
thus: "The issue in this petition is whether an employee who has already received his separation pay can
still recover retirement benefits from his employer." Resolving the question affirmatively, the Court declared
in part: But petitioner contends that private respondent can only avail himself of either separation pay or
retirement benefits but not both, citing in support thereof, the ruling of this Court in the case of Cipriano v.
San Miguel Corporation. 24 SCRA 703. The foregoing ruling cannot be made to apply to the present suit
because in said case it is so expressly provided in the Labor Agreement that: "Regular employees who are
separated from the service of the company for any reason other than misconduct or voluntary resignation
shall be entitled to either 100% of the benefits provided in Section 2, Article VIII hereof regardless of their
length of service in the company or to the severance pay provided by law, whichever is the greater
amount." Thus, in said case the employee was entitled to either the amount prescribed in the plan or the
severance pay provided by law whichever is the greater amount. In the present case, there is nothing in the
labor agreement entered into by the petitioner with Batangas Transportation Employees Association of which
private respondent is a member barring the latter from recovering whatever benefits he is entitled to under
the law in addition to the gratuity benefits under the labor agreement between him and his employer.
Neither is there any provision in the Termination Pay Law (Republic Act No. 1052, as amended by Republic
Act No. 1787) that an employee who receives his termination pay upon separation from the service without
cause is precluded from recovering any other benefits agreed upon by him and his employer. In the absence
of any such prohibition, both in the aforesaid Labor Agreement and the Termination Pay Law the private
respondent has the right to recover from the petitioner whatever benefits he is entitled to under the
Termination pay Law in addition to the other benefits conferred upon him by the aforesaid labor agreement.

3. ID.; COLLECTIVE BARGAINING AGREEMENT; NATURE. — Bargaining is a process where the parties
discuss their demands and counter-demands and, after haggling, agree on what is essentially a compromise
reflecting the concessions mutually given by the parties to arrive at a common understanding. The resultant
contract provides for demandable rights, not withdrawable doles. When the employer signs a collective
bargaining agreement, it recognizes the rights of the workers and does not merely concede certain
privileges to them out of the goodness of its heart.

DECISION

CRUZ, J.:

The petitioners’ services were terminated on the ground of retrenchment, and they received separation pay
double that required by the Labor Code. Thereafter, they demanded retirement benefits, invoking the
Retirement Plan of the respondent company which they said was contractual rather than statutory. The
question eventually submitted to the labor authorities was, Having received the separation pay, were the
petitioners still entitled to the retirement benefits? The Labor Arbiter said they were, but the NLRC reversed
him. The issue is now before us for final resolution.

The petitioners were employees of private respondent Otis Elevator Company when they were informed of
the termination of their employment in line with the need of the company "to streamline its operations,
consolidate certain functions, reduce its manpower and cut non-essential spending." The separate letters
addressed to the petitioners advised them that —

In lieu of notice, you shall be paid one month’s equivalent salary, plus your regular allowances, counted
from such date, and you shall be covered with the normal benefits for that period. you shall also be paid
your earned and/or unused sick leave and vacation leave, including your pro-rata 13th month pay. And for
every year of service with the Company, you shall be paid one month’s basic salary or your retirement
benefits, if applicable to you, whichever is higher. 1

Accordingly, petitioners were paid their separation pay, computed as follows: chanrob1es virtual 1aw libra ry

Basic monthly Years in Separation

salary service Pay

Conrado M. Aquino P4,300 22 P94,600

Napoleon P. Aromin 10,350 22 227,700

Roberto A. Gaspan 3,800 19 72,200


Nicardo P. Blanquisco 8,800 13 110,500

The separation pay was based on Section 4, Article VII of the Collective Bargaining Agreement between the
company and its employees providing thus: chanrob1es virtual 1aw library

All employees in the bargaining unit separated without cause shall be granted separation pay of not less
than one (1) month’s latest basic rate for every year of service subject to the existing provisions of the
Retirement Plan.

In justifying their subsequent demand for retirement benefits before the Labor Arbiter, the petitioners
invoked Section 1, Article XIV, of the CBA in relation to Section 5.2, Article V, of the company’s Retirement
Plan, which provides: chanrob1es virtual 1aw library

The COMPANY shall maintain the present group retirement plan which is attached hereto as Annex "A" and
made an integral part of this contract. (Sec. 1, Art. XIV).

x x x

5.2 A Participant who is terminated from employment and who has rendered at least ten (10) years of
service shall be entitled to receive in lump sum all or a portion of his accrued benefit credits as of his date of
termination, in accordance with the following schedule: chanrob1es virtual 1aw library

Years of Service Vested Percentage

Upon Termination of Benefit Credits

Less than 10 years NIL

10 to less than 15 50%

15 to less than 20 75%

20 years and over 100%

They also cited the case of their co-employees Cleodeveo Soriano, Jr. and Patriciano Destajo, Jr., whose
services were terminated on the ground of redundancy in 1983 and 1982, respectively, and were both given
separation pay and retirement benefits.

For its part, the respondent company argued that separation ply and retirement benefits were mutually
exclusive; hence, the petitioners could no longer claim the latter after having received the former. chanrobles virtual lawlib rary

The Labor Arbiter ruled in favor of the petitioners mainly on the ground that the company was estopped
from withholding retirement benefits from them after having granted similar benefits to the employees
earlier mentioned. He held that a different treatment of the petitioners would constitute discrimination
because benefits accorded to other employees must likewise be extended to the rest who are similarly
situated." 2

In reversing the appealed decision, the NLRC declared that the case cited by the petitioners was exceptional
and could not be considered a precedent. Moreover —

The CBA provision is very clear that while the employees separated without cause are entitled to a
separation pay of not less than one (1) month’s latest basic rate for every year of service, this is made
merely subject to and not in addition to the existing provisions of Section 5.2 of the Article V of the
Retirement Plan. In other words, no logical inference can be made that the benefits under Section 5.2 of
Article V of the Retirement in addition to the one (1) month’s latest basic rate for every year of service. (sic)
Therefore, the offer of appellant perfectly fits well within the contemplation of the parties as envisaged in
the aforementioned provisions of the CBA and the Retirement Plan. 3

It is important at the outset to note the distinction between separation pay and retirement benefits.
Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code, which include
retrenchment, and is computed at least one month salary or at the rate of one-half month salary for every
year of service, whichever is higher. We have held that it is as statutory right designed to provide the
employee with the wherewithal during the period that he is looking for another employment. 4

Retirement benefits, where not mandated by law, may be granted by agreement of the employees and 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 support,
and are a form of reward for his loyalty and service to the employer. 5

It is on the basis of these distinctions that the petitioners claim to be entitled not only to the separation pay
they have already received but also to the retirement benefits provided for in the Retirement Plan of the
respondent company.

In rejecting this contention, the private respondent insists that the retirement benefits are subject to the
provisions of the Retirement Plan under Section 4 of the CBA. Moreover, under the Omnibus Implementing
Rules of the Labor Code, retired employees whose services are terminated shall receive the corresponding
retirement benefits or separation pay, whichever is higher. 6 This clearly indicates that one benefit should
exclude the other.

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
prescribed minimum period of ten years. chanrobles virtual lawlib rary

In Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 7 Justice Martin started his ponencia thus: "The
issue in this petition is whether an employee who has already received his separation pay can still recover
retirement benefits from his employer." Resolving the question affirmatively, the Court declared in part: chanrob1es virtual 1aw library

But petitioner contends that private respondent can only avail himself of either separation pay or retirement
benefits but not both, citing in support thereof, the ruling of this Court in the case of Cipriano v. San Miguel
Corporation. 24 SCRA 703. The foregoing ruling cannot be made to apply to the present suit because in said
case it is so expressly provided in the Labor Agreement that: jgc:chanrobles.com.ph

"Regular employees who are separated from the service of the company for any reason other than
misconduct or voluntary resignation shall be entitled to either 100% of the benefits provided in Section 2,
Article VIII hereof regardless of their length of service in the company or to the severance pay provided by
law, whichever is the greater amount." cralaw virtua1aw l ibrary

Thus, in said case the employee was entitled to either the amount prescribed in the plan or the severance
pay provided by law whichever is the greater amount. In the present case, there is nothing in the labor
agreement entered into by the petitioner with Batangas Transportation Employees Association of which
private respondent is a member barring the latter from recovering whatever benefits he is entitled to under
the law in addition to the gratuity benefits under the labor agreement between him and his employer.
Neither is there any provision in the Termination Pay Law (Republic Act No. 1052, as amended by Republic
Act No. 1787) that an employee who receives his termination pay upon separation from the service without
cause is precluded from recovering any other benefits agreed upon by him and his employer. In the absence
of any such prohibition, both in the aforesaid Labor Agreement and the Termination Pay Law the private
respondent has the right to recover from the petitioner whatever benefits he is entitled to under the
Termination pay Law in addition to the other benefits conferred upon him by the aforesaid labor agreement.
*

The same issue was squarely raised in University of the East v. Minister of Labor, 8 where the award of both
separation pay and retirement benefits to the employees was assailed by the employer on the ground that
"there could only be one mode of termination of employment with respect to one and the same employee."
Through Justice Gutierrez, the Court reaffirmed the above-quoted ruling in the BLTB Case and held as
follows:chanrobles law library

Therefore, if there is no provision contained in the collective bargaining agreement to the effect that benefits
received under the Termination Pay Law shall preclude the employee from receiving other benefits from the
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
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
in this case. **

We have carefully examined the record, and particularly the Collective Bargaining Agreement and the
Retirement Plan, and have found no specific prohibition against the payment of both benefits to the
employee.

Maintaining that the above cases have no application to the case at bar, the company calls attention to Book
VI, Section 14, Rule 1, of the Omnibus Rules Implementing the Labor Code, which provides as follows: chanrob1es virtual 1aw libra ry

(a) An employee who is retired pursuant to a bonafide retirement plan or in accordance with the applicable
individual or collective agreement or established employer policy shall be entitled to all the retirement
benefits provided therein or to termination pay equivalent to at least one-half month salary for every year of
service, whichever is higher, a fraction of at least six (6) months being considered as one whole year.

However, it overlooks sub-section (c) of the same Section 14, which clearly provides that: chanrob1es virtual 1aw library

(c) This Section shall apply where the employee retires at the age of sixty (60) years or more.

The private respondent has not shown that the petitioners were sixty years or older at the time of their
separation and therefore covered by the said section. Having itself invoked that provision, the company had
the obligation to prove that the petitioners cane under its terms.

The private respondent’s argument that the petitioners did not retire but were terminated in employment is.
in our view, plain nitpicking. It cannot be seriously contended that if an employee dies before he can retire
(at a time when he is already eligible for retirement), his beneficiaries are entitled to the retirement pay he
would have himself earned. The effective cause of separation is death, for which his heirs are entitled to
death benefits, but they are also paid retirement benefits as a consequence of such death.

This is not to say that one whose services are terminated not only because he has retired but for another
cause resulting in retirement is always entitled to both separation pay and retirement benefits. It should be
obvious that if, say, an employee is dismissed for dishonesty, he is not entitled to separation pay or, for that
matter, even retirement benefits. But in the case before us, the petitioners have not been separated for
cause, in the sense that they have committed an offense warranting their removal. They were separated for
reasons not imputable to them, as the letter above quoted categorically declared: chanrob1es virtual 1aw l ibrary

Finally, we want to assure you that your retrenchment is through no fault of your own but mainly due to
prevention of further losses. In behalf of the Company, we express our sincere appreciation for your services
and loyalty and wish you every success in your future undertakings. 9

In arriving at our conclusion, we are guided by the principle that any doubt concerning the rights of labor
should be resolved in its favor, pursuant to the social justice policy. The Court feels that if the private
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
Bargaining Agreement so as to remove all possible ambiguity regarding this matter.

We may presume that the counsel of the respondent company was aware of the prevailing doctrine
embodied in the cases earlier cited. Knowing this, he should have made it a point to categorically provide in
the Retirement Plan and the CBA that an employee who had received separation pay would no longer be
entitled to retirement benefits. Or to put it more plainly, collection of retirement benefits was prohibited if
the employee had already received separation pay. chanrobles virtual lawlib rary

The private respondent argues that it had paid the petitioners more than what the law requires by giving
them separation pay at the rate of one month instead of one-half month for every year of service. The
suggestion is that the company had been more than liberal and that to require it to pay the retirement
benefits as well would be a strain on its benevolence.

The petitioners are not pleading for generosity but demanding their rights. These rights are embodied in the
Collective Bargaining Agreement, which was the result of negotiations between the company and the
employees.

Bargaining is a process where the parties discuss their demands and counter-demands and, after haggling,
agree on what is essentially a compromise reflecting the concessions mutually given by the parties to arrive
at a common understanding. The resultant contract provides for demandable rights, not withdrawable doles.
When the employer signs a collective bargaining agreement, it recognizes the rights of the workers and does
not merely concede certain privileges to them out of the goodness of its heart.

The private respondent asserts in its statement of facts that it gave the petitioners a choice between
accepting the separation pay and the retirement benefits and they opted for the former. This is not borne by
the record. In its letter advising the petitioners of the termination of their services, the company merely
informed them that they would be given separation pay or retirement benefits, whichever was higher. The
petitioners received the separation pay because they felt they were entitled thereto but they lid not thereby
waive their rights to the retirement benefits.

We realize that the retirement benefits of the petitioners come up to a substantial figure, considering their
respective lengths of service with the company. These benefits, added to the separation pay they have
already received, make up a tidy sum indeed. The point, however, is that the petitioners are entitled to this
amount under the provisions of the CBA and the Retirement plan freely entered into by the parties. These
instruments are binding agreements, not being contrary to law, morals, good customs, public order or public
policy, and must therefore be upheld. chanrobles law library

WHEREFORE, the petition is GRANTED. The decision of the respondent National Labor Relations Board is
REVERSED and a new judgment is hereby rendered directing the payment of retirement benefits to the
petitioners in accordance with the Retirement Plan of the respondent company and its Collective Bargaining
Agreement with its employees.

SO ORDERED.

Narvasa, C.J., Griño-Aquino and Medialdea, JJ., concur.