BANCO FILIPINO SAVINGS AND MORTGAGE BANK V LAZARO

June 27, 2012 | Sereno, J. | Review|Applicability of RA 7641

FACTS:
1. Respondent Lazaro was hired by petitioner bank as a probationary employee in 1968. He rose up the ranks to the
position of assistant manager. In 1985, the bank was shut down by the Central Bank. The bank still hired respondent
as part of its task force to collect its debts.
2. The bank resumed operations in 1992 and respondent was now an assistant vice-president until retirement on 1
December 1995.
3. The bank paid him retirement benefits for (1) 20 years and 7 months pegged at a (2) 38k P/month.
4. Respondent contests both the length and the salary amount claiming that (1) the time when the bank was liquidated
should be included in the computation, (2) that the length should be rounded up, and (3) that the salary should be 50k
P/month since that was the salary for the month of December 1995.
ISSUE:
Should RA 7641 apply in this case to grant the rounding off of respondents tenure? NO.
RULING:.
RATIO:
1. Petitioner based its claim on Art 287 which provides that a fraction of at least 6 months shall be considered as one
year. This provision only applies if the employee's retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein.
2. It cannot be gainsaid that the Rules of the Banco Filipino Retirement Fund provide for benefits lower than those
in the Labor Code. In fact, the bank offers a retirement pay equivalent to one and one-half month salary for every
year of service, a rate over and above the one-half month salary threshold provided by the law.
3. Although the Rules of the Banco Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless
provide that prorated credit shall be given for incomplete years, regardless of the fraction of months in the
retirees length of service. Hence, even if the retiree rendered only a fraction of five months, the retiree shall still
be credited with retirement benefits based on the fraction of five months of service actually rendered.
4. Notwithstanding the lack of a rounding-up provision, still, the higher retirement pay, together with the prorated
crediting, cannot be deemed to be less favorable than that provided for by the law. Ultimately, the more important
threshold to be considered in construing whether the retirement agreement provides less benefits, compared to
those provided by the Retirement Pay Law, is that the retirement benefits in the said agreement should at least
amount to one-half of the employees monthly salary.
5. Therefore, considering that Lazaro is bound by the terms of the Rules of the Banco Filipino Retirement Fund, it
follows that he cannot claim his 27 years and 10 months of work to be rounded off to 28 years in order to obtain
a higher retirement pay.
Enriquez Security Services, Inc. v Cabotaje
July 21, 2006|CoronaJ.| Petition for Certiorari|components of 1/2 month pay/salary, Implementing Rules, Guidelines 5.2
FACTS:
1. Sometime in Jan. 1979, Cabotaje was employed as a security guard by Enriquez Security and Investigation Agency. On Nov. 13, 1985,
petitioner was incorporated. Respondent continued to work as a guard in petitioners agency. Upon turning 60yrs.old, Cabotaje
applied for retirement.
2. Petitioner acknowledged that Cabotaje was entitled to retirement benefits but said that the computation of such benefits must be
reckoned from when ESSI was incorporated and not when he started working for ESIA.
3. Respondent filed a complaint in the NLRC seeking payment of retirement benefits under RA7641 (Retirement Pay Law).

4. LA: reckoned from when he started working forESIA.NLRC set aside LAs award of 1-month salary for every year of service for
being excessive. It ruled that under RA7641, Cabotaje was entitled to retirement pay equivalent only to month salary for every yr
of service. CA affirmed.
5. Petitioner argued that RA7641 cant apply retroactively and that only 1/12 of the SIL should be included in the computation of the
retirement benefit.
ISSUE:
1. WoN retirement law can be applied retroactively- YES
2. WoN the whole 5 days SIL or just portion thereof equivalent to should be included in the month salary for purposes of computing
the retirement pay NO
RULING:Petition DENIED. CA AFFIRMED.
RATIO:
1. RA 7641 is undoubtedly a social legislation. The law has been enacted as a laborprotection measure and as a curative statute that
absent a retirement plan devisedby, an agreement with, or a voluntary grant from, an employer can respond, inpart at least, to the
financial well-being of workers during their twilight years soonfollowing their life of labor. There should be little doubt about the
fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be
reckoned not only from the date of the laws enactment but retroactively to the time said employment contracts have started.
2. Sec. 1 of RA 76411and Sec. 5.2 of Rule II, Book VI of the IR2are clear that the whole 5 days of SIL are included in the computation of
a retiring employees pay.
3. Petitioners veil of corporate fiction shall be pierced because respondent worked w/ESIA and ESSI, who were owned by the Enriquez
family, continuously and uninterrupted and ESSI maintained its office in the same place where ESIA previously held office. The
attempt to make the agencies appear as 2 separate entities was a devise to defeat the law.
4. It was correct to order petitioner to pay respondents retirement under RA7641 computed from 1979 up to the time he applied for
retirement in July 1997.

SY v. METROBANK
November 2, 2006 | Quisumbing, J. | Petition for Certiorari |Forfeiture of Benefits
PETITIONER: Dennis D. Sy
RESPONDENTS: Metropolitan Bank & Trust Company
SUMMARY:Dennis Sy was the branch manager of Metrobank- Davao. He tendered a letter of retirement requesting the release of
benefits due him but it was denied because he was allegedly involved in certain kiting activities which caused the bank to lose
money. He was eventually dismissed. Both the LA and CA dismissed his complaint for lack of merit.
DOCTRINE:Under the Labor Code, only unjustly dismissed employees are entitled to retirement benefits and other privileges
including reinstatement and backwages.
FACTS:
1. Dennis Sy was the branch manager in Bajada, Davao of
Metrobank. Under the banks Retirement Plan, an employee
must retire upon reaching the age of 55 years or after

rendering 30 years of service, whichever comes first. Sy

would have rendered 30 years of service by August 18, 1999.
However, on February 5, 1999, he was reappointed as branch
manager for a term of one year starting August 18, 1999 until

1 Unless the parties provide for broader inclusions, the term month salary shall mean 15 days plus 1/12 of the 13

th

month pay and the cash equivalent of not more

than 5 days of service incentive leave.

2For the purpose of determining the minimum retirement pay due an employee under this Rule, the term one-half month salary shall include all the following:a. 15
days salary of the employee based on his latest salary rate.
b. the cash equivalent of not more than 5 days of SIL
c. of the 13th month pay due an employee
d. all other benefits that the employer and employee may agree upon that should be included in the computation of the employees retirement pay.

August 18, 2000. His monthly compensation was accordingly

increased from P50,400 to P54,500.
2.On November 15, 1999, Sy tendered an irrevocable letter of
retirement.In his letter, he requested the timely release of his
retirement pay and other benefits. His request was denied. The
bank alleged that Sy allowed spouses Gorgonio and Elizabeth
Ong to conduct "kiting" activities in their account with the
bank (Approving DBP accommodations beyond the authority
limits established by Management; Approving DBP
accommodations against accounts already found to be engaged
in irregular and unsound banking practice; Releasing/renewing
loans without Head Office approval; Allowing persons other
than the depositor to purchase Cashiers Checks without
authority, etc.) Thus, the bank placed Sy under preventive
suspension and gave him 48 hours to submit a written
explanation. In response, Sy wrote a letter explaining that he
only made a wrong credit judgment. Not satisfied with his
answer, the bank notified Sy of other alleged violations of
company policies (Granting of DBP- Clean accomodations to
Sps Aquino who are his relatives; Purchasing checks payable
to Landcraft Transport, a company owned by said relatives).
3. In reply, Sy explained in writing that the accommodation
granted to spouses Samuel Aquino and CharitoSy-Aquino was
only P650,000, not P9.11M as claimed by the bank. He added
that the spouses even offered a parcel of land as collateral and
were willing to sell a vehicle in settlement of their obligation
with the bank.Unconvinced, the bank dismissed Sy on
December 15, 1999.
4. Sy filed a complaint for illegal suspension, illegal dismissal
and money claims. The LA dismissed the case for lack of
merit. On appeal, the NLRC deemed Sycumpolorily retired.
Thus, the NLRC awarded him retirement benefits, unpaid
salary, monetary value of unused leave credits, 13th month
pay, Christmas bonus, and refund of provident fund. The
appellate court set aside the ruling of the NLRC and reinstated
the Decision of the LA.
ISSUES:

1.
2.

WoNSy was illegally dismissed NO

WoNSy is still entitled to retirement benefits NO

RULING:Petition DENIED. CA decision AFFIRMED.

RATIO:
1.Sy was validly dismissed on the ground of fraud and willful
breach of trust under Article 282 LC. Records show that as
bank manager, he authorized "kiting" or drawing of checks
against uncollected funds in wanton violation of the banks
policies. It was sufficient basis for the bank to lose trust in
him.Unlike a rank-and-file worker, where breach of trust as a
ground for valid dismissal requires proof of involvement in the
alleged anomaly and where mere uncorroborated accusation
by the employer will not suffice, the sheer existence of a basis
for believing that the employers trust has been breached is
enough for the dismissal of a managerial employee. As for the
requirement of due process, records show that it has been fully
satisfied in the instant case. The bank had complied with the
two-notice requirement.
2.Indeed, he would have qualified for compulsory retirement
under the banks Retirement Plan. However, he opted to
accept the banks offer of extending his employment for
another year with a corresponding salary increase. Thus, in
effect, he had never retired. Unfortunately for him, while
serving such extended term, the bank discovered his
unauthorized grant of accommodation to accounts engaged in
"kiting" activity. Such act is a clear breach of the trust reposed
in him by the bank. He cannot now elude dismissal for a just
cause by claiming he was already retired compulsorily.
3.Since petitioners dismissal was for a just cause, he is not
entitled to any retirement benefit. To hold otherwise would be
to reward acts of willful breach of trust by the employee. It
would also open the floodgate to potential anomalous banking
transactions by bank employees whose employments have
been extended. Since a banks operation is essentially imbued
with public interest, it owes great fidelity to the public it deals
with. In turn, it cannot be compelled to continue in its employ
a person in whom it has lost trust and confidence and whose
continued employment would patently be inimical to the
banks interest.

PLDT v REUS
July 9, 2008 | Brion, J. | Petition for Review on Certiorari | Retirement Equitable Solution
PETITIONER: Philippine Long Distance Telephone Company, Inc
RESONDENT: Antonio T. Reus
SUMMARY: Reus was dismissed by PLDT but the LA ordered PLDT to pay Reus P2,000 as indemnity plus
retirement benefits that he MAY BE entitled. NLRC modified this decision and ordered PLDT to pay Reus the said
benefits on the basis of equity. Lots of motions, petitions and appeals were made by both parties. In the end, SC
affirmed the decision of the NLRC which is for PLDT to pay Reus retirement benefits.
DOCTRINE: RATIO 7

FACTS:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Reus has been in the employ of PLDT for 16 years and 3 months and he was dismissed on October 30, 1990 for
shortages in his collections. He was at that time a long distance booth attendant.
July 24, 1991, LA Linsangan upheld the Reus dismissal, but required PLDT to pay the P2,000.00 as indemnity
for the failure to afford the Reus a hearing. The LA noted that PLDT had an existing retirement plan and ordered them to pay the
Reus "any retirement benefit complainant MAY BE entitled under the plan.
October 7, 1993, the NLRC modified the LA: affirmed Reus dismissal but ordered PLDT to pay him benefits
under their retirement plan less the amount of collection and other outstanding obligations of Reus.
Arbiter Linsangan issued the requested writ on December 12, 1995 while LA Reyes (who took over the case upon
the retirement of Linsangan) issued on May 14, 1996 an order directing the sheriff of the NLRC to proceed with the execution of the
award. On September 27, 1996, Sheriff Gaddi issued a Notice of Garnishment to the PCI Bank.
May 28, l996, PLDT appealed Arbiter Reyes order with the submission that it never received a copy of the
November 2, 1995 Order of Arbiter Linsangan, and that the Reus was not entitled to the benefits program of the company because
he was only 36 years old and had rendered only 16 years of service at the time of his dismissal.
The NLRC found merit in PLDTs appeal and resolved on July 29, 1998 to vacate Arbiter Linsangans Order. It
ordered that the records of the case be remanded for the computation of Reus benefits under the retirement plan and that a Writ of
Execution be issued if he is entitled to benefits thereunder. PLDT did not question this decision.
October 27, 1998, Reus filed a motion for the issuance of a third alias writ of execution of the 1993 NLRC
decision. After the parties submissions, Arbiter Reyes granted the motion on September 3, 1999 and ordered PLDT to pay Reus
retirement benefits as computed by the NLRC. He declared as null and void the 1998 NLRC decision.
February 14, 2000, PLDT appealed the Order of Arbiter Reyes to the NLRC, contending that Arbiter Reyes had
acted in excess of authority and without jurisdiction in declaring the 1998 NLRC decision null and void; had committed error in
granting the motion for issuance of the third alias writ; and had gravely erred in ordering PLDT to pay Reus retirement benefits.
December 14, 2001, while Reus petition for mandamus was pending before the CA, the NLRC granted PLDTs
appeal and annulled the September 3, 1999 Order of Arbiter Reyes. The NLRC reiterated the modifications it made in its 1993
NLRC decision, clarifying that Reus retirement benefits are to be paid after determination of his qualification to receive these
benefits under the company retirement plan. Again, Reus did not appeal. In the meantime, the CA, in a Decision dated March 28,
2003, granted Reus petition for mandamus. It directed the LA to execute the Linsangan decision as modified by the 1993 NLRC
decision. PLDT moved for the reconsideration of the CA Decision, but the CA denied this motion on October 17, 2003.

ISSUE:
1. WON Reus is entitled to the retirement benefits YES (based on equity) Ratio 7
RULING: Petition DENIED. CA decision (March 2003) and resolution (October 2003) AFFIRMED.
RATIO:
PLDT submits that in the absence of a showing that Reus had a clear right to the payment of retirement benefits, the CA seriously
erred in granting Reus petition for mandamus and in ordering the LA to issue a writ of execution. It contends that Reus is clearly
not entitled to benefits under the plan and hence should not be paid benefits thereunder.
2.
The execution of the 1993 NLRC decision has long been overdue; it became final and executory more than a decade ago when
this Court dismissed the petitions for certiorari filed by both parties to assail this decision. To reiterate, this Courts own resolutions
of dismissal that upheld the 1993 NLRC decision were entered in the Book of Entry of Judgment on March 15, 1995 or more
than 13 years ago.
3.
PLDT reads the decretal portion of the 1993 NLRC Decision to mean that Reus should be entitled to benefits under the terms of
the plan in order to be paid under the decision. NLRC explained to the Court that "x x x it is but just and equitable, as NLRC and the
LA correctly pointed out, to award retirement benefits to said employee, if qualified under the retirement plan of PLDT." PLDT then
points out that since Reus was only 36 years old and had rendered only 16 years of service, he was not qualified to receive
retirement benefits under the retirement plan.
4.
The court notes that the NLRC was in error in rendering the resolution dated July 29, 1998, correcting an already final judgment.
Worse, they were trying to correct the already final judgment by using, as basis, the decision of LA Linsangan which they have
previously modified. Worst, it was never prayed for by Reus in its appeal dated May 28, 1996. Reus merely prayed that the Order
dated May 14, 1996 of LA Reyes be set aside and a new one entered declaring that no valid service of the Order dated November
02, 1995 was made upon PLDT. Thus, we rule that the decision dated July 29, 1998 of the NLRC was rendered with grave abuse of
discretion in excess of its jurisdiction, hence null and void and without legal effect.
5.
A critical point in appreciating the 1993 NLRC decision is the fact that it MODIFIED the Linsangan decision directing PLDT to
pay Reus Php 2,000 as indemnity and any retirement benefit he may be entitled to under the companys retirement plan.
6.
The most material change is the removal of the order for payment of retirement benefits that Reus "may be entitled" to under the
companys retirement plan. The NLRC simply ordered "PLDT to pay Reus benefits under its company retirement plan, less the
amount of the lost collection and other outstanding obligations of the complainant with the company as of date"; thus, removing the
condition of "entitlement" found in the LAs decision.
7.
Why the NLRC so worded the dispositive portion of its decision is clarified by its own penultimate paragraph where the NLRC
explained the basis for the modification, thus: Mindful however of the length of service of Reus with PLDT and considering
1.

8.

9.

further that the proximate cause of the loss of the collection is not solely attributable to him, the equitable solution would be
for Reus to be entitled to the retirement benefits under the retirement plan.
With this explanation, it immediately becomes clear that the NLRC was not ordering the payment of benefits under the plan
because Reus was entitled thereto under the terms of the plan, or that it entertained doubts about entitlement and was ordering
payment if entitlement could be established. The NLRC wanted to order payment not strictly based on the law for there was a
cited cause for dismissal, nor on the eligibility terms of the companys retirement plan for he was not being retired but on the
basis of equity; it was simply applying the benefits of the plan as a measure of what should be paid as "equitable solution."
Whether such equitable grant is justified or not, legally correct or in error, or whether it is wise or unwise, are issues that are
beyond the parties reach at this time. We hasten to add that the NLRC decision and our affirmation of this decision cannot and
should not be used as authority for issues relating to the terms of the company retirement plan; what we hereby affirm is the finality
of the NLRCs equitable award and its terms, not any issue on the interpretation or application of, or the entitlement under, the terms
of the plan. With the NLRC decision now fully implemented through the garnishment of the supersedeas bond posted by PLDT and
the release of the proceeds to Reus, this case is ready to be declared fully closed and terminated upon the finality of this Decision.

DAABAY v COCA-COLA BOTTLERS PHILIPPINES INC

August 28 2013 | Reyes | Petition for Review on Certiorari |Non-Entitlement to Equitable Solution Just Cause
PETITIONER: Jerome Daabay
RESPONDENT: Coca-cola Bottlers Philippines
SUMMARY:.Coca-Cola terminated Sales Logistic CheckerDaabay for pilferage, serious misconduct, and loss of trust and
confidence. NLRC finds Daabay validly dismissed for said grounds but rewarded retirement pay as a measure of equity and
social justice. SC deletes reward of retirement pay because of the grounds for which Daabay was dismissed.
DOCTRINE: Financial assistance, or whatever name its called, as a measure of social justice is allowed only in instances
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character,
as explained in Philippine Long Distance Telephone Company v NLRC. An award of retirement pay upon the dismissal of
an employee falls under the definition of financial assistance.
FACTS:
1 Daabay is a Sales Logistics Checker of Coca-Cola, an
employee for 8 years. Sorin executed an affidavit where
he claimed that Daabay was part of aconspiracy that
allowed the pilferage of company property. The losses
were confirmed by an inventory and audit where losses
amount to P20.86M consisting of assorted softdrinks,
empty bottles, missing shells, and pallets. When asked to
explain while he was preventively suspended, Daabay
denied any participation. After a formal investigation,
Coca-Cola terminated Daabay for pilferage, serious
misconduct, and loss of trust and confidence.
2 Daabay filed an illegal dismissal, illegal suspension, ULP
complaint against Coca-Coa. LA ruled for Daabay and
ordered payment to Daabay of backwages and separation
pay OR his retirement Benefits based on the latest CBA.
3 NLRC found that Daabay was validly dismissed not only
for serious misconduct, but also for breach of trust or loss
of confidence arising from company losses. Hiss
involvement in the conspiracy was sufficiently
established, and his failure to detect the pilferage was
taken against him. But NLRC still awarded retirement
benefits in favor of Daabay in order to humanize the
severe effects of dismissal and tilt the scales of justice in
favor of labor as a measure of equity and compassionate
social justice and remanded the case to LA for
computation.
4 CA deletes retirement benefits, citing PLDT v NLRC.
ISSUE/S:WON Daabay should be given retirement benefits
NO.

RULING:AFFIRMED.
RATIO:
1 NLRC found Daabay to be lawfully dimissed on the
grounds of serous misconduct, breach of trust, and loss of
confidence. As stated in PAL v NLRC on the issue of
whether an employee who is dismissed for just cause may
still claim retirement benefits, we ruled that termination
for cause renders nugatoryany entitlement to mandatory
or optional retirement pay that she might have previously
possessed.Citation omitted and emphasis ours.
2 NLRCs lone justification is to humanize the severe
effects of dismissal and as a measure of social justice.
NLRCs award was then akin to financial
assistance/separation pay that is granted to a dismissed
employee notwithstanding legality of his dismissal. And
financial assistance, or whatever name its called, as a
measure of social justice is allowed only where the
employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral
character, as explained in Philippine Long Distance
Telephone Company v NLRC. And since in this case,
Daabay was dismissed for serious misconduct, breach of
trust, and loss of confidence, an award based on equity is
unwarranted.
3 NLRCs reliance on Coca-Colas alleged admission in its
motion to reduce bond that Daabay is entitled to
retirement benefits is misplaced, since those were only in
light of LAs ruling that Daabay is illegally dismissed.

RIVERA v. UNILAB
April 22, 2009 |Brion, J. | Petition for review on certiorari | Retirement
PETITIONER:Januaria A. Riveria
COUNSEL: FloranteArceo Bautista
RESPONDENT:United Laboratories, Inc.
COUNSEL: Sycip, Salazar, Hernandez &Gatmaitan
SUMMARY:Unilab compulsorily retired Rivera after 30 years of service. She continued to work for Unilab even after retirement as
AVP from 1989-1992. Thereafter, the retirement plan was amended, increasing the retirement benefit from 1 mo. to 1.5 mos. of
Terminal Basic Salary per year of service. Rivera asked that her retirement benefits be increased in accordance with the amended
retirement program based on her Dec 31, 1992 terminal basic salary, multiplied by her 34 years of service with Unilab. The Court
ruled that by the strict standards of law, it cannotgrant Riveras petition.
DOCTRINE:Retirement in its ordinary signification is the termination of an employees service upon reaching retirement age. Prior
to the Retirement Pay Law, Article 287, LC simply provided that [a]ny employee may be retired upon reachingthe retirement age
established in the collective bargainingagreement or other applicable employment contract; the employee shall be entitled to
receive such retirement benefits as hemay have earned under existing laws and any collectivebargaining or other agreement.

FACTS:
1. Rivera completed 30 years of service with Unilab in 1988. Unilab compulsorily retired her on Dec. 31, 1988, under its pre1992retirement plan whose Section 1, Article IV provided that:
1. Any member (manager or nonmanager) shall be retired on Dec 31 of the year during which he attained age 60 or has rendered 30
years of service, whichever comes first and shall be entitled to the full normal retirement benefits as provided for in the succeeding
Article V of the retirement plan document x xx.
2. The plan is supported by a retirement fund with thefollowing components:
(a) Trust Fund A which consists of contributions made exclusively by the company for the account ofeach member based on
actuarial estimates, and
(b) Trust Fund B which consists of contributions from the members themselves.
3. When Rivera retired, her accrued retirement benefits under Trust Fund A and Trust Fund B were withdrawn from the retirement
Fund and deposited in Trust Fund C, a special investment account from which she could make withdrawals as she pleased.
4. Rivera continued to work for UNILAB until the end of 1992 and was made Assistant VicePresidentin January1989. Effective
December 31, 1992, UNILAB declared herretired from employment and gave her the balance of whatremained at Trust Fund C with
accrued interests.
5. In December 1992, the retirement plan wasamended which provided the following terms:
a) The retirement benefit has been increased from 1 month to1.5 months of Terminal Basic Salary per year of service.
b) The effective date of normal or mandatory retirement from the Plan is 30 days after an employee reaches his/her 60 thbirthday.
This effective date applies to all rank and file as well asKPs.
6. The Plan provides for full vesting of benefits to allemployees who leave the company after reaching the age of55, regardless of the
number of service years.
7. As of Dec 31, 1992, Riveras retirementbenefits in Trust Fund C amounted to P1,175,666.22.
8. On Jan 15, 1993, Rivera received her retirement pay check.
9. From 1993-94, Rivera continued to work as apersonal consultant at ARMCO in 1993 and at FIL-ASIAin1994. These companies
have interlocking directorates and common facilities with UNILAB. The work she wasassigned still pertained to UNILAB.
2.
3. ISSUE:
4. WONthe provisions of the retirementplan on compulsory retirement age and maximum years ofservice were deemed waived when
UNILAB continued toemploy the services of Rivera for 6 more years after her compulsory retirement on 1988 NO
5.

6. RULING:WHEREFORE, premises considered, we hereby DENY the petition and DISMISS the claim of Januaria A. Riverafor
unpaid retirement pay differential for lack of merit.
RATIO:
1. The governing laws at the end of 1988 when Rivera compulsorily retired under the UNILABretirement plan are Article 287 of the
Labor Code3 and Section 13 of the Rules to Implement the Labor Code4.
2. Retirementcarries with it certain legal effects, one of which is the retired employees terminationof the services with the company
as of the retirement date,in this case Dec 31, 1988. With this retirement, hercoverage by the UNILAB retirement plan ceased based
onthe express terms of the plan. As a consequence, Riverasretirement pay was computed; her accrued retirementbenefits under Trust
Fund A and Trust Fund B of the planwere withdrawn, and deposited in Trust Fund C.
3. A twist in Riveras case is that she continued workingbeyond the compulsory separation from service thatresulted from her
retirement. Whether she could or couldnot resume working with the company is, as a rule, aconsensual matter for the parties to agree
upon, limitedonly by company policiesand the applicable terms of the retirement plan. To be sure, there is no limitation by law that
barred her fromcontinuing her work with UNILAB; even the Implementing Rules, in setting the retirement age at 60,deferred to the
parties agreement.
4. Her employment terms under this renewed employment are based on what she andthe company agreed upon. Whether these terms
includedrenewed coverage in the retirement plan is an evidentiarygap that could have been conclusively shown by evidence
ofdeductions of contributions to the plan after 1988. Twoindicators, however, show that no such coverage tookplace:
a) The first is that the terms of the retirement plan,before and after its 1992 amendment, continued to excludethose who have
rendered 30 years of service or havereached 60 years of age. Therefore, the plan could not havecovered her.
b) The second is the absence of evidence of, or ofany demand for, any reimbursement of what Rivera wouldhave paid as
contributions to the plan had her coverageand deductions continued after 1988.
7. Thus, her renewed service did not have the benefit of any retirement plan coverage.
5. She could also not have availed of retirement benefits under the Retirement Pay Law, which became effective Dec 31, 1992
because she did not qualify under the terms of that law when she was retired effective December 31, 1992. In the absence of a plan,
the Retirement Pay Law requires that an employeemust have served for at least 5 years to be entitled tocoverage. As of December 31,
2002, her service withoutany retirement plan coverage was only 4 years, i.e.from Jan 1, 1989 to Dec 31, 1992.
6. In considering her renewed employment period, the Court did not included the years 1993-1994for three reasons:
a) Based on Riveras extrajudicial demand for the balance of her retirement pay, especially the first twoletters, she counted 34
years of service withUNILAB starting Apr 7, 1958 up to Dec 31, 1992,thereby excluding the years 1993 to 1994 from her
servicerecord. The evidence on record shows that Rivera herselfconceded these last two years as periods when she workedas a
consultant. Given this concession and in the absenceof evidence showing that her principals controlled her as tothe means,
manner and the results of her work, the Court cannotconclude that an employment relationship existed.
b) That there was no ER-EErelationship in her service with ARMCO in 1993 and withFIL-ASIA in 1994 is supported,not only by
the records,but by the consultancy contracts Rivera herself marked asExhibits J and P in her appeal to the NLRC.
c) The Court cannot accept Riveras theory that her employment service with UNILAB extended to 1994because herlast two
years with ARMCO and FIL-ASIA were in factservices rendered to UNILAB as consultant.It is a recognized practice inthis
country for companiesto continue to avail of the expertise and experience of theirretired employees by retaining them either as
employees oras consultants.

8. MAGDADARO v. PNB
9. July 17, 2009 | Carpio, J. | Petition for Review on Certiorari|Retirement: Management Prerogative

10.
11.
PETITIONER: MarcelinoMagdadaro
12.
RESPONDENT:Philippine National Bank
13.
14.
SUMMARY:Magdadaro worked for PNB for almost 30 years. He applied for early retirement under the
companys program, and indicated that his preferred effective date of retirement was on Dec 31, 1999. PNB approved the
application but set the date of his retirement to 1998. Magdadaro claimed that the accelerated retirement amounted to illegal
dismissal, for there was no showing that his continued employment woud impair bank operations. SC held that the question
of whether continued employment would impair business operations is within management prerogative.
15.
16.
DOCTRINE:The exercise of management prerogative is valid provided it is not performed in a malicious, harsh,
oppressive, vindictive or wanton manner or out of malice or spite.
17.

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

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

18.
FACTS:
1. MarcelinoMagdadaro was employed by PNB since 1968.
He became Senior Asst Manager of PNBs Branch
Operations and Consumer Finance Division for Visayas.
On Sept 21, 1998, he filed an application for early
retirement under the banks Special Separation Incentive
Program (SSIP). The application provided that his
preferred effective date of retirement was Dec 31, 1999.
2. PNB approved the application but made the retirement
effective on Dec 31, 1998. Magdadaro protested the
acceleration of his retirement and separation benefits,
claiming that it amounted to illegal dismissal.
3. LA ruled that it was management prerogative and does
not constitute illegal dismissal. NLRC reversed, ruling
the accelerated retirement as invalid, as they could not
see how petitioners continued employment would
impair the delivery of bank services. CA again reversed,
claiming management prerogative.
19.
20.
ISSUE:WoN the accelerated retirement fell within
management prerogativeYES.
21.
22.
RULING:Petition DENIED. No Illegal Dismissal.
23.
24.
RATIO:
10. Retirement is the result of a bilateral act of the parties, a

voluntary agreement between the ER and the EE,

whereby the latter, after reaching a certain age, agrees to
sever his/her employment with the former. Retirement is
provided for under LC, Article 287, and is determined by
an existing agreement between the ER and the EE.
11. In this case, PNB offered the SSIP to overhaul the bank
structure and allow it to effectively compete with local
peer and foreign banks. Magdadaro voluntarily availed of
the SSIP, accomplished the form and submitted it. Ho
only questioned the approval of his retirement on a date
earlier than his preferred retirement date.
12. On management prerogative, the Court rules that whether
petitioners early retirement within the SSIP period will
improve or impair the delivery of bank services is a
business decision properly within the exercise of
management prerogative. Moreover, the SSIP provides,
Management shall have the discretion and prerogative
in approving the applications filed under the Plan, as well
as in setting the effectivity dates for separation within the
implementation period of the Plan. Thus, It is clear that
it is within respondents prerogative to set the date of
effectivity of retirement and it may not be necessarily
what is stated in the application. There was a valid
exercise of management prerogative, it not being carried
out in a malicious, harsh, oppressive, vindictive or
wanton manner out of malice or spite.

25.
26.
27.

28.
29.

aARIOLA v. PHILEX MINING CORPORATION

30.
August 9, 2005 | Carpio, J. | Certiorari | Voluntary Retirement
PETITIONERS: Roberto Ariola et al (Members of Philex Mines Supervisory Employees Union)
RESPONDENTS: Philex Mining Corporation and Voluntary arbitrator Norma b. Advincula

31.
32.
33.
34.
SUMMARY: Petitioners are former supervisors of Philex. Citing financial losses, Philex implemented measures to
reduce personnel via voluntary retirement and retrenchment. In the case of supervisory employees, the union, signed a
MOA prescribing the criteria for retrenchment. They received notices of retrenchment and separation pay. However, they
filed for illegal dismissal.
35.
DOCTRINE: Retirement results from a voluntary agreement between the employer and the employee where the
latter, after reaching a certain age, agrees to sever his employment with the former. IF the intent to retire is not clearly
established or if retirement is involuntary, it is to be treated as a discharge.
36.
37.
FACTS:
the Union representing the supervisory employees.
38.
1. Petitioners are former supervisors of respondent
40.
3. Philex informed DOLE of its plan to retrench 241
Philex Mining Corporation. In 1992, Philex sustained
employees. And then 6 supervisory and 49 rank-and-file
financial losses in its operations. To save costs, Philex adopted
employees received notice of termination from Philex
several measures including reducing personnel through early
effective 30 days after receipt. All of them signed Deeds of
voluntary retirement and retrenchment programs. Some of the
Release and Quitclaim in Philexs favor.
employees who are in redundant positions were re-assigned
41.
4. Both the supervisory and rank-and-file employees
and some took early retirement.
claim that Philex dismissed them illegally and submitted the
39.
2. There were two MOA in this case prescribing the
case to voluntary arbitration.
criteria for retrenchment: (1) between Philex and the Labor
42.
5. In the case of the rank-and-file employees:
Union of the rank-and-file employees, (2) between Philex and
Arbitrator Valdex declared that they were illegally dismissed

and that Philex failed to prove its financial losses and the
criteria for retrenchment in the MOA were arbitrary and
inconsistent with the CBA then in force. CA reversed the
Arbitrators findings and that there is valid reason for the
retrenchment, however Philex is liable for illegal dismissal
because the criteria for retrenchment in the rank-and-files
MOA were inequitable. The decision became final on 27 April
1998.
43.
6. In the case of the Supervisory employees:
Arbitrator Advincula ordered the reinstatement of the
employees. However, upon Philex motion, Advincula reversed
his decision and held that there is sufficient basis or just cause
for Philex to undertake a retrenchment. He also held that the
petitioners were barred from questioning their separation from
service because they availed of the early retirement program
and executed the Deeds of Release and Quitclaim releasing
Philex from further liability. The Arbitrator added that there no
indication that the retirement was forced since the
complainants are not ordinary laborers but they are
supervisors, hence there is every reason to believe that they
know their basic rights and that they would not allow
themselves to be coerced into signing away these rights. CA
affirmed the decision of the Arbiter.
44.
45.
ISSUE:
46.
1. WoN petitioners retired or Philex dismissed them
from services DISMISSED for Retrenchment
47.
2. WoN the dismissal was illegal YES
48.
49.
RULING: Petition GRANTED.
50.
51.
RATIO:
52.
1. The Arbitrator and CA based their decisions on the
fact that the petitioners availed and acquired the retirement
gratuity as evidenced by the quitclaims and receipts.
HOWEVER, the court held that the retirement gratuity
regarged by Philex is actually a separation pay as it was paid
because of the petitioners retrenchment. The letter of notice
delivered to Benjamin Biete (one of the petitioners) states:
You will be retiring from service due to separation at the
instance of Philex Mining Corporation as a result of its
retrenchment program. Since your separation is for cause
beyond your control, you will be entitled to payment of
retirement gratuity under the Retirement Gratuity Plan.
CLEARLY, Philex treated the retirement gratuity as
petitioners basic separation pay. Significantly, Philex paid
petitioners such separation pay after notifying them of their
retrenchment.
53.
2. FURTHERMORE, Philex failed to submit other
documents proving petitioners retirement, such as their
application for retirement under Philexs early retirement
program and their clearance slips, undermines its claim.
Submission of these documents would have put to rest any

doubt on the cause of the separation. Vouchers of payment do

not suffice to prove petitioners retirement from Philex (SEE
DOCTRINE). Since the payment is for the reason of
retrenchment, the petitioners are dismissed for retrenchment as
well.
54.
3. Even as an action for retrenchment, the dismissal is
still illegal. The requirements for retrenchment are (1) it is
undertaken to prevent losses, which are not merely
deminimis, but substantial, serious, actual, and real, or if only
expected, are reasonably imminent as perceived
objectivelyand in good faith by the employer, (2) the employer
serves written notice both to the DOLE and employees, 30
days prior to the intended date of retrenchmentl and (3) the
employer pays the retrenched employees separation pay
equivalent to 1 month pay or at least month pay for every
year of service, whichever is higher. (4) employer must use
fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees,
and that (5) the retrenchment must be undertaken in good
faith. An independent auditor confirmed Philexs claim for
financial losses and that the suffered and projected loss is
substantial. HOWEVER, Philex failed to implement its
retrenchment program in a just and proper manner. One of the
criteria for the retrenchment of supervisory employees
contravenes with the CBA then in force. The criteria evaluates
ones disciplinary record oever a 3 year period regardless of
the penalty involved, however the CBA stipulates that offenses
punishable by reprimands and warnings of separation will be
stricken-off the record every 1st February of each year. Since
the Union did not ratify the MOA, the MOA cannot prevail
over the CBA. Failure to use a reasonable and fair standard in
the computation of the supervisors demerits points is not
merely a procedural but a substantive defect which invalidates
petitioners dismissal. If the CBA governs instead of the
MOA, petitioners may not fall under those to be retrenched.
FURTHERMORE, Philex did not explain why it retrenched
the petitioners Biete who got the highest rating in his unit and
Petitioner Mamayson even though he got the third highest
rating in his unit. The criteria for retrenchment were arbitrarily
applied. THe petitioners are thus entitled to reinstatement will
full backwages, HOWEVER, the amounts received as net
separation pay should be deducted from their back wages.
55.
5. LASTLY, the Court held that the petitioners are not
estopped to file a complaint for illegal dismissal despite
signing a Deeds or Release and Quitclaims. Even though the
petitioners are supervisors and not rank-and-fuled employees,
it does not make them less susceptible to financial offers,
faced as they were with the prospect of unemployment.
Petitioners claim that economic necessity constrained them to
accept Philexs monetary offer and sign the Deeds of Release
and Quitclaims..
56.
57.

58.
59.

60.
61.

Philippine Blooming Mills v SSS

August 31, 1966 | Barrera, J | Social Security Legislation

62.
63.

For reference:

64.

April 28, 1957 to October 26, 1958 = Employment of the 6 Japanese employees

65.

The amendment =became effective on January 14, 1958&published on November 10, 1958 issue of the Official Gazette

66.
67.
Summary: PBM here employed 6 Japanese employees. At first both the employee and employer are entitled to refund upon
the departure of the former. An amendment on the rules was issued and removing the refund to it unless they have been member of
the system for 2 years. Commission denied the refund because of said amendment. This was affirmed by the SC
68.
69.

FACTS

70.
1.
2.
3.

4.
5.
6.
7.
8.

The Philippine Blooming Mills Co., Inc. has been employing Japanese technicians under a pre-arranged contract of
employment,
They sent an inquiry to the Social Security System (SSS) whether these employees are subject to compulsory coverage under
the System
The First Deputy Administrator of the SSS reply: Aliens who are employed in the Phil. Shall also be covered but aliens who
are employed temporarily shall be entitled to a rebate of a proportionate amount of their contribution upon their departure and
that their employers shall be entitled to the same proportionate rebate of their contributions in behalf of said aliens employed
by them.
Then the Japanese employees left the Philippines. Premium contributions of the employer and the employees on the latter's
memberships in the SSS werepaid
the Assistant General Manager of the corporation, on behalf of the Japanese technicians, filed a claim with the SSS for the
refund of the premiums paid to the System, on the ground of termination of the members' employment. BUT WAS DENIED
Petitioners filed a petition with the Social Security Commission for the return or refund of the premiums, paid by both
employer and Japanese employees
SSS denied it.
After hearing, the Commission denied it because the rule was amended by eliminating the portion granting a return of the
premium contributions. This amendment became effective on January 14, 1958, or before the employment of the subject
aliens terminated. And that it only allows such refund if they have been at least a member of the system for 2 years.

71.
72.

Hence this appeal,

73.
74.
ISSUE: WON appellants are bound by the amended Rules requiring membership for two years before refund of the premium
contributions may be allowed - NO
75.
76.
RULING: Finding no error in the resolution of the Commission appealed from, the same is hereby affirmed, with costs
against the appellants. So ordered.
77.
78.
79.

RATIO

80.

1.It is not here disputed that the Rules and Regulations of the SSS, having been promulgated in implementation of a law, have

the force and effect of a statute;" that the amendment thereto, although approved by the President on January 14, 1958, was published
after the employment of the Japanese technicians had ceased and the corresponding claim for the refund of the premium contributions
was filed with the System.
81.
82.
2.It may be argued, however, that while the amendment to the Rules may have been lawfully made by the Commission and
duly approved by the President on January 14, 1958, such amendment was only published in the November 1958 issue of the Official
Gazette, and after appellants' employment had already ceased. Suffice it to say, in this regard, that under Article 2 of the Civil Code,
the date of publication of laws in the Official Gazette is material for the purpose of determining their effectivity, only if the statutes
themselves do not so provide.
83.
84.
3.In the present case, the original Rules and Regulations of the SSS specifically provide that any amendment thereto
subsequently adopted by the Commission, shall take effect on the date of its approval by the President. Consequently, the delayed
publication of the amended rules in the Official Gazette did not affect the date of their effectivity, which is January 14, 1958, when
they were approved by the President. It follows that when the Japanese technicians were separated from employment in October,
1958, the rule governing refund of premiums is Rule IX of the amended Rules and Regulations, which requires membership for 2
years before such refund of premiums may be allowed.
85.
86.
power

4.Also, the Court held that an allegation of non-impairment of contract will not prosper because this is an exercise of police

87.
88.

*I DEDICATE THIS LAST DIGEST TO RENZ and ISO

89.
90.

92.
93.
94.

SANTIAGO v CA

91.
Oct 31 1984 | Melencio-Herrera, J.| Review| Social Security Act
PETITIONER:Manuel Santiago et al
RESPONDENT:CA, SSS

95.
SUMMARY:Employer failed to remit to SSS the personal contributions by the Ps wc were deducted from their
salary. Ps sought to have the amts(premiums and salary loan installments) credited in their favor saying that there is a contract
of agency bet their employer and SSS. Commission denied saying that Ps should have proceeded against their employer. SC
held that there is no contract of agency bet SSS and employer; the latter is merely the conduit, authorized by the employee, to
remit premiums to SSS. W regard to the premiums not remitted by employer, SSS can go after the employer w/o prejudice to
the rights of employees to the benefits of the coverage. The mentioned benefits, however, do not include the salary loan
privileges that member-employees apply for. The System may or may not grant those loans; they are not covered by law but
by contract between the System as lender, and the private employee, as borrower.
96.
DOCTRINE:It is the borrower (employee) who expressly authorizes his employer and subsequent employers to
deduct from his salary the installments due on his salary loan. The employer then remits the installments due to the System in
accordance with rules that the System has laid down. The employer, in so deducting the installment payments from the
borrower, does so upon the latter's authorization. The employer is merely the conduit for remitting the premiums for reasons of
administrative convenience and expediency in order that SSS mems may be served efficiently and expeditiously. No contract
of agency, in the legal sense, therefore may be said to exist between the employer and the System.
97.
98.

FACTS:

1.

Ps were employees of I-FengEnamelling Com (Phil.) Inc.

for several years, some from 1950 up to the time the comp
closed its business on May 1, 1965, and that since the
enactment of the Social Security Act, said employees
have been paying, through salary deductions, their
personal contribs to the System.
During their
employment, they also enjoyed salary loan benefits, their
installment payments thereto were likewise deducted and
collected by their employer, and that said employer failed
to remit to the System not only the installment payments
to their salary loans but also the back premiums,
excluding of course the penalties therefor.
2.

100.
RULING:Modified in that only the premium
contribs paid by Ps to I-Feng Enamelling Company (Phil.)
Inc., shall be credited in Ps' favor so that they may continue to
enjoy the benefits of the coverage as provided by law
101.
102.
RATIO:

2.

3.

4.

But Ps also rely on the "Current Employer's

Certification/Agreement" providing that the employer is
empowered to deduct monthly from the salaries of said
employee the installments due on the loan that may be
granted by virtue of the app and to remit the same to the
System not later than the 20th day of the month ff the end
of each calendar quarter, the employer being entitled to
deduct from the total quarterly collections P.07 for every
P10 thereof as his collection fee.

5.

The foregoing reiterates the proviso in SSS Circular No.

52, reading: the System shall charge a service fee of P3.50
for every approved app deductible in advance from the
proceeds of the loan.

6.

However, the employer shall be entitled to deduct from

the total quarterly collections that he remits to the System
a collection fee of P.07 for every P10 or fraction thereof.

7.

The entitlement to the collection fee by the employer

neither makes the latter the agent of the System. The fee
was devised to encourage employers to be prompt in the
remittance of their collections to the System. The
negligible collection fee is only an incentive granted to all
employers throughout the country covered by SSS for
their efforts in helping the System collect the necessary
contribs and payments made to the latter by the
innumerable individual mems.

8.

To rule otherwise would be to open the door for

unscrupulous employers to circumvent the law by not
remitting their collections of salary loans installment
payments from employees since, anyway, the System
would credit them with what they had paid to the
Employer even though the latter fails to remit them to the
System.

9.

There is a difference, however, in respect of premium

contributions, by reason of the explicit provision of
Section 22(b) of the Social Security Act, reading: The
contributions payable under this Act in cases where an
employer refuses or neglects to pay the same shall be
collected by the System in the same manner as taxes are
made collectible under the Natl Internal Revenue Code, as
amended, Failure or refusal of the employer to pay or
remit the contributions herein prescribed shall not

Petitioners sought to have the amounts credited in their

favor but the Commission denied their petition, stating
that they should have proceeded against the IFengEnamelling Company (Phil.) Inc., their alleged
employer. CA affirmed.

99.
ISSUE:WON the premium contribs and payments of
salary loans by Ps, which were deducted and collected from
their salaries by their Employer, but hot remitted to the
System, should be credited in their favor by the System YES,
but only the premium contribs

1.

from the borrower, does so upon the latter's authorization.

The employer is merely the conduit for remitting the
premiums for reasons of administrative convenience and
expediency in order that SSS members may be served
efficiently and expeditiously. No contract of agency, in
the legal sense, therefore may be said to exist between
the employer and the System.

Ps argue that they are entitled to full credit for the

unremitted premium contribs and salary loan installment
payments deducted from their wages because, by law, a
contract of agency exists between SSS and the Employer
in the collection of the salary loan installment payments,
and therefore, as such agent, payment to the Employer is
payment to the principal, which is the System.
On the matter of payments of salary loans, SSS Circular
No. 52 provides: in case the borrower is in active
employment, payment shall be made thru this employer
by means of salary deductions. For this purpose, he shall
expressly authorize in the app form his employer and the
subsequent employers to whom he may later on transfer
to deduct from his salaries the installments due. The
employer, in turn shall remit to the System these
installments.
From the rule, it is the borrower who expressly authorizes
his employer and subsequent employers to deduct from
his salary the installments due on his salary loan. The
employer then remits the installments due to the System
in accordance with rules that the System has laid down.
The employer, in so deducting the installment payments

prejudice the right of the covered employee to the benefits

of the coverage.
10. Clearly, if the employer neglects to pay the premium
contribs, the System may proceed w the collection in the
same manner as the BIR in case of unpaid taxes. Plainly,
too, notwithstanding non-remittance by employers of the
premium contributions, covered employees are entitled to
the benefits of the coverage, such as death sickness,
retirement, and permanent disability benefits.
11. These benefits continue to be enjoyed by the employees
by operation of law and not, as Ps allege, because the
premium contribs and salary loan installment payments
have already became the money of the System upon
payment by the employees to the employer. It should be
remembered that funds contributed to the System by
compulsion of law are funds belonging to the mems, wc
are merely held in trust by the govt. The mentioned
benefits, however, do not include the salary loan
privileges that member-employees apply for. The System
may or may not grant those loans pursuant to its rules and
1.
2.

regulations. The salary loans are not covered by law but

by contract between the System as lender, and the private
employee, as borrower.
12. Contrary to Ps contention, the penalty of 3%/mo imposed
on the employer, if any premium contrib is not paid to the
System, prescribed by Sec 22 of the Act from the date the
contribution falls due until paid, does not necessarily
make the employer the agent of the System. The
prescribed penalty is intended to exact compliance by the
employer. It is evidently of a punitive character to assure
that employers do not take lightly the State's exercise of
the police power in the implementation of the Republic's
declared policy to develop, establish gradually, and
perfect an SSS wc shall be suitable to the needs of the
people throughout the PH and to provide protection to
employees against the hazards of disability, sickness, old
age, and death.
103.
104.
105.

3.
4.

5.