Llora Motors

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Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
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 Lawoffice 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, premisesall considered, we hereby order the respondentsto pay complainantsPrimitivo Alviar, asfollows:
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'sfees
P16,164.87 Total award
and to pay complainant legal interest on the total award to be compounded annually after ten (10) daysfrom receipt of thisdecision.
Respondentsare finally ordered to pay complainant through thisRegional Arbitration Branch Office or present proof of compliance with
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thisorder within ten (10) daysfrom 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 Arbiter and ordering dismissal of the
appeal. A Motion for Reconsideration wasdenied on 28 March 1988.
6
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. ThisCourt hasheld in the past that a formal or trial-type hearing isnot at all times
and in all instancesessential 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 benefitsashe may have earned under existing lawsand
any collective bargaining or other agreement. (Emphasissupplied)
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 employeesover 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
conditionsof employment which providesfor retirement at an older age, an employee may be retired upon reaching the age of sixty (60)
years. (Emphasissupplied)
where an additional retirement plan hasbeen established by a collective bargaining agreement, or other applicable agreement (or, under Section 14, an
"established employer policy"), but such plan failsto 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
wasperhapsdue to the Labor Arbiter'sciting Section 14 of Implementing Rule I, which readsasfollows:
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) monthsbeing considered asone 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. (Emphasissupplied)
Section 14 (a) refersto "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 isimportant to keep the two (2) conceptsof "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
G.R. No. 82895 1/28/2014
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 fromthe date of the effectivity of the Labor Code. That isitscontention. 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 fromthe time private respondent started working with petitioner since respondent employee's
application for retirement benefitsand the company'sapproval of the same make expressmention of Sections13 and 14, rule I, BookVI
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
(Emphasissupplied)
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 basisor any "established employer policy" that contemplated the grant of such retirement benefits.
Clearly, there wasin the instant case no consensual basisfro 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.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes
1 Rollo, pp. 55-58.
2 Id., p. 15.
3 Id., pp. 31-40.
4 Id., pp. 16-22.
5 Id., pp. 42-46.
6 Id., p. 67.
7 Richardsv. Asoy, 152 SCRA 45 (1987).
8 Tajonera v. Lamaroza, 110 SCRa 438 (1981).
9 Rollo, pp. 23-30.
10 Id., pp. 47-53.
11 Id., pp. 59-66.
12 See Social Security Act, Republic Act No. 1161 (effective 18 June 1954), asamended by a whole seriesof Republic Acts,
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Presidential Decreesand Executive Orders: Section 12-B (Retirement Benefits); 13 (Death Benefits); 13-A (Permanent Disability
Benefits); 13-B (Funeral Benefit); 14 (SicknessBenefit); and 14-A (Maternity Leave Benefit).
13 See Article 283 of the Labor Code dealing with"
1. installation of labor saving devices;
2. redundancy;
3.retrenchment to prevent losses;
4. closing or cessation of operation of the company; and Article 284 referring to
5.termination of servicesby reason of disease; and Section 4 (b), Rule I, bookVI of the Implementing Rulesand Regulationsrelating to
situations
6. where the reinstatement of the employee to hisformer position isrequired but isnot possible because the company hasclosed or
ceased operationsor hisformer position no longer existsat the time of reinstatement (for reasonsnot attributable to the fault of the
employer).
14 91 SCRA 265 (1975).
15 91 SCRA at 268-269.
16 That is, in addition to the retirement benefitsprovided by the Social Security Act.
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SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 72971 October 15, 1990
ABAQUIN SECURITY AND DETECTIVE AGENCY, INC., petitioner,
vs.
HON. DIEGO P. ATIENZA, HON. CLETO T. VILLATUYA, HON. GERONIMO Q. CUADRA,
NATIONAL LABOR RELATIONS COMMISSION and ANTONIO B. JOSE, respondents.
D. P. Mercado & Associates for petitioner.

FERNAN, C.J.:
The instant petition for certiorari raisesprimarily the issue of whether or not a security agency may be required to pay retirement or termination benefitsin
favor of itssecurity guard who voluntarily resigned, in the absence of an agreement, contract or management policy regarding such benefits.
Petitioner security agency employed private respondent Antonio B. Jose asa security guard on August 29, 1959. Almost twenty-five (25) yearslater or on
April 12, 1984, Jose voluntarily resigned in view of his failing health and his desire to withdraw his cash deposits with petitioner. He was then sixty-one
(61) yearsold. After Jose had executed a certificate of discharge acknowledging full payment of hisservicesaswell asa quitclaim of all demandsagainst
petitioner, the latter, relying on the absence of any management policy or agreement between them regarding retirement or termination benefits, paid
Jose only hiscash deposits. Feeling aggrieved, Jose filed before the Arbitration Branch of the National Labor RelationsCommission (NLRC) a complaint
against petitioner for separation pay, or in lieu thereof, gratuity benefits equal to one-half month salary for every year of service and other benefits
provided for by law.
Labor Arbiter Domingo V. del Rosario dismissed Jose's complaint on the following grounds: (a) an employee's enjoyment of retirement benefits or
separation pay under Article 288 of the Labor Code and Sections 13 and 14 (a), Rule I, Book VI of the Rules and Regulations Implementing the Labor
Code issubject to the existence of a retirement plan, individual or collective agreement or established management policy; (b) Jose cannot claim under
said implementing rulesbenefitswhich are not granted by the Code, otherwise the then Ministry of Labor would be guilty of legislative usurpation; and (c)
Jose wasput in estoppel when he executed the certificate of discharge and when he voluntarily resigned.
1
On appeal, the NLRC in its decision of September 30, 1985, set aside the labor arbiter's decision, disposing, thus:
WHEREFORE, premises considered, the appealed decision is hereby SET ASIDE and another one entered
ordering respondent-appellee to pay complainant-appellant (herein private respondent Jose) his retirement or
termination pay as provided for under existing laws and rules in an amount equivalent to one-half () month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Consequently, respondent-appellee (herein petitioner) is directed to show proof of immediate compliance to
(sic) the mandate of this Decision after ten (10) days from receipt hereof.
SO ORDERED.
2
The NLRC construed Section 14 (a) of Rule I, Book VI of the Implementing Rules and Regulations of the Labor Code in
relation to the second paragraph of Article 288 as entitling a retiring employee to termination pay of one-half () month for
every year of service in the absence of any agreement or employer policy on retirement pay. It ruled that said Section 14 (a)
was intended "to give full effect and application to Article 288 of the Labor Code (which) covers all retiring employees,
regardless of the existence of any agreement, company policy or otherwise."
3
It added that under the principle of equity, it is
only just and fair to reward retiring employees for their long years of faithful service to their employer. Moreover, the NLRC
said that Jose's execution of the certificate of discharge "never implied (his) abdication" or waiver of the benefits due him
under existing laws on account of the principle that labor standards are not subject to waiver or any agreement which would
deprive the workingman of said benefits.
Hence, the instant petition for certiorari raising the issues of whether or not a 61-year-old security guard who voluntarily
resigned is entitled to retirement benefits under Article 288 of the Labor Code and whether or not Sections 13 and 14 (a),
Rule I, Book VI of the Rules and Regulations Implementing the Labor Code can alter, repeal or modify said Article 288.
The Court dismissed the instant petition for lack of merit on December 16, 1985.
4
Expectedly, petitioner filed a motion for
reconsideration reiterating as grounds therefor the two issues it had raised in the petition and, in addition, the grounds that
the aforesaid sections of the implementing rules may not be the sources of a privilege in favor of private respondent and that
equity demands that it "be not unduly burdened in paying retirement benefits to a former employee."
5
Respondents having filed their comments on the motion for reconsideration, the Court reconsidered the dismissal resolution
in view of the fact that this case requires the interpretation of Article 288 of the Labor Code and said Sections 13 and 14 (a)
of Implementing Rule I.
6
The legal provisions involved in this petition provide as follows:
Art, 288. * 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 benefitsashe may have earned under existing lawsand
any collective bargaining or other agreement. (Labor Code)
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Sec. 13. Retirement. In the absence of any collective bargaining agreement or other applicable agreement concerning terms and
conditionsof employment which providesfor retirement at an older age, an employee may be retired upon reaching the age of sixty (60)
years.
Sec. 14. Retirement benefits. 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 at least to one-half month salary for every year of service, whichever is higher, a fraction of at
least six (6) monthsbeing considered asone whole year.
7
Construing these provisions in relation to the same issue presented in this petition, this Court in the case of Llora Motors,
Inc., and/ or Constantino Carlota, Jr. vs. Hon. Franklin Drilon, et al.,
8
clarified that Article 288 (now 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.
9
Llora went further to elucidate on the import of Sections 13 and 14 of Implementing Rule I to end the confusion between the
concepts "retirement benefits" and "termination pay" inadvertently engendered by the phraseology of Section 14, which deals
with both. Thus:
... 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. Termination pay where properly due
and payable under some applicable provision of the Labor Code or under Section 4 (b) of Implementing Rule I,
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 I, 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 up by prior agreement with the employer. ... 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. ...
10
Based on the foregoing, there being no individual or collective agreement between the parties or established employer's
policy regarding retirement benefits, petitioner's resistance to private respondent's claim therefor is legally defensible.
However, it must be noted that the complaint filed by private respondent prayed primarily for termination benefits and only in
the alternative for gratuity benefits. In fact, the dispositive portion of the decision. under review ordered petitioner to pay
private respondent "retirement or termination pay". In so ordering, the NLRC reasoned:
... The implementing rule particularly applicable to paragraph No. 2 Art. 288 is Section 14 (a) of Rule I, Book
VI, of the Implementing Rules and Regulations of the Labor Code. This rule provides retirement benefits to
employees who have reached the retirement age, in an amount equivalent either to a bona-fide retirement plan,
a CBA or individual agreement, an established employer policy, or in the absence of the preceeding three
practices, a termination pay of 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. ...
11
Taken in the light of our pronouncements in Llora, the incorrectness of the interpretation given by the NLRC to Article 288 in
relation to Section 14 (a) of Implementing Rule I is at once apparent. "While it is true that the contemporaneous construction
placed upon a statute by executive officers whose duty is to enforce it should be given great weight by the courts, still if such
construction is so erroneous, as in the instant case, the same must be declared as null and void. It is the role of the
Judiciary to refine and, when necessary, correct constitutional (and/or statutory) interpretation, in the context of the
interactions of the three branches of the government, almost always in situations where some agency of the State has
engaged in action that stems ultimately from some legitimate area of governmental power (The Supreme Court in Modern
Role, C. B. Swisher, 1958, p. 36)."
12
We hasten to add, lest a misimpression is created, that we are here setting aside as
null and void merely the interpretation given in the instant case by the NLRC to Section 14(a) of Implementing Rule I in
relation to Article 288 of the Labor Code, and not Section 14(a) itself which had been given by this Court in Llora supra a
construction that is in harmony and consistent with Article 288 of the Labor Code.
Be that as it may, we are not prepared to altogether set aside the award of termination pay, considering that there exists
another legal basis therefor. As keenly observed by the Solicitor General:
It may not be improper to state that respondent Jose should be paid termination pay for reasons analogous to
those contemplated under Article 285 of the Labor Code, which provides:
Art. 285. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-
employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary
or to one half () month salary for every year of service, whichever is greater, a fraction of at least
six (6) months being considered as one (1) whole year.
It is true that respondent Jose voluntarily resigned but he resigned because, among others, he suffered from ill
health. When petitioner accepted his resignation, it terminated his services partly for that reason.
13
Under Article 245 of the Labor Code, "(s)ecurity guards and other personnel employed for the protection and security of the
person, properties and premises of the employer shall not be eligible for membership in any labor organization." As such,
they are a special class of employees in that they are deprived of the right to ventilate demands collectively. They are subject
to terms and conditions of employment circumscribed by employment contracts imposed on them by their employer. While
they may make particular individual demands in said contracts, more often than not, they fail to do so at the time of hiring.
Hence, their only refuge is the liberality of the law. Private respondent, who was in the employ of petitioner for almost a
quarter of a century and whose reason for terminating his employment was his failing health, deserves the full measure of the
law's benevolence.
WHEREFORE, the petition is DISMISSED. The monetary award in favor of private respondent Antonio B. Jose is understood
G.R. No. 72971 1/28/2014
to be in the concept of termination pay, rather than retirement benefits.
This decision is immediately executory.
SO ORDERED.
Gutierrez, Jr., Bidin and Cortes, JJ., concur.
Feliciano, J., is on leave.

Footnotes
1 Rollo, pp. 18-21.
2 Rollo, pp. 16-17.
3 Rollo, p. 16.
4 Rollo, p. 22.
5 Rollo, p. 29.
6 Rollo, p. 115.
* Renumbered Art. 287 in subsequent amendments.
7 Rule 1, BookVI, Rulesand RegulationsImplementing the Labor Code.
8 G.R. No. 82895, November 7, 1989.
9 p. 7, Decision, underscoring in the original.
10 pp. 10-11, Decision, emphasisin the original.
11 Rollo, p. 15.
12 Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, G.R. No. 52415, October 23, 1984, 132 SCRA 663.
13 Rollo, p. 107.
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G.R. No. 72971 1/28/2014

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SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 156934 March 16, 2007
ALPHA C. JACULBE, Petitioner,
vs.
SILLIMAN UNIVERSITY,Respondent.
D E C I S I O N
CORONA, J.:
Petitioner comes to us via this petition for review on certiorari
1
to challenge a decision
2
of the Court of
Appeals (CA) and the resolution
3
affirming it.
Sometime in 1958, petitioner began working for respondents 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 respondents 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 petitioners impending retirement.
A brief exchange of letters
7
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 reversed the labor arbiters decision and dismissed the complaint for lack of merit.
11
The NLRC likewise denied petitioners motion for reconsideration.
12
In the assailed decision and
resolution, the CA affirmed the NLRC.
Hence, this petition.
The issues for our consideration are:
1) did respondents 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 respondents
G.R. No. 156934 1/28/2014
http://www.lawphil.net/judjuris/juri2007/mar2007/gr_156934_2007.html 8 / 25
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 respondents 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 respondents 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 latters 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 employees 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 3% 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 Universitys 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 CAs theory that petitioners "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, respondents 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 1970
18
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.
G.R. No. 156934 1/28/2014
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
latters imposition of the early retirement age in its retirement plan, opting instead to harp on petitioners
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 respondents 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 employers 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.nt 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.
SO ORDERED.
RENATO C. CORONA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
ADOLFO S. AZCUNA
Asscociate Justice
CANCIO C. GARCIA
Associate Justice
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision
had been reached in consultation before the case was assigned to the writer of the opinion of the Courts
Division.
REYNATO S. PUNO
Chief Justice
Foonotes
1
Under Rule 45 of the Rules of Court.
2
Dated July 11, 2002 in CA-G.R. SP No. 50445, penned by Associate Justice Amelita G.
Tolentino and concurred in by Associate Justices Ruben T. Reyes (now Presiding Justice) and
G.R. No. 156934 1/28/2014
Renato C. Dacudao of the Eighth Division of the Court of Appeals; rollo, pp. 149-158.
3
Dated January 20, 2003 in CA-G.R. SP No. 50445, penned by Associate Justice Amelita G.
Tolentino and concurred in by Associate Justices Ruben T. Reyes (now Presiding Justice) and
Renato C. Dacudao of the Eighth Division of the Court of Appeals; id., p. 197.
4
Id., p. 15.
5
Id., pp. 60-61.
6
Id., p. 135.
7
Id., pp. 62-70.
8
Social Security System.
9
Rollo, pp. 55-59.
10
Id., pp. 88-97.
11
Id., pp. 116-120.
12
Id., pp. 129-132.
13
Pantranco North Express, Inc. v. NLRC, 328 Phil. 470 (1996).
14
Supra note 2, at 155-156.
15
Rollo, p. 134.
16
Id., p. 135.
17
Supra note 2, at 156.
18
Rollo, p. 133.
19
Soberano v. Clave, G.R. Nos. L-43753-56 & L-50991, 29 August 1980, 99 SCRA 549.
20
Id.
21
Mercury Drug Co., Inc. v. CIR, 155 Phil. 636 (1974).
22
Id., pp. 79-80.
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G.R. No. 156934 1/28/2014

Supreme Court
Manila

THIRD DIVISION

ALBERTO P. OXALES, G.R. No. 152991
Petitioner,
Present:

YNARES-SANTIAGO, J.,
Chairperson,
- versus - QUISUMBING*
AUSTRIA-MARTINEZ,
AZCUNA,** and
REYES, JJ.

Promulgated:
UNITED LABORATORIES, INC.,
Respondent. July 21, 2008

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

D E C I S I O N

REYES, R.T., J.:

HOW should a private company retirement plan for employees be implemented vis--vis The Retirement Pay Law (Republic Act No.
7641)?

Papaano ipapatupad ang isang plano ng pribadong kompanya para sa pagreretiro ng mga empleyado sa harap ng
Batas ng Pagbabayad sa Pagreretiro (Batas Republika Blg. 7641)?
G.R. No. 152991 1/28/2014
http://sc.judiciary.gov.ph/jurisprudence/2008/july2008/152991.htm 12 / 25

We address the concern in this appeal by certiorari of the Decision[1] of the Court of Appeals (CA) affirming the Resolution[2]
and Decision[3] of the Labor Arbiter and the National Labor Relations Commission (NLRC), respectively, dismissing petitioner
Alberto P. Oxales complaint for additional retirement benefits, recovery of the cash equivalent of his unused sick leaves, damages,
and attorneys fees, against respondent United Laboratories, Inc. (UNILAB).

The Facts

Sometime in 1959, UNILAB established the United Retirement Plan (URP).[4] The plan is a comprehensive retirement program
aimed at providing for retirement, resignation, disability, and death benefits of its members. An employee of UNILAB becomes a
member of the URP upon his regularization in the company. The URP mandates the compulsory retirement of any member-employee
who reaches the age of 60.

Both UNILAB and the employee contribute to the URP. On one hand, UNILAB provides for the account of the employee an actuarially-
determined amount to Trust Fund A. On the other hand, the employee chips in 2% of his monthly salary to Trust Fund B. Upon
retirement, the employee gets both amounts standing in his name in Trust Fund A and Trust Fund B.

As retirement benefits, the employee receives (1) from Trust Fund A a lump sum of 1 months pay per year of service based on the
members last or terminal basic monthly salary,[5] and (2) whatever the employee has contributed to Trust Fund B, together with the
income minus any losses incurred. The URP excludes commissions, overtime, bonuses, or extra compensations in the computation
of the basic salary for purposes of retirement.

Oxales joined UNILAB on September 1, 1968. He was compulsorily retired by UNILAB when he reached his 60th birthday on
September 7, 1994, after having rendered service of twenty-five (25) years, eleven (11) months, and six (6) days. He was then
Director of Manufacturing Services Group.

In computing the retirement benefits of Oxales based on the 1 months for every year of service under the URP, UNILAB took into
account only his basic monthly salary. It did not include as part of the salary base the permanent and regular bonuses, reasonable
value of food allowances, 1/12 of the 13th month pay, and the cash equivalent of service incentive leave.

Thus, Oxales received from Trust Fund A P1,599,179.00, instead of P4,260,255.70. He also received P176,313.06, instead of
P456,039.20 as cash equivalent of his unused sick leaves. Lastly, he received P397,738.33 from his contributions to Trust Fund B. In
sum, Oxales received the total amount of P2,173,230.39 as his retirement benefits.

On August 21, 1997, Oxales wrote UNILAB, claiming that he should have been paid P1,775,907.23 more in retirement pay and
unused leave credits. He insisted that his bonuses, allowances and 13th month pay should have been factored in the computation of
his retirement benefits.[6]

On September 9, 1997, UNILAB wrote[7] back and reminded Oxales about the provision of the URP excluding any commissions,
overtime, bonuses or extra compensations in the computation of the basic salary of the retiring employee.

Disgruntled, Oxales filed a complaint with the Labor Arbiter for (1) the correct computation of his retirement benefits, (2) recovery
of the cash equivalent of his unused sick leaves, (3) damages, and (4) attorneys fees. He argued that in the computation of his
retirement benefits, UNILAB should have included in his basic pay the following, to wit: (a) cash equivalent of not more than five (5)
days service incentive leave; (b) 1/12th of 13th month pay; and (c) all other benefits he has been receiving.

Efforts were exerted for a possible amicable settlement. As this proved futile, the parties were required to submit their respective
pleadings and position papers.

G.R. No. 152991 1/28/2014
Labor Arbiter, NLRC and CA Dispositions

On June 30, 1998, Labor Arbiter Romulus A. Protasio rendered a decision dismissing the complaint, thus:

WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant complaint for lack of merit.

SO ORDERED.[8]

The Labor Arbiter held that the URP clearly excludes commission, overtime, bonuses, or other extra compensation. Hence, the
benefits asked by Oxales to be included in the computation of his retirement benefits should be excluded.[9]

The Arbiter also held that the inclusion of the fringe benefits claimed by Oxales would put UNILAB in violation of the terms and
conditions set forth by the Bureau of Internal Revenue (BIR) when it approved the URP as a tax-qualified plan. More, any overpayment
of benefits would adversely affect the actuarial soundness of the plan. It would also expose the trustees of the URP to liabilities and
prejudice the other employees. Worse, the BIR might even withdraw the tax exemption granted to the URP.[10] Lastly, the Labor
Arbiter opined that the URP precludes the application of the provisions of R.A. No. 7641.[11]

Oxales appealed to the NLRC. On February 8, 1999, the NLRC affirmed the decision of the Labor Arbiter, disposing as follows:

WHEREFORE, in view thereof, the instant appeal is hereby dismissed for lack of merit and the appealed decision is ordered
affirmed.

SO ORDERED.[12]

The NLRC ruled that the interpretation by Oxales of R.A. No. 7641 is selective. He only culled the provisions that are beneficial to him,
putting in grave doubt the sincerity of his motives. For instance, he claims that the value of the food benefits and other allowances
should be included in his monthly salary as multiplicand to the number of his years of service with UNILAB. At the same time,
however, he does not intend to reduce the 1 month salary as multiplier under the URP to under R.A. No. 7641.[13]

The NLRC agreed with the Labor Arbiter that the provisions of R.A. No. 7641 do not apply in view of the URP. The NLRC also
took into account the fact that the benefits granted to Oxales by virtue of the URP was even higher than what R.A. No. 7641
requires.[14]

His motion for reconsideration having been denied, Oxales filed with the CA a petition for certiorari under Rule 65.

In a decision promulgated on April 12, 2002, the CA dismissed the petition. The CA ruled that the petition of Oxales calls for a review
of the factual findings of the Labor Arbiter as affirmed by the NLRC. It is not the normal function of the CA in a special civil action for
certiorari to inquire into the correctness of the evaluation of the evidence by the Labor Arbiter. Its authority is confined only to issues of
jurisdiction or grave abuse of discretion.[15]

Just like the Labor Arbiter and the NLRC, the CA also held that R.A. No. 7641 is applicable only in the absence of a retirement plan or
agreement providing for the retirement benefits of employees in an establishment.[16]

Finally, the CA denied the claim of Oxales to moral and exemplary damages. According to the appellate court, he failed to prove the
presence of bad faith or fraud on the part of UNILAB. His mere allegations of having suffered sleepless nights, serious anxiety, and
G.R. No. 152991 1/28/2014
mental anguish are not enough. No premium should be placed on the right to litigate.[17]

Left with no other option, Oxales filed the present recourse under Rule 45 of the 1997 Rules of Civil Procedure.[18]

Issues

In his Memorandum,[19] Oxales raises the following issues for Our disposition, to wit:

1. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT ACCORDING TO PREVAILING
JURISPRUDENCE, SUCH ERRORS IN THE COMPUTATION OF RETIREMENT BENEFITS OF PETITIONER SHOULD BE
CORRECTED IN A SPECIAL ACTION FOR CERTIORARI;

2. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT THE NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN INCORRECTLY INTERPRETING THE URP TO EXCLUDE SEVERAL REMUNERATIONS FROM THE
SAID SALARY BASE;

3. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN
TOTALLY IGNORING THE ISSUE AND IN NOT FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN
INCORRECTLY INTERPRETING THE URP TO EXCLUDE PERMANENT AND REGULAR ALLOWANCES FROM THE SALARY
BASE FOR COMPUTING RETIREMENT BENEFITS OF PETITIONER;

4. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT THE NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN INCORRECTLY INTERPRETING THE URP TO EXCLUDE PERMANENT AND REGULAR
REMUNERATIONS MISLABELED AS BONUSES FROM THE SALARY BASE FOR COMPUTING THE RETIREMENT BENEFITS
OF THE PETITIONER;

5. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN INCORRECTLY INTERPRETING THE URP TO EXCLUDE ONE TWELFTH (1/12th) OF THE STATUTORY
THIRTEENTH MONTH PAY FROM THE SALARY BASE FOR COMPUTING RETIREMENT BENEFITS;

6. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN THE INTERPRETATION OF R.A. NO. 7641 WHEN IT
CONCLUDED THAT THE SAID LAW IS APPLICABLE ONLY IN THE ABSENCE OF RETIREMENT PLAN OR AGREEMENT
PROVIDING FOR THE RETIREMENT BENEFITS OF EMPLOYEES IN AN ESTABLISHMENT;

7. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT FINDING THAT THE DEFINITION OF SALARY
UNDER THE IMPLEMENTING RULES OF R.A. NO. 7641 SHOULD BE INTERPRETED TO INCLUDE THE PERMANENT AND
REGULAR REMUNERATIONS OF PETITIONER IN THE SALARY BASE FOR COMPUTING RETIREMENT BENEFITS;

8. WHETHER OR NOT THE LABOR ARBITER, THE NLRC, AND COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION IN IGNORING AND NOT RESOLVING THE ISSUES REGARDING PETITIONERS UNPAID CASH EQUIVALENT OF
THE UNUSED SICK LEAVE CREDITS;

9. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT THE NLRC GRAVELY ABUSED
ITS
DISCRETION IN ITS FAILURE TO PROPERLY INTERPRET THE URP IN DETERMINING THE EMPLOYMENT PERIOD OF
PETITIONER FOR THE PURPOSE OF COMPUTING RETIREMENT BENEFITS;

10. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT THE NLRC COMMITTED GRAVE
ABUSE OF DISCRETION IN NOT REINSTATING THE MEDICAL RETIREMENT BENEFITS OF PETITIONER;
G.R. No. 152991 1/28/2014

11. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN
TOTALLY AND ARBITRARILY IGNORING THE ISSUE AND IN NOT FINDING THAT THE NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN RENDERING A DECISION IN VIOLATION OF THE CONSTITUTIONAL REQUIREMENTS WHICH IN EFFECT
DENIED PETITIONERS RIGHT TO DUE PROCESS;

12. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN
LIKEWISE RENDERING A DECISION IN VIOLATION OF THE CONSTITUTIONAL REQUIREMENT THAT DECISIONS SHOULD
EXPRESS CLEARLY AND DISTINCTLY THE FACTS OF THE CASE AND THE LAW ON WHICH IT IS BASED;

13. WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN NOT GRANTING MORAL AND EXEMPLARY
DAMAGES AND ATTORNEYS FEES TO PETITIONER;

14. WHETHER OR NOT THE SUPREME COURT SHOULD GRANT PETITIONER UNPAID RETIREMENT PAY, UNPAID CASH
EQUIVALENT OF UNUSED LEAVE CREDITS, REINSTATEMENT OF MEDICAL BENEFITS, MORAL AND EXEMPLARY
DAMAGES, AND ATTORNEYS FEES.[20] (Underscoring supplied)

The issues posed by Oxales may be compressed as follows: first, whether in the computation of his retirement and sick leave
benefits, UNILAB should have factored such benefits like bonuses, cash and meal allowances, rice rations, service incentive leaves,
and 1/12 of the 13th month pay; second, whether R.A. No. 7641 is applicable for purposes of computing his retirement benefits; and
third, whether UNILAB is liable for moral damages, exemplary damages, and attorneys fees.

Our Ruling

The clear language of the URP should be respected.

A retirement plan in a company partakes the nature of a contract, with the employer and the employee as the contracting parties. It
creates a contractual obligation in which the promise to pay retirement benefits is made in consideration of the continued faithful
service of the employee for the requisite period.[21]

The employer and the employee may establish such stipulations, clauses, terms, and conditions as they may deem convenient.[22] In
Allgeyer v. Louisiana,[23] NewYork Life Ins. Co. v. Dodge,[24] Coppage v. Kansas,[25] Adair v. United States,[26] Lochner v. New
York,[27] and Muller v. Oregon,[28] the United States Supreme Court held that the right to contract about ones affair is part and
parcel of the liberty of the individual which is protected by the due process of law clause of the Constitution.

The obligations arising from the agreement between the employer and the employee have the force of law between them and should
be complied with in good faith.[29] However, though the employer and the employee are given the widest latitude possible in the
crafting of their contract, such right is not absolute. There is no such thing as absolute freedom of contract. A limitation is provided for
by the law itself. Their stipulations, clauses, terms, and conditions should not be contrary to law, morals, good customs, public order,
or public policy.[30] Indeed, the law respects the freedom to contract but, at the same time, is very zealous in protecting the
contracting parties and the public in general. So much so that the contracting parties need not incorporate the existing laws in their
contract, as the law is deemed written in every contract. Quando abest, proviso parties, adest proviso legis. When the provision of
the party is lacking, the provision of the law supplies it. Kung may kulang na kondisyon sa isang kasunduan, ang batas ang
magdaragdag dito.

Viewed from the foregoing, We rule that Oxales is not entitled to the additional retirement benefits he is asking. The URP is very
G.R. No. 152991 1/28/2014
clear: basic monthly salary for purposes of computing the retirement pay is the basic monthly salary, or if daily[,] means the basic
rate of pay converted to basic monthly salary of the employee excluding any commissions, overtime, bonuses, or extra
compensations.[31] Inclusio unius est exclusio alterius. The inclusion of one is the exclusion of others. Ang pagsama ng isa,
pagpwera naman sa iba.

The URP is not contrary to law, morals, good customs, public order, or public policy to merit its nullification. We, thus,
sustain it. At first blush, the URP seems to be disadvantageous to the retiring employee because of the exclusion of commissions,
overtime, bonuses, or extra compensations in the computation of the basic monthly salary. However, a close reading of its provisions
would reveal otherwise. We quote with approval the explanation of the NLRC in this regard, viz.:

x x x the United Retirement Plan of the respondent [Unilab] has a one and one-half months salary for every year of service as the basis
of entitlement. Under the new law, only one-half month of the retirees salary inclusive however, of not more than five (5) days of
service incentive leave and one-twelfth (1/12) of the 13th month pay are used as the bases in the retirement benefits computation.

Mathematically speaking therefore, complainants [Oxales] benefits received amounting to P1,599,179.00 under Trust Fund A
together with the cash equivalent of his unused leaves which has an amount of P176,313.06 and his contribution in the Trust Fund B
amounting to P397,738.33 are way above the entitlement he could have received under Republic Act 7641, otherwise known as the
New Retirement Law.[32] (Underscoring supplied)

Both law[33] and jurisprudence[34] mandate that if the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control. Thus, if the terms of a writing are plain and unambiguous, there
is no room for construction, since the only purpose of judicial construction is to remove doubt and uncertainty.[35] Only where the
language of a contract is ambiguous and uncertain that a court may, under well-established rules of construction, interfere to reach a
proper construction and make certain that which in itself is uncertain.[36] Where the language of a contract is plain and unambiguous,
its meaning should be determined without reference to extrinsic facts or aids.[37]

R.A. No. 7641 does not apply in view of the URP which gives to the retiring employee more than what the law requires; the
supporting cases cited by Oxales are off-tangent.

R.A. No. 7641, otherwise known as The Retirement Pay Law, only applies in a situation where (1) there is no collective bargaining
agreement or other applicable employment contract providing for retirement benefits for an employee; or (2) there is a collective
bargaining agreement or other applicable employment contract providing for retirement benefits for an employee, but it is below the
requirements set for by law. The reason for the first situation is to prevent the absurd situation where an employee, who is otherwise
deserving, is denied retirement benefits by the nefarious scheme of employers in not providing for retirement benefits for their
employees. The reason for the second situation is expressed in the latin maxim pacta privata juri publico derogare non possunt.
Private contracts cannot derogate from the public law. Ang kasunduang pribado ay hindi makasisira sa batas publiko. Five (5)
reasons support this conclusion.

First, a plain reading of the Retirement Pay Law. R.A. No. 7641 originated from the House of Representatives as House Bill 317
which was later consolidated with Senate Bill 132. It was approved on December 9, 1992 and took effect on January 7, 1993.[38]
Amending Article 287 of the Labor Code, it provides 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 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
G.R. No. 152991 1/28/2014
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. (Underscoring
supplied)

Second, the legislative history of the Retirement Pay Law. It may be recalled that R.A. No. 7641 traces back its history in the
case of Llora Motors, Inc. v. Drilon.[39] In this case, the Court held that the then Article 287 of the Labor Code[40] and its
Implementing Rules[41] may not be the source of an employees entitlement to retirement pay absent the presence of a collective
bargaining agreement or voluntary company policy that provides for retirement benefits for the employee.[42]

Third, the legislative intent of the Retirement Pay Law. A reading of the explanatory note of Representative Alberto S. Veloso would
show why Congress sought to pass the Retirement Pay Law: many employers refuse or neglect to adopt a retirement plan for their
employees because of the absence of any legal compulsion for them to do so, thus:

When the Labor Code came into effect in 1974, retirement pay had, as a matter of course, been granted to employees in the private
sector when they reach the age of sixty (60) years. This had practically been the rule observed by employers in the country pursuant to
the rules and regulations issued by the then Minister of Labor and Employment to implement the provisions of the Labor Code, more
particularly, where there is no provision for the same in the collective bargaining agreement or retirement plan of the establishment.

At present, however, such benefit of retirement pay is no longer available where there is no collective agreement thereon or any
retirement plan at all. This is so because, in a decision of the Supreme Court (Llora Motors vs. Drilon and NLRC, et al., G.R. No.
82895, November 7, 1989), it was held that the grant of such benefit under the rules implementing the Labor Code is not supported by
any express provision of the Labor Code itself. In short, there is no specific statutory basis for the grant of retirement benefits for
employees in the private sector reaching the age of 60 years.

Since the time of such nullification by the Supreme Court of said implementing rules on retirement pay for private sector employees,
many employers simply refuse or neglect to adopt any retirement plan for their workers, obviously emboldened by the thought that,
after said ruling, there is no longer any legal compulsion to grant such retirement benefits. In our continuous quest to promote social
justice, unfair situations like this, productive of grievance or irritants in the labor-management relations, must immediately be corrected
or remedied by legislation. (Underscoring supplied)

Fourth, the title of the Retirement Pay Law. The complete title of R.A. No. 7641 is An Act Amending Article 287 of Presidential
Decree No. 442, As Amended, Otherwise Known as the Labor Code of the Philippines, By Providing for Retirement Pay to Qualified
Private Sector in the Absence of Any Retirement Plan in the Establishment. Res ipsa loquitur. The thing speaks for itself. Isang
bagay na nangungusap na sa kanyang sarili.

Fifth, jurisprudence. In Oro Enterprises, Inc. v. National Labor Relations Commission,[43] the Court held that R.A. No. 7641
is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that absent a
retirement plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in part at least, to the financial
well-being of workers during their twilight years soon following their life of labor.[44]

In Pantranco North Express, Inc. v. National Labor Relations Commission,[45] the Court held that Article 287 of the Labor Code
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,[46] and that 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.[47]

Lastly, in Brion v. South Philippine Union Mission of the Seventh Day Adventist Church,[48] the Court ruled that a reading of Article
287 of the Labor Code would reveal that the employer and employee are free to stipulate on retirement benefits, as long as these do
not fall below floor limits provided by law.[49]

G.R. No. 152991 1/28/2014
We are aware of the several cases cited by Oxales to support his claim that the computation of his retirement benefits should
not have been limited to the basic monthly salary as defined by the URP. However, these cases negate, rather than support, his claim.

In Villena v. National Labor Relations Commission,[50] the compulsory retirement of Villena was, in fact, an illegal dismissal
in disguise. Thus, the Court ordered the Batangas, Laguna, Tayabas Bus Co. to pay Villena his full backwages, allowances, and
other benefits for a period of three (3) years after his illegal dismissal on April 24, 1987, until he reached the compulsory retirement
age plus his retirement benefits equivalent to his gross monthly pay, allowances and other benefits for every year of service up to age
sixty (60), which is the normal retirement age for him.[51]

The distinction between Villena with the instant case is readily apparent. The Court used the regular compensation of Villena in
computing his retirement benefits because the provision of the CBA for rank-and-file employees is inapplicable to him, being a
managerial employee. The Villena case was also decided before the passage of R.A. No. 7641.

In Planters Products, Inc. v. National Labor Relations Commission,[52] the petitioning employees were given termination benefits
based on their basic salary. However, Planters Products, Inc. had integrated the allowances of its remaining employees into their
basic salary. Thus, it was the basic salary that increased. Also, it was the basic salary as increased (not the basic salary and
allowances) which still formed the basis for the computation of the termination benefits of the remaining employees of the company.
The Court held that fairness demanded that the terminated employees receive the same treatment.[53] Clearly, such situation is
absent here.

In Manuel L. Quezon University v. National Labor Relations Commission,[54] the issue raised was whether respondents are entitled
to the retirement benefits provided for under R.A. No. 7641, even if petitioner has an existing valid retirement plan. The Court held that
the coverage of the law 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.[55]

Admittedly, this Court held in the case of Songco v. National Labor Relations Commission[56] that not only the basic salary but also
the allowances (like transportation and emergency living allowances) and earned sales commissions should be taken into
consideration in computing the backwages and separation pay of the employee. However, a closer examination of the case would
show that the CBA[57] between Zuellig and F.E. Zuellig Employees Association, in which Songco was a member, did not contain an
explicit definition of what salary is. Neither was there any inclusions or exclusions in the determination of the salary of the employee.
Here, the URP has an explicit provision excluding any commissions, overtime, bonuses, or extra compensations for purposes of
computing the basic salary of a retiring employee. Too, the Songco case was decided before the passage of R.A. No. 7641.

Clearly then, R.A. No. 7641 does not apply because the URP grants to the retiring employee more than what the law gives.
Under the URP, the employee receives a lump sum of 1 pay per year of service, compared to the minimum month salary for every
year of service set forth by R.A. No. 7641.

Oxales is trying to have the best of both worlds. He wants to have his cake and eat it too: the 1 months formula under the URP,
and the inclusion of the value of food benefits and other allowances he was entitled to as employee of UNILAB with his monthly salary
as the multiplicand of his number of years in the service. This he should not be permitted to do, lest a grave injustice is caused to
UNILAB, and its past and future retirees.

We agree with the NLRC observation on this score:

As an illustration, Complainant claims that his monthly salary as the multiplicand of his number of years in the service should
include the value of the food benefits and other allowances he was entitled while in the employ of respondent. However, he did not
even, by implication, intend to reduce the 1 month salary as multiplier under the URP to under the law he invoked. This is a sign of
covetousness, unfair both to the employer and those employees who have earlier retired under said plan.[58]

Oxales is not entitled to the reinstatement of his medical benefits, which are not part of the URP. Corollarily, he is not also
G.R. No. 152991 1/28/2014
entitled to moral damages, exemplary damages, and attorneys fees.

Oxales claims that UNILAB unilaterally revoked his medical benefits, causing him humiliation and anxiety. This, he argues,
entitles him to moral damages, exemplary damages, plus attorneys fees.

We cannot agree. The records bear out that after Oxales retired from UNILAB, he chose to join a rival company, Lloyds
Laboratories, Inc. As UNILAB correctly puts it, [i]f any employer can legally and validly do the supreme act of dismissing a disloyal
employee for having joined or sympathized with a rival company, with more reason may it do the lesser act of merely discontinuing a
benefit unilaterally given to an already-retired employee.[59] As a retired employee, Oxales may not claim a vested right on these
medical benefits. A careful examination of the URP would show that medical benefits are not included in the URP.

Indeed, while there is nothing wrong in the act of Oxales in joining a rival company after his retirement, justice and fair play would
dictate that by doing so, he cannot now legally demand the continuance of his medical benefits from UNILAB. To rule otherwise would
result in an absurd situation where Oxales would continue to receive medical benefits from UNILAB while working in a rival company.
We note that these medical benefits are merely unilaterally given by UNILAB to its retired employees.

We are not unaware of this Courts pronouncement in Brion v. South Philippine Union Mission of the Seventh Day Adventist
Church.[60] However, Oxales plight differs from Brion because the URP does not expressly cover medical benefits to retirees. In
contrast, the retired employee in Brion had acquired a vested right to the withheld benefits.

The claim of Oxales to moral damages, exemplary damages, and attorneys fees must also be denied for want of basis in law or
jurisprudence. On this score, We echo the pronouncement of the Court in Audion v. Electric Co., Inc. v. National Labor Relations
Commission,[61] to wit:

Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. The person
claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good
faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the
other party. Invariably, such action must be shown to have been willfully done in bad faith or with ill motive, and bad faith or ill motive
under the law cannot be presumed but must be established with clear and convincing evidence. Private respondent predicated his
claim for such damages on his own allegations of sleepless
nights and mental anguish, without establishing bad faith, fraud or ill motive as legal basis therefor.

Private respondent not being entitled to award of moral damages, an award of exemplary damages is likewise baseless. Where the
award of moral and exemplary damages is eliminated, so must the award for attorneys fees be deleted. Private respondent has not
shown that he is entitled thereto pursuant to Art. 2208 of the Civil Code.[62] (Citations omitted)

Here, there was no dismissal, as Oxales was retired by UNILAB by virtue of the URP. He was also paid his complete retirement
benefits.

Epilogue

It is not disputed that Oxales has worked tirelessly for UNILAB. For one thing, he has spent a considerable amount of years with the
company. For another, he has contributed much to its growth and expansion. However, even as We empathize with him in his time of
great need, it behooves Us to interpret the law according to what it mandates.

We reiterate the time-honored principle that the law, in protecting the rights of the laborer, authorizes neither oppression nor self-
destruction of the employer. While the Constitution is committed to the policy of social justice and the protection of the working class,
management also has its own rights, which are entitled to respect and enforcement in the interest of fair play. Out of its concern for
those with less privilege in life, this Court has inclined more often than not toward the employee and upheld his cause with his conflicts
with the employer. Such favorable treatment, however, has not blinded the Court to rule that justice is in every case for the deserving.
Justice should be dispensed in the light of the established facts and applicable law and doctrine.[63]
G.R. No. 152991 1/28/2014

WHEREFORE, the appealed Decision is AFFIRMED. No costs.

SO ORDERED.

RUBEN T. REYES
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

LEONARDO A. QUISUMBING MA. ALICIA AUSTRIA-MARTINEZ Associate Justice Associate
Justice

ADOLFO S. AZCUNA
Associate Justice

A T T ES T A T I O N

G.R. No. 152991 1/28/2014
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

C ERT I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice
* Vice Associate Justice Minita V. Chico-Nazario. Justice Nazario is on official leave per Special Order No. 508 dated June 25,
2008.
** Designated as additional member vice Associate Justice Antonio Eduardo B. Nachura per raffle dated June 25, 2008. Justice
Nachura participated as Solicitor General in the present case.
[1] Rollo, pp. 122-128; Annex A. CA-G.R. SP No. 55528. Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate
Justices Delilah Vidallon-Magtolis and Eliezer R. De Los Santos, concurring.
[2] Id. at 170-182; Annex O. NLRC-CA 016627-98. Penned by Commissioner Alberto R. Quimpo, with Commissioners Rogelio I.
Rayala and Vicente S.E. Veloso, concurring.
[3] Id. at 163-169; Annex N. NLRC-NCR Case No. 00-08-06073-97. Penned by Labor Arbiter Romulus S. Protasio.
[4] Annex C.
[5] United Retirement Plan, Art. V, Sec. 1(a).
[6] Annex L.
[7] Annex L-1.
[8] Rollo, p. 169.
[9] Id. at 168.
G.R. No. 152991 1/28/2014
[10] Id. at 168-169.
[11] Id. at 169.
[12] Id. at 181.
[13] Id. at 179-180.
[14] Id. at 178-179.
[15] Id. at 126.
[16] Id. at 127.
[17] Id. at 126-127.
[18] Id. at 11-120.
[19] Id. at 438-568.
[20] Id. at 456-458.
[21] Brion v. South Philippine Union Mission of the Seventh Day Adventist Church, G.R. No. 135136, May 19, 1999, 307 SCRA
497, 504.
[22] See Civil Code, Art. 1306.
[23] 165 US 578, 591.
[24] 246 US 357, 373, 374.
[25] 236 US 1, 10, 14.
[26] 208 US 161.
[27] 198 US 45, 49.
[28] 208 US 412, 421.
[29] See Civil Code, Art. 1159; Pichel v. Alonzo, G.R. No. L-36902, January 30, 1982, 111 SCRA 341; De Cortes v. Venturanza,
G.R. No. L-26058, October 28, 1977, 79 SCRA 709; Villonco Realty Company v. Bormaheco, Inc., G.R. No. L-26872, July 25, 1975,
65 SCRA 352; Government v. Vaca, 64 Phil. 6 (1937); Government v. Lim, 61 Phil. 737 (1935); Government v. Conde, 61 Phil. 714
(1935); Hanlon v. Haussermann, 41 Phil. 276 (1920); Ollendorff v. Abrahamson, 38 Phil. 585 (1918); Compaia de Tabacos v.
Obed, 13 Phil. 391 (1909); De la Rama v. Inventor, 12 Phil. 44 (1908); Alcantara v. Alinea, 8 Phil. 111 (1907); Borromeo v. Franco,
5 Phil. 49 (1905); Salonga v. Concepcion, 3 Phil. 563 (1904); Co-Tiangco v. To-Jamco, 3 Phil. 210 (1908).
[30] Id., Art. 1306.
[31] Rollo, p. 131; United Retirement Plan, Art. II, Sec. 1(j). (Emphasis supplied.)
[32] Id. at 179.
[33] Civil Code, Art. 1370. See also Rules of Court, Rule 130, Secs. 10-19 on Interpretation of Documents.
[34] Chinchilla v. Rafel, 39 Phil. 888 (1919); Escario v. Regis, 31 Phil. 618 (1915); De Lizardi v. Yaptico, 30 Phil. 211 (1915); Nolan
v. Majinay, 12 Phil. 559 (1909); Nolan v. Majinay, 12 Phil. 140 (1908); Palacios v. Municipality of Cavite, 12 Phil. 140 (1908);
Azarraga v. Rodriguez, 9 Phil. 637 (1908); Alburo v. Villanueva, 7 Phil. 277 (1907).
[35] 17A Am. Jur. 2d 337, citing Binghamton Bridge, 70 US 51, 18 L. Ed. 137; South Hampton Co. v. Stinnes Corp., (CA5 Tex)
733 F. 2d 1108, 38 UCCRS 1137; Murray v. Kaiser Aluminum & Chemical Corp., (SD W Va) 591 F. Supp. 1550, affd without op.
(CA4 W Va) 767 F. 2d 912; Schulist v. Blue Cross of Iowa, (ND Ill) 553 F. Supp. 248, 4 EBC 1193, affd (CA7 Ill) 717 F. 2d 1127, 4
EBC 2237; P & S Business, Inc. v. South Cent. Bell Tel. Co., (Ala) 466 So. 2d 928; Estate of Wamack, (2nd Dist) 137 Cal. App. 2d
112, 289 P. 2d 871; BMW of North America, Inc. v. Krathen, (Fla App D4) 471 So. 2d 585, 10 FLW 1452, review den (Fla) 484 So.
2d 7, later proceeding (Fla App D4) 510 So. 2d 366, 12 FLW 1857; Petroziello v. United States Leasing Corp., EOS Leasing Div.,
176 Ga. App. 858, 338 SE 2d 63; Hanagami v. China Airlines, Ltd., 67 Hawaii 357, 688 P. 2d 1139; P. A. Bergner & Co. v. Lloyds
Jewelers, Inc., 112 Ill. 2d 196, 97 Ill. Dec. 415, 492 NE 2d 1288; Jenkins v. King, 224 Ind. 164, 65 NE 2d 121, 163 ALR 397; Scott v.
Anderson Newspapers, Inc., (Ind App) 477 NE 2d 553; Allen v. Highway Equipment Co., (Iowa) 239 NW 2d 135; General Motors
Acceptance Corp. v. Daniels, 303 Md. 254, 492 A. 2d 1306; Craig v. Bossenbery, 134 Mich. App. 543, 351 NW 2d 596; Kuhlman v.
Educational Publishers, 245 Minn. 171, 71 NW 2d 889; State by CrowWing Environment Protection Asso. v. Breezy Point, (Minn
App) 363 NW 2d 778, later app (Minn App) 394 NW 2d 592; Adams v. Kerr, (Mo App) 655 SW 2d 49; T.V. Transmission, Inc. v.
Lincoln, 220 Neb. 887, 374 NW 2d 49; Parks v. Venters Oil Co., 255 NC 498, 121 SE 2d 850; Re Robinsons Will, 101 Vt. 464, 144
A. 457, 75 ALR 59; Ross v. Harding, 64 Wash. 2d 231, 391 P. 2d 526; Cotiga Dev. Co. v. United Fuel Gas Co., 147 W. Va. 484,
128 SE 2d 626, 17 OGR 583.
G.R. No. 152991 1/28/2014
[36] Id., citing Gulf Cities Gas Corp. v. Tangelo Park Service Co., (Fla App D4) 253 So. 2d 744; Sears, roebuck & Co. v. Poling, 248
Iowa 582, 81 NW 2d 462; Gans v. Aetna Life Ins. Co., 214 NY 326, 108 NE 443; General American Indem. Co. v. Pepper, 161 Tex.
263, 339 SW 2d 660; Griffin v. Fairmont Coal Co., 59 W. Va. 480, 53 SE 24.
[37] Id., citing Massey-Ferguson v. Bent Equipment Co., (CA5 Fla) 283 F. 2d 12, 3 FR Serv. 2d 135; Atlas Sewing Center, Inc. v.
Belks Dept. Store, Inc., (Fla App D2) 162 So. 2d 274; Coopersmith v. Isherwood, 219 Md. 455, 150 A. 2d 243; Shapleigh Hardware
Co. v. Spiro, 141 Miss. 38, 106 So. 209, 44 ALR 393, later app 153 Miss. 81, 118 So. 429, motion overr 153 Miss. 195, 119 So.
206; Wood v. Security Mut. Life Ins. Co., 112 Neb. 66, 198 NW 537, 34 ALR 712; Republic Nat. Life Ins. Co. v. Spillars, (Tex) 368
SW 2d 92, 5 ALR 3d 957.
[38] CJC Trading, Inc. v. National Labor Relations Commission, G.R. No. 115884, July 20, 19995, 246 SCRA 724; Oro Enterprises
v. National Labor Relations Commission, G.R. No. 110861, November 14, 1994, 238 SCRA 105.
[39] G.R. No. 82895, November 7, 1989, 179 SCRA 175.
[40] Article 287. Retirement. Any employee may be retired upon reaching the 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.
[41] Section 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.
Section 14. Retirement Benefits. (a) 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 at least to 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 employers total
contribution thereto shall not be less than the total termination pay to which the employee would have been entitled had there been no
retirement fund. In case the employers 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. (Rules to Implement the Labor
Code, Book VI, Rule I, Sec. 14.)
[42] Llora Motors, Inc. v. Drilon, supra note 39, at 181-187.
[43] G.R. No. 110861, November 14, 1994, 238 SCRA 105.
[44] Oro Enterprises, Inc. v. National Labor Relations Commission, id. at 112.
[45] G.R. No. 95940, July 24, 1996, 259 SCRA 161.
[46] Pantranco North Express, Inc. v. National Labor Relations Commission, id. at 173.
[47] Id.
[48] G.R. No. 135136, May 19, 1999, 307 SCRA 497.
[49] Brion v. South Philippine Union Mission of the Seventh Day Adventist Church, id. at 504.
[50] G.R. No. 90664, February 7, 1991, 193 SCRA 686.
[51] Villena v. National Labor Relations Commission, id. at 693.
[52] G.R. Nos. 78524 & 78739, January 20, 1989, 169 SCRA 328.
[53] Planters Products, Inc. v. National Labor Relations Commission, id. at 339.
[54] G.R. No. 141673, October 17, 2001, 367 SCRA 488.
[55] Manuel L. Quezon University v. National Labor Relations Commission, id. at 494.
[56] G.R. Nos. 50999-51000, March 23, 1990, 183 SCRA 610.
[57] Article XIV. Retirement Gratuity.
Section 1(a). Any employee, who is separated from employment, due to old age, sickness, death or permanent lay-off not due to
the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to one (1) months salary per
year of service. One month of salary shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed
equivalent to total service credits, a fraction of at least six months being considered as one year, including probationary employment.
G.R. No. 152991 1/28/2014
(Songco v. National Labor Relations Commission, id. at 613, citing rollo, p. 71.)
[58] Rollo, p. 180.
[59] Id. at 432.
[60] Supra note 48.
[61] G.R. No. 106648, June 17, 1999, 308 SCRA 340.
[62] Audion v. Electric Co., Inc. v. National Labor Relations Commission, id. at 355.
[63] Revidad v. National Labor Relations Commission, G.R. No. 111105, June 27, 1995, 245 SCRA 356, 372-373, citing Mercury
Drug Corporation v. National Labor Relations Commission, G.R. No. 75662, September 15, 1989, 177 SCRA 580.
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