G.R. No.
82895 November 7, 1989 The complaint was opposed by petitioners who, in their own Position
LLORA MOTORS, INC. and/or CONSTANTINO CARLOTA, JR., petitioners,
vs.
HON. FRANKLIN DRILON in his capacity as the Secretary of the Department
of Labor and Employment, HON. DANIEL M. LUCAS, DOMINGO H. ZAPANTA
and OSCAR N. ABELLA, in their capacity as Commissioners of the National
Labor Relations Commission (NLRC) Manila, Second Division, HON.
RICARDO N. OLAIREZ, in his capacity as the Labor Arbiter of the Regional
Arbitration Branch No. I, San Fernando, La Union and PRIMITIVO
ALVIAR, respondents.
Yabes & Associates Law office for petitioners.
Francisco T. Gualberto and Humberto M. Tutaan, Sr. counsel and Tupas ROI
Representatives for Alviar.
FELICIANO, J.:
The subject of the present Petition for certiorari with Preliminary Injunction is the
Resolution 1 dated 20 January 1988 of the public respondent National Labor
Relations Commission (NLRC) in NLRC Case No. RAB-1-0096-85 (entitled
"Primitivo V. Alviar, complainant. versus Llora Motors Inc., and/or Constatino
Carlota, respondents").
Sometime in September of 1968, private respondent Primitivo V. Alviar began his
employment with petitioner Llora Motors, Inc. As a truck driver, Mr. Alviar rendered
services to the company eight (8) hours a day (exluding overtime) seven days a
week, and for his labor received a salary computed on a per trip basis plus
emergency cost of living allowance (ECOLA). At the time he stopped working on
19 April 1985, Mr. Alviar was 65 Years of age.
On 28 October 1985, private respondent Alviar filed with NLRC Regional
Arbitration Branch No. I (San Fernando, La Union) a complaint 2 (docketed as
NLRC Case No. RAB-I-0096-85) for "Separation Pay and Non-Payment of Daily
Wages" against petitioners Llora Motors and Constantino Carlota, Jr., the
company manager. In a Position Paper 3he 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.
Paper, 4 alleged that all of the employment benefits claimed by private respondent
Alviar had already been fully paid. On the matter of retirement benefits, it was
contended that Mr. Alviar had not been dismissed by Llora Motors, but that
"[s]ometime in the early part of 1985, [Alviar] showed utter lack of interest in his
work [and] would be absent for no apparent reason; "that "[i]n the meantime, Truck
No. 802, assigned to complainant, laid Idle and because of non-use for sometime,
it deteriorated so seriously;" that in the last week of April of 1985, Mr. Alviar
reported for work and was then informed that "while Truck 802 has not been
rehabilitated as yet, he could act as relief driver;" that "complainant did not like to
be a relief driver in the meantime for since then he did not report for work;" and
that "it was complainant who abandoned his work since the last week of April 1985
and never reported since then." Neither had Mr. Alviar been retired, petitioners
claimed, "for the simple reason that respondent corporation does not have any
retirement plan ... [or] any collective bargaining agreement with the employees for
no union exists within the company because the employees, drivers included,
received more than the standard benefits for their labor." Petitioners contended
further that "records will show that complainant had received retirement benefits
from the Social Security System when he retired therefrom in 1983."
Mr. Alviar, in his pleadings submitted before the Labor Arbiter, did not controvert
petitioner's allegations of abandonment and non-dismissal. Mr. Alviar there simply
alleged that in April of 1985, he "retired from the service due to his old age of 65
years."
On 27 January 1987, the respondent Labor Arbiter rendered a Decision, 5 the
dispositive portion of which read:
WHEREFORE, premises all considered, we hereby order the
respondents to pay complainants Primitivo Alviar, as follows:
1. P4,709.54 — Unpaid ECOLA differentials
2. 9,985.80 — Retirement benefits(for 17 years)
P14,695.34
3. 1,469.53 — 10% attorney's fees
P16,164.87 — Total award
and to pay complainant legal interest on the total award to be
compounded annually after ten (10) days from receipt of this
decision.
 Respondents are finally ordered to pay complainant through this
Regional Arbitration Branch Office or present proof of compliance
with this order within ten (10) days from receipt hereof
SO ORDERED.
An appeal was subsequently interposed with public respondent NLRC, petitioners
there claiming that they had been denied due process by the Labor Arbiter, who
had rendered judgment in NLRC Case No. RAB-1-0096-85 without first conducting
formal hearings therein. In addition, petitioners, reiterating that private respondent
Alviar had neither been dismissed nor retired by the company, questioned the
propriety of the P9,985.80 award of retirement benefits.
On 20 January 1988, public respondent NLRC issued the disputed Resolution,
affirming the decision of the Labor Arbiter and ordering dismissal of the appeal. A
Motion for Reconsideration was denied 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. This Court has held in
the past that a formal or trial-type hearing is not at all times and in all instances
essential to due
process, 7 the requirements of which are satisfied where parties are afforded fair
and reasonable opportunity to explain their side of the controversy at hand. 8 Such
opportunity had not here been withheld from petitioners. The record shows that in
response to private respondent Alviar's complaint below and before the Labor
Arbiter rendered his decision of 27 January 1987, petitioners submitted on 21
January 1987, petitioners submitted on 21 January 1986 a Position Paper,
complete with annexes, 9 where they had set out and argued the factual as well as
the legal bases of their position. Petitioners do not claim that their submissions
there were ignored or disregarded altogether by the Labor Arbiter. The record
moreover shows that petitioners were given additional opportunity to argue their
case on appeal before public respondent NLRC, in a Memorandum, 10 and Motion
for Reconsideration, 11 which pleadings were likewise considered by that labor
agency in the course of resolving the case. All told, the due process argument put
forward by petitioners must fail.
In respect of the second and principal issue, it is urged by petitioners that the
award of retirement benefits to private respondent Alviar is improper, there being
no contractual or statutory basis for such award.
Our Labor Code has only one article that deals with the subject of "retirement from
the service." Article 287 of the Code reads as follows:
Article 287. Retirement. — Any employee may be retired upon
reaching the retirement age established in the Collective
Bargaining Agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive
such retirement benefits as he may have earned under existing
laws and any collective bargaining or other agreement. (Emphasis
supplied)
Examination of Article 287 above shows that entitlement to retirement benefits may
accrue either (a) under existing laws or (b) under a collective bargaining
agreement or other employment contract. It is at once apparent that Article 287
does not itself purport to impose any obligation upon employers to set up a
retirement scheme for their employees over and above that already established
under existing laws. In other words, Article 287 recognizes that existing laws
already provide for a scheme by which retirement benefits may be earned or
accrue in favor of employees, as part of a broader social security system that
provides not only for retirement benefits but also death and funeral benefits,
permanent disability benefits, sickness benefits and maternity leave benefits. 12 As
is commonplace knowledge, the Social Security Act provides for retirement
benefits which essentially consist of the right to receive a monthly pension for the
rest of the covered employee's life provided that: (1) such employee had paid at
least one hundred twenty (120) monthly contributions prior to retirement; and (2)
has reached the age of sixty (60) years (if his salary is less than P300.00 a month)
or 65 years. The retirement scheme here 'established is compulsory and
contributory in character on the part of both the employer and the employee,
backed up by criminal sanctions and administered by a large and elaborate
bureaucracy.
Article 287 of the Labor Code recognizes that employers and employees may, by a
colective bargaining or other agreement, set up a retirement plan in addition to that
stablished by the Social Security law, but prescribes at the same time that such
consensual additional retirement plan cannot be substituted for or reduce the
retirement benefits available under the compulsory scheme established by the
Social Security law. Such is the thrust of the second paragraph of Article 287
which directs that the employee shall be entitled to receive retirement benefits
earned "under existing laws and any collective bargaining or other agreement."
It is also important here to examine Section 13 and 14 of Rule, I, book VI of the
Rules and Regulations Implementing the Labor Code (hereafter, "Implementing
rule I"). Implementing Rule I deals with both termination of services and retirement,
being entitled "Termination of Employment and Retirement." But Sections 13 and
14 of Implementing Rule I are the only provisions which deal with retirement
matters. Under Section 13 which provides as follows:
Sec. 13. Retirement. — In the absence of any
collective bargaining agreement or other applicable
agreement concerning terms and conditions of employment which
provides for retirement at an older age, an employee may be
retired upon reaching the age of sixty (60) years. (Emphasis
supplied)
where an additional retirement plan has been established by a collective
bargaining agreement, or other applicable agreement (or, under Section 14, an
"established employer policy"), but such plan fails to specify another, older, age of
retirement, an employee may retire, and may in turn be retired by his employer,
upon reaching age sixty (60).
That there was some confusion in the mind of the Labor Arbiter in the case at bar
between "termination pay" and "retirement benefits" would seem entirely possible:
private respondent Alviar initially asked for "separation pay" and the Labor Arbiter
awarded him "retirement benefits." That confusion was perhaps due to the Labor
Arbiter's citing Section 14 of Implementing Rule I, which reads as follows:
Sec. 14. Retirement benefits. — (a) An employee who is retired
pursuant to a bona-fide retirement plan or a in accordance with
the applicable individual or collective agreement or established
employer policy shall be entitled to all the retirement benefits
provided therein or to termination pay equivalent at least one-half
month salary for every year of service, whichever is higher, a
fraction of at least six (6) months being considered as one whole
year.
(b) Where both the employer and the employee contribute to
the retirement plan, agreement or policy, the employer's total
contribution thereto shall not be less than the total termination pay
to which the employee would have been entitled had there been
no such retirement fund. In case the employer's contribution is
less than the termination pay the employee is entitled to receive,
the employer shall pay the deficiency upon the retirement of the
employee.
(c) This Section shall apply where the employee retires at the age
of sixty (60) years or older. (Emphasis supplied)
Section 14 (a) refers to "termination pay equivalent to at least one-half (1/2) month
for every year of service" while Section 14 (b) mentions "termination pay to which
the employee would have been entitled had there been no such retirement fund"
as well as "termination pay the employee is entitled to receive." It should be
recalled that Sections 13 and 14 are found in Implementing rule I which deals with
both "termination of employment" and "retirement." It is important to keep the two
(2) concepts of "termination pay" and "retirement benefits" separate and distinct
from each other. Termination pay or separation pay is required to be paid by an
employer in particular situations Identified by the Labor Code itself or by
Implementing rule I. 13 Termination pay where properly due and payable under
some applicable provision of the Labor Code or under Section 4 (b) of
Implementing Rule 1, must be paid whether or not an additional retirement plan
has been set up under an agreement with the employer or under an "established
employer policy."
What needs to be stressed, however, is that Section 14 of Implementing Rule 1,
like Article 287 of the Labor Code, does not purport to require "termination pay" to
be paid to an employee who may want to retire but for whom no additional
retirement plan had been set tip by prior agreement with the employer. Thus,
Section 14 itself speaks of an employee "who is retired pursuant to a bona-fide
retirement plan or in accordance with the applicable individual or collective
agreement or established employer policy." What Section 14 of Implementing Rule
I may be seen to be saying is that where termination pay is otherwise payable to
an employee under an applicable provision of the Labor Code, and an additional or
consensual retirement plan exists, then payments under such retirement plan may
be credited against the termination pay that is due, subject, however, to certain
conditions. These conditions are: (a) that payments under the additional retirement
plan cannot have the effect of reducing the amount of termination pay due and
payable to less than one-half (1/2) month's salary for every year of service; and (b)
the employee cannot be made to contribute to the termination pay that he is
entitled to receive under some provision of the Labor Code; in other words, the
employee is entitled to the full amount of his termination pay plus at least the
return of his own contributions to the additional retirement plan.
The respondents, in defending the award of retirement benefits granted by the
Labor Arbiter and affirmed by the NLRC, invoke Allied Investigation Bureau, Inc. v.
Ople.14 Examination, however, of Allied shows that respondents' reliance thereon
is quite misplaced. In Allied, Victoriano Velasquez had been an employee of the
Allied Investigation Bureau, Inc., a security guard agency, since 1953. In 1976,
having reached the age of sixty (60) years, Velasquez submitted to Allied an
application for retirement benefits, which application was subsequently approved
by Allied,although there was then no collective bargaining agreement or employer
policy establishing an additional retirement plan for employees of the agency. A
controversy arose in respect of the method adopted by Allied in computing the
amount of retirement benefits it had undertaken to pay to Velasquez. Instead of
basing that amount upon Velasquez's actual period of employment with the
agency (i.e., from 1953 to 1976), Allied computed such amount as starting from the
date of effectivity of the Labor Code (i.e., 1 November 1974 to 1976). Acting on the
complaint for retirement benefits, the Labor Arbiter ordered Allied to pay Velasquez
on amount computed on the basis of the latter's twenty- three (23) years of service
with the agency. On a Petition for Certiorari, the Court upheld the Labor Arbiter's
computation of retirement benefits in favor of Velasquez. The Court, speaking
through then Mr. Justice Fernando, said:
1. There is no question that petitioner had agreed to grant
retirement benefits to private respondent. It would, however, limit
such retirement benefits only from the date of the effectivity of the
Labor Code.That is its contention. The refutation given in the
Comment of Solicitor General Estelito P. Mendoza is persuasive.
As was pointed out,"in the computation thereof, public
respondents acted judiciously in reckoning the retirement pay from
the time private respondent started working with petitioner since
respondent employee's application for retirement benefits and the
company's approval of the same make express mention of
Sections 13 and 14, rule I, Book VI of the Implementing Rules and
Regulations of the Labor Code as the basis for retirement pay.
Section 14 (a) of said rule provides that an employee who is
retired pursuant to a bona-fide retirement plan or in accordance
with the applicable individual or collective agreement or
established employer policy shall be entitled to all the retirement
benefits provided therein or to termination pay equivalent to at
least one-half month salary for every year of service, whichever is
higher, a fraction of at least six (6) months being considered as
one whole year." Further it was stated: 'This position taken by
public respondents squares with the principle that social legislation
should be interpreted in favor of workers in the light of the
Constitutional mandate that the State shall afford protection to
labor. 15 (Emphasis supplied)
consistently resisted the demand for separation pay or retirement benefits by
private respondent Alviar, precisely pointing to the fact that there was no collective
bargaining agreement or other contractual basis or any "established employer
policy" that contemplated the grant of such retirement benefits.
Clearly, there was in the instant case no consensual basis fro the required
payment of additional retirement benefits. 16 The Labor Arbiter and the NLRC had
not declared private respondent Alviar to have been illegally dismissed by
petitioners. neither was there any pretense on the part of private respondent Alviar
that labor-saving devices had been installed, or that redundancy or retrenchment
or cessation of operations had occurred in Llora Motors or that he was afflicted by
some disabling disease, or that, being entitled to reinstatement, he could not be
reinstated to this old position. Under these circumstances, the portion of the Labor
Arbiter's award which required petitioners to pay an amount equivalent to a half
month's pay for every year of service of Mr. Alviar cannot be justified either as
(additional) retirement benefits or as termination pay and hence constituted an act
without or in excess of jurisdiction.
WHEREFORE, the Decision of the Labor Arbiter dated 27 January 1987 and the
Resolution of the National Labor Relations Commission dated 20 January 1988 in
NLRC Case No. RAB-I-0096-85 are hereby SET ASIDE and a new decision shall
be entered REQUIRING petitioners to pay private respondent Primitivo Alviar the
amount of P4,709.54 for unpaid ECOLA differentials, plus ten percent (10%)
thereof as attorney's fees and to pay private respondent legal interest on the total
award, compounded annually, from the date of petitioners' receipt of the original
(now vacated) decision of the Labor Arbiter, and until full payment of the amount
here awarded. No pronouncement as to costs.
SO ORDERED.

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
 [G.R. No. 143686. January 15, 2002]
PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION
OF THE PHILIPPINES, respondent.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari seeking to annul and set aside the
March 2, 2000 Decision[1] and the June 19, 2000 Resolution[2] of the Court of
Appeals[3] in CA-G.R. SP No. 54403 which affirmed the Order[4] dated June 13, 1998
and Resolution[5] dated June 1, 1991 of the Secretary of Labor and Employment in
NCMB-NCR-N.S. 12-514-97.
The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and
respondent Airline Pilots Association of the Philippines (ALPAP), the exclusive
bargaining representative of all commercial airline pilots of petitioner, stemmed from
petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes under
Section 2, Article VII, of the 1967 PAL-ALPAP Retirement
Plan. Contending, inter alia,that the retirement of Captain Collantes constituted
illegal dismissal and union busting, ALPAP filed a Notice of Strike with the
Department of Labor and Employment (DOLE). Pursuant to Article 263 (g) of the
Labor Code, the Secretary of the DOLE (hereafter referred to as Secretary)
assumed jurisdiction over the labor dispute.
On June 13, 1998, the Secretary issued the assailed order
upholding PALs action of unilaterally retiring Captain Collantes and recognizing the
same as a valid exercise of its option under Section 2, Article VII, of the 1967 PAL-
ALPAP Retirement Plan. The Secretary further ordered that the basis of the
computation of Captain Collantes retirement benefits should be Article 287 of the
Labor Code (as amended by Republic Act No. 7641) and not Section 2, Article VII,
of the PAL-ALPAP Retirement Plan. The Secretary added that in the exercise of its
option to retire pilots, PAL should first consult the pilot concerned before
implementing his retirement. The dispositive portion of the said order reads:
WHEREFORE, premises considered, this Office hereby issues the following
resolutions:
(1) PALs action on Captain Albino Collantes is hereby recognized as a valid
exercise of its option under Sections 1 and 2, Article VII of the 1976 Retirement
Plan. However, the retirement benefits provided under Section 2 shall be adjusted
to comply with Section 5, of Republic Act No. 7641.
(2) Said 1967 Retirement Plan which was incorporated as Article XXVII of the PAL-
ALPAP Collective Bargaining Agreement, is hereby sustained. In the interest of
justice, however, this Office holds that whenever PAL exercises its option under
Section 2, it shall consult the pilot involved before the retirement is implemented.
(3) PAL is not guilty of gross violation of the CBA insofar as the Wet Lease
Agreement is concerned; and
(4) The coverage of Section 6, Article 1 of the PAL-ALPAP Collective Bargaining
Agreement is limited only to union dues and other fees and assessments which
are rightfully remitted to and are due ALPAP.
The above dispositions shall be without prejudice to the parties arriving at a
voluntary settlement of the dispute, especially in connection with employer-
employee relations in PAL. Accordingly, the National Conciliation and Mediation
Board (NCMB) is hereby directed to continue assisting the parties in arriving at
such a settlement.
The department takes notice of the Ex-parte Manifestation filed by PAL on June
10, 1998.
SO ORDERED.[6]
A motion for reconsideration of the foregoing order was denied by the Secretary
on June 1, 1991.
On September 24, 1999, PAL filed with the Court of Appeals a petition
for certiorari with prayer for injunction and temporary restraining order. On March 2,
2000, and June 19, 2000, however, the Court of Appeals denied the petition and the
motion for reconsideration of petitioner, respectively. Hence, PAL appealed to this
Court, contending that:
I
THE QUESTION OF WHETHER OR NOT THE AMOUNT OF RETIREMENT
PAY TO BE PAID UNDER SECTION 2, ARTICLE VII OF THE PAL-ALPAP
RETIREMENT PLAN OF 1967 SHOULD BE INCREASED WAS NOT IN
NCMB-NCR CASE NO. 12514-97.
II
A JUDGMENT THAT GOES BEYOND THE ISSUES AND PURPORTS TO
ADJUDICATE SOMETHING UPON WHICH THE PARTIES WERE NOT
 HEARD IS IRREGULAR AND INVALID SINCE IT AMOUNTS TO A DENIAL
OF DUE PROCESS.
III
THE LAW GRANTS TO THE CONTRACTING PARTIES THE EXCLUSIVE
RIGHT TO DETERMINE FOR THEMSELVES THE PROVISIONS OF A
COLLECTIVE BARGAINING AGREEMENT.
IV
THE SECRETARY OF LABOR AND EMPLOYMENT CANNOT AMEND THE
CBA AND THE PAL-ALPAP RETIREMENT PLAN OF 1967 WITHOUT
VIOLATING THE PROSCRIPTION AGAINST THE IMPAIRMENT OF
CONTRACTS.
V pilots are in, the parties provided for a special scheme of retirement different from
ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND
EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP
RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT AND
INIQUITOUS TO COMPEL PETITIONER TO PAY RETIREMENT PAY IN
ACCORDANCE WITH ARTICLE 287 OF THE LABOR CODE.
VI
ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND
EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP
RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT TO COMPEL
PETITIONER TO CONSULT THE PILOT CONCERNED BEFORE
RETIREMENT IS IMPLEMENTED.[7]
The Court of Appeals, applying the second paragraph of Article 287 of the
Labor Code, held that an employees retirement benefits under any collective
bargaining and other agreement shall not be less than those provided in the Labor
Code.[8] Hence, Article 287 of the Labor Code and not the 1967 PAL-ALPAP
Retirement Plan, should govern the computation of the benefits to be awarded to
Captain Collantes.
The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:
SECTION 1. Normal Retirement. (a) Any member who completed twenty (20)
years of service as a pilot for PAL or has flown 20,000 hours for PAL shall be
eligible for normal retirement. The normal retirement date is the date on which he
completes twenty (20) years of service, or on which he logs his 20,000 hours as a
pilot for PAL. The member who retires on his normal retirement shall be entitled to
either (a) a lump sum payment of P100,000.00 or (b) to such termination pay
benefits to which he may be entitled to under existing laws, whichever is the
greater amount.
SECTION 2. Late Retirement. Any member who remains in the service of the
Company after his normal retirement date may retire either at his option or at the
option of the Company and when so retired he shall be entitled either (a) to a lump
sum payment of P5,000.00 for each completed year of service rendered as a pilot,
or (b) to such termination pay benefits to which he may be entitled under existing
laws, whichever is the greater amount.[9]
A pilot who retires after twenty years of service or after flying 20,000 hours
would still be in the prime of his life and at the peak of his career, compared to one
who retires at the age of 60 years old. Based on this peculiar circumstance that PAL
that contemplated in the Labor Code. Conversely, the provisions of Article 287 of
the Labor Code could not have contemplated the situation of PALs pilots. Rather, it
was intended for those who have no more plans of employment after retirement, and
are thus in need of financial assistance and reward for the years that they have
rendered service.
In any event, petitioner contends that its pilots who retire below the retirement
age of 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement
Plan but also an equity of the retirement fund under the PAL Pilots Retirement
Benefit Plan,[10] entered into between petitioner and respondent on May 30, 1972.
The PAL Pilots Retirement Benefit Plan[11] is a retirement fund raised from
contributions exclusively from petitioner of amounts equivalent to 20% of each pilots
gross monthly pay. Upon retirement, each pilot stands to receive the full amount of
the contribution. In sum, therefore, the pilot gets an amount equivalent to 240% of
his gross monthly income for every year of service he rendered to petitioner. This is
in addition to the amount of not less than P100,000.00 that he shall receive under
the 1967 Retirement Plan.
On the other hand, Article 287 of the Labor Code:
Art. 287. Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: provided, however, That an employees
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided herein.
In the absence of a retirement plan or agreement plan providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared as the compulsory retirement age, who has served at least five (5) years
in the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
Surely, the requirement to consult the pilots prior to their retirement defeats the
exercise by management of its option to retire the said employees. It gives the pilot
concerned an undue prerogative to assail the decision of management. Due process
only requires that notice be given to the pilot of petitioners decision to retire
him. Hence, the Secretary of Labor overstepped the boundaries of reason and
fairness when he imposed on petitioner the additional requirement of consulting
each pilot prior to retiring him.
Furthermore, when the Secretary of Labor and Employment imposed the added
requirement that petitioner should consult its pilots prior to retirement, he resolved a
question which was outside of the issues raised, thereby depriving petitioner an
opportunity to be heard on this point.[15]

Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive
leaves. xxx xxx xxx.
In short, the retirement benefits that a pilot would get under the provisions of
the above-quoted Article 287 of the Labor Code are less than those that he would
get under the applicable retirement plans of petitioner.
Finally, on the issue of whether petitioner should consult the pilot concerned
before exercising its option to retire pilots, we rule that this added requirement, in
effect, amended the terms of Article VII, Section 2 of the 1976 PAL-ALPAP
Retirement Plan. The option of an employer to retire its employees is recognized as
valid.[12] In the earlier case of Bulletin Publishing Corp. v. Sanchez,[13] this Court
held:
WHEREFORE, in view of all the foregoing, the petition is GRANTED. The
March 2, 2000 Decision and the June 19, 2000 Resolution of the Court of Appeals
in CA-G.R. SP No. 54403 are REVERSED and SET ASIDE. The Order of the
Secretary of Labor in NCMB-NCR-N.S. 12-514-97, dated June 13, 1998, is
MODIFIED as follows: The retirement benefits to be awarded to Captain
Albino Collantes shall be based on the 1967 PAL-ALPAP Retirement Plan and the
PAL Pilots Retirement Benefit Plan. The directive contained in subparagraph (2) of
the dispositive portion thereof, which required petitioner to consult the pilot involved
before exercising its option to retire him, is DELETED. The said Order is AFFIRMED
in all other respects.
SO ORDERED.

The aforestated sections explicitly declare, in no uncertain terms, that retirement of

an employee may be done upon initiative and option of the management. And
where there are cases of voluntary retirement, the same is effective only upon the
approval of management. The fact that there are some supervisory employees
who have not yet been retired after 25 years with the company or have reached
the age of sixty merely confirms that it is the singular prerogative of
management, at its option, to retire supervisors or rank-and-file members when it
deems fit. There should be no unfair labor practice committed by management if
the retirement of private respondents were made in accord with the agreed
option. That there were numerous instances wherein management exercised its
option to retire employees pursuant to the aforementioned provisions, appears to
be a fact which private respondents have not controverted. It seems only now
when the question of the legality of a supervisors union has arisen that private
respondents attempt to inject the dubious theory that the private respondents are
entitled to form a union or go on strike because there is allegedly no retirement
policy provided for their benefit. As above noted, this assertion does not appear to
have any factual basis.[14]
DR. PERLA A. POSTIGO v. PHILIPPINE TUBERCULOSIS SOCIETY, INC., (G.R.
No. 155146, January 24, 2006) denied their claims on the ground that the accommodation extended by the GSIS to

the petitioners removed them from the coverage of the law.

The petitioners then sought the opinion of the Bureau of Working Conditions
This petition assails the Decision [1] dated June 13, 2002 of the Court
(BWC) of the Department of Labor and Employment regarding their entitlement to
of Appeals in CA-G.R. SP No. 59597, which set aside
the retirement benefits provided in Rep. Act No. 7641. [5] The BWC confirmed their
the Resolution [2] dated January 31, 2000 of the National Labor Relations
entitlement.[6] The same opinion was rendered and submitted by the respondents
Commission (NLRC) in NLRC NCR CN 00-02-02148-99. The NLRC had dismissed
legal counsel, Atty. Rene V. Sarmiento, to its Board of Directors.[7] Despite this,
the respondents appeal from the Decision of the Labor Arbiter, who ordered the
respondent PTSI refused to pay the petitioners their retirement benefits.
payment of retirement benefits under Republic Act No. 7641 to petitioners. This
petition likewise assails the Resolution[3] dated September 3, 2002 of the Court of
The petitioners then filed a complaint before the Labor Arbiter.
Appeals denying petitioners motion for reconsideration.
In a Decision[8] dated June 30, 1999, the Labor Arbiter declared petitioners
The antecedent facts, as summarized by the Court of Appeals and borne by the
entitled to retirement benefits under Rep. Act No. 7641. However, one petitioner, Dr.
records, are as follows:
Finaflor C. Tan who was awarded her terminal leave pay, was not included in the

award of retirement benefits.

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

respondent Philippine Tuberculosis Society, Inc. (PTSI). They retired on various

Aggrieved, respondent PTSI appealed to the NLRC. Instead of posting the
dates from 1996 to 1998. Upon retirement from service, some of the petitioners who
required cash or surety bond equivalent to the amount of the award, the respondent
were compulsory members of the Government Service Insurance System (GSIS)
filed a Motion to Reduce Bond on the ground that the amount awarded by the Labor
obtained retirement benefits from the GSIS.
Arbiter was erroneous. On January 31, 2000, the NLRC dismissed the appeal for

failure to post the required cash or surety bond.

At the time the petitioners retired, Article 287 of the Labor Code had been
amended by Republic Act No. 7641.[4] Rep. Act No. 7641 granted retirement pay to
qualified employees in the private sector, in the absence of any retirement plan or
On June 13, 2002, the CA reversed the NLRCs decision in this wise:
agreement with the company. As the respondent did not have a retirement plan for
its employees, aside from its contribution to the GSIS, petitioners claimed from the
respondent their retirement benefits under Rep. Act No. 7641. The respondent
Undaunted, the respondent elevated the matter to the Court of Appeals.
Indeed, in several occasions, the Supreme Court has
cautioned the NLRC to give Article 223 of the Labor Code, as
amended, particularly the provisions on requiring a bond on appeals
involving monetary awards, a liberal interpretation in line with the
desired objective of resolving controversies on the merits.
 Hence, considering the timeliness of the filing of the motion
to reduce the appeal bond and the meritorious ground upon which
it relies, We believe and so hold that the legal requirement of
posting an appeal bond has been substantially satisfied. Public
respondent acted with grave abuse of discretion in dismissing the
appeal without passing upon the motion to reduce the appeal bond.
WHEREFORE, the petition is hereby GRANTED.
Resolutions dated 31 January 2000 and 24 May 2000 in NLRC-
NCR CN 00-02-02148-99 of public respondent National Labor
Relations Commission are hereby SET ASIDE. The NLRC is
directed to act on the Motion to Reduce Bond and to give due
course to the Appeal.
SO ORDERED.[9]
The petitioners now submit the following issues for our consideration:
I. Whether or not the remand of the case to
the NLRC would only further delay the resolution of this
case.
II. Whether or not the Honorable Court
of Appeals decided the instant case in accordance with law
and applicable jurisprudence and based on the evidence
on record for having failed to apply the jurisprudential
precepts that:
a. errors in the computation of the monetary award
are properly a subject of appeal and should be
ventilated at the appropriate time, not in a
mere motion to reduce bond; and
b. the posting of a bond is an indispensable
requirement to perfect an employers appeal.
III. Whether or not Petitioners are entitled to the benefits of
the Retirement Pay Law.
IV. Whether or not Petitioners are entitled to interest on
their retirement benefits for the unjustified withholding
thereof.
V. Whether or not Petitioner Dr. Tan should be made
similarly entitled to her retirement pay, which was
inadvertently excluded by the Labor Arbiter, pursuant to the
timely motion to render judgment nunc pro tunc she filed
before the Labor Arbiter and which was consistently raised
all the way up to this Honorable Court, in order to effect a
complete disposition of the instant case.[10]
In short, petitioners raise for our resolution these issues: (1) Did the Court
of Appeals err in granting the petition and directing the NLRC to act on the Motion
to Reduce Bond and to give due course to the appeal? and (2) Are the petitioners
entitled to benefits under Rep. Act No. 7641?
On the first issue, petitioners contend that (1) errors in the computation of
the monetary award are properly a subject of appeal and should be ventilated at the
appropriate time, not in a mere motion to reduce bond; and (2) the posting of a bond
is an indispensable requirement to perfect an employers appeal.
Respondent counters that in case the monetary award is being disputed, an
appeal may still be filed without the appeal bond, provided that a motion to reduce
bond is filed within the reglementary period.
We think that the Court of Appeals did not err in granting the petition and
holding that there was substantial compliance in the posting of a cash or surety
bond. We likewise find Nationwide Security and Allied Services, Inc. v.
NLRC[11] and Rosewood Processing, Inc. v. NLRC[12] inapplicable to this case.
In Nationwide Security, the petitioners therein filed a motion to reduce bond
instead of an appeal or surety bond. The NLRC denied the motion on the grounds
that petitioners alleged inability to post the bond was without basis, and to grant the
motion on the grounds stated therein would be tantamount to ruling on the merits.
In affirming the decision of the NLRC, the Court noted that petitioners had funds
from its other businesses to post the required bond. Further, the errors raised in the
motion dealt with matters that would go into the merits of the case and were thus
more appropriate in an appeal.
In this case, respondent deferred the posting of the surety bond in view of
the alleged erroneous computation by the Labor Arbiter of the monetary award.
While the Labor Arbiter awarded P5,480,484.25[13] as retirement benefits,
only P5,072,277.73,[14] according to the respondents computation was due and
owing to the petitioners. Since the motion raised a pure mathematical error, the
same may be resolved without going into the merits of the case.
In Rosewood, the petitioner therein filed a motion to reduce the bond with
the appeal bond, albeit not in the amount equivalent to the monetary award in the
judgment appealed from. The Court held that the NLRC gravely abused its discretion
in dismissing the appeal since a consideration of the merits appearing in the appeal
as well as the filing of the appeal bond show that there was substantial compliance
with the rules governing appeal.
Here, aside from the fact that the filing of the motion was justified, the
[15]
respondent immediately submitted a supersedeas bond with its motion for
reconsideration of the NLRC resolution dismissing its appeal. In Ong v. Court of
Appeals,[16] we ruled that the aggrieved party may file the appeal bond within the
ten-day reglementary period following the receipt of the resolution of the NLRC to
forestall the finality of such resolution.[17] Hence, while the appeal of a decision
involving a monetary award in labor cases may be perfected only upon the posting
of a cash or surety bond and the posting of the bond is an indispensable requirement
to perfect such an appeal, a relaxation of the appeal bond requirement could be
justified by substantial compliance with the rule.
Article 223 of the Labor Code provides that an appeal from a decision of the
Labor Arbiter must be made within ten calendar days from receipt of a copy of the
decision by the aggrieved party; and if the decision involves a monetary award, an
appeal by the aggrieved party may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the NLRC
in the amount equivalent to the monetary award. In addition, Section 6, Rule VI of
the New Rules of Procedure of the NLRC provides that the Commission may, in
justifiable cases and upon motion of the aggrieved party, reduce the amount of the
bond. Further, the filing of the motion to reduce bond does not stop the running of
the period to perfect appeal.
Time and again, this Court has ruled that while the above-mentioned rule
treats the filing of a cash or surety bond in the amount equivalent to the monetary
award in the judgment appealed from, as a jurisdictional requirement to perfect an
appeal, the bond requirement on appeals involving awards is sometimes given a
liberal interpretation in line with the desired objective of resolving controversies on
the merits.[18]
The special circumstances in this case, upon which the motion to reduce
the bond was predicated, justify the relaxation of the appeal bond requirement.
However, considering that the claim for retirement benefits was made sometime in
1999 to support the petitioners during the twilight years of their lives, there is no
doubt that a remand of the case to the NLRC will only unduly delay the determination
of their entitlement to such benefits. Moreover, since the case calls for the resolution Respondents reliance on the afore-quoted rules is unfounded. The definition

of a question of law, we consider it more appropriate to resolve the appeal at this of a public sector employer as quoted above is relevant only for purposes of

juncture, rather than remand the case to the NLRC. coverage under the Employees Compensation and State Insurance Fund. Instead,

it is the implementing rules of Title II, Book VI of the Labor Code, which provides for
We come now to the second issue. The petitioners contend that despite
the coverage and exemptions of retirement benefits. Thus:
their compulsory membership in the GSIS, they are still covered by Rep. Act No. SECTION 1. General Statement on Coverage. This Rule
shall apply to all employees in the private sector, regardless of their
7641 for the following reasons: (1) the respondent is registered with the Securities position, designation or status and irrespective of the method by
which their wages are paid, except to those specifically exempted
and Exchange Commission as a non-stock and non-profit corporation; hence, it is a
under Section 2 hereof. As used herein, the term Act shall refer to
private entity and its employees are employees in the private sector; and (2) the Republic Act No. 7641 which took effect on January 7, 1993.

petitioners are not included in the exemptions from coverage of Rep. Act No. 7641. SEC. 2. Exemption. This Rule shall not apply to the
following employees:
2.1 Employees of the National Government and
Respondent PTSI counters that as an employer in the public sector, it is not its political subdivisions, including
Government-owned and/or controlled
covered by Rep. Act No. 7641 which applies only to employees in the private sector.
corporations, if they are covered by the
It relies on Section 3, Rule I of the Amended Rules Implementing Title II, Book IV of Civil Service Law and its regulations.

the Labor Code, to wit: ...

SEC. 3. Employer(a) The term shall mean any person
natural or juridical, domestic or foreign, who carries on in
the Philippines any trade, business, industry, undertaking or activity Having determined the applicable implementing rules, we now proceed to
of any kind and uses the services of another person who is under
his orders as regards the employment. resolve whether the respondent is a private corporation or a public corporation; and
(b) An employer shall belong to either:
(1) The public sector covered by the GSIS, consequently, whether the petitioners are employees in the private sector or in the
comprising the National Government,
including government-owned or controlled public sector.
corporations, the Philippine Tuberculosis
Society, the Philippine National Red Cross, On this score, the case of Feliciano v. Commission on Audit,[19] finds strong
and the Philippine Veterans Bank; or
(2) The private sector covered by the SSS, relevance. Although with different factual circumstances, the Court discussed
comprising all employers other than those
defined in the immediately preceding therein the two classes of corporations recognized by the 1987 Constitution. The
paragraph.
first refers to private corporations created under a general law; the second refers to
government-owned or controlled corporations created by special charters. We also

reiterated that under Section 14 of the Corporation Code, [a]ll corporations

organized under this Code shall file with the Securities and Exchange Commission
articles of incorporation
The respondent was incorporated on March 11, 1960 as a non-profit,
benevolent and non-stock corporation under the Corporation Code.[20] Having been
created under the general corporation law instead of a special charter, we hold that
the respondent is a private and not a governmental corporation. More so, Section
2(1), Article IX(B) of the 1987 Constitution provides:
SECTION 2. (1) The civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with original
charters.
Extant on the records is the respondents admission that although its employees are
compulsory members of the GSIS, said employees are not governed by the Civil
Service Law. If the respondent is truly a government-owned or controlled
corporation, and petitioners are employees in the public sector, then, they should
have been covered by said law. The truth, however, is that, the respondent is a non-
profit but private corporation organized under the Corporation Code, and the
petitioners are covered by the Labor Code and not by the Civil Service Law.
From the foregoing, it is clear to us that the petitioners are employees in the
private sector, hence entitled to the benefits of Rep. Act No. 7641.
Even assuming that by virtue of their compulsory inclusion in the GSIS, the
petitioners became employees in the public sector, they are still entitled to the
benefits of Rep. Act No. 7641 since they are not covered by the Civil Service Law
and its regulations. This much is certain upon reading the implementing rules of Title
II, Book VI of the Labor Code as afore-cited as well as the Labor Advisory on
Retirement Pay Law.[21] Under the said advisory, the coverage of, as well as the
exclusion from, Rep. Act No. 7641 has been delineated as follows:
RA 7641 or the Retirement Pay Law shall apply to all
employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their
wages are paid. They shall include part-time employees,
employees of service and other job contractors and domestic
helpers or persons in the personal service of another.
The law does not cover employees of retail, service and
agricultural establishments or operations employing not more than
(10) employees or workers and employees of the National
Government and its political subdivisions, including Government-
owned and/or controlled corporations, if they are covered by the
Civil Service Law and its regulations. (Underscoring ours.)
Neither do we find merit in the respondents argument that the rationale
behind the enactment of Rep. Act No. 7641 justifies the exclusion of employees in
the public sector, who are already enjoying retirement benefits under the GSIS law,
from the New Retirement Law.
We direct the respondents attention to Section 2 of Rep. Act No. 7641, to
wit:
SEC. 2. Nothing in this Act shall deprive any employee of
benefits to which he may be entitled under existing laws or company
policies or practices.
In addition, Rule II of the Rules Implementing Book VI of the Labor Code
provides as follows:
SEC. 8. Relation to agreements and
regulations. Nothing in this Rule shall justify an employer from
withdrawing or reducing any benefits, supplements or payments as
provided in existing laws, individual or collective agreements or
employment practices or policies.
 ...
On the matter of petitioner Dr. Finaflor C. Tan, records show she has two causes of

action: (1) non-payment of terminal leave pay; and (2) non-payment of retirement
In Juco v. NLRC,[22] we clarified that employees of government-owned and
benefits.[23] While the Labor Arbiter ruled that she is entitled to the commutation into
controlled corporations with special charters are covered under the Civil Service. On
cash of her unused leave credits which is the equivalent of her terminal leave pay,
the other hand, employees of government-owned and controlled corporations under
the former did not include her in the award of retirement benefits. This was properly
the Corporation Code are governed by the provisions of the Labor Code.
raised in the Motion to Render Judgment Nunc Pro Tunc[24] filed by the petitioners

The Philippine Tuberculosis Society, Inc. (PTSI) belongs to the latter on October 29, 1999 before the NLRC. We see no cogent reason why she should

category and, therefore, covered by Rep. Act No. 7641 which is an amendment to be excluded from the over-all award of retirement benefits considering that she has

the Labor Code. The accommodation under Rep. Act No. 1820 extending GSIS participated in the proceedings before the Labor Arbiter.

coverage to PTSI employees did not take away from petitioners the beneficial
WHEREFORE, this petition is PARTIALLY GRANTED. The Decision
coverage afforded by Rep. Act No. 7641. Hence, the retirement pay payable under
dated June 13, 2002 of the Court of Appeals in CA-G.R. SP No. 59597, directing the
Article 287 of the Labor Code as amended by Rep. Act No. 7641 should be
NLRC to act on the Motion to Reduce Bond and to give due course to the Appeal, as
considered apart from the retirement benefit claimable by the petitioners under the
well as its Resolution denying the petitioners motion for reconsideration,
social security law or, as in this case, the GSIS law.
are MODIFIED.

As to the alleged prolonged refusal by the respondent to pay the petitioners their
Consequently, it is DECLARED that the petitioners are entitled to retirement
retirement benefits, we do not think that the respondents stance was entirely in bad
benefits under Rep. Act No. 7641. In addition to retirement benefits, petitioner Dr.
faith. The respondent harbored the honest belief that their compulsory coverage in
Finaflor C. Tan is entitled to the commutation into cash of her unused leave credits
the GSIS converted it into a public corporation excluded from the coverage of Rep.
which is the equivalent of her terminal leave pay. Likewise, the petitioners are
Act No. 7641. As noted by this Court, the respondent even filed
entitled to attorneys fees, equivalent to 10% of the total monetary award.
a supersedeas bond, albeit belatedly, with its motion for reconsideration of the

NLRC resolution dismissing its appeal. Such act only demonstrates that the Let this case be remanded to the Labor Arbiter for the computation of the
respondent filed the appeal in good faith. We could not speculate and say that retirement benefits and terminal leave pay above-mentioned. No pronouncement as
respondent did not intend to pay the petitioners their retirement benefits in case the to costs.
appeal is dismissed.
 [G.R. No. 120802. June 17, 1997]
JOSE T. CAPILI, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
and UNIVERSITY OF MINDANAO, respondents.
DECISION
DAVIDE, JR., J.:
The pivotal issue in this petition is whether an instructor of a private educational
institution may be compelled to retire at the age of sixty years. A corollary issue is
whether his subsequent acceptance of retirement benefits would estop him from
pursuing his complaint questioning the validity of his forced retirement.
Petitioner Jose T. Capili, Jr., was employed by private respondent University of
Mindanao (hereafter, UM) as a college instructor in November 1982. On 2 July 1993,
the private respondent informed the petitioner that under the law and UM's
retirement program he would be eligible for retirement when he would reach the age
of 60 years on 18 August 1993. In his answer of 5 August 1993, the petitioner
informed UM that pursuant to Section 4, Rule II, Book VI of the Rules Implementing
the Labor Code, the that he was not opting to retire but would continue to serve until
he reaches the compulsory retirement age of 65. In its reply of 10 August 1993 to
the petitioner, UM reiterated its position that under the universitys retirement plan, it
could retire him. It argued that under Section 4 cited by the petitioner, the employee
has the option only in the absence of a retirement plan.
Perceiving the schools insistence as constructive dismissal, and recalling at
least four other faculty members who were allowed to teach beyond their sixtieth
birth anniversary, the petitioner filed a complaint[1] for illegal dismissal before the
Regional Arbitration Branch No. XI of the NLRC in Davao City. He sought his
reinstatement to his former position without loss of seniority rights with full back
wages, wage differential, 13th month differential, moral and exemplary damages,
and attorneys fees.[2]
In its position paper,[3]UM invoked Article 287 of the Labor Code which
provides that any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment
contract. It contended that it has a retirement plan, known as the University of
Mindanao & Associated Enterprises Retirement Plan, under which it could retire the
petitioner upon his reaching the age of 60. UM also cited Policy Instruction No. 25
issued by the Secretary of Labor, which provides that in the absence of a retirement
plan any teacher or other employee in a private educational institution may retire or
be retired from the service upon reaching the age of 60 years.
In his position paper[4] the petitioner maintained that private respondents
retirement plan applies only to members thereof, pursuant to Articles II and III of its
Rules and Regulations,[5] and that since he is not a member of the Plan, he is not
covered by it. He further contended that Policy Instruction No. 25, issued on 1 June
1977, was abrogated by Republic Act No. 7641, which took effect on 7 January
1993; and that pursuant to the new Rule II, Book VI of the Omnibus Rules
Implementing the Labor Code,[6] which also took effect on 7 January 1993, he has
the option whether or not to retire upon attaining the age of 60 years.
On 18 April 1994,[7] Labor Arbiter Newton Sancho held for UM and dismissed
the complaint. He ruled:
There is no question that UM [University of Mindanao] has an existing retirement
plan which fixed 60 years as an age for normal retirement. It applies to all its
employees and that of its associated enterprises, including the non-members
thereof as a matter of school policy. As such, the option to retire complainant lies
on the administration of UM.
Complainants reliance on R.A. No. 7641 is evidently misplaced. It only provides for
retirement pay to qualified private sector employees in the absence of any
retirement plan of the establishment. Given UMs retirement plan or school policy of
retiring its teachers upon reaching the age of 60, said law does not clearly operate
in his favor.
That at least four (4) teachers had been allowed to work beyond their 60th birthday
does not make them an exception to UMs policy on the matter. They did so on a
case-to-case and semestral basis to which UM consented in the exercise of its
management prerogative.
The charge that he was discriminated against through "forced" retirement because
of his propensity to question certain school policies or regulations cannot be given
credence. For want of corroborative evidence, it is simply self-serving!
Ditto his money claims. UM has proofs that he had been fully paid thereof.
The petitioner appealed[8] from the decision to the respondent Commission on
10 May 1994, or thirteen days after he received the Labor Arbiters decision. He
argued that the Labor Arbiter erred in ruling that private respondents retirement plan
applies to all its employees and that he had been fully paid his monetary claims.
The private respondent moved to dismiss the appeal[9] for having been filed out
of time, as the same should have been filed within ten days from petitioners receipt
of the Arbiters decision, or, at the latest, on 7 May 1994.
 On 21 November 1994, the private respondent filed a Manifestation with
Motion[10] alleging that on 6 October 1994, the petitioner received his retirement pay
and other accrued benefits due from the private respondent, thus making the appeal
moot and academic. The petitioner filed a Counter-Manifestation[11] wherein he
alleged that his partial acceptance of retirement benefits did not render the case
moot and academic, and that having "long and unjustly been denied of his retirement
benefits since August 18, 1993 [he could not] be expected to remain idle."
On 19 January 1995, the respondent NLRC dismissed the appeal for having
been filed out of time, it appearing that since the petitioner received a copy of the
assailed decision on 27 April 1994, he had only until 7 May 1994 to file his appeal;
however, considering that 7 May 1994 was a Saturday, he had until 9 May 1994, the
next working day, to file the appeal. He filed the appeal only on 10 May 1994.[12]
The petitioner moved for the reconsideration[13] of the order, alleging that he
could not have filed his appeal on 9 May 1994 which was a non-working holiday, as
the barangay elections were held on the said date.
In its resolution of 31 March 1995,[14] the NLRC reconsidered the order of 19
January 1995 and decided the case on its merits. In disposing of the appeal, it made
the following observations and conclusions:
After a careful review of the respective arguments of the parties, We find no
serious inconsistency between the company retirement plan of the university and
the provision of Article 287 of the Labor Code, as amended by R.A. 7641. Both
speak of fixing the normal retirement age at 60 in the absence of a retirement plan
or agreement. The retirement plan of the university allows retirement at a later or
beyond 60 by mutual assent and on a case-to-case basis. Whereas, R.A. 7641,
has fixed 65 as the compulsory retirement date.
Except therefore for the fixing of a maximum retirement age of 65 or the
compulsory retirement date, Section 14, Rule I, Book VI of the Implementing Rules
of Article 287 prior to its amendment by R.A. 7641, has equally fixed the retirement
benefit to at least one-half (1/2) month for every year of service.
The contention of complainant that respondent's retirement plan is inapplicable for
being a non-member is beside the point. Respondent has expressly assented to
the extension of the retirement plan to complainant thereby serving as the
"consensual basis" for the applicability of the retirement plan to
complainant. (See Llora Motors, Inc. vs. Drilon, 179 SCRA 176, November 7,
1989, citing Allied Investigation Bureau, Inc. vs. Ople, 91 SCRA 265).
The ultimate question, however, is that will complainant be forced by the
respondent to retire at age 60 or on his 60th birthday if he refuses to accept the
same.
It is Our well discerned view that respondent may not force complainant to retire at
age 60, unless there are other justifiable reason to compel complainant to accept
the same. This is so because the law (R.A. 7641) has fixed age 65 as the
compulsory age of retirement.
It, however, appears that this particular issue has become moot and academic.
During the pendency of the case, complainant has accepted and received from
respondent university his retirement benefits (Annex "1" to Respondent's
Manifestation).
Complainant's counter-manifestation that this was only "partial acceptance" of his
retirement benefits is belied by the computation of his retirement benefits based on
his length of service in the sum of P67,344.42, plus other fringe benefits or in the
total sum of P75,338.10. Deducting therefrom the sum of P60,015.45 which was
partially released to him, he received the balance of his retirement benefits in the
sum of P15,322.65 as shown by his signature appearing on the Journal Voucher
dated October 4, 1994 (Annex "2", ibid).
Except for the notation on the exclusion of incremental proceeds of his benefits
which is still subject of conciliation, there is nothing on Annex "1" indicating that
complainant only received partial payment of his retirement benefits or a
reservation that receipt of the balance of his retirement was without prejudice to his
claims in the instant case.
Complainant therefore by his own act of accepting the proceeds of his retirement
benefits as originally offered to him by respondent is now estopped from further
pursuing his claims in the instant case. Besides, the main cause of action of
complainant in suing respondent is the charge of illegal or constructive dismissal.
There being no concrete and convincing proof that complainant was illegally
dismissed, the present action must equally fail. Thus, the issue as to whether or
not complainant was forced to prematurely retire by respondent is now moot and
academic in view of the subsequent acceptance by complainant of his retirement
benefits from respondent.
It then dismissed the appeal for lack of merit and affirmed the Labor Arbiters
decision, subject to the foregoing modification.
Petitioners motion for reconsideration[15] of the above resolution having been
denied in the resolution[16] of 31 May 1995, the petitioner filed this petition. He
alleges that the respondent Commission committed grave abuse of discretion
amounting to excess or lack of jurisdiction
 (i) ... WHEN IT RENDERED ITS RESOLUTIONS IN A MANNER
VIOLATIVE OF SUBSTANTIAL DUE PROCESS.
(ii) ...WHEN IT RENDERED THE QUESTIONED RESOLUTION...
DISMISSING THE APPEAL IN CONTRAVENTION TO THE
RULING OF THE SUPREME COURT IN THE CASE OF ZURBANO,
SR. VS. NLRC (229 SCRA 563) AND OTHERS.
(iii) ...IN HOLDING THAT THE PETITIONER BY ACCEPTING THE
PROCEEDS OF HIS RETIREMENT BENEFITS IS ESTOPPED
FROM PURSUING HIS CLAIMS.
The first assigned error consists of the last two errors, which boil down to the
issue of whether the petitioner, by his acceptance of retirement benefits, is estopped
from pursuing his claim of illegal dismissal arising from his forced retirement before
the age of 65.
In its comment, the Office of the Solicitor General agrees with the petitioner that
the latters acceptance of retirement benefits does not amount to estoppel or render
the appeal moot and academic, and hence, the NLRC committed reversible error
and grave abuse of discretion in perfunctorily dismissing petitioners appeal solely
on the ground of estoppel. It nevertheless disagreed with the NLRCs conclusion that
the petitioner could not be forced to retire at age 60. It is of the view that petitioners
forced retirement at the age of 60 is valid and that petitioners not being a member
of the retirement plan is of no moment, since all employees of UM are covered by
it. These notwithstanding, the OSG concurred in the dispositive portion of the
NLRCs resolution.
On the other hand, the private respondent submits that the NLRC was correct
in holding that petitioners voluntarily acceptance of his retirement benefits amounted
to a waiver of his claims, and that his retirement was in accordance with UMs
retirement policy.
We resolved to give due course to the petition and required the parties to submit
their respective memoranda. Only the petitioner and private respondent submitted
their memoranda. The OSG manifested that it be excused from filing a
memorandum and that its comment be treated as its memorandum.
The applicable law on the matter is Article 287 of the Labor Code of the
Philippines, as amended by R.A. No. 7641, which took effect on 7 January
1993.[17] As amended, the Article reads as follows:
ART. 287. Retirement. --
Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employees
retirement benefits under any collective bargaining agreement and other
agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
The article provides for two types of retirement: (a) compulsory and (b)
optional. The first takes place at age 65, while the second is primarily determined by
the collective bargaining agreement or other employment contract or employers
retirement plan. In the absence of any provision on optional retirement in a collective
bargaining agreement, other employment contract, or employers retirement plan, an
employee may optionally retire upon reaching the age of 60 years or more, but not
beyond 65 years, provided he has served at least five years in the establishment
concerned. That prerogative is exclusively lodged in the employee.
It may be noted that before the effectivity of R.A. No. 7641, Article 287 of the
Labor Code did not specifically provide for the retirable age of employees in the
private sector, thus:
ART. 287. Retirement. -- Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and other collective
bargaining or other agreement.
Section 13, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code
provided:
Sec. 13. In the absence of any collective bargaining agreement or other applicable
agreement concerning terms and conditions of employment which provides for
retirement at an older age, an employee may retire upon reaching the age of sixty
(60) years.
Notably, the option to retire at 60 years was the employees prerogative. However,
the Department of Labor and Employment had provided a separate rule for
employees of private educational institutions. Policy Instruction No. 25 promulgated
on 1 June 1977 by the Secretary of Labor provided as follows:
For purposes of applying the retirement provisions of the Labor Code in private
educational institutions, and in consideration of the unique characteristics and
peculiar problems and work situations of such institutions, the following rules are
hereby issued for the information and guidance of all concerned:
I - If there is a retirement plan under a collective agreement or employer policy in
private educational institutions, any teacher and/or employee who retires or is
retired from the service pursuant to the same shall be entitled to all the retirement
benefits provided therein.
II - In the absence of any such company policy or collective agreement providing
for a retirement plan for teachers and other employees in private educational
institutions, any teacher and/or employee may retire or be retired from the service
upon reaching the age of sixty (60) years and shall be paid the equivalent of at
least one month salary or one-half month salary for every year of service,
whichever is higher, a fraction of at least six (6) months being considered as one
whole year.
It is clear therefrom that in the absence of a collective bargaining agreement or
company policy providing for a retirement plan, the option to retire at age 60 could
be exercised by either the employee or the employer. This power of the employer
no longer exists under R.A. No. 7641, which unequivocally provides that the option
to retire upon reaching the age of 60 years or more but not beyond 65 is the
exclusive prerogative of the employee if there is no provision on retirement in a
collective bargaining agreement or any other agreement or if the employer has no
retirement plan.
The foregoing brings us to the next point of inquiry, viz., whether private
respondent UM has a retirement plan or collective bargaining agreement or other
agreement vesting upon UM the prerogative to retire an employee who reaches 60
years. UM insists that it has a retirement plan under the title University of Mindanao
& Associated Enterprises Retirement Plan,[18] which became effective on 1 July
1968, and that the petitioner is covered by it. On the other hand, the petitioner
contends that the Plan covers only those who opted to become members thereof.
We agree with the petitioner. Indeed, under UMs Retirement Plan only
members are covered by it. It defines Member as
an employee, as herein defined, who chooses to contribute to the Fund as
provided for in Article IV, Section 1 hereof. Only Members shall be entitled to
any of the benefits provided for under this Plan and to any of the Companys
contributions as provided for in Articles IV and V hereof.[19]
As to eligibility for membership therein of employees hired after the effectivity of the
Plan, it explicitly provides as follows:
[A]ny employee hired after the effective date may become a Member of the
Plan on the date he becomes a permanent full-time employee if he chooses
to contribute to the Fund in accordance with Article IV, Section 1, hereof. [20]
Nothing could be clearer from the above provisions of the Plan than that it is
not applicable to all employees of UM and its associated enterprises. It applies only
to those who opted to become members thereof. Contracts take effect only between
the parties thereto.[21] Since the Plan was prepared and approved only by the
responsible officials of UM and its associated enterprises, namely, the Presidents of
UM, Mt. Apo Science Foundation, and Davao Savings and Loan Association,[22] the
Plan may thus be described as a contract of adhesion. Hence, the above provisions
on requirements of membership and eligibility must be strictly construed against UM
and its associated enterprises.[23] UM cannot now be heard to claim that the plan
applies to all its employees or to those who did not even opt to become members
thereof.
The validity then of UMs retirement of the petitioner upon the latters 60th birth
anniversary on 18 August 1993 could only be based on proof that the petitioner
became a member of its Retirement Plan at any time after his employment in 1982
but before 18 August 1993. The burden to prove such a fact was on UM, but the
record fails to show that UM has discharged that burden.
UMs belated attempt to prove that it is a school policy to retire employees who
reach the age of 60, pursuant to UMs Retirement Policies dated 16 December
1990[24] and Updated Retirement Policy dated 3 August 1993,[25] cannot sway this
Court in UMs favor. These documents are mere scraps of paper, they being only
xerox copies. They have not been certified to be true copies or offered in evidence
before the Labor Arbiter and the NLRC. Neither have they even been referred to in
UMs comment in this case.
The foregoing notwithstanding, a supervening event worked against the
petitioner. On 30 April 1994, after receiving the Labor Arbiters decision but before
filing his appeal from that decision, the petitioner received partial payment of his
retirement pay and other accrued benefits from respondent UM. [26] During the
pendency of his appeal with the NLRC, specifically, on 6 October 1994, he received
full payment of his retirement benefits. In his Counter-Manifestation[27] he declared:
COMPLAINANT-APPELLANT ... most respectfully maintains that the partial
acceptance of the retirement benefits does not render the instant case moot
 and academic. The complainant-appellant who had long and unjustly been
denied of his retirement benefits since August 18, 1993 cannot be expected
to remain idle.

By his acceptance of retirement benefits the petitioner is deemed to have opted

to retire under the third paragraph of Article 287 of the Labor Code, as amended by
R.A. No. 7641. Thereunder he could choose to retire upon reaching the age of 60
years, provided it is before reaching 65 years, which is the compulsory age of
retirement.
Also worth noting is his statement that he had long and unjustly been denied of
his retirement benefits since August 18, 1993. Elsewise stated, he was entitled to
retirement benefits as early as 18 August 1993 but was denied thereof without
justifiable reason. This could only mean that he has already acceded to his
retirement, effective on such date - when he reached the age of 60 years.
WHEREFORE, the 31 March 1995 and 31 May 1995 Resolutions of the
National Labor Relations Commission in NLRC CA No. M-002096-94 are
AFFIRMED subject to the modification that the petitioner is hereby declared to be
not covered by respondent University of Mindanaos Retirement Plan but is,
nevertheless, deemed to have opted to retire when he reached the age of sixty
years, pursuant to Article 287 of the Labor Code, as amended by R.A. No. 7641.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 156934 March 16, 2007
ALPHA C. JACULBE, Petitioner,
vs.
SILLIMAN UNIVERSITY,Respondent.
DECISION
CORONA, J.:
Petitioner comes to us via this petition for review on certiorari1 to challenge a
decision2 of the Court of Appeals (CA) and the resolution3 affirming it.
Sometime in 1958, petitioner began working for respondent’s university medical
center as a nurse.4
In a letter dated December 3, 1992,5 respondent, through its Human Resources
Development Office, informed petitioner that she was approaching her 35th year of
service with the university and was due for automatic retirement on November 18,
1993, at which time she would be 57 years old. This was pursuant to respondent’s
retirement plan for its employees which provided that its members could be
automatically retired "upon reaching the age of 65 or after 35 years of
uninterrupted service to the university."6 Respondent required certain documents
in connection with petitioner’s impending retirement.
A brief exchange of letters7 between petitioner and respondent followed. Petitioner
emphatically insisted that the compulsory retirement under the plan was
tantamount to a dismissal and pleaded with respondent to be allowed to work until
the age of 60 because this was the minimum age at which she could qualify for
SSS8 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 arbiter’s decision and dismissed the complaint for lack of merit.11 The NLRC
likewise denied petitioner’s 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 respondent’s retirement plan imposing automatic retirement after 35
years of service contravene the security of tenure clause in the 1987
Constitution and the Labor Code?
2) did respondent commit illegal dismissal by retiring petitioner solely by
reason of such provision in its retirement plan?
Retirement plans allowing employers to retire employees who are less than the
compulsory retirement age of 65 are not per se repugnant to the constitutional
guaranty of security of tenure. Article 287 of the Labor Code provides:
ART. 287. Retirement - Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract. xxx
By its express language, the Labor Code permits employers and employees to fix
the applicable retirement age at below 60 years.13
However, after reviewing the assailed decision together with the rules and
regulations of respondent’s retirement plan, we find that the plan runs afoul of the
constitutional guaranty of security of tenure contained in Article XIII, also known as
the provision on Social Justice and Human Rights.
The CA, in ruling against petitioner, premised its decision to uphold the retirement
plan on her voluntary participation therein:
The petitioner in this case may, however, argue that the Pantranco case is not
applicable in the case at bar as the controversy in the said case involves a
compulsory retirement on the basis of the length of service rendered by the
employee as agreed in an existing CBA, whereas in the present case, the private
respondent compulsorily retired the petitioner not based on a CBA but on the
retirement scheme provided for in the private respondent’s retirement plan.
Nonetheless, this argument must fail. The contract fixing for retirement age as
allowed under Article 287 of the Labor Code does not exclusively refer to CBA
which provides for an agreed retirement age. The said provision explicitly allows,
as well, other applicable employment contract to fix retirement age.
The records disclose that the private respondent’s Retirement Plan has been in
effect for more than 30 years. The said plan is deemed integrated into the
employment contract between private respondent and its employees as
evidenced by the latter’s voluntary contribution through monthly salary
deductions. Previous retirees have already enjoyed the benefits of the retirement
plan, and ever since the said plan was effected, no questions or disagreement
have been raised, until the same was made to apply to the petitioner.
xxx14 (emphasis ours)
The problem with this line of reasoning is that a perusal of the rules and
regulations of the plan shows that participation therein was not voluntary at all.
Rule III of the plan, on membership, stated:
SECTION 1 – MEMBERSHIP
All full-time Filipino employees of the University will automatically become
members of the Plan, provided, however, that those who have retired from the
University, even if rehired, are no longer eligible for membership in the Plan. A
member who continues to serve the University cannot withdraw from the
Plan.
xxx xxx xxx
SECTION 2 – EFFECTIVITY OF MEMBERSHIP
Membership in the Plan starts on the day a person is hired on a full-time basis by
the University.
SECTION 3 – TERMINATION OF MEMBERSHIP
Termination of membership in the Plan shall be upon the death of the member,
resignation or termination of employee’s contract by the University, or
retirement from the University.15 (emphasis ours).
Rule IV, on contributions, stated:
The Plan is contributory. The University shall set aside an amount equivalent to
3½% of the basic salaries of the faculty and staff. To this shall be added a 5%
deduction from the basic salaries of the faculty and staff.
A member on leave with the University approval shall continue paying, based on
his pay while on leave, his leave without pay should pay his contributions to the
Plan. However, a member, who has been on leave without pay should pay his
contributions based on his salary plus the University’s contributions while on leave
or the full amount within one month immediately after the date of his reinstatement.
Provided[,] further that if a member has no sufficient source of income while on
leave may pay within six months after his reinstatement.16
From the language of the foregoing retirement plan rules, the compulsory nature of
both membership in and contribution to the plan debunked the CA’s theory that
petitioner’s "voluntary contributions" were evidence of her willing participation
therein. It was through no voluntary act of her own that petitioner became a
member of the plan. In fact, the only way she could have ceased to be a member
thereof was if she stopped working for respondent altogether. Furthermore, in the
rule on contributions, the repeated use of the word "shall" ineluctably pointed to the
conclusion that employees had no choice but to contribute to the plan (even when
they were on leave).
According to the assailed decision, respondent’s retirement plan "ha(d) been in
effect for more than 30 years."17What was not pointed out, however, was that the
retirement plan came into being in 197018 or 12 years after petitioner started
working for respondent. In short, it was not part of the terms of employment to
which petitioner agreed when she started working for respondent. Neither did it
become part of those terms shortly thereafter, as the CA would have us believe.
Retirement is the result of a bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the latter, after reaching a
certain age agrees to sever his or her employment with the former. 19In Pantranco
North Express, Inc. v. NLRC,20 to which both the CA and respondent refer, the
imposition of a retirement age below the compulsory age of 65 was deemed
acceptable because this was part of the CBA between the employer and the
employees. The consent of the employees, as represented by their bargaining unit,
to be retired even before the statutory retirement age of 65 was laid out clearly in
black and white and was therefore in accord with Article 287.
In this case, neither the CA nor the respondent cited any agreement, collective or
otherwise, to justify the latter’s imposition of the early retirement age in its
retirement plan, opting instead to harp on petitioner’s alleged "voluntary"
contributions to the plan, which was simply untrue. The truth was that petitioner
had no choice but to participate in the plan, given that the only way she could
refrain from doing so was to resign or lose her job. It is axiomatic that employer
and employee do not stand on equal footing,21 a situation which often causes an
employee to act out of need instead of any genuine acquiescence to the employer.
This was clearly just such an instance.
Not only was petitioner still a good eight years away from the compulsory
retirement age but she was also still fully capable of discharging her duties as
shown by the fact that respondent’s board of trustees seriously considered rehiring
her after the effectivity of her "compulsory retirement."22

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

At this point, reinstatement is out of the question.1awphi1.nét Petitioner is now 71

years old and therefore well over the statutory compulsory retirement age. For this
reason, we grant her separation pay in lieu of reinstatement. It is also for this
reason that we modify the award of backwages in her favor, to be computed from
the time of her illegal dismissal on November 18, 1993 up to her compulsory
retirement age.

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of

Appeals in CA-G.R. SP No. 50445 is REVERSED and SET ASIDE. The October
25, 1994 decision of the labor arbiter finding respondent guilty of illegal dismissal
is REINSTATED, with the MODIFICATION that, in lieu of reinstatement, petitioner
is awarded separation pay, the award of backwages to be computed from the time
of her illegal dismissal up to her compulsory retirement age.

SO ORDERED.
LOURDES A. CERCADO v. UNIPROM, INC., (G.R. No. 188154, October 13, 2010) UNIPROM exercised its option under the retirement plan, and decided to

Assailed in this Petition for Review on Certiorari[1] are the July 31, 2007 retire Cercado effective at the end of business hours on February 15, 2001. A check

Decision[2] and the May 26, 2009 Resolution[3] of the Court of Appeals (CA) in CA- of even date in the amount of P100,811.70, representing her retirement benefits

G.R. SP No. 87508, declaring as valid the unilateral retirement of petitioner by under the regular retirement package, was issued to her. Cercado refused to accept

respondent. the check.

The Facts
UNIPROM nonetheless pursued its decision and Cercado was no longer

Petitioner Lourdes A. Cercado (Cercado) started working for respondent given any work assignment after February 15, 2001. This prompted Cercado to file

UNIPROM, Inc. (UNIPROM) on December 15, 1978 as a ticket seller assigned at a complaint for illegal dismissal before the Labor Arbiter (LA), alleging, among

Fiesta Carnival, Araneta Center, Quezon City. Later on, she was promoted as others, that UNIPROM did not have a bona fide retirement plan, and that even if

cashier and then as clerk typist. there was, she did not consent thereto.

On April 1, 1980, UNIPROM instituted an Employees Non-Contributory For its part, respondent UNIPROM averred that Cercado was automatically
Retirement Plan[4] which provides that any participant with twenty (20) years of covered by the retirement plan when she agreed to the companys rules and

service, regardless of age, may be retired at his option or at the option of the regulations, and that her retirement from service was a valid exercise of a

company. management prerogative.

On January 1, 2001, UNIPROM amended the retirement plan in compliance After submission of the parties position papers, the LA rendered a decision[7] finding

with Republic Act (R.A.) No. 7641.[5] Under the revised retirement plan,[6] UNIPROM petitioner to be illegally dismissed. Respondent company was ordered to reinstate

reserved the option to retire employees who were qualified to retire under the her with payment of full backwages.

program.
The National Labor Relations Commission (NLRC) affirmed the LAs

Sometime in December 2000, UNIPROM implemented a company-wide decision, adding that there was no evidence that Cercado consented to the alleged

early retirement program for its 41 employees, including herein petitioner, who, at retirement plan of UNIPROM or that she was notified thereof.[8]

that time, was 47 years old, with 22 years of continuous service to the company.
She was offered an early retirement package amounting to P171,982.90, but she On certiorari, the CA set aside the decisions of the LA and the NLRC. The

rejected the same. decretal portion of the Decision reads:

 WHEREFORE, the petition is GRANTED. The Decision of
the Labor Arbiter and the assailed Resolutions of the NLRC are
NULLIFIED and SET ASIDE. Judgment is hereby rendered
declaring respondents retirement as valid and legal being in
conformity with petitioners Retirement Plan.[9]
The CA ruled that UNIPROMs retirement plan was consistent with Article
287 of the Labor Code, which provides that any employee may be retired upon
reaching the retirement age established in the collective bargaining agreement or
other applicable employment contract. The CA applied the doctrine laid down
in Progressive Development Corporation v. NLRC[10] wherein the phrase may be
retired in Article 287 of the Labor Code was interpreted to mean that an option is
given to an employer to retire an employee, and such option is within the discretion
of the employer to exercise.
The CA further noted that Cercado cannot feign ignorance of the retirement plan
considering that she was already working with the company when it took effect in
1980.
Cercado moved for reconsideration, but the same was denied.[11] Hence, the instant
recourse raising the following issues: 1) whether UNIPROM has a bona fide
retirement plan; and 2) whether petitioner was validly retired pursuant thereto.
The petition is meritorious.
Retirement is the result of a bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the former. [12]
Article 287 of the Labor Code, as amended by R.A. No. 7641,[13] pegs the
age for compulsory retirement at 65 years, while the minimum age for optional
retirement is set at 60 years. An employer is, however, free to impose a retirement
age earlier than the foregoing mandates. This has been upheld in numerous
cases[14] as a valid exercise of management prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having served
the company for 22 years, pursuant to UNIPROMs Employees Non-Contributory
Retirement Plan,[15] which provides that employees who have rendered at least 20
years of service may be retired at the option of the company. At first blush,
respondents retirement plan can be expediently stamped with validity and justified
under the all encompassing phrase management prerogative, which is what the CA
did. But the attendant circumstances in this case, vis--vis the factual milieu of the
string of jurisprudence on this matter, impel us to take a deeper look.
In Pantranco North Express, Inc. v. NLRC,[16] the Court upheld the
retirement of private respondent pursuant to a Collective Bargaining Agreement
(CBA) allowing Pantranco to compulsorily retire employees upon completing 25
years of service to the company. Interpreting Article 287, the Court ruled that the
Labor Code permits employers and employees to fix the applicable retirement age
lower than 60 years of age. The Court also held that there was no illegal dismissal
involved, since it was the CBA itself that incorporated the agreement between the
employer and the bargaining agent with respect to the terms and conditions of
employment. Hence, when the private respondent ratified the CBA, he concurrently
agreed to conform to and abide by its provisions. Thus, the Court stressed,
"[p]roviding in a CBA for compulsory retirement of employees after twenty-five (25)
years of service is legal and enforceable so long as the parties agree to be governed
by such CBA."
 Similarly, in Philippine Airlines, Inc. (PAL) v. Airline Pilots Association of the
Philippines (APAP),[17] the retirement plan contained in the CBA between PAL and
APAP was declared valid. The Court explained that by their acceptance of the CBA,
APAP and its members are obliged to abide by the commitments and limitations
they had agreed to cede to management.
The foregoing pronouncements served as guiding principles in the recent Cainta
Catholic School v. Cainta Catholic School Employees Union (CCSEU), [18] wherein
the compulsory retirement of two teachers was upheld as valid and consistent with
the CBA provision allowing an employee to be retired by the school even before
reaching the age of 60, provided that he/she had rendered 20 years of service.
In Progressive Development Corporation v. NLRC,[19] although
retirement plan was not embodied in a CBA, its provisions were made known to the
employees union. The validity of the retirement plan was sustained on the basis of
the finding of the Director of the Bureau of Working Conditions of the Department of
Labor and Employment that it was expressly made known to the employees and
accepted by them.
It is axiomatic that a retirement plan giving the employer the option to retire
its employees below the ages provided by law must be assented to and accepted
by the latter, otherwise, its adhesive imposition will amount to a deprivation of
property without due process of law.
In the above-discussed cases, the retirement plans in issue were the result of
negotiations and eventual agreement between the employer and the employees.
The plan was either embodied in a CBA, or established after consultations and
negotiations with the employees bargaining representative. The consent of the
employees to be retired even before the statutory retirement age of 65 years was
thus clear and unequivocal.
Unfortunately, no similar situation obtains in the present case. In fact, not even an
iota of voluntary acquiescence to UNIPROMs early retirement age option is
attributable to petitioner.
The assailed retirement plan of UNIPROM is not embodied in a CBA or in any
employment contract or agreement assented to by petitioner and her co-employees.
On the contrary, UNIPROMs Employees Non-Contributory Retirement Plan was
unilaterally and compulsorily imposed on them. This is evident in the following
provisions of the 1980 retirement plan and its amended version in 2000:
the
ARTICLE III
ELIGIBILITY FOR PARTICIPATION
Section 1. Any regular employee, as of the Effective
Date, shall automatically become a Participant in the Plan,
provided the Employee was hired below age 60.
Verily, petitioner was forced to participate in the plan, and the only way she could
have rejected the same was to resign or lose her job. The assailed CA Decision did
not really make a finding that petitioner actually accepted and consented to the plan.
The CA simply declared that petitioner was deemed aware of the retirement plan on
account of the length of her employment with respondent. Implied knowledge,
regardless of duration, cannot equate to the voluntary acceptance required by law
in granting an early retirement age option to an employer. The law demands more
than a passive acquiescence on the part of employees, considering that an
employers early retirement age option involves a concession of the formers
constitutional right to security of tenure.
 We reiterate the well-established meaning of retirement in this
jurisdiction: Retirement is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee whereby the latter, after
reaching a certain age, agrees to sever his or her employment with the former.[20]
Acceptance by the employees of an early retirement age option must be
explicit, voluntary, free, and uncompelled. While an employer may unilaterally retire
an employee earlier than the legally permissible ages under the Labor Code, this
prerogative must be exercised pursuant to a mutually instituted early retirement
plan. In other words, only the implementation and execution of the option may be
unilateral, but not the adoption and institution of the retirement plan containing such
option. For the option to be valid, the retirement plan containing it must be voluntarily
assented to by the employees or at least by a majority of them through a bargaining
representative.
The following pronouncements in Jaculbe v. Silliman University[21] are elucidating:
[A]n employer is free to impose a retirement age less than 65 for as
long as it has the employees consent. Stated conversely,
employees are free to accept the employers offer to lower the
retirement age if they feel they can get a better deal with the
retirement plan presented by the employer.
We disagree with the CAs conclusion that the retirement plan is part of petitioners
employment contract with respondent. It must be underscored that petitioner was
hired in 1978 or 2 years before the institution of UNIPROMs retirement plan in 1980.
Logically, her employment contract did not include the retirement plan, much less
the early retirement age option contained therein.
We also cannot subscribe to respondents submission that petitioners
consent to the retirement plan may be inferred from her signature in the personnel
action forms[22] containing the phrase: Employee hereby expressly acknowledges
receipt of and undertakes to abide by the provisions of his/her Job Description,
Company Code of Conduct and such other policies, guidelines, rules and
regulations the company may prescribe.
It should be noted that the personnel action forms relate to the increase in
petitioners salary at various periodic intervals. To conclude that her acceptance of
the salary increases was also, simultaneously, a concurrence to the retirement plan
would be tantamount to compelling her to agree to the latter. Moreover, voluntary
and equivocal acceptance by an employee of an early retirement age option in a
retirement plan necessarily connotes that her consent specifically refers to the plan
or that she has at least read the same when she affixed her conformity thereto.
Hence, consistent with the Courts ruling in Jaculbe,[23] having terminated petitioner
merely on the basis of a provision in the retirement plan which was not freely
assented to by her, UNIPROM is guilty of illegal dismissal. Petitioner is thus entitled
to reinstatement without loss of seniority rights and to full backwages computed from
the time of her illegal dismissal in February 16, 2001 until the actual date of her
reinstatement. If reinstatement is no longer possible because the position that
petitioner held no longer exists, UNIPROM shall pay backwages as computed
above, plus, in lieu of reinstatement, separation pay equivalent to one-month pay for
every year of service. This is consistent with the preponderance of
jurisprudence[24] relative to the award of separation pay in case reinstatement is no
longer feasible.
WHEREFORE, the petition is GRANTED. The July 31, 2007 Decision and the May
26, 2009 Resolution of the Court of Appeals in CA- G.R. SP No. 87508 are
hereby REVERSED and SET ASIDE. The October 30, 2002 Decision of the Labor
Arbiter is REINSTATED, with the MODIFICATION that the award of backwages
shall be computed from the time of her illegal dismissal until the actual date of her
reinstatement. If reinstatement is no longer possible because the position that
petitioner held no longer exists, respondent UNIPROM shall pay backwages as
computed above, plus, in lieu of reinstatement, separation pay equivalent to one-
month pay for every year of service.

SO ORDERED.
CAINTA CATHOLIC SCHOOL v. CAINTA CATHOLIC SCHOOL
EMPLOYEES UNION (G.R. No. 151021, May 4, 2006)
The main issue for resolution hinges on the validity of a stipulation in a Collective
Bargaining Agreement (CBA) that allows management to retire an employee in its
employ for a predetermined lengthy period but who has not yet reached the
minimum compulsory retirement age provided in the Labor Code. Jurisprudence has
answered the question in the affirmative a number of times and our duty calls for the
application of the principle of stare decisis. As a consequence, we grant the petition
and reverse the Court of Appeals.
Before us is a petition for review on certiorari under Rule 45 of the Rules of
Court, assailing the Decision[1] dated 20 August 2001 of the Court of Appeals in CA-
G.R. SP No. 50851, which reversed the Resolutions dated 31 January 1997, [2] and
30 April 1997[3] of the National Labor Relations Commission (NLRC), Third Division
in NLRC NCR CC No. L-000028-93 (NLRC RAB-IV-7-6827-94-R), as well as the
Resolution[4] dated 6 December 2001.
The antecedent facts follow:
On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into
between Cainta Catholic School (School) and the Cainta Catholic School
Employees Union (Union) effective 1 January 1986 to 31 May 1989. This CBA
provided, among others, that:
ARTICLE IX
DURATION OF AGREEMENT
This Collective Bargaining Agreement shall become
effective and binding upon the parties from January 1, 1986 up
to May 31, 1989. At least sixty (60) days before the expiration of
this Agreement, the parties hereto shall submit written proposals
which shall be made the basis of negotiations for the execution of
a new agreement.
If no new agreement is reached by the parties at the
expiration of this agreement, all the provisions of this Agreement
shall remain full force and in effect, up to the time a new Agreement
shall be executed.[5]
Msgr. Mariano Balbago (Balbago) was appointed School Director in April
1987. From this time, the Union became inactive.
It was only in 10 September 1993 that the Union held an election of officers, with
Mrs. Rosalina Llagas (Llagas) being elected as President; Paz Javier (Javier), Vice-
President; Fe Villegas (Villegas), Treasurer; and Maria Luisa Santos (Santos),
Secretary. Llagas was then the Dean of the Student Affairs while Villegas
and Santos were Year-Level Chairmen. The other elected officers were Rizalina
Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer; Gilda Galange and
Jimmy del Rosario, auditors; Filomeno Dacanay and Adelina Andres, P.R.O.s; and
Danilo Amigo and Arturo Guevarra, business managers.[6]
On 15 October 1993, the School retired Llagas and Javier, who had rendered more
than twenty (20) years of continuous service, pursuant to Section 2, Article X of the
CBA, to wit:
An employee may be retired, either upon application by the
employee himself or by the decision of the Director of the School,
upon reaching the age of sixty (60) or after having rendered at
least twenty (20) years of service to the School the last three (3)
years of which must be continuous.[7]
 On 27 July 1994, the Union filed a complaint[9] for unfair labor practice
Three (3) days later, the Union filed a notice of strike with the National Conciliation
before the NLRC docketed as NLRC Case No. RAB-IV-7-6827-94-R, entitled,
and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-93.
Cainta Catholic School Employees Union v. Cainta Catholic School, et. al., before
Arbitration Branch IV. Upon motion, then Labor Arbiter Oswald Lorenzo ordered the
On 8 November 1993, the Union struck and picketed the Schools entrances.
consolidation of this unfair labor practice case with the above-certified case.

On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued an

On 31 January 1997, the NLRC rendered a Resolution favoring the School.
Order certifying the labor dispute to the National Labor Relations Commission
(NLRC). The dispositive portion reads:
Three (3) issues were passed upon by the NLRC, namely: (1) whether the

WHEREFORE, PREMISES CONSIDERED, this Office retirement of Llagas and Javier is legal; (2) whether the School is guilty of unfair
hereby certifies the labor dispute at the Cainta Catholic School to labor practice; and (3) whether the strike is legal.
the National Labor Relations Commission for compulsory
arbitration, pursuant to Article 263(g) of the Labor Code as
amended. The NLRC ruled that the retirement of Llagas and Javier is legal as the
Accordingly, all striking teachers and employees are School was merely exercising an option given to it under the CBA.[10] The NLRC
directed to return to work within 24 hours from receipt of this Order dismissed the unfair labor practice charge against the School for insufficiency of
and the School Administrator to accept all returning employees
under the same terms and conditions prevailing prior to the strike. evidence. Furthermore, it was found that the strike declared by the Union from 8 to
12 November 1993 is illegal, thereby declaring all union officers to have lost their
Furthermore, the effects of the termination of Ms.
Rosalinda Llagas and Paz A. Javier are hereby suspended. In line employment status.[11]
with this Order, the School Administration is ordered to reinstate
them to their former positions without loss of seniority rights and
privileges pending determination of the validity of their dismissal. The Union moved for reconsideration but it was denied in a Resolution
dated 30 April 1997.
Both parties are further directed to cease and desist from
committing any acts that might aggravate the situation.
Hence, on 9 July 1997, the Union filed a petition for certiorari before this
SO ORDERED.[8]
Court docketed as G.R. No. 129548. The Court issued a temporary restraining order
(TRO) against the enforcement of the subject resolutions effective as of 23 July
1997. The School, however, filed a motion for clarification considering that it had
On 20 December 1993, the School filed a petition directly with the NLRC to
already enforced the 31 January 1997 NLRC Resolution.
declare the strike illegal.

On 28 July 1997, ten (10) regular teachers, who were declared to have lost
their employment status under the aforesaid NLRC Resolution reported back to work
but the School refused to accept them by reason of its pending motion for
clarification. This prompted the Union to file a petition for contempt against Balbago
and his agents before this Court, docketed as G.R. No. 130004, which was later on
consolidated with G.R. No. 129548.
Pursuant to the ruling of this Court in St. Martin Funeral Homes v.
NLRC,[12] the case was referred to the Court of Appeals and re-docketed as CA-G.R.
SP No. 50851.
On 20 August 2001, the Court of Appeals rendered a decision giving due
course and granting the petition to annul and set aside the 31 January 1997 and 30
April 1997 Resolutions of the NLRC; while dismissing the petition for contempt for
lack of merit. The decretal portion of the decision reads:
WHEREFORE, premises considered, the petition to annul
and set aside the 31 January 1997 and the 30 April
1997 resolutions of the National Labor Relations Commission
is GRANTED. Judgment is hereby RENDERED directing private
respondents: 1) to REINSTATE the terminated union officers,
except Rosalinda Llagas, Paz Javier, Gilda Galange and Ester
Amigo, to their former positions without loss of seniority rights and
other privileges with full backwages, inclusive of allowances and
other benefits or their monetary equivalent from 9 June 1997 up to
the time of their actual reinstatement; 2) to pay Rosalinda Llagas:
a) separation pay equivalent to one (1) month pay for every year of
service, in lieu of reinstatement, with full backwages, inclusive of
allowances and other benefits or their monetary equivalent from 9
June 1997 up to the time of the finality of this decision; b) moral
and exemplary damages in the amount of ten thousand pesos
(P10,000.00) and five thousand (P5,000.00), respectively; 3) to pay
Paz Javier, or her heirs: a) unpaid salaries, inclusive of allowances
and other benefits, including death benefits, or their monetary
equivalent from the time her compensation was withheld from her
up to the time of her death; b) separation pay equivalent to one (1)
months salary for every year of service; and c) moral and
exemplary damages in the amount of ten thousand pesos
(P10,000.00) and five thousand pesos (P5,000.00), respectively.
Private respondents are also ordered to pay petitioner
union attorneys fees equivalent to five percent (5%) of the total
judgment award.
The petition for contempt, however, is DISMISSED for lack
of merit.
No pronouncement as to costs.
SO ORDERED.[13]
In reversing the decision of the NLRC, the Court of Appeals construed the
retirement of Llagas and Javier as an act amounting to unfair labor practice when
viewed against the backdrop of the relevant circumstances obtaining in the
case. The appellate court pointed out, thus:
The two happened to be the most vocal, dynamic and
influential of all union officers and members and they held
considerable suasion over the other employees. Rosalinda Llagas
objected to the signing of the prepared form distributed by the
school, as a consequence of which, no one accomplished the form,
and opposed the formation of the high school faculty club as the
teachers already had sufficient representation through the
union. Paz Javier, on the other hand, demanded that she be given
the floor during the faculty club organizational meeting and went on
to win the presidency of the faculty club, conclusively showing that
she enjoyed the support of the high school teachers. They were
therefore a new and different breed of union leaders assertive,
militant and independent the exact opposite of former union
president Victor Javier who seemed to be passive, cooperative and
pacific. The school saw the two as threats which it could not control,
and faced with a very uncomfortable situation of having to contend
with an aggressive union which just dominated the high school
faculty club (except for Joel Javeniar, all of the faculty clubs officers
were union members; Rollo, p. 418), the school decided to nip in
the bud the reactivated union by retiring its most prominent leaders.
xxxx
 It is not difficult to see the anti-union bias of the school. One
of the first acts of private respondent Msgr. Balbago immediately
after his assumption of office as school director was to ask for a
moratorium on all union activities. With the union in inactive status,
the school felt secure and comfortable but when the union
reactivated, the school became apprehensive and reacted by
retiring the unions two topmost officers by invoking the provisions
of the CBA. When the union furnished the school, through counsel,
a copy of a proposed CBA on 3 November 1993, the school in a
cavalier fashion ignored it on the pretext that the union no longer
enjoyed the majority status among the employees x x x[14]
The appellate court concluded that the retirement of the two (2) union
officers was clearly to bust the reactivated union.
Having established that the School committed unfair labor practice, the Court of
Appeals declared that the no-strike, no-lockout clause in the CBA was not violated
when the union members staged a strike from 8 to 12 November 1993.[15] It further
held that minor disorders or isolated incidents of perceived coercion attending the
strike do not categorize it as illegal:
We studied carefully the available records and found that
the existence of force during the strike was certainly not pervasive
and widespread, or consistently and deliberately resorted to as a
matter of policy, so as to stamp the strike with illegality, or to cause
the loss of employment of the guilty party x x x [16]
The motion for reconsideration subsequently filed by the School was denied in a
Resolution dated 6 December 2001, save in case of some union officers where the
appellate court modified its ruling granting them separation pay instead of
reinstatement because of their retirement or death.[17]
Thereafter, petitioners filed this petition for review on certiorari raising three main
issues, summarized as: (1) whether the Schools decision to retire Llagas and Javier
constitutes unfair labor practice; (2) whether the strike was legal; and (3) whether
some union officers ordered dismissed are entitled to backwages.[18]
The School avers that the retirement of Llagas and Javier was clearly in
accordance with a specific right granted under the CBA. The School justifies its
actions by invoking our rulings in Pantranco North Express, Inc. v.
NLRC[19] and Bulletin Publishing Corporation v. Sanchez[20] that no unfair labor
practice is committed by management if the retirement was made in accord with
management prerogative or in case of voluntary retirement, upon approval of
management.
The Union, relying on the findings made by the Court of Appeals,[21] argues
that the retirement of the two union officers is a mere subterfuge to bust the union. [22]
The NLRC, however, gave another justification to sustain the validity of the two union
officers forcible retirement, viz:
The retirement of Rosalinda Llagas has become inevitable
because, being a managerial employee by reason of her position
as Dean of Student Affairs, she accepted the Union
presidency. She lost the trust and confidence on her by the
SCHOOL as she occupied a managerial position as Dean of
Student Affairs. . . Being also the union president, she has allowed
her loyalties to be divided between the administration and the union.
As to Paz Javier, her retirement was decided upon after an
evaluation shows that she was not performing well as her students
were complaining about her brusque attitude and bad language,
aside from being habitually absent and late. [23]
At the outset, only questions of law are entertained by this Court through a petition
for review on certiorari. There are, however, well-recognized exceptions such as in
this case when the factual findings of the NLRC and the Court of Appeals are Article 287 of the Labor Code, as amended, governs retirement of
contradictory.[24] A re-evaluation of the records of this case is necessary for its employees, stating:
proper resolution. ART. 287. Retirement.

Any employee may be retired upon reaching the retirement

The key issue remains whether the forced retirement of Llagas and Javier was a age established in the collective bargaining agreement or other
valid exercise of management prerogative. Undoubtedly, the retirement of the two applicable employment contract.

(2) union officers triggered the declaration of strike by the Union, and the ruling on In case of retirement, the employee shall be entitled to
whether the strike was legal is highly dependent on whether the retirement was valid. receive such retirement benefits as he may have earned under
existing laws and any collective bargaining agreement and other
agreements: Provided, however, That an employees retirement
benefits under any collective bargaining agreement and other
We are impelled to reverse the Court of Appeals and affirm the validity of the
agreements shall not be less than those provided herein.
termination of employment of Llagas and Javier, arising as it did from a management
In the absence of a retirement plan or agreement providing
prerogative granted by the mutually-negotiated CBA between the School and for retirement benefits of employees in the establishment, an
the Union. 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
Pursuant to the existing CBA,[25] the School has the option to retire an in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for
employee upon reaching the age limit of sixty (60) or after having rendered at least every year of service, a fraction of at least six (6) months being
considered as one whole year.
twenty (20) years of service to the School, the last three (3) years of which must be
continuous. Retirement is a different specie of termination of employment from
dismissal for just or authorized causes under Articles 282 and 283 of the Labor
The CBA in the case at bar established 60 as the compulsory retirement
Code. While in all three cases, the employee to be terminated may be unwilling to
age. However, it is not alleged that either Javier or Llagas had reached the
part from service, there are eminently higher standards to be met by the employer
compulsory retirement age of 60 years, but instead that they had rendered at least
validly exercising the prerogative to dismiss for just or authorized causes. In those
20 years of service in the School, the last three (3) years continuous. Clearly, the
two instances, it is indispensable that the employer establish the existence of just or
CBA provision allows the employee to be retired by the School even before reaching
authorized causes for dismissal as spelled out in the Labor Code. Retirement, on
the age of 60, provided that he/she had rendered 20 years of service. Would such a
the other hand, is the result of a bilateral act of the parties, a voluntary agreement
stipulation be valid? Jurisprudence affirms the position of the School.
between the employer and the employee whereby the latter after reaching a certain
age agrees and/or consents to sever his employment with the former.[26]
Pantranco North Express, Inc. v. NLRC, cited by petitioners, finds direct
application in this case. The CBA involved in Pantranco allowed the employee to be
compulsorily retired upon reaching the age of 60 or upon completing [25] years of
service to [Pantranco]. On the basis of the CBA, private respondent was
compulsorily retired by Pantranco at the age of 52, after 25 years of service.
Interpreting Article 287, the Court ruled that the Labor Code permitted employers
and employees to fix the applicable retirement age at below 60 years of
age. Moreover, the Court also held that there was no illegal dismissal since it was
the CBA itself that incorporated the agreement reached between the employer and
the bargaining agent with respect to the terms and conditions of employment; hence,
when the private respondent ratified the CBA with his union, he concurrently agreed
to conform to and abide by its provisions. Thus, the Court asserted, [p]roviding in a
CBA for compulsory retirement of employees after twenty-five (25) years of service
is legal and enforceable so long as the parties agree to be governed by such CBA. [27]
A similar set of facts informed our decision in Progressive Development
Corporation v. NLRC.[28] The CBA therein stipulated that an employee with [20]
years of service, regardless of age, may be retired at his option or at the option of
the company. The stipulation was used by management to compulsorily retire two
employees with more than 20 years of service, at the ages of 45 and 38. The Court
affirmed the validity of the stipulation on retirement as consistent with Article 287 of
the Labor Code.
Philippine Airlines, Inc. v. Airline Pilots Association of the Phils. [29] further
bolsters the Schools position. At contention therein was a provision of the PAL-
ALPAP Retirement Plan, the Plan having subsequently been misquoted in the CBA
mutually negotiated by the parties. The Plan authorized PAL to exercise the option
of retirement over pilots who had chosen not to retire after completing 20 years of
service or logging over 20,000 hours for PAL. After PAL exercised such option over
a pilot, ALPAP charged PAL with illegal dismissal and union-busting. While the
Secretary of Labor upheld the unilateral retirement, it nonetheless ruled that PAL
should first consult with the pilot to be retired before it could exercise such option.
The Court struck down that proviso, ruling that the requirement to consult the pilots
prior to their retirement defeats the exercise by management of its option to retire
the said employees, [giving] the pilot concerned an undue prerogative to assail the
decision of management.
By their acceptance of the CBA, the Union and its members are obliged to
abide by the commitments and limitations they had agreed to cede to management.
The questioned retirement provisions cannot be deemed as an imposition foisted on
the Union, which very well had the right to have refused to agree to allowing
management to retire retire employees with at least 20 years of service.
It should not be taken to mean that retirement provisions agreed upon in the
CBA are absolutely beyond the ambit of judicial review and nullification. A CBA, as
a labor contract, is not merely contractual in nature but impressed with public
interest. If the retirement provisions in the CBA run contrary to law, public morals, or
public policy, such provisions may very well be voided. Certainly, a CBA provision
or employment contract that would allow management to subvert security of tenure
and allow it to unilaterally retire employees after one month of service cannot be
upheld. Neither will the Court sustain a retirement clause that entitles the retiring
employee to benefits less than what is guaranteed under Article 287 of the Labor
Code, pursuant to the provisions express proviso thereto in the provision.
Yet the CBA in the case at bar contains no such infirmities which must be
stricken down. There is no essential difference between the CBA provision in this
case and those we affirmed in Pantranco and Progressive. Twenty years is a more
than ideal length of service an employee can render to one employer. Under ordinary
contemplation, a CBA provision entitling an employee to retire after 20 years of
service and accordingly collect retirement benefits is reward for services rendered
since it enables an employee to reap the fruits of his labor particularly retirement
benefits, whether lump-sum or otherwise at an earlier age, when said employee, in
presumably better physical and mental condition, can enjoy them better and
longer.[30]
We affirm the continued validity of Pantranco and its kindred cases, and
thus reiterate that under Article 287 of the Labor Code, a CBA may validly accord
management the prerogative to optionally retire an employee under the terms and
conditions mutually agreed upon by management and the bargaining union, even if
such agreement allows for retirement at an age lower than the optional retirement
age or the compulsory retirement age. The Court of Appeals gravely erred in
refusing to consider this case from the perspective of Pantranco, or from the settled
doctrine enunciated therein.
What the Court of Appeals did instead was to favorably consider the claim
of the Union that the real purpose behind the retirement of Llagas and Javier was to
bust the union, they being its president and vice-president, respectively. To that end,
the appellate court favorably adopted the citation by the Union of the American
case of NLRB v. Ace Comb, Co.,[31] which in turn was taken from a popular local
labor law textbook. The citation stated that [f]or the purpose of determining whether
or not a discharge is discriminatory, it is necessary that the underlying reason for
the discharge be established. The fact that a lawful cause for discharge is available
is not a defense where the employee is actually discharged because of his union
activities.[32]
Reliance on NLRB v. Ace Comb, Co. was grossly inapropos. The case did
not involve an employee sought to be retired, but one who cited for termination from
employment for cause, particularly for violating Section 8(a)(3) of the National Labor
Relations Act, or for insubordination. Moreover, the United States Court of Appeals
Eighth Circuit, which decided the case, ultimately concluded that here the evidence
abounds that there was a justifiable cause for [the employees] discharge, [33] his
union activities notwithstanding. Certainly, the Union and the Court of Appeals
would have been better off citing a case wherein the decision actually concluded
that the employee was invalidly dismissed for union activities despite the ostensible
existence of a valid cause for termination.
Nonetheless, the premise warrants considering whether management may
be precluded from retiring an employee whom it is entitled to retire upon a
determination that the true cause for compulsory retirement is the employees union
activities.
The law and this Court frowns upon unfair labor practices by management,
including so-called union-busting. Such illegal practices will not be sustained by the
Court, even if guised under ostensibly legal premises. But with respect to an active
unionized employee who claims having lost his/her job for union activities, there are
different considerations presented if the termination is justified under just or
authorized cause under the Labor Code; and if separation from service is effected
through the exercise of a duly accorded management prerogative to retire an
employee. There is perhaps a greater imperative to recognize the management
prerogative on retirement than the prerogative to dismiss employees for just or
authorized causes. For one, there is a greater subjectivity, not to mention factual
dispute, attached to the concepts of just or authorized cause than retirement which
normally contemplates merely the attainment of a certain age or a certain number
of years in the service. It would be easier for management desirous to eliminate
pesky union members to abuse the prerogative of termination for such purpose since
the determination of just or authorized cause is rarely a simplistic question, but
involves facts highly prone to dispute and subjective interpretation. There are other arguments raised by petitioners. We need to discuss them
only in brief, as they are no longer central to the resolution of this case.
On the other hand, the exercise by management of its retirement
prerogative is less susceptible to dubitability as to the question whether an employee
The School insisted that Llagas and Javier were actually managerial
could be validly retired. The only factual matter to consider then is whether the
employees, and it was illegal for the Union to have called a strike on behalf of two
employee concerned had attained the requisite age or number of years in service
employees who were not legally qualified to be members of the Union in the first
pursuant to the CBA or employment agreement, or if none, pursuant to Article 287
place.[35] The Union, on the other hand, maintains that they are rank-and-file
of the Labor Code. In fact, the question of the amount of retirement benefits is more
employees.
likely to be questioned than the retirement itself. Evidently, it more clearly emerges
in the case of retirement that management would anyway have the right to retire an
Article 212(m) of the Labor Code defines a managerial employee as "one
employee, no matter the degree of involvement of said employee in union activities.
who is vested with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
There is another point that militates against the Union. A ruling in its favor
discipline employees, or to effectively recommend such managerial actions." The
is tantamount to a concession that a validly drawn management prerogative to retire
functions of the Dean of Student Affairs, as occupied by Llagas, are enumerated in
its employees can be judicially interfered on a showing that the employee in question
the Faculty Manual. The salient portions are hereby enumerated:
is highly valuable to the union. Such a rule would be a source of mischief, even if
narrowly carved out by the Court, for it would imply that an active union member or a. Manages the High School Department with the
Registrar and Guidance Counselors (acting as a COLLEGIAL
officer may be, by reason of his/her importance to the union, somehow exempted BODY) in the absence of the Director or Principal.
from the normal standards of retirement applicable to the other, perhaps less vital
b. Enforces the school rules and regulations governing
members of the union. Indeed, our laws protection of the right to organize labor does students to maintain discipline.
not translate into perpetual job security for union leaders by reason of their
xxxx
leadership role alone. Should we entertain such a notion, the detriment is ultimately
to the union itself, promoting as it would a stagnating entrenched leadership. g. Plans with the Guidance Counselors student leadership
training programs to encourage dynamic and responsible
leadership among the students and submits the same for the
approval of the Principal/Director.
We can thus can comfortably uphold the principle, as reiterated in Philippine
Airlines,[34] that the exercise by the employer of a valid and duly established xxxx
prerogative to retire an employee does not constitute unfair labor practice. i. Studies proposals on extra-curricular or co-curricular
activities and projects proposed by teachers and students and
recommends to the Principal/Director the necessary approval.
 j. Implements and supervises activities and projects Supervisory employees, as defined in Article 212(m) are those who, in the
approved by the Principal/Director so that the activities and interest of the employer, effectively recommend such managerial actions if the
projects follow faithfully the conditions set forth by the
Principal/Director in the approval. exercise of such authority is not merely routinary or clerical in nature but requires
the use of independent judgment.
k. Assists in the planning, supervising and evaluating of
programs of co-curricular activities in line with the philosophy and
objectives of the School for the total development of the students. In the same vein, a reading of the above functions leads us to conclude that
l. Recommends to the Principal policies and rules to serve Javier was a supervisory employee. Verily, Javier made recommendations as to
as guides to effective implementation of the student activity
what actions to take in hiring, termination, disciplinary actions, and management
program.[36]
policies, among others.
xxxx

We can concede, as the Court of Appeals noted, that such job descriptions
or appellations are meaningless should it be established that the actual duties
It is fairly obvious from a perusal of the list that the Dean of Student Affairs exercises
performed by the employees concerned are neither managerial nor supervisory in
managerial functions, thereby classifying Llagas as a managerial employee.
nature. Yet on this point, we defer to the factual finding of the NLRC, the proximate
trier of facts, that Llagas and Javier were indeed managerial and supervisory
Javier was occupying the position of Subject Area Coordinator. Her duties and
employees, respectively.
responsibilities include:

1. Recommends to the principals consideration Having established that Llagas is a managerial employee, she is proscribed
the appointment of faculty members in the department, their from joining a labor union,[38] more so being elected as union officer. In the case of
promotion, discipline and even termination;
Javier, a supervisory employee, she may join a labor union composed only of
2. Recommends advisory responsibilities of
supervisory employees.[39] Finding both union officers to be employees not
faculty members;
belonging to the rank-and-file, their membership in the Union has become
3. Recommends to the principal curricular
changes, purchase the books and periodicals, supplies and questionable, rendering the Union inutile to represent their cause.
equipment for the growth of the school;

4. Recommends his/her colleagues and serves Since the strike has been declared as illegal based on the foregoing
as channel between teachers in the department the principal and/or discussion, we need not dwell on its legality with respect to the means employed by
director.[37]
the Union.
 Finally, there is neither legal nor factual justification in awarding backwages
to some union officers who have lost their employment status, in light of our finding
that the strike is illegal. The ruling of the NLRC is thus upheld on this point. We are
also satisfied with the disposition of the NLRC that mandates that Llagas and Javier
(or her heirs) receive their retirement benefits.

WHEREFORE, the petition is GRANTED. The Resolution dated 31 January 1997 of

the National Labor Relations Commission in NLRC NCR CC No. L-000028-93 is
REINSTATED.

SO ORDERED.
 [G.R. No. 95940. July 24, 1996] "WHEREFORE, with all the foregoing considerations, we find the three
complainants illegally and unjustly dismissed and we hereby order the respondent
to reinstate them to their former or substantially equivalent positions without loss of
seniority rights with full backwages and other benefits, computed as follows:
PANTRANCO NORTH EXPRESS, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and URBANO SUIGA, respondents. xxx xxx xxx

DECISION 3. Urbano Suiga

PANGANIBAN, J.:
27,375.00 Backwages Aug. 16/89 to March 31/90 (P3,650.00 x 7.5
mos.)
Is a Collective Bargaining Agreement provision allowing compulsory retirement
before age 60 but after twenty five years of service legal and enforceable? Who has
jurisdiction over a case involving such a question -- the labor arbiter or arbitrators 1,368.75 13th month pay for 1989 (P16,425.00 over 12)
authorized by such CBA?
P28,743.75
The foregoing questions are presented in the instant petition
for Certiorari seeking the nullification of the Resolution[1] promulgated September 2,874.37 10% attorney's fees
28, 1990 by the National Labor Relations Commission[2] in an illegal dismissal case
brought by private respondent. In its assailed Resolution, the public respondent
affirmed the decision of Labor Arbiter Ricardo N. Olairez dated March 26, P31,618.12 Total as of March 31/90 plus additional backwages and
1990[3] declaring that the compulsory retirement of private respondent constituted other benefits but not to exceed 3 years and the
illegal dismissal, ordering his reinstatement and granting him backwages. corresponding attorney's fees.

The amounts already received by complainants shall be considered as advanced

payment of their retirement pay which shall be deducted when they shall actually
The Antecedent Facts retire or (be) separated from the service.

Private respondent was hired by petitioner in 1964 as a bus conductor. He The order of reinstatement is immediately executory even pending appeal."
eventually joined the Pantranco Employees Association-PTGWO. He continued in
petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two Petitioner appealed to public respondent, which issued the questioned
(52) after having rendered twenty five years' service. The basis of his retirement was Resolution affirming the labor arbiter's decision in toto. Hence, this petition.
the compulsory retirement provision of the collective bargaining agreement between
the petitioner and the aforenamed union. Private respondent received P49,300.00
as retirement pay. The Issues
On February 15, 1990, private respondent filed a complaint[4] for illegal
dismissal against petitioner with the Sub-Regional Arbitration Branch of the
respondent Commission in Dagupan City. The complaint was consolidated with two Petitioner raises the following issues for decision:
other cases of illegal dismissal[5] having similar facts and issues, filed by other
employees, non-union members. "I. The National Labor Relations Commission gravely abused its discretion in
holding that the Labor Arbiter has jurisdiction over the case.
After hearings were held and position papers submitted, on March 26, 1990,
Labor Arbiter Olairez rendered his decision, the dispositive portion of which reads:
II. Assuming that the Labor Arbiter has jurisdiction over the case, the National
Labor Relations Commission gravely abused its discretion in affirming the Labor
Arbiter's decision that private respondent Urbano Zuiga (sic) was illegally
dismissed."
Of course, it is obvious that the underlying and pivotal issue is whether the CBA
stipulation on compulsory retirement after twenty-five years of service is legal and
enforceable. If it is, private respondent has been validly retired. Otherwise, petitioner
is guilty of illegal dismissal. The answer to said question will settle the issue of the
validity of the questioned resolution of the public respondent.
The Court's Ruling
On the key issue, the Court finds the petition meritorious, thus warranting
reversal of the questioned Resolution.
First Issue: Jurisdiction of Labor Arbiter
Petitioner contends that the labor arbiter had no jurisdiction because the
dispute concerns a provision of the CBA and its interpretation. It claims that the case
falls under the jurisdiction of the voluntary arbitrator or panel of arbitrators under
Article 261 of the Labor Code, which provides:
"Article 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. -
- The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and
exclusive jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel policies
referred to in the immediately preceding Article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall
no longer be treated as unfair labor practice and shall be resolved as grievances
under the Collective Bargaining Agreement. For purposes of this Article, gross
violations of a Collective Bargaining agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes, grievances or
matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or
panel of Voluntary Arbitrators and shall immediately dispose and refer the same to
the Grievance Machinery or Voluntary Arbitration provided in the Collective
Bargaining Agreement."
The Labor Arbiter believed otherwise. In his decision[6], he stated:
"In our honest opinion we have Jurisdiction over the complaint on the following
grounds:
First, this is a complaint of illegal dismissal of which original and exclusive
jurisdiction under Article 217 has been conferred to the Labor Arbiters. The
interpretation of the CBA or enforcement of the company policy is only corollary to
the complaint of illegal dismissal. Otherwise, an employee who was on AWOL, or
who committed offenses contrary to the personnel polices (sic) can no longer file a
case of illegal dismissal because the discharge is premised on the interpretation or
enforcement of the company polices (sic).
Second. Respondent voluntarily submitted the case to the jurisdiction of this labor
tribunal. It adduced arguments to the legality of its act, whether such act may be
retirement and/or dismissal, and prayed for reliefs on the merits of the case. A
litigant cannot pray for reliefs on the merits and at the same time attacks (sic) the
jurisdiction of the tribunal. A person cannot have one's cake and eat it too. x x x."
The Court agrees with the public respondent's affirmance of the arbiter's
decision in respect of the question of jurisdiction.
In Sanyo Philippines Workers Union PSSLU vs. Caizares,[7] a case cited by the
petitioner, this Court ruled:
x x x Hence, only disputes involving the union and the company shall be referred
to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No grievance between
them exists which could be brought to a grievance machinery. The problem or
dispute in the present case is between the union and the company on the one
hand and some union and non-union members who were dismissed, on the other
hand. The dispute has to be settled before an impartial body.The grievance
machinery with members designated by the union and the company cannot be
expected to be impartial against the dismissed employees. Due process demands
that the dismissed workers grievances be ventilated before an impartial
body. Since there has already been an actual termination, the matter falls within
the jurisdiction of the Labor Arbiter."
Applying the same rationale to the case at bar, it cannot be said that the
"dispute" is between the union and petitioner company because both have
previously agreed upon the provision on "compulsory retirement" as embodied in
the CBA. Also, it was only private respondent on his own who questioned the
compulsory retirement. Thus, the case is properly denominated as a "termination
dispute" which comes under the jurisdiction of labor arbiters.
Therefore, public respondent did not commit a grave abuse of discretion in
upholding the jurisdiction of the labor arbiter over this case.
Second Issue: Private Respondent's Compulsory Retirement Is Not Illegal
Dismissal
The bone of contention in this case is the provision on compulsory retirement
after 25 years of service. Article XI, Section 1 (e) (5) of the May 2, 1989 Collective
Bargaining Agreement[8] between petitioner company and the union states:
"Section 1. The COMPANY shall formulate a retirement plan with the following
main features:
xxx xxx xxx
(e) The COMPANY agrees to grant the retirement benefits herein provided to
regular employees who may be separated from the COMPANY for any of the
following reasons:
xxx xxx xxx
(5) Upon reaching the age of sixty (60) years or upon completing twenty-five (25)
years of service to the COMPANY, whichever comes first, and the employee shall
be compulsory retired and paid the retirement benefits herein provided."
Petitioner contends that the aforequoted provision is valid and in consonance
with Article 287 of the Labor Code. The respondent Commission holds otherwise.
The said Code provides:
"Art. 287. Retirement. -- Any employee may be retired upon reaching the
retirement age established in the Collective Bargaining Agreement or other
applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
or other agreement."
The Solicitor General, in his Manifestation in Lieu of Comment,[9] agrees with
petitioner's contention that the law leaves to the employer and employees the fixing
of the age of retirement. He cites Section 13, Rule I, Book VI of the Omnibus Rule
Implementing the Labor Code, which reads:
"Retirement. -- In the absence of any collective bargaining agreement or other
applicable agreement concerning terms and condition of employment which
provides for retirement at an older age, an employee may be retired upon reaching
the age of sixty (60) years."
Arguing that the law on compulsory retirement age is open-ended, as indicated by
the use of the word "may," the Solicitor General maintains that there is no prohibition
against parties fixing a lower age for retirement.[10]
Additionally, the Solicitor General and the petitioner contend that a CBA
provision lowering compulsory retirement age to less than sixty (60) is not contrary
to law because it does not diminish the employee's benefits. Rather, they argue that
early retirement constitutes a reward of employment, and therefore, retirement
pursuant to the CBA provision in question cannot be considered a dismissal
following this Court's ruling in Soberano vs. Clave,10a the relevant portions of which
read as follows:
"Retirement and dismissal are entirely different from each other. Retirement is the
result of a bilateral act of the parties, a voluntary agreement between the employer
and the employees whereby the latter after reaching a certain age agrees and/or
consents to severe his employment with the former. On the other hand, dismissal
refers to the unilateral act of the employer in terminating services of an employee
with or without cause. In fine, in the case of dismissal, it is only the employer who
decides when to terminate the services of an employee x x x Moreover,
concomitant with the provisions on retirement in a Labor Agreement is a stipulation
regarding retirement benefits pertaining to a retired employee. Here again, the
retirement benefits are subject to stipulation by the parties unlike in dismissals
where separation pay is fixed by law in cases of dismissals without just
cause. Evident, therefore, from the foregoing is that retirements which are agreed
upon by the employer and the employee in their collective bargaining agreement
are not dismissals x x x. To further fortify the aforesaid conclusion, it is noteworthy
that even the New Labor Code recognizes this distinction when it treats retirement
from service under a separate title from that of dismissal or termination of
employment, aside from expressly recognizing the right of the employer to retire
any employee who has reached the retirement age established in the collective
bargaining agreement or other applicable employment contract and the latter to
receive such retirement benefits as he may have earned under existing laws and
any collective bargaining or other agreement (Art. 277, New Labor Code)."
 We agree with petitioner and the Solicitor General. Art. 287 of the Labor Code
as worded permits employers and employees to fix the applicable retirement age at
below 60 years. Moreover, providing for early retirement does not constitute
diminution of benefits. In almost all countries today, early retirement, i.e., before age
60, is considered a reward for services rendered since it enables an employee to
reap the fruits of his labor particularly retirement benefits, whether lump-sum or
otherwise at an earlier age, when said employee, in presumably better physical and
mental condition, can enjoy them better and longer. As a matter of fact, one of the
advantages of early retirement is that the corresponding retirement benefits, usually
consisting of a substantial cash windfall, can early on be put to productive and
profitable uses by way of income-generating investments, thereby affording a more
significant measure of financial security and independence for the retiree who, up
till then, had to contend with life's vicissitudes within the parameters of his fortnightly
or weekly wages. Thus we are now seeing many CBAs with such early retirement
provisions. And the same cannot be considered a diminution of employment
benefits.
It is also further argued that, being a union member, private respondent is
bound by the CBA because its terms and conditions constitute the law between the
parties.[11] The parties are bound not only to the fulfillment of what has been
expressly stipulated but also to all the consequences which according to their nature,
may be in keeping with good faith, usage and law.[12] It binds not only the union but
also its members.[13] Thus, the Solicitor General[14] said:
"Private respondent cannot therefore claim illegal dismissal when he was
compulsory retired after rendering twenty-five (25) years of service since his
retirement is in accordance with the CBA."
We again concur with the Solicitor General's position. A CBA incorporates the
agreement reached after negotiations between employer and bargaining agent with
respect to terms and conditions of employment. A CBA is not an ordinary
contract. "(A)s a labor contract within the contemplation of Article 1700 of the Civil
Code of the Philippines which governs the relations between labor and capital, (it)
is not merely contractual in nature but impressed with public interest, thus it must
yield to the common good. As such, it must be construed liberally rather than
narrowly and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it is negotiated
and purpose which it is intended to serve."[15]
Being a product of negotiation, the CBA between the petitioner and the union
intended the provision on compulsory retirement to be beneficial to the employees-
union members, including herein private respondent. When private respondent
ratified the CBA with the union, he not only agreed to the CBA but also agreed to
conform to and abide by its provisions. Thus, it cannot be said that he was illegally
dismissed when the CBA provision on compulsory retirement was applied to his
case.
Incidentally, we call attention to Republic Act No. 7641, known as "The
Retirement Pay Law," which went into effect on January 7, 1993. Although passed
many years after the compulsory retirement of herein private respondent,
nevertheless, the said statute sheds light on the present discussion when it
amended Art. 287 of the Labor Code, to make it read as follows:
"ART. 7. Retirement. Any employee may be retired upon reaching the retirement
age establish in the collective bargaining agreement or other applicable
employment contract.
xxx xxx xxx
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment may retire x x x."
The aforequoted provision makes clear the intention and spirit of the law to give
employers and employees a free hand to determine and agree upon the terms and
conditions of retirement. Providing in a CBA for compulsory retirement of employees
after twenty-five (25) years of service is legal and enforceable so long as the parties
agree to be governed by such CBA. The law presumes that employees know what
they want and what is good for them absent any showing that fraud or intimidation
was employed to secure their consent thereto.
On this point then, public respondent committed a grave abuse of discretion in
affirming the decision of the labor arbiter. The compulsory retirement of private
respondent effected in accordance with the CBA is legal and binding.
WHEREFORE, premises considered, the petition is GRANTED and the
questioned Resolution is hereby set aside. No costs.
SO ORDERED.
[G.R. No. 117174. November 13, 1996]
CAPITOL WIRELESS, INC., petitioner, vs. HONORABLE SECRETARY MA.
NIEVES R. CONFESOR and KILUSANG MANGGAGAWA NG CAPWIRE
KMC-NAFLU, respondents.
DECISION
BELLOSILLO, J.:
Petitioner Capitol Wireless, Inc., and respondent Kilusang Manggagawa ng
Capwire KMC-NAFLU (Union) entered into a Collective Bargaining Agreement
(CBA) on 15 November 1990 covering a period of five (5) years. Towards the end
of the third year of their CBA the parties renegotiated the economic aspects of the
agreement. On 18 July 1993 when the negotiations were on-going petitioner
dismissed on the ground of redundancy eight (8) out of its eleven (11) couriers who
were Union members.
As a consequence, respondent Union filed a notice of strike with the National
Conciliation and Mediation Board (NCMB) on the ground of bargaining deadlock and
unfair labor practice, specifically, for illegal dismissal and violations of the
CBA. Conciliation proceedings were conducted by the NCMB but the same yielded
negative results. On 20 August 1993 respondent Union went on strike. On the same
day, respondent Secretary assumed jurisdiction over the controversy.
In the conference held on 14 September 1993 the parties agreed to confine the
scope of the dispute to the following issues: (a) unfair labor practice, consisting of
CBA violations and acts inimical to the workers right to self-organization; (b)
redundancy, affecting the dismissed employees; and (c) CBA deadlock, which
includes all items covered by respondent Unions proposals.
On 2 May 1994 respondents Secretary of Labor resolved the controversy in
this manner: (1) the parties were ordered to modify the fourth and fifth years of their
CBA in accordance with the dispositions she found just and equitable [1] the same to
be retroactive to 1 July 1993 and effective until 30 June 1995 or until superseded by
a new agreement; (2) all other provisions of the existing CBA were deemed retained
but all new demands of respondent Union that were not passed upon by her deemed
denied; (3) the dismissal of the eight (8) employees on the ground of redundancy
was upheld, but due to defective implementation by petitioner the latter was ordered
to pay each of the former an indemnity equivalent to two (2) months salary based
on their adjusted rate for the fourth year in addition to the separation benefits due
them under the law and the CBA, and if still unpaid, petitioner to pay the same
immediately; and (4) the charge of unfair labor practice was dismissed for lack of
merit.[2]
On 28 July 1994 the motion for reconsideration of petitioner was denied.[3]
Petitioner imputes grave abuse of discretion on respondent Secretary of Labor
for holding that it failed to accord due process to the dismissed employees; in not
applying to the letter the ruling in Wenphil Corp. v. NLRC;[4] and, in awarding
retirement benefits beyond those granted by R.A. 7641.[5]
Petitioner argues that what it implemented was not retrenchment but
redundancy program, as such, respondent Secretary of Labor should not have relied
upon Asiaworld Publishing House, Inc. v. Ople[6] in holding that the dismissed
employees were not accorded procedural due process. The additional requirements
enumerated in Asiaworld are inapplicable to the present case because that case
involved retrenchment, and petitioners basis in deciding those to be covered by the
redundancy program was the area serviced by the couriers. All areas outside the
vicinity of its head office, which were the areas of delivery of the dismissed
employees, were declared redundant.
Petitioner misses the point. Its violation of due process consists in its failure, as
found by respondent Secretary of Labor, to apprise respondent Union of any fair and
reasonable criteria for implementation of its redundancy program. In Asiaworld we
laid down the principle that in selecting employees to be dismissed a fair and
reasonable criteria must be used, such as but not limited to: (a) less preferred status
(e.g., temporary employee), (b) efficiency and (c) seniority. Although the case of
Asiaworld dealt with retrenchment, still the principle is applicable to the present case
because in effecting the dismissals petitioner had to select from among its
employees.
We agree with respondent Secretary of Labor in her observation and
conclusion that the implementation by petitioner of its redundancy program was
inconsistent with established principles of procedural due process. She elaborated
on this point in her resolution of the motion for reconsideration. Thus
Whether it is redundancy or retrenchment, no employee may be dismissed without
observance of the rudiments of good faith. This is the point of our assailed order. If
the Company (were) really convinced of the reasons for dismissal, the least it
could have done to the employees affected was to observe fair play and
transparency in implementing the decision to dismiss. To stress, the redundancy
was implemented without the Company so much apprising the Union of any fair
and reasonable criteria for implementation.
As a matter of fact, this office called the parties to a conference on 14 March 1994,
at which the Company was given an opportunity to clarify the criteria it used in
effecting redundancy. Represented by Ms. Ma. Lourdes Mendoza of Mercado and
Associates, its counsel of record, the Company submitted quitclaims which do not
contain any amounts purportedly executed by five of the eight dismissed
employees. More importantly, the minutes of the conference show that within two
days thereafter, the Company committed to submit a pleading to explain the
criteria it used in effecting the redundancy; where no such submission is made by
17 March 1994, the case shall be deemed submitted for resolution. The Company
never complied with this commitment.
As has been made clear, even this Office recognized that an authorized cause for
dismissal did exist; what it could not countenance is the means employed by the
Company in making the cause effective. But no matter what kind of justification the
Company presents now, this has become moot, academic and irrelevant. The
same should have been communicated to the affected employees prior to or
simultaneously with the implementation of the redundancy, or at the very
least, before the assailed order was rendered.
In any event, the explanation being advanced by the Company now purportedly
based on areas of assignment loses significance from the more compelling
viewpoint of efficiency and seniority. For instance, during the period covered by the
Companys own time and motion analysis, Rogelio Varona delivered 96 messages
but was dismissed; Ressurecion Bordeos delivered only an average of 75 but was
retained. In terms of seniority, the Company itself states the Ms. Bordeos holds the
same position/area as Rogelio Varona, however, she was retained because she is
more senior than the latter. The Company should look at its own evidence
again. Bordeos had only 16 years of service. Varona had 19, Neves 18, and Valle,
Basig and Santos 17, yet all five were dismissed.
One should also consider that the redundancy was implemented at the height of
bargaining negotiations. The bargaining process could have been the best
opportunity for the Company to apprise the Union of the necessity for
redundancy. For unknown reasons, the Company did not take an advantage of
it. Intended or not, the redundancy reinforced the conditions for a deadlock, giving
the Union members the impression that it was being used by the Company to
obtain a bargaining leverage.[7]
Petitioner argues next that granting that procedural due process was not
afforded the dismissed employees, still, the award of two (2) months salary for each
of them is not in accord with existing jurisprudence. The Wenphil doctrine teaches,
as in other cases, that where the dismissal of an employee is for a just cause but
without due process, the employer must indemnify the dismissed employee.
Petitioner must have failed to read the full text of Wenphil or simply chose to
ignore the sentence immediately succeeding the P1,000.00 indemnity enunciated
therein. The case is explicit that the measure of the award depends on the facts of
each case and the gravity of the omission committed by the employer. In fact, in the
recent case of Reta v. NLRC,[8] the Court saw fit to impose P10,000.00 as penalty
for the employers failure to comply with the due process requirement. The
ratiocination of respondent Secretary of Labor should have put petitioners argument
at rest
x x x x Wenphil, however, simply provides the authority to impose the indemnity; it
is not meant to be definitive as to the amount of indemnity applicable in all cases,
this being dependent on the particular circumstances of a case.Indeed, in the later
case of Maritime Seahorse v. NLRC, G.R. No. 84712, 5 May 1989, the Supreme
Court applied the Wenphil doctrine but awarded an indemnity
of P5,000.00. Clearly, there is a recognition that the amount of indemnity to be
awarded is subject to the discretion of the agency making the award, considering
all attendant circumstances.[9]
Lastly, petitioner argues that the retirement benefits granted by respondent
Secretary of Labor are in excess of what is required of it under the law and what the
Union demands. In particular, R.A. 7641 grants to the employee retirement pay
equivalent to 21.82 days per year of service only but respondent Secretary of Labor
granted the equivalent of 22.5 days. To this, six (6) more days were granted for
compulsory retirement and three (3) days for optional retirement. The existing
provisions of the CBA, the respective proposals of the parties, and the award of
respondent Secretary of Labor are reproduced hereunder
EXISTING PROVISIONS OF THE CBA
a. Normal Retirement
compulsory upon reaching 60 years of age or after 35 years of continuous service,
whichever comes first, provided that those who reach 55 or have 10 years of
uninterrupted service may be retired at employees or Compulsory option.
PETITIONER'S PROPOSAL
a. Normal Retirement
60 years old R.A. 7641
b. Optional Retirement
55 years old or 10 years of continuous service months basic salary for every year
of continuous service plus 1 day equivalent pay
UNIONS PROPOSAL
a. Normal Retirement
150 % of basic salary
b. Optional Retirement
50 % of basic salary commencing in the 5th year of service
SECRETARYS AWARD
a. Compulsory Retirement
An employee shall be compulsory retired upon reaching the age of sixty (60), or
after thirty-five (35) years of continuous service, whichever comes first.
An employee shall be entitled to a retirement benefit of month salary plus six (6)
days multiplied by the number of years in service.
b. Optional Retirement
At his option, an employee may retire upon reaching the age of fifty-five (55) or
more if he has served for at least five (5) years;
Provided, however, that any employee who is under fifty-five (55) years old may
retire if he has rendered at least ten (10) years of continuous service.
Such an employee shall be entitled to a retirement benefit of month salary plus
three (3) days multiplied by the number of years in service.
For purposes of computing compulsory sand optional retirement benefits and to
align the current retirement plan with the minimum standards of Art. 287 of the
Labor Code, as amended by R.A. 7641, and Sec. 5 (5.2) of its implementing rules,
1/2 month salary means 22.5 days salary, exclusive of leave conversion benefits.
Article 287 of the Labor Code, as amended by R.A. 7641, provides
Art. 287. Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: provided, however, That an employees
retirement benefits under any collective bargaining and other agreements shall not
be less than those provided herein.
In the absence of a retirement plan or agreement plan providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves x
x x x (italics supplied).
The records fail to disclose that petitioner bothered to inform the Court how it
arrived at 21.82 days as basis in the computation of the retirement pay. Anyway, it
is clear in the law that the term one-half (1/2) month salary means 22.5 days: 15
days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay plus 5 days
of service incentive leave. In this regard, there is no reason for petitioner to complain
that the retirement benefits granted by respondent Secretary of Labor exceeded the
requirements of law.
With respect to the additional six (6) days for compulsory retirement and three
(3) days for optional retirement, these may appear in excess of the requirements of
the law and the demand of respondent Union. Yet, it should be noted that the law
merely establishes the minimum retirement benefits as it recognizes that an
employee may receive more under existing laws and any CBA or other
agreements.Besides, respondent Secretary of Labor had to break the bargaining
deadlock. After taking into account all the circumstances, public respondent found it
expedient to strike a reasonable middle ground between the parties respective
positions. Unless there are cogent reasons, and we do not find any, this Court will
not alter, modify or reverse the factual findings of the Secretary of Labor because,
by reason of her official position, she is considered to have acquired expertise as
her jurisdiction is confined to specific matters.[10]
As we perceive it, by design or otherwise, petitioners arguments only scratch
the surface, so to speak. They do not extend beneath, as our studies of
jurisprudence and the law disclose. Otherwise, the baseless of the instant petition
and the absence of any of discretion, much less grave, would have earlier been
exposed.
WHEREFORE, the petition is DISMISSED. The Order of 2 May 1994 of
respondent Secretary of Labor and her Resolution of 28 July 1994 are AFFIRMED.
SO ORDERED.
 [G.R. No. 155214. February 13, 2004]
R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, petitioners, vs. AVELINA
P. LATAG, representing her deceased husband, PEDRO M.
LATAG, respondents.
DECISION
PANGANIBAN, J.:
Factual issues may be reviewed by the Court of Appeals (CA) when the findings
of fact of the National Labor Relations Commission (NLRC) conflict with those of the
labor arbiter. By the same token, this Court may review factual conclusions of the
CA when they are contrary to those of the NLRC or of the labor arbiter.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking
to nullify the June 3, 2002 Decision[2] and the August 28, 2002 Resolution[3] of the
Court of Appeals in CA-GR SP No. 67998. The appellate court disposed as follows:
WHEREFORE, premises considered, the petition is hereby GRANTED. The
assailed Order of public respondent NLRC is SET ASIDE. The March 14,
2001[4] [D]ecision of the Labor Arbiter a quo is REINSTATED.[5]
The challenged Resolution denied petitioners Motion for Reconsideration.
The Factual Antecedents
The antecedents of the case are narrated by the CA as follows:
Pedro Latag was a regular employee x x x of La Mallorca Taxi since March 1,
1961. When La Mallorca ceased from business operations, [Latag] x x x
transferred to [petitioner] R & E Transport, Inc. x x x. He was receiving an average
daily salary of five hundred pesos (P500.00) as a taxi driver.
[Latag] got sick in January 1995 and was forced to apply for partial disability with
the SSS, which was granted. When he recovered, he reported for work in
September 1998 but was no longer allowed to continue working on account of his
old age.
Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his
retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on
December 21, 1998, [Latag] filed a case for payment of his retirement pay before
the NLRC.
Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag,
substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in
favor of [Latag], the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering x x x LA MALLORCA TAXI,
R & E TRANSPORT, INC. and their owner/chief executive officer HONORIO
ENRIQUEZ to jointly and severally pay MRS. AVELINA P. LATAG the sum
of P277,500.00 by way of retirement pay for her deceased husband, PEDRO M.
LATAG.
SO ORDERED.
On January 21, 2000, [Respondent Avelina Latag,] with her then counsel[,] was
invited to the office of [petitioners] counsel and was offered the amount
of P38,500.00[,] which she accepted. [Respondent] was also asked to sign an
already prepared quitclaim and release and a joint motion to dismiss the case.
After a day or two, [respondent] received a copy of the January 10, 2000 [D]ecision
of the Labor Arbiter.
On January 24, 2000, [petitioners] filed the quitclaim and motion to dismiss.
Thereafter, on May 23, 2000, the Labor Arbiter issued an order, the relevant
portion of which states:
WHEREFORE, the decision stands and the Labor Arbitration Associate of this
Office is directed to prepare the Writ of Execution in due course.
SO ORDERED.
On January 21, 2000, [petitioners] interposed an appeal before the NLRC. On
March 14, 2001, the latter handed down a [D]ecision[,] the decretal portion of
which provides:
WHEREFORE, in view of the foregoing, respondents Appeal is hereby
DISMISSED for failure to post a cash or surety bond, as mandated by law.
SO ORDERED.
On April 10, 2001, [petitioners] filed a motion for reconsideration of the above
resolution. On September 28, 2001, the NLRC came out with the assailed
[D]ecision, which gave due course to the motion for reconsideration. [6](Citations
omitted)
Respondent appealed to the CA, contending that under Article 223 of the Labor
Code and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an
employers appeal of a decision involving monetary awards may be perfected only
upon the posting of an adequate cash or surety bond.
Ruling of the Court of Appeals
The CA held that the labor arbiters May 23, 2000 Order had referred to the
earlier January 10, 2000 Decision awarding respondent P277,500 as retirement
benefit.
According to the appellate court, because petitioners appeal before the NLRC
was not accompanied by an appropriate cash or surety bond, such appeal was not
perfected. The CA thus ruled that the labor arbiters January 10, 2000 Decision and
May 23, 2000 Order had already become final and executory.
Hence, this Petition.[7]
Issues
Petitioners submit the following issues for our consideration:
I The power of the CA to review NLRC decisions via a Rule 65 petition is now a
Whether or not the Court should respect the findings of fact [of] the NLRC as
against [those] of the labor arbiter.
II
Whether or not, in rendering judgment in favor of petitioners, the NLRC committed
grave abuse of discretion.
III
Whether or not private respondent violated the rule on forum-shopping.
IV
Whether or not the appeal of petitioners from the Order of the labor arbiter to the
NLRC involves [a] monetary award.[8]
In short, petitioners raise these issues: (1) whether the CA acted properly when
it overturned the NLRCs factual findings; (2) whether the rule on forum shopping
was violated; and (3) whether the labor arbiters Order of May 23, 2000 involved a
monetary award.
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Factual Findings of the NLRC
Petitioners maintain that the CA erred in disregarding the factual findings of the
NLRC and in deciding to affirm those of the labor arbiter. Allegedly, the NLRC
findings were based on substantial evidence, while those of the labor arbiter were
groundless. Petitioners add that the appellate court should have refrained from
tackling issues of fact and, instead, limited itself to those of jurisdiction or grave
abuse of discretion on the part of the NLRC.
settled issue. As early as St. Martin Funeral Homes v. NLRC,[9] we have definitively
ruled that the proper remedy to ask for the review of a decision of the NLRC is a
special civil action for certiorari under Rule 65 of the Rules of Court,[10] and that such
petition should be filed with the CA in strict observance of the doctrine on the
hierarchy of courts.[11] Moreover, it has already been explained that under Section 9
of Batas Pambansa (BP) 129, as amended by Republic Act 7902, [12] the CA --
pursuant to the exercise of its original jurisdiction over petitions for certiorari -- was
specifically given the power to pass upon the evidence, if and when necessary, to
resolve factual issues.[13]
Likewise settled is the rule that when supported by substantial
evidence,[14] factual findings made by quasi-judicial and administrative bodies are
accorded great respect and even finality by the courts. These findings are not
infallible, though; when there is a showing that they were arrived at arbitrarily or in
disregard of the evidence on record, they may be examined by the courts.[15] Hence,
when factual findings of the NLRC are contrary to those of the labor arbiter, the
evidentiary facts may be reviewed by the appellate court. [16] Such is the situation in
the present case; thus, the doors to a review are open. [17]
The very same reason that behooved the CA to review the factual findings of
the NLRC impels this Court to take its own look at the findings of fact. Normally, the
Supreme Court is not a trier of facts.[18]However, since the findings of fact in the
present case are conflicting,[19] it waded through the records to find out if there was
enough basis for the appellate courts reversal of the NLRC Decision.
Number of Creditable Years
of Service for Retirement Benefits
Petitioners do not dispute the fact that the late Pedro M. Latag is entitled to
retirement benefits. Rather, the bone of contention is the number of years that he
should be credited with in computing those benefits. On the one hand, we have the
findings of the labor arbiter,[20] which the CA affirmed. According to those findings,
the 23 years of employment of Pedro with La Mallorca Taxi must be added to his 14
years with R & E Transport, Inc., for a total of 37 years. On the other, we also have
the findings of the NLRC[21] that Pedro must be credited only with his service to R &
E Transport, Inc., because the evidence shows that the aforementioned companies
are two different entities.
After a careful and painstaking review of the evidence on record, we support
the NLRCs findings. The labor arbiters conclusion -- that Mallorca Taxi and R & E
Transport, Inc., are one and the same entity -- is negated by the documentary
evidence presented by petitioners. Their evidence[22] sufficiently shows the following
facts: 1) R & E Transport, Inc., was established only in 1978; 2) Honorio Enriquez,
its president, was not a stockholder of La Mallorca Taxi; and 3) none of the
stockholders of the latter company hold stocks in the former. In the face of such
evidence, which the NLRC appreciated in its Decision, it seems that mere surmises
and self-serving assertions of Respondent Avelina Latag formed the bases for the
labor arbiters conclusions as follows:
While [Pedro M. Latag] claims that he worked as taxi driver since March 1961
since the days of the La Mallorca Taxi, which was later renamed R & E Transport,
Inc., [petitioners] limit the employment period to 14 years.
Resolving this matter, we note [respondents] ID (Annex A, [Latag] position paper),
which appears to bear the signature of Miguel Enriquez on the front portion and
the date February 27, 1961 when [x x x Latag] started with the company. We also
note an SSS document (Annex C) which shows that the date of initial coverage of
Pedro Latag, with SSS No. 03-0772155, is February 1961.
Viewed against [petitioners] non-disclaimer [sic] that La Mallorca preceded R & E
Taxi, Inc.[;] x x x that both entities were/are owned by the Enriquez family, with
[petitioner] Honorio [Enriquez] as the latters President[; and] x x x that La Mallorca
was a different entity (page 2, [petitioners] position paper), we are of the
conclusion that [Latags] stint with the Enriquez family dated back since February
1961 and thus, he should be entitled to retirement benefits for 37 years, as of the
date of the filing of this case on December 12, 1998.[23]
Furthermore, basic is the rule that the corporate veil may be pierced only if it
becomes a shield for fraud, illegality or inequity committed against a third
person.[24] We have thus cautioned against the inordinate application of this doctrine.
In Philippine National Bank v. Andrada Electric & Engineering Company,[25] we said:
x x x [A]ny application of the doctrine of piercing the corporate veil should be done
with caution. A court should be mindful of the milieu where it is to be applied. It
must be certain that the corporate fiction was misused to such an extent that
injustice, fraud, or crime was committed against another, in disregard of its rights.
The wrongdoing must be clearly and convincingly established; it cannot be
presumed. Otherwise, an injustice that was never unintended may result from an
erroneous application.
xxxxxxxxx
The question of whether a corporation is a mere alter ego is one of fact. Piercing
the veil of corporate fiction may be allowed only if the following elements concur:
(1) control -- not mere stock control, but complete domination -- not only of
finances, but of policy and business practice in respect to the transaction attacked,
must have been such that the corporate entity as to this transaction had at the time
no separate mind, will or existence of its own; (2) such control must have been
used by the defendant to commit a fraud or a wrong to perpetuate the violation of a
statutory or other positive legal duty, or a dishonest and an unjust act in
contravention of plaintiffs legal right; and (3) the said control and breach of duty
must have proximately caused the injury or unjust loss complained of. [26]
 Respondent has not shown by competent evidence that one taxi company had
stock control and complete domination over the other or vice versa. In fact, no
evidence was presented to show the alleged renaming of La Mallorca Taxi to R & E
Transport, Inc. The seven-year gap between the time the former closed shop and
the date when the latter came into being also casts doubt on any alleged intention
of petitioners to commit a wrong or to violate a statutory duty. This lacuna in the
evidence compels us to reverse the Decision of the CA affirming the labor arbiters
finding of fact that the basis for computing Pedros retirement pay should be 37 years,
instead of only 14 years.
Validity of the Quitclaim
and Waiver
As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the
appellate court committed no error when it ruled that the document was invalid and
could not bar her from demanding the benefits legally due her husband. This is not
say that all quitclaims are invalid per se. Courts, however, are wary of schemes that
frustrate workers rights and benefits, and look with disfavor upon quitclaims and
waivers that bargain these away.
Courts have stepped in to annul questionable transactions, especially where
there is clear proof that a waiver, for instance, was wangled from an unsuspecting
or a gullible person; or where the agreement or settlement was unconscionable on its
face.[27] A quitclaim is ineffective in barring recovery of the full measure of a workers rights,
and the acceptance of benefits therefrom does not amount to estoppel.[28] Moreover,
a quitclaim in which the consideration is scandalously low and inequitable cannot be
an obstacle to the pursuit of a workers legitimate claim.[29]
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E
Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No.
7641,[30] provides:
Art. 287. Retirement. - x x x
xxxxxxxxx
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half-month salary
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days of service incentive leaves.
x x x x x x x x x (Italics supplied)
The rules implementing the New Retirement Law similarly provide the above-
mentioned formula for computing the one-half month salary.[31] Since Pedro was
paid according to the boundary system, he is not entitled to the 13th month[32] and
the service incentive pay;[33] hence, his retirement pay should be computed on the
sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those
sums in excess of the boundary or fee they pay to the owners or operators of their
vehicles.[34] Thus, the basis for computing their benefits should be the average daily
income. In this case, the CA found that Pedro was earning an average of five hundred
pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days
x 14 years of service equals P105,000. Compared with this amount, the P38,850 he
received, which represented just over one third of what was legally due him, was
unconscionable.
Second Issue:
Was There Forum Shopping?
Also assailed are the twin appeals that two different lawyers filed for respondent
before the CA. Petitioners argue that instead of accepting her explanation, the
appellate court should have dismissed the appeals outright for violating the rule on
forum shopping.
Forum shopping is the institution of two or more actions or proceedings
grounded on the same cause, on the supposition that one or the other court would
render a favorable disposition.[35] Such act is present when there is an identity of
parties, rights or causes of action, and reliefs sought in two or more pending
cases.[36] It is usually resorted to by a party against whom an adverse judgment or
order has been issued in one forum, in an attempt to seek and possibly to get a
favorable opinion in another forum, other than by an appeal or a special civil action
for certiorari.[37]
We find, as the CA[38] did, that respondent has adequately explained why she
had filed two appeals before the appellate court. In the August 5, 2002
Affidavit[39] that she attached as Annex A to her Compliance to Show Cause Order
with Comment on petitioners Motion for Reconsideration,[40] she averred that she
had sought the services of another counsel to file her Petition for certiorari before
the CA. She did so after her original counsel had asked for an extension of time to
file the Petition because of time constraints and a tremendous workload, only to
discover later that the original counsel had filed a similar Petition.
We cannot fault respondent for her tenacity. Besides, to disallow her appeal
would not be in keeping with the policy of labor laws [41] to shun highly technical
procedural laws in the higher interest of justice.
Third Issue:
Monetary Award
Petitioners contention is that the labor arbiters January 10, 2000 Decision was
supplanted by the Compromise Agreement that had preceded the formers official
release[42] to, and receipt[43] by, the parties. It appears from the records that they had
entered into an Amicable Settlement on January 21, 2000; that based on that
settlement, respondent filed a Motion to Dismiss on January 24, 2000, before the
labor arbiter who officially released on the same day his Decision dated January 10,
2000; that upon receipt of a copy thereof, respondent filed a Manifestation and
Motion to Set Aside the Motion to Dismiss; and that the labor arbiter subsequently
calendared the case for conference, held hearings thereon, and required the parties
to exchange positions -- by way of comments, replies and rejoinders -- after which
he handed down his May 23, 2000 Order.
Under the circumstances, the case was in effect reopened by the proceedings
held after respondent had filed her Manifestation and Motion to Set Aside the Motion
to Dismiss. This ruling is in accordance with the fourth paragraph of Section 2, Rule
V of the New Rules of Procedure of the NLRC,[44] which therefore correctly held as
follows:
x x x Thus, the further hearings conducted thereafter, to determine the validity of
complainants manifestation and motion are but mute confirmation that indeed the
10 January 2000 decision in this case has not as yet attained finality. Finally, the
appealed order of 23 May 2000 itself declaring [that] the decision stands and the
Labor Arbitration Associate of this office is directed to prepare the Writ of
Execution in due course, obviously, is a conclusion that the decision in this case
has been supplanted and rendered functus officio by the herein parties acts. Thus,
when the Labor Arbiter a quo found in his appealed order that the amount
of P38,850.00 is unconscionable viewed against the amount awarded in the
decision, the same became appealable independently of the 10 January 2000
decision, which has not attained finality, in the first place. [45]
We cannot concur, however, in petitioners other contention that the May 23,
2000 Order did not involve a monetary award. If the amicable settlement between
the parties had rendered the January 10, 2000 Decision functus oficio, then it follows
that the monetary award stated therein was reinstated -- by reference -- by the
aforementioned Order. The appeal from the latter should perforce have followed the
procedural requirements under Article 223 of the Labor Code.
As amended, this provision explicitly provides that an appeal from the labor
arbiters decision, award or order must be made within ten (10) calendar days from
receipt of a copy thereof by the party intending to appeal it; and, if the judgment
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond. Such cash or bond must have been issued by
a reputable bonding company duly accredited by the NLRC in the amount equivalent
to the monetary award stated in the judgment. Sections 1, 3 and 6 of Rule VI of the
New Rules of Procedure of the NLRC implement this Article.
Indeed, this Court has repeatedly ruled that the perfection of an appeal in the
manner and within the period prescribed by law is not only mandatory but
jurisdictional, and the failure to perfect an appeal has the effect of rendering the
judgment final and executory.[46] Nonetheless, procedural lapses may be
disregarded because of fundamental considerations of substantial justice; [47] or
because of the special circumstances of the case combined with its legal merits or
the amount and the issue involved.[48]
The requirement to post a bond to perfect an appeal has also been relaxed in
cases when the amount of the award has not been included in the decision of the
labor arbiter.[49] Besides, substantial justice will be better served in the present case
by allowing petitioners appeal to be threshed out on the merits,[50] especially
because of serious errors in the factual conclusions of the labor arbiter as to the
award of retirement benefits.
WHEREFORE, this Petition is partly GRANTED. The Decision of the Court of
Appeals is MODIFIED by crediting Pedro M. Latag with 14 years of service.
Consequently, he is entitled to retirement pay, which is hereby computed
at P105,000 less the P38,850 which has already been received by respondent, plus
six (6) percent interest thereon from December 21, 1998 until its full payment. No
costs.
SO ORDERED.
G.R. No. 74007 July 31, 1987
UNIVERSITY OF THE EAST, petitioner,
vs.
HON. MINISTER OF LABOR AND U.E. FACULTY ASSOCIATION, respondents.
GUTIERREZ, JR., J.:
This petition for certiorari seeks to nullify the order of the Minister of Labor and
Employment directing the University of the East to pay the faculty members
concerned retirement benefits in accordance with their collective bargaining
agreement, in addition to the payment of separation pay according to the
Termination Pay Law.
On April 23, 1983 and May 4, 1983, the then president of the University of the East
(UE) announced the phase-out of the College of Secretarial Education and the
High School Department respectively, starting with the school year 1983-1984 on
the grounds of lack of economic viability and financial losses.
The respondent UE Faculty Association opposed the phase-out, contending that
such action contravened the law because it constitutes union busting. The
association also emphasized the alleged failure of the petitioner to present
evidence substantiating the alleged losses.
The parties tried to find a solution for the problems attending the phase-out but
were unsuccessful. Hence, the private respondent filed a notice of strike with the
Bureau of Labor Relations (BLR) on August 4, 1983, The BLR conducted several
conciliation proceedings but when no amicable settlement was reached by the
parties, the respondent Minister issued an order assuming jurisdiction over the
case and directing the BLR to receive evidence in connection with the dispute.
On September 25, 1985, the respondent Minister issued the questioned order. He
ruled that the phaseout of the two departments was arbitrary. According to the
respondent Minister, nowhere in the submissions of the petitioner was there any
evidence or allegation that the departments concerned had contributed the most to
the university's financial losses and neither was there evidence that their closure
would reverse the trend. The public respondent further found violations of Articles
278 and 284 of the Labor Code because the petitioner did not serve the necessary
one month termination notice to the private respondent prior to the phase-out.
Finally, the respondent Minister ruled that the accrued benefits under the collective
bargaining agreement (CBA) are not affected by the phase-out of the two
departments. Hence, the petitioner is liable for the payment of separation pay in
addition to the payment of retirement benefits to those entitled under the CBA. The
dispositive portion of the questioned order provides:
WHEREFORE, respondent University of the East is hereby directed to pay
all affected faculty members of the College Secretarial Education and the
High School Department a separation pay of one month or one-half month
pay for every year of service whichever is higher plus one month
compensation in addition to said separation pay in lieu of notice.
In addition to the termination pay, the University is likewise directed to pay
retirement benefits to all affected faculty members who, in accordance with
the collective bargaining agreement, are retireable prior to or at the time of
the phase-out. (Rollo, p. 59).
The petitioner filed a motion for reconsideration but the same was denied on
February 14, 1986. Hence, it filed this petition raising the sole issue of whether or
not the respondent Minister of Labor and Employment committed grave abuse of
discretion amounting to lack of jurisdiction in awarding both retirement benefits and
separation pay to the faculty members affected by the phase-out.
The petitioner maintains that there can only be one mode of termination of
employment with respect to one and the same employee. It argues that the faculty
members of the phased out departments cannot be considered retired and,
therefore, entitled to retirement benefits and at the same time retrenched with the
right to separation pay. The petitioner cites the case of Soberano v. Hon. Secretary
of Labor, (99 SCRA 549) where this Court ruled that retirement from service is
distinct from dismissal or termination of employment and that retirements which
are agreed upon by the employer and the employee in their collective bargaining
agreement are not dismissals as contemplated under the termination pay law.
The public respondent argues that the faculty members affected by the phase-out
were awarded separation pay because the petitioner failed to show that their
separation from employment was due to a valid or authorized cause; while the
award for retirement benefits was by virtue of the provisions of the CBA,
regardless of the cause of separation.
We rule for the respondents.
Under Article 284 of the Labor Code, the termination of employment of any
employee arising from retrenchment to prevent losses shall entitle the employee
affected thereby to separation pay equivalent to one (1) month pay or at least one-
half (1/2) month pay for every year of service, whichever is higher. (Columbia
Development Corporation v. Minister of Labor and Employment, 146 SCRA 421,
429).
The respondent Minister found that the petitioner failed to present evidence as to
the university's actual losses and what caused them. It, therefore, failed to satisfy
the burden under Article 278(b) of the Labor Code of proving that the termination
of employees was for a valid or authorized cause, in this case to prevent losses.
No evidence was presented to show that it was the operation of the two
departments which resulted in financial losses. A complete statement of the
university's finances was not submitted. The Minister of Labor further ruled that the
private respondents concerned were entitled to separation pay and one-month pay
in lieu of the required notice which the petitioner likewise failed to give. The
employees were thus deprived of the opportunity to look for other
employment.1avvphi1
The petitioner, however, takes exception to the respondent Minister's order that in
addition to separation benefits, retirement benefits may also be awarded to the
private respondent pursuant to the CBA. It maintains that the award of separation
pay pursuant to the Termination Pay Law necessarily excludes retirement benefits.
In the case of Batangas Laguna Tayabas Bus Co. v. Court of Appeals (71 SCRA
470, 482-483) we ruled:
But petitioner contends that private respondent can only avail himself of
either separation pay or retirement benefits but not both, citing in support
thereof, the ruling of this Court in the case of Cipriano v. San Miguel. (24
SCRA 703) The foregoing ruling cannot be made to apply to the present
suit because in said case it is so expressly provided in the Labor
Agreement that:
Regular employees who are separated from the service of the
company for any reason other than misconduct or voluntary
resignation shall be entitled to either 100% of the benefits
provided in Section 2, Article VIII hereof regardless of their length
of service in the company or to the severance pay provided by
law, whichever is the greater amount.
Thus in said case the employee was entitled to either the amount
prescribed in the plan or the severance pay provided by law whichever is
the greater amount. In the present case, there is nothing in the labor
agreement entered into by petitioner with the Batangas Transportation
Employees Association of which private respondent is a member barring
the latter from recovering whatever benefits he is entitled to under the law
in addition to the gratuity benefits under the labor agreement between him
and his employer. Neither is there any provision in the Termination Pay
Law (Republic Act No. 1052, as amended, by Republic Act No. 1787) that
an employee who receives his termination pay upon separation from the
service without cause is precluded from recovering any other benefits
agreed upon by him and his employer. In the absence of any such
prohibition, both in the aforesaid Labor Agreement and the Termination
Pay law the private respondent has the right to recover from the petitioner
whatever benefits he is entitled to under the Termination Pay Law in
addition to other benefits conferred upon him by the aforesaid labor
agreement.
Therefore, if there is no provision contained in the collective bargaining agreement
to the effect that benefits received under the Termination Pay Law shall preclude
the employee from receiving other benefits from the agreement, then said
employee is entitled to the benefits embodied in the agreement in addition to
whatever benefits are mandated by statute. In the case at bar, there is no such
provision. We cannot presume that it forms an implicit part of either the CBA or the
law. Separation pay arising from a forced termination of employment and benefits
given as a contractual right due to many years of faithful service are not
necessarily antagonistic to each other, especially where there are strong equitable
considerations as in this case. Article VII-8.2 of the CBA provided:
Art. VIII-8.2. In case of unusual circumstances, such as decrease in
enrollment, or the closure of any College or Department of the University,
etc., which may warrant the reduction of the number of faculty members in
any rank, faculty members whose services are terminated shall be granted
the retirement benefits, if they are entitled thereto, provided that the
services of those with less years of service shall be terminated first. Those
who have not yet met the requirements for retirement as to length of
service will also be considered as retired and will be given the retirement
pay provided in the Rules on retirement of the University based on the
actual length of their services. This retirement privilege, however, shall not
apply to faculty members who may be transferred from one College or
Department to another of the University. (Rollo, p. 115).
Clearly, the only situation contemplated in the CBA wherein an employee shall be
precluded from receiving retirement benefits is when said employee is not
separated from service but transferred instead from one college or department to
another. There is no provision to the effect that teachers who are forcibly
dismissed are not entitled to retirement benefits if the MOLE awards them
separation pay. Furthermore, since the above provision has become in effect part
of the petitioner's policy, the same should be enforced separately from the
provisions of the Termination Pay Law. As we have ruled in Philippine Overseas
Drilling and Oil Development Corporation v. Ministry of Labor, (1 46 SCRA 79, 89):
 Be that as it may, the finding of the respondent Director, that there was a
company policy to grant separation benefit or pay equivalent to one (1)
month pay for every year of service to employees who were similarly
situated as private respondent, is supported by substantial evidence which
means "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion." (Ang Tibay v. CIR, 69 Phil. 635;
Canete v. Workmen's Compensation Commission, May 8, 1985, 136
SCRA 302, 208). Documents to this effect were presented by private
respondent at the hearing on January 24, 1980 as Annexes "D" thru "D-7"
of his position paper.

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

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

WHEREFORE, IN VIEW OF THE FOREGOING, the petition is hereby

DISMISSED for lack of merit. The temporary restraining order issued on June 18,
1986 is LIFTED.

SO ORDERED.
G.R. No. 87653 February 11, 1992
CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A. GASPAN and
NICARDO P. BLANQUISCO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND OTIS ELEVATOR
COMPANY, respondents.
Alejandro P. Ruiz, Jr. for petitioners.
Abad, Leano & Associates for private respondent.
CRUZ, J.:
The petitioners' services were terminated on the ground of retrenchment, and they
received separation pay double that required by the Labor Code. Thereafter, they
demanded retirement benefits, invoking the Retirement Plan of the respondent
company which they said was contractual rather than statutory. The question
eventually submitted to the labor authorities was, having received the separation
pay, were the petitioners still entitled to the retirement benefits? The Labor Arbiter
said they were, but the NLRC reversed him. The issue is now before us for final
resolution.
The petitioners were employees of private respondent Otis Elevator Company
when they were informed of the termination of their employment in line with the
need of the company "to streamline its operations, consolidate certain functions,
reduce its manpower and cut non-essential spending." The separate letters
addressed to the petitioners advised them that —
In lieu of notice, you shall be paid one month's equivalent salary,
plus your regular allowances, counted from such date, and you
shall be covered with the normal benefits for that period. You shall
also be paid your earned and/or unused sick leave and vacation
leave, including your pro-rata 13th month pay. And for every year
of service with the Company, you shall be paid one month's basic
salary or your retirement benefits, if applicable to you, whichever
is higher. 1
Accordingly, petitioners were paid their separation pay, computed as follows:
Basic monthly Years in Separation
salary service Pay
Conrado M. Aquino P 4,300 22 P 94,600
Napoleon B. Aromin 10,350 22 227,700
Roberto A. Gaspan 3,800 19 72,200
Nicardo P. Blanquisco 8,800 13 110,500
The separation pay was based on Section 4, Article VII of the Collective
Bargaining Agreement between the company and its employees providing thus:
All employees in the bargaining unit separated without cause shall
be granted separation pay of not less than one (1) month's latest
basic rate for every year of service subject to the existing
provisions of the Retirement Plan.
In justifying their subsequent demand for retirement benefits before the Labor
Arbiter, the petitioners invoked Section 1, Article XIV, of the CBA in relation to
Section 5.2, Article V, of the company's Retirement Plan, which provides:
The COMPANY shall maintain the present group retirement plan
which is attached hereto as Annex "A"and made an integral part of
this contract. (Sec. 1, Art. XIV).
xxx xxx xxx
5.2. A Participant who is terminated from employment and who
has rendered at least ten (10) years of service shall be entitled to
receive in lump sum all or a portion of his accrued benefit credits
as of his date of termination, in accordance with the following
schedule:
Years of Service Vested Percentage
Upon Termination of Benefit Credits
Less than 10 years NIL
10 to less than 15 50%
15 to less than 20 75%
20 years and over 100%
They also cited the case of their co-employees Cleodeveo Soriano, Jr. and
Patriciano Destajo, Jr., whose services were terminated on the ground of
redundancy in 1983 and 1982, respectively, and were both given separation pay
and retirement benefits.
For its part, the respondent company argued that separation pay and retirement
benefits were mutually exclusive; hence, the petitioners could no longer claim the
latter after having received the former.
The Labor Arbiter ruled in favor of the petitioners mainly on the ground that the
company was estopped from withholding retirement benefits from them after
having granted similar benefits to the employees earlier mentioned. He held that a
different treatment of the petitioners would constitute discrimination because
"benefits accorded to other employees must likewise be extended to the rest who
are similarly situated." 2
In reversing the appealed decision, the NLRC declared that the case cited by the
petitioners was exceptional and could not be considered a precedent. Moreover —
The CBA provision is very clear that while the employees
separated without cause are entitled to a separation pay of not
less than one (1) month's latest basic rate for every year of
service, this is made merely subject to and not in addition to the
existing provisions of Section 5.2 of the Article V of the Retirement
Plan. In other words, no logical inference can be made that the
benefits under Section 5.2 of Article V of the Retirement in
addition to the one (1) month's latest basic rate for every year of
service. (sic) Therefore, the offer of appellant perfectly fits well
within the contemplation of the parties as envisaged in the
aforementioned provisions of the CBA and the Retirement Plan. 3
It is important at the outset to note the distinction between separation pay and
retirement benefits.
Separation pay is required in the cases enumerated in Articles 283 and 284 of the
Labor Code, which include retrenchment, and is computed at at least one month
salary or at the rate of one-half month salary for every year of service, whichever is
higher. We have held that it is a statutory right designed to provide the employee
with the wherewithal during the period that he is looking for another employment. 4
Retirement benefits, where not mandated by law, may be granted by agreement of
the employees and their employer or as a voluntary act on the part of the
employer. Retirement benefits are intended to help the employee enjoy the
remaining years of his life, lessening the burden of worrying for his financial
support, and are a form of reward for his loyalty and service to the employer. 5
It is on the basis of these distinctions that the petitioners claim to be entitled not
only to the separation pay they have already received but also to the retirement
benefits provided for in the Retirement Plan of the respondent company.
In rejecting this contention, the private respondent insists that the retirement
benefits are subject to the provisions of the Retirement Plan under Section 4 of the
CBA. Moreover, under the Omnibus Implementing Rules of the Labor Code, retired
employees whose services are terminated shall receive the corresponding
retirement benefits or separation pay, whichever is higher. 6 This clearly indicates
that one benefit should exclude the other.
The petitioners are covered by the Retirement Plan because they have contributed
to the retirement fund, have been separated by reason of the retrenchment, and
have served the company for more than the prescribed minimum period of ten
years.
In Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 7 Justice Martin started
his ponencia thus: "The issue in this petition is whether an employee who has
already received his separation pay can still recover retirement benefits from his
employer." Resolving the question affirmatively, the Court declared in part:
But petitioner contends that private respondent can only avail
himself of either separation pay or retirement benefits but not
both, citing in support thereof, the ruling of this Court in the case
of Cipriano vs. San Miguel Corporation, 24 SCRA 703. The
foregoing ruling cannot be made to apply to the present suit
because in said case it is so expressly provided in the Labor
Agreement that:
Regular employees who are separated from the
service of the company for any reason other than
misconduct or voluntary resignation shall be
entitled to either 100% of the benefits provided in
Section 2, Article VIII hereof regardless of their
length of service in the company or to the
severance pay provided by law, whichever is the
greater amount.
Thus, in said case the employee was entitled to either the amount
prescribed in the plan or the severance pay provided by law
whichever is the greater amount. In the present case, there is
nothing in the labor agreement entered into by the petitioner with
Batangas Transportation Employees Association of which private
respondent is a member barring the latter from recovering
 whatever benefits he is entitled to under the law in addition to the
gratuity benefits under the labor agreementbetween him and his
employer. Neither is there any provision in the Termination Pay
Law (Republic Act No. 1052, as amended by Republic Act
No. 1787) that an employee who receives big termination pay
upon separation from the service without cause is precluded from
recovering any other benefits agreed upon by him and his
employer. In the absence of any such prohibition, both in the
aforesaid Labor Agreement and the Termination Pay Law the
private respondent has the right to recover from the petitioner
whatever benefits he is entitled to under the Termination Pay Law
in addition to the other benefits conferred upon him by the
aforesaid labor agreement. *
The same issue was squarely raised in University of the East v. Minister of
Labor, 8 where the award of both separation pay and retirement benefits to the
employees was assailed by the employer on the ground that "there could only be
one mode of termination of employment with respect to one and the same
employee." Through Justice Gutierrez, the Court reaffirmed the above-quoted
ruling in the BLTB case and held as follows:
Therefore, if there is no provision contained in the collective
bargaining agreement to the effect that benefits received under
the Termination Pay Law shall preclude the employee from
receiving other benefits from the agreement, then said employee
is entitled to the benefits embodied in the agreement in addition to
whatever benefits are mandated by statute. In the case at bar,
there is no such provision. We cannot presume that it forms an
implicit part of either the CBA or the law. Separation pay arising
from a forced termination of employment and benefits given as a
contractual right due to many years of faithful service are not
necessarily antagonistic to each other, especially where there are
strong equitable considerations as in this case. **
We have carefully examined the record, and particularly the Collective Bargaining
Agreement and the Retirement Plan, and have found no specific prohibition
against the payment of both benefits to the employee.
Maintaining that the above cases have no application to the case at bar, the
company calls attention to Book VI, Section 14, Rule 1, of the Omnibus Rules
Implementing the Labor Code, which provides as follows:
(a) An employee who is retired pursuant to a bonafide retirement
plan or in accordance with the applicable individual or collective
agreement or established employer policy shall be entitled to all
the retirement benefits provided therein or to termination pay
equivalent to at least one-half month salary for every year of
service, whichever is higher, a fraction of at least six (6) months
being considered as one whole year.
However, it overlooks sub-section (c) of the same Section 14, which clearly
provides that:
(c) This Section shall apply where the employee retires at the age
of sixty (60) years or more.
The private respondent has not shown that the petitioners were sixty years or older
at the time of their separation and therefore covered by the said section. Having
itself invoked that provision, the company had the obligation to prove that the
petitioners came under its terms.
The private respondent's argument that the petitioners did not retire but were
terminated in employment is, in our view, plain nitpicking. It cannot be seriously
contended that if an employee dies before he can retire (at a time when he is
already eligible for retirement), his beneficiaries are entitled to the retirement pay
he would have himself earned. The effective cause of separation is death, for
which his heirs are entitled to death benefits, but they are also paid retirement
benefits as a consequence of such death.
This is not to say that one whose services are terminated not only because he has
retired but for another cause resulting in retirement is always entitled to both
separation pay and retirement benefits. It should be obvious that if, say, an
employee is dismissed for dishonesty, he is not entitled to separation pay or, for
that matter, even retirement benefits. But in the case before us, the petitioners
have not been separated for cause, in the sense that they have committed an
offense warranting their removal. They were separated for reasons not imputable
to them, as the letter above quoted categorically declared:
Finally, we want to assure you that your retrenchment is through
no fault of your own but mainly due to prevention of further losses.
In behalf of the Company, we express our sincere appreciation for
your services and loyalty and wish you every success in your
future undertakings. 9
In arriving at our conclusion, we are guided by the principle that any doubt
concerning the rights of labor should be resolved in its favor, pursuant to the social
justice policy. The Court feels that if the private respondent really intended to make
the separation pay and the retirement benefits mutually exclusive, it should have
sought inclusion of the corresponding provision in the Retirement Plan and the
Collective Bargaining Agreement so as to remove all possible ambiguity regarding
this matter.
We may presume that the counsel of the respondent company was aware of the
prevailing doctrine embodied in the cases earlier cited. Knowing this, he should
have made it a point to categorically provide in the Retirement Plan and the CBA
that an employee who had received separation pay would no longer be entitled to
retirement benefits. Or to put it more plainly, collection of retirement benefits
was prohibited if the employee had already received separation pay.
parties. These instruments are binding agreements, not being contrary to law,
morals, good customs, public order or public policy, and must therefore be upheld.
WHEREFORE, the petition is GRANTED. The decision of the respondent National
Labor Relations Board is REVERSED and a new judgment is hereby rendered
directing the payment of retirement benefits to the petitioners in accordance with
the Retirement Plan of the respondent company and its Collective Bargaining
Agreement with its employees.
SO ORDERED.

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

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

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

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

We realize that the retirement benefits of the petitioners come up to a substantial

figure, considering their respective lengths of service with the company. These
benefits, added to the separation pay they have already received, make up a tidy
sum indeed. The point, however, is that the petitioners are entitled to this amount
under the provisions of the CBA and the Retirement Plan freely entered into by the