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G.R. No.

82895 November 7, 1989 employees for no union exists within the company because the employees, drivers
included, received more than the standard benefits for their labor." Petitioners
LLORA MOTORS, INC. and/or CONSTANTINO CARLOTA, JR., petitioners, vs. contended further that "records will show that complainant had received retirement
HON. FRANKLIN DRILON in his capacity as the Secretary of the Department of benefits from the Social Security System when he retired therefrom in 1983."
Labor and Employment, HON. DANIEL M. LUCAS, DOMINGO H. ZAPANTA and
OSCAR N. ABELLA, in their capacity as Commissioners of the National Labor Mr. Alviar, in his pleadings submitted before the Labor Arbiter, did not controvert
Relations Commission (NLRC) Manila, Second Division, HON. RICARDO N. petitioner's allegations of abandonment and non-dismissal. Mr. Alviar there simply
OLAIREZ, in his capacity as the Labor Arbiter of the Regional Arbitration alleged that in April of 1985, he "retired from the service due to his old age of 65
Branch No. I, San Fernando, La Union and PRIMITIVO ALVIAR, respondents. years."

FELICIANO, J.: On 27 January 1987, the respondent Labor Arbiter rendered a Decision, 5 the
dispositive portion of which read:
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 WHEREFORE, premises all considered, we hereby order the respondents to pay
Relations Commission (NLRC) in NLRC Case No. RAB-1-0096-85 (entitled "Primitivo complainants Primitivo Alviar, as follows:
V. Alviar, complainant. versus Llora Motors Inc., and/or Constatino Carlota,
respondents"). 1. P4,709.54 — Unpaid ECOLA differentials
2. 9,985.80 — Retirement benefits(for 17 years)
Sometime in September of 1968, private respondent Primitivo V. Alviar began his P14,695.34
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 3. 1,469.53 — 10% attorney's fees
week, and for his labor received a salary computed on a per trip basis plus P16,164.87 — Total award
emergency cost of living allowance (ECOLA). At the time he stopped working on 19
April 1985, Mr. Alviar was 65 Years of age.
and to pay complainant legal interest on the total award to be compounded
annually after ten (10) days from receipt of this decision.
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 Respondents are finally ordered to pay complainant through this Regional
petitioners Llora Motors and Constantino Carlota, Jr., the company manager. In a Arbitration Branch Office or present proof of compliance with this order within ten
Position Paper 3he filed in support of his complaint, Mr. Alviar claimed entitlement to, (10) days from receipt hereof. SO ORDERED.
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 An appeal was subsequently interposed with public respondent NLRC, petitioners
month's pay for every year of service. 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
The complaint was opposed by petitioners who, in their own Position Paper, 4 alleged hearings therein. In addition, petitioners, reiterating that private respondent Alviar had
that all of the employment benefits claimed by private respondent Alviar had already neither been dismissed nor retired by the company, questioned the propriety of the
been fully paid. On the matter of retirement benefits, it was contended that Mr. Alviar P9,985.80 award of retirement benefits.
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 On 20 January 1988, public respondent NLRC issued the disputed Resolution,
apparent reason; "that "[i]n the meantime, Truck No. 802, assigned to complainant, affirming the decision of the Labor Arbiter and ordering dismissal of the appeal. A
laid Idle and because of non-use for sometime, it deteriorated so seriously;" that in Motion for Reconsideration was denied on 28 March 1988. 6
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 The Petition at bar raises two (2) principal issues: (1) whether or not petitioners had
"complainant did not like to be a relief driver in the meantime for since then he did not been denied due process of law by the Labor Arbiter; and (2) whether or not private
report for work;" and that "it was complainant who abandoned his work since the last respondent Alviar is legally entitled to receive retirement benefits from petitioner's, his
week of April 1985 and never reported since then." Neither had Mr. Alviar been former employers.
retired, petitioners claimed, "for the simple reason that respondent corporation does
not have any retirement plan ... [or] any collective bargaining agreement with the
With respect to the first issue, petitioners allege that failure by the Labor Arbiter to is compulsory and contributory in character on the part of both the employer and the
conduct a formal hearing, prior to rendition of judgment. resulted in violation of their employee, backed up by criminal sanctions and administered by a large and
constitutional right to due process. We do not agree. This Court has held in the past elaborate bureaucracy.
that a formal or trial-type hearing is not at all times and in all instances essential to
due Article 287 of the Labor Code recognizes that employers and employees may, by a
process, 7 the requirements of which are satisfied where parties are afforded fair and colective bargaining or other agreement, set up a retirement plan in addition to that
reasonable opportunity to explain their side of the controversy at hand.8 Such stablished by the Social Security law, but prescribes at the same time that such
opportunity had not here been withheld from petitioners. The record shows that in consensual additional retirement plan cannot be substituted for or reduce the
response to private respondent Alviar's complaint below and before the Labor Arbiter retirement benefits available under the compulsory scheme established by the Social
rendered his decision of 27 January 1987, petitioners submitted on 21 January 1987, Security law. Such is the thrust of the second paragraph of Article 287 which directs
petitioners submitted on 21 January 1986 a Position Paper, complete with that the employee shall be entitled to receive retirement benefits earned "under
annexes, 9 where they had set out and argued the factual as well as the legal bases existing laws and any collective bargaining or other agreement."
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 It is also important here to examine Section 13 and 14 of Rule, I, book VI of the Rules
public respondent NLRC, in a Memorandum, 10 and Motion for and Regulations Implementing the Labor Code (hereafter, "Implementing rule I").
Reconsideration, 11 which pleadings were likewise considered by that labor agency in Implementing Rule I deals with both termination of services and retirement, being
the course of resolving the case. All told, the due process argument put forward by entitled "Termination of Employment and Retirement." But Sections 13 and 14 of
petitioners must fail. Implementing Rule I are the only provisions which deal with retirement matters. Under
Section 13 which provides as follows:
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 Sec. 13. Retirement. — In the absence of any collective bargaining
contractual or statutory basis for such award. 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)
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:
where an additional retirement plan has been established by a collective bargaining
agreement, or other applicable agreement (or, under Section 14, an "established
Article 287. Retirement. — Any employee may be retired upon reaching the employer policy"), but such plan fails to specify another, older, age of retirement, an
retirement age established in the Collective Bargaining Agreement or other employee may retire, and may in turn be retired by his employer, upon reaching age
applicable employment contract. sixty (60).

In case of retirement, the employee shall be entitled to receive such That there was some confusion in the mind of the Labor Arbiter in the case at bar
retirement benefits as he may have earned under existing laws and any between "termination pay" and "retirement benefits" would seem entirely possible:
collective bargaining or other agreement. (Emphasis supplied) private respondent Alviar initially asked for "separation pay" and the Labor Arbiter
awarded him "retirement benefits." That confusion was perhaps due to the Labor
Examination of Article 287 above shows that entitlement to retirement benefits may Arbiter's citing Section 14 of Implementing Rule I, which reads as follows:
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 Sec. 14. Retirement benefits. — (a) An employee who is retired pursuant to
purport to impose any obligation upon employers to set up a retirement scheme for a bona-fide retirement plan or a in accordance with the applicable individual or
their employees over and above that already established under existing laws. In other collective agreement or established employer policy shall be entitled to all the
words, Article 287 recognizes that existing laws already provide for a scheme by retirement benefits provided therein or to termination pay equivalent at least
which retirement benefits may be earned or accrue in favor of employees, as part of a one-half month salary for every year of service, whichever is higher, a fraction of
broader social security system that provides not only for retirement benefits but also at least six (6) months being considered as one whole year.
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 (b) Where both the employer and the employee contribute to the retirement
monthly pension for the rest of the covered employee's life provided that: (1) such plan, agreement or policy, the employer's total contribution thereto shall not be
employee had paid at least one hundred twenty (120) monthly contributions prior to less than the total termination pay to which the employee would have been
retirement; and (2) has reached the age of sixty (60) years (if his salary is less than entitled had there been no such retirement fund. In case the employer's
P300.00 a month) or 65 years. The retirement scheme here 'established
contribution is less than the termination pay the employee is entitled to receive, actual period of employment with the agency (i.e., from 1953 to 1976), Allied
the employer shall pay the deficiency upon the retirement of the employee. 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
(c) This Section shall apply where the employee retires at the age of sixty (60) Arbiter ordered Allied to pay Velasquez on amount computed on the basis of the
years or older. (Emphasis supplied) 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:
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 1. There is no question that petitioner had agreed to grant retirement benefits to
as "termination pay the employee is entitled to receive." It should be recalled that private respondent. It would, however, limit such retirement benefits only from
Sections 13 and 14 are found in Implementing rule I which deals with both the date of the effectivity of the Labor Code.That is its contention. The refutation
"termination of employment" and "retirement." It is important to keep the two (2) given in the Comment of Solicitor General Estelito P. Mendoza is persuasive. As
concepts of "termination pay" and "retirement benefits" separate and distinct from was pointed out,"in the computation thereof, public respondents acted
each other. Termination pay or separation pay is required to be paid by an employer judiciously in reckoning the retirement pay from the time private respondent
in particular situations Identified by the Labor Code itself or by Implementing rule started working with petitioner since respondent employee's application for
I. 13 Termination pay where properly due and payable under some applicable retirement benefits and the company's approval of the same make express
provision of the Labor Code or under Section 4 (b) of Implementing Rule 1, must be mention of Sections 13 and 14, rule I, Book VI of the Implementing Rules and
paid whether or not an additional retirement plan has been set up under an Regulations of the Labor Code as the basis for retirement pay. Section 14 (a) of
agreement with the employer or under an "established employer policy." 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
What needs to be stressed, however, is that Section 14 of Implementing Rule 1, like benefits provided therein or to termination pay equivalent to at least one-half
Article 287 of the Labor Code, does not purport to require "termination pay" to be paid month salary for every year of service, whichever is higher, a fraction of at least
to an employee who may want to retire but for whom no additional retirement plan six (6) months being considered as one whole year." Further it was stated: 'This
had been set tip by prior agreement with the employer. Thus, Section 14 itself speaks position taken by public respondents squares with the principle that social
of an employee "who is retired pursuant to a bona-fide retirement plan or in legislation should be interpreted in favor of workers in the light of the
accordance with the applicable individual or collective agreement or established Constitutional mandate that the State shall afford protection to
employer policy." What Section 14 of Implementing Rule I may be seen to be saying labor. 15 (Emphasis supplied)
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 Because Allied had agreed to pay retirement benefits to Velasquez, the mode of
termination pay that is due, subject, however, to certain conditions. These conditions computation adopted by the Labor Arbiter — which is the generally accepted mode of
are: (a) that payments under the additional retirement plan cannot have the effect of computation in retirement plans — could hardly be regarded as merely arbitrary or
reducing the amount of termination pay due and payable to less than one-half (1/2) capricious. Thus, while Allied had no collective bargaining agreement or similar
month's salary for every year of service; and (b) the employee cannot be made to employment contract establishing a plan under which employees could retire, its
contribute to the termination pay that he is entitled to receive under some provision of approval of Velasquez's application, although unilateral and possibly ad hoc, supplied
the Labor Code; in other words, the employee is entitled to the full amount of his the necessary consensual basis. In the instant case, Llora Motors consistently
termination pay plus at least the return of his own contributions to the additional resisted the demand for separation pay or retirement benefits by private respondent
retirement plan. 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.
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 Clearly, there was in the instant case no consensual basis fro the required payment of
quite misplaced. In Allied, Victoriano Velasquez had been an employee of the Allied additional retirement benefits. 16 The Labor Arbiter and the NLRC had not declared
Investigation Bureau, Inc., a security guard agency, since 1953. In 1976, having private respondent Alviar to have been illegally dismissed by petitioners. neither was
reached the age of sixty (60) years, Velasquez submitted to Allied an application for there any pretense on the part of private respondent Alviar that labor-saving devices
retirement benefits, which application was subsequently approved by Allied,although had been installed, or that redundancy or retrenchment or cessation of operations
there was then no collective bargaining agreement or employer policy establishing an had occurred in Llora Motors or that he was afflicted by some disabling disease, or
additional retirement plan for employees of the agency. A controversy arose in respect that, being entitled to reinstatement, he could not be reinstated to this old position.
of the method adopted by Allied in computing the amount of retirement benefits it had Under these circumstances, the portion of the Labor Arbiter's award which required
undertaken to pay to Velasquez. Instead of basing that amount upon Velasquez's 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.
G.R. No. 141673 October 17, 2001 that they have rendered at least ten (10) years of continuous service.
(Underscoring supplied)
MANUEL L. QUEZON UNIVERSITY/AUGUSTO B. SUNICO, President, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION (Third Division), NOEMI B. "(b) Those who have not attained the age of 65 years, but who have
JUAT and EDILBERTO AZURIN, respondents. rendered at least 20 years of continuous service to the Manuel L. Quezon
Educational Institution, Inc. at the date of retirement. (Underscoring
PARDO, J.: supplied)

The Case "(c) This plan does not apply to members of the Board of Regents, the
President, the Executive Officer, and the Treasurer, whose retirement shall
be determined by the Board of Regents without prejudice to their retirement
The case is an appeal via certiorari from the decision1 of the Court of Appeals under this plan as members of the faculty.
affirming the resolutions of the National Labor Relations Commission ruling that
respondents retiring faculty members of petitioner Manuel L. Quezon University were
entitled to retirement benefits under Republic Act No. 7641, even if petitioner had an "ARTICLE IV
existing valid retirement plan.
"COMPULSORY NATURE OF RETIREMENT
The Facts
"(a) Upon fulfillment of the conditions set forth in paragraphs (a) and (b) of
The facts, as found by the Court of Appeals, are as follows: Article III, retirement of faculty members and employees concerned shall be
compulsory, unless the Board of Regents expressly and in writing decides to
defer their retirement on a year to year basis or for a definite period.
"Petitioner Manuel L. Quezon University (MLQU) is a private educational
institution which established a retirement plan for its employees as early as
June 26, 1967. The Retirement Plan which was duly approved by the "ARTICLE V
Bureau of Internal Revenue for tax purposes provides as follows:
"THE RETIREMENT PLAN
"x x x
"(a) Every faculty member or employee is entitled to receive as retirement
"ARTICLE I – PURPOSE compensation an amount equivalent to one month pay for every year of
service. The one month shall be computed as specified in paragraph (b)
below. (Underscoring supplied)
"The Board of Regents of the Manuel L. Quezon Educational Institution, Inc.,
recognizing the value of long and loyal service and desiring to reward those
who remain in its employ continuously for a substantial number of years, "(b) In determining the one month salary to which a retiree is entitled, all
approves this Retirement Plan to assist financially its officers, faculty salaries, bonuses and other amounts received by him as a faculty member
members and administrative personnel by providing for their retirement. or employee during the entire period of his employment shall be added and
(Underscoring supplied) the same shall be divided by the number of years that he has been
employed; service exceeding six (6) months shall be considered as service
for one year. The quotient shall then be divided by twelve (12), in case of
"x x x xxx xxx retirees rendering services throughout the year, that is, during a period of
twelve (12) months, and in the case of retirees, not rendering service
"ARTICLE III throughout the year, such as faculty members not receiving monthly
compensations, the quotient shall then be divided by the number of months
"PERSONS ENTITLED TO RETIREMENT PRIVILEGES determined as follows: (1) if they taught for only one semester during the
year, four and one half (4 & 1/2) months; (2) if for two semesters, nine (9)
months; (3) if for one semester and summer, 6 months. This last quotient
"(a) All faculty members and employees who attain the age of 65 years while shall be considered for the purpose of this retirement plan.
employed with the Manuel L. Quezon Educational Institution, Inc., provided
"However, any sums paid to the employee by reason of his membership in Office of Legal Aid to prosecute her claim for deficiency. On September 20,
the Social Security System and any sums paid to him as compensation 1996 private respondent through counsel sent a letter of demand to MLQU
under the Workmen’s Compensation Act shall be excluded, that is, it shall President August Sunico, demanding the payment of the deficiency plus
not be considered as part of his gross income for the purpose of computing interest at the rate of 12% a year from the date of retirement. On October 3,
his retirement pay. 1996, petitioner replied, alleging that private respondent was not entitled to
receive retirement benefits as she was only a "part-time employee" of
"If the retiree is an employee and a faculty member at the same time, his MLQU, much less to the payment of deficiency. In the same letter it
earnings received from the Manuel L. Quezon Educational Institution, Inc. in expressed its willingness to settle the matter amicably but to no avail as no
both categories shall be added for the purpose of determining his retirement amicable settlement was reached. On March 25, 1997, private respondent
pay. filed a complaint before the National Labor Relations Commission (NLRC) to
recover the balance of her retirement benefits under Republic Act No. 7641.
"(c) The faculty member or employee who is on an extended leave of
absence may, at the discretion of the Board of Regents, be considered in the "Edilberto D. Azurin is a Certified Public Accountant (CPA) and was hired as
service continuously until the end of his extended leave for the purpose of a teacher/instructor, on a full-time basis, of the petitioner (MLQU) for twenty-
determining the twenty (20) years service requirement. Hereafter, no five (25) years, from September 1969 until June 7, 1994. As member of the
extended leave of absence shall be granted for a longer period than one faculty of the School of Commerce, private respondent taught accounting
year unless, in special cases, the Board of Regents decides otherwise. subjects in semestral and summer classes and was likewise given teaching
Extended leave of absence heretofore granted shall continue only for a assignments in other colleges of petitioner university. He received monthly
period of two years from the approval of this plan by the Board of Regents, compensation, the last and highest of which was P11,100.50, payable every
unless in special cases, the Board decides otherwise. thirtieth day of every month.

"x x x xxx xxx "On June 7, 1994, a letter was received by private respondent Azurin,
informing him that he was being retired under Article III, Section (a) of the
MLQU Retirement Plan. As stated in said letter, he will receive the amount of
"Noemi B. Juat, now 68 years of age, worked for almost twenty nine (29) P34,282.02 which amount he received under protest, as evidenced formally
years and started as a part-time instructor of the petitioner, Manuel L. requested for reconsideration and recomputation of his retirement of his
Quezon University (MLQU), from June 16, 1965 until her compulsory retirement gratuity, stating that under R.A. 7641, he should have received
retirement on March 31, 1994. the total amount of P150,215.75 based on the last salary and benefits
received by him. Despite receipt of said demand letter, petitioner failed and
"x x x On January 14, 1993, then MLQU President Amado Dizon informed in refused and continuously refuse to heed complainant’s demand for the
writing private respondent Juat that she was eligible for retirement under payment of his valid claim, prompting private respondent to institute a
Article III, Section I of the MLQU Retirement Plan as cited in the Revised complaint against petitioner asking for the payment of deficiency of
Faculty Manual of June 13, 1990. The retirement of private respondent was retirement benefits and attorney’s fee. This was assigned to Honorable
deferred because she was still given teaching load for school year 1993- Labor Arbiter Jovencio Mayor. However, upon motion for reconsideration by
1994. On February 1, 1994 she received another letter from President Dizon herein petitioners, the complaint was consolidated with private respondent
informing her that she was considered compulsorily retired effective at the Juat’s complaint filed with the Honorable Labor Arbiter Manuel R. Caday.
end of second semester of school year 1993-1994 pursuant to the After the parties failed to reach an amicable settlement during the
Retirement Plan. On February 3, 1994, private respondent Juat received a conciliatory proceedings of the cases, they were required to submit their
third letter from Dean Leticia L. Lava of petitioner University’s School of Arts respective position papers. On June 24, 1998, Labor Arbiter Manuel R.
and Science informing her of the approval by the Board of Regents Caday rendered a decision for petitioners, disposing thus:
considering her as compulsorily retired. On November 17, 1992, a letter was
sent by private respondent to petition inquiring the amount of retirement "WHEREFORE, premises considered, the instant complaints
benefits due to her and in response petitioner provided her with a should be, as they are hereby DISMISSED for lack of merit and
computation of the retirement benefits through a letter dated July 29, 1994. want of legal and factual bases.
On the same day private respondent Juat received, under protest, the two
installments of her retirement pay in the total amount of P71,674.91, as
evidenced by the general voucher, when the alleged correct amount should "SO ORDERED.
be P149, 401.62.
"Believing that the decision of Labor Arbityer Caday was erroneous private
"Believing that she was entitled to a higher amount of retirement benefits, respondents Azurin and Juat filed their Memorandum of Appeal on July 27,
private respondent engaged the services of the University of the Philippines, 1998 and July 30, 1998, respectively, with the NLRC.
"On October 28, 1998, the Third Division of the NLRC came out with the retirement plans whose benefits are less than those prescribed under the proviso in
questioned resolution, reversing the ruling of the Labor Arbiter, and question.
disposing thus:
Republic Act No. 7641 is a curative social legislation.7 By their nature, curative
"WHEREFORE, premises considered, the twin Appeals are hereby statutes may be given retroactive effect, unless it will impair vested rights.8 Republic
GRANTED except with regard to the claims for actual damages and Act No. 7641 has retroactive effect to include in its coverage the employees’ services
ten percent (10%) attorney’s fees. Accordingly, the Decision to an employer rendered prior to its effectivity.9 It applies to employees in the employ
appealed from is hereby REVERSED and SET ASIDE and a new of employers at the time the law took effect and who are eligible to benefits under that
one entered directing respondent University to pay complainants statute.10
Juat and Azurin their retirement differential pay of P77,726.72 and
P115,933.73, respectively, plus legal interest of six percent (6%) The Fallo
per annum from the date of filing of their complaints on March 27,
1997 up to actual payment.
WHEREFORE, we AFFIRM the decision of the Court of Appeals in toto.
"SO ORDERED.
No costs.
"On January 18, 1999, a motion for reconsideration was filed by petitioner
which was outrightly denied in a resolution dated March 17, 1999. SO ORDERED.
Dissatisfied with the aforesaid decision, petitioner found its way to this Court
via the petition under consideration, contending that the NLRC gravely
abused its discretion in reversing the decision of the Labor Arbiter and
awarding retirement benefits to private respondents Juat and Azurin by
giving retroactive application to the provision of R. A. 7641."2

On September 3, 1999, the Court of Appeals promulgated a decision3 affirming the


resolutions of the NLRC as set out in the opening paragraph of this decision.

On October 14, 1999, petitioners filed a motion for reconsideration of the NLRC
resolution.4

On January 18, 2000, the Court of Appeals denied petitioner’s motion for
reconsideration.5

Hence, this appeal.6

The Issue

The issue raised is whether respondents are entitled to the retirement benefits
provided for under Republic Act No. 7641, even if the petitioner has an existing valid
retirement plan.

The Court’s Ruling

We affirm the decision of the Court of Appeals. The law, Republic Act No. 7641,
intends to give the minimum retirement benefits to employees not entitled thereto
under collective bargaining and other agreements. Its coverage applies to
establishments with existing collective bargaining or other agreements or voluntary
G.R. No. 143686 January 15, 2002 (3) PAL is not guilty of gross violation of the CBA insofar as the Wet Lease
Agreement is concerned; and
PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF
THE PHILIPPINES, respondent. (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
YNARES-SANTIAGO, J.: assessments which are rightfully remitted to and are due ALPAP.

This is a petition for review on certiorari seeking to annul and set aside the March 2, The above dispositions shall be without prejudice to the parties' arriving at a
2000 Decision1 and the June 19, 2000 Resolution2 of the Court of Appeals3 in CA- voluntary settlement of the dispute, especially in connection with employer-
G.R. SP No. 54403 which affirmed the Order4 dated June 13, 1998 and employee relations in PAL. Accordingly, the National Conciliation and
Resolution5 dated June 1, 1991 of the Secretary of Labor and Employment in NCMB- Mediation Board (NCMB) is hereby directed to continue assisting the parties
NCR-N.S. 12-514-97. in arriving at such a settlement.

The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and The department takes notice of the Ex-parte Manifestation filed by PAL on
respondent Airline Pilots Association of the Philippines (ALPAP), the exclusive June 10, 1998.
bargaining representative of all commercial airline pilots of petitioner, stemmed from
petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes under SO ORDERED.6
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 A motion for reconsideration of the foregoing order was denied by the Secretary on
busting, ALPAP filed a Notice of Strike with the Department of Labor and Employment June 1, 1991.
(DOLE). Pursuant of Article 263 (g) of the Labor Code, the Secretary of the DOLE
(hereafter referred to as Secretary) assumed jurisdiction over the labor dispute.
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
On June 13, 1998, the Secretary issued the assailed order upholding PAL's action of June 19, 2000, however, the Court of Appeals denied the petition and the motion for
unilaterally retiring Captain Collantes and recognizing the same as a valid exercise of reconsideration of petitioner, respectively. Hence, PAL appealed to this Court,
its option under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. The contending that:
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 I
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 THE QUESTION OF WHETHER OR NOT THE AMOUNT OF RETIREMENT
portion of the said order reads: PAY TO BE PAID UNDER SECTION 2, ARTICLE VII OF THE PAL-ALPAP
RETIREMENT PLAN OF 1967 SHOULD BE INCREASED WAS NOT IN
WHEREFORE, premises considered, this Office hereby issues the following NCMB-NCR CASE NO. 12514-97.
resolutions:
II
(1) PAL's 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 A JUDGMENT THAT GOES BEYOND THE ISSUES AND PURPORTS TO
Retirement Plan. However, the retirement benefits provided under Section 2 ADJUDICATE SOMETHING UPON WHICH THE PARTIES WERE NOT
shall be adjusted to comply with Section 5, of Republic Act No. 7641. HEARD IS IRREGULAR AND INVALID SINCE IT AMOUNTS TO A DENIAL
OF DUE PROCESS.
(2) Said 1967 Retirement Plan which was incorporated as Article XXVII of
the PAL-ALPAP Collective Bargaining Agreement, is hereby sustained. In the III
interest of justice, however, this Office holds that whenever PAL exercises its
option under Section 2, it shall consult the pilot involved before the THE LAW GRANTS TO THE CONTRACTING PARTIES THE EXCLUSIVE
retirement is implemented. RIGHT TO DETERMINE FOR THEMSELVES THE PROVISIONS OF A
COLLECTIVE BARGAINING AGREEMENT.
IV 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
THE SECRETARY OF LABOR AND EMPLOYMENT CANNOT AMEND THE at the age of 60 years old. Based on this peculiar circumstance that PAL pilots are in,
CBA AND THE PAL-ALPAP RETIREMENT PLAN OF 1967 WITHOUT the parties provided for a special scheme of retirement different from that
VIOLATING THE PROSCRIPTION AGAINST THE IMPAIRMENT OF contemplated in the Labor Code. Conversely, the provisions of Article 287 of the
CONTRACTS. Labor Code could not have contemplated the situation of PAL's 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
V service.

ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND In any event, petitioner contends that its pilots who retire below the retirement age of
EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement Plan
RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT AND but also an equity of the retirement fund under the PAL Pilots' Retirement Benefit
INIQUITOUS TO COMPEL PETITIONER TO PAY RETIREMENT PAY IN Plan,10 entered into between petitioner and respondent on May 30, 1972.
ACCORDANCE WITH ARTICLE 287 OF THE LABOR CODE.
The PAL Pilots' Retirement Benefit Plan11 is a retirement fund raised from
VI contributions exclusively from petitioner of amounts equivalent to 20% of each pilot's
gross monthly pay. Upon retirement, each pilot stands to receive the full amount of
ON THE ASSUMPTION THAT THE SECRETARY OF LABOR AND the contribution. In sum, therefore, the pilot gets an amount equivalent to 240% of his
EMPLOYMENT MAY AMEND THE CBA AND THE PAL-ALPAP gross monthly income for every year of service he rendered to petitioner. This is in
RETIREMENT PLAN OF 1967, IT IS LEGALLY INCORRECT TO COMPEL addition to the amount of not less than P100,000.00 that he shall receive under the
PETITIONER TO CONSULT THE PILOT CONCERNED BEFORE 1967 Retirement Plan.
RETIREMENT IS IMPLEMENTED.7
On the other hand, Article 287 of the Labor Code:
The Court of Appeals, applying the second paragraph of Article 287 of the Labor
Code, held that an employee's retirement benefits under any collective bargaining Art. 287. Retirement. - Any employee may be retired upon reaching the
and other agreement shall not be less than those provided in the Labor retirement age established in the collective bargaining agreement or other
Code.8 Hence, Article 287 of the Labor Code and not the 1967 PAL-ALPAP applicable employment contract.
Retirement Plan, should govern the computation of the benefits to be awarded to
Captain Collantes.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any
The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states: collective bargaining agreement and other agreements: provided, however,
That an employee's retirement benefits under any collective bargaining and
SECTION 1. Normal Retirement. (a) Any member who completed twenty other agreements shall not be less than those provided herein.1âwphi1.nêt
(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 In the absence of a retirement plan or agreement plant providing for
on which he completes twenty (20) years of service, or on which he logs his retirement benefits of employees in the establishment, an employee upon
20,000 hours as a pilot for PAL. The member who retires on his normal reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
retirement shall be entitled to either (a) a lump sum payment of P100,000.00 years which is hereby declared as the compulsory retirement age, who has
or (b) to such termination pay benefits to which he may be entitled to under served at least five (5) years in the said establishment, may retire and shall
existing laws, whichever is the greater amount. 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
SECTION 2. Late Retirement. Any member who remains in the service of considered as one whole year.
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 Unless the parties provide for broader inclusions, the term 'one-half (1/2)
either (a) to a lump sum payment of P5,000.00 for each completed year of month salary' shall mean fifteen (15) days plus one-twelfth (1/12) of the
service rendered as a pilot, or (b) to such termination pay benefits to which 13th month pay and the cash equivalent of not more than five (5) days of
he may be entitled under existing laws, whichever is the greater amount.9 service incentive leaves. xxx xxx xxx.
In short, the retirement benefits that a pilot would get under the provisions of the required petitioner to consult the pilot involved before exercising its option to retire
above-quoted Article 287 of the Labor Code are less than those that he would get him, is DELETED. The said Order is AFFIRMED in all other respects.
under the applicable retirement plans of petitioner.
SO ORDERED.1âwphi1.nêt
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:

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

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 petitioner's 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

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
G.R. No. 155146 January 24, 2006 legal counsel, Atty. Rene V. Sarmiento, to its Board of Directors.7 Despite this,
respondent PTSI refused to pay the petitioners their retirement benefits.
DR. PERLA A. POSTIGO, FRANCISCO F. ALMACEN, NARCISO M. ALMENDRAL,
NENA E. BASTO, JUANITO M. BERNARDINO, ADELFA B. CRESCINI, MARCIAL The petitioners then filed a complaint before the Labor Arbiter.
R. DE JESUS, DR. PEDRO LOPEZ DE LEON, PREMIA M. DUMLAO, DAVID F.
ESTACIO, LINA G. ESTRELLA, GENOVEVA V. HERNANDEZ, PEDRO A. PARIL, In a Decision8 dated June 30, 1999, the Labor Arbiter declared petitioners entitled to
PEDRO H. SINGSON, ALBERTO A. TUDIO, MARIETTA B. ULIT, LOURDES C. retirement benefits under Rep. Act No. 7641. However, one petitioner, Dr. Finaflor C.
LEGASPI, PEDRO PEROCHO, LANI CORTEZ, GUADALUPE B. MACATANGAY, Tan who was awarded her terminal leave pay, was not included in the award of
DOLORES C. FERNANDEZ, LUMINOSA G. REYNO, ESTRELLA P. SURATOS, retirement benefits.
LYDIA E. DE BOSCH, ZENAIDA C. CARRIEDO, DR. FINAFLOR C.
TAN, Petitioners,
vs. PHILIPPINE TUBERCULOSIS SOCIETY, INC., Respondent. Aggrieved, respondent PTSI appealed to the NLRC. Instead of posting the required
cash or surety bond equivalent to the amount of the award, the respondent filed a
Motion to Reduce Bond on the ground that the amount awarded by the Labor Arbiter
DECISION was erroneous. On January 31, 2000, the NLRC dismissed the appeal for failure to
post the required cash or surety bond.
QUISUMBING, J.:
Undaunted, the respondent elevated the matter to the Court of Appeals. On June 13,
This petition assails the Decision1 dated June 13, 2002 of the Court of Appeals in 2002, the CA reversed the NLRC’s decision in this wise:
CA-G.R. SP No. 59597, which set aside the Resolution2 dated January 31, 2000 of
the National Labor Relations Commission (NLRC) in NLRC NCR CN 00-02-02148-99. Indeed, in several occasions, the Supreme Court has cautioned the NLRC to give
The NLRC had dismissed the respondent’s appeal from the Decision of the Labor Article 223 of the Labor Code, as amended, particularly the provisions on requiring a
Arbiter, who ordered the payment of retirement benefits under Republic Act No. 7641 bond on appeals involving monetary awards, a liberal interpretation in line with the
to petitioners. This petition likewise assails the Resolution3 dated September 3, desired objective of resolving controversies on the merits.
2002 of the Court of Appeals denying petitioners’ motion for reconsideration.
Hence, considering the timeliness of the filing of the motion to reduce the appeal
The antecedent facts, as summarized by the Court of Appeals and borne by the bond and the meritorious ground upon which it relies, We believe and so hold that the
records, are as follows: legal requirement of posting an appeal bond has been substantially satisfied. Public
respondent acted with grave abuse of discretion in dismissing the appeal without
Petitioners Dr. Perla A. Postigo, et al., were regular employees of the respondent passing upon the motion to reduce the appeal bond.
Philippine Tuberculosis Society, Inc. (PTSI). They retired on various dates from 1996
to 1998. Upon retirement from service, some of the petitioners who were compulsory WHEREFORE, the petition is hereby GRANTED. Resolutions dated 31 January 2000
members of the Government Service Insurance System (GSIS) obtained retirement and 24 May 2000 in NLRC-NCR CN 00-02-02148-99 of public respondent National
benefits from the GSIS. 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.
At the time the petitioners retired, Article 287 of the Labor Code had been amended
by Republic Act No. 7641.4Rep. Act No. 7641 granted retirement pay to qualified SO ORDERED.9
employees in the private sector, in the absence of any retirement plan or agreement
with the company. As the respondent did not have a retirement plan for its employees,
aside from its contribution to the GSIS, petitioners claimed from the respondent their The petitioners now submit the following issues for our consideration:
retirement benefits under Rep. Act No. 7641. The respondent denied their claims on
the ground that the accommodation extended by the GSIS to the petitioners removed I. Whether or not the remand of the case to the NLRC would only further
them from the coverage of the law. delay the resolution of this case.

The petitioners then sought the opinion of the Bureau of Working Conditions (BWC) II. Whether or not the Honorable Court of Appeals decided the instant case
of the Department of Labor and Employment regarding their entitlement to the in accordance with law and applicable jurisprudence and based on the
retirement benefits provided in Rep. Act No. 7641.5 The BWC confirmed their evidence on record for having failed to apply the jurisprudential precepts
entitlement.6 The same opinion was rendered and submitted by the respondent’s that:
a. errors in the computation of the monetary award are properly a In this case, respondent deferred the posting of the surety bond in view of the alleged
subject of appeal and should be ventilated at the appropriate time, erroneous computation by the Labor Arbiter of the monetary award. While the Labor
not in a mere motion to reduce bond; and Arbiter awarded P5,480,484.2513 as retirement benefits,
only P5,072,277.73,14 according to the respondent’s computation was due and owing
b. the posting of a bond is an indispensable requirement to perfect to the petitioners. Since the motion raised a pure mathematical error, the same may
an employer’s appeal. be resolved without going into the merits of the case.

III. Whether or not Petitioners are entitled to the benefits of the Retirement In Rosewood, the petitioner therein filed a motion to reduce the bond with the appeal
Pay Law. 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
IV. Whether or not Petitioners are entitled to interest on their retirement well as the filing of the appeal bond show that there was substantial compliance with
benefits for the unjustified withholding thereof. the rules governing appeal.

V. Whether or not Petitioner Dr. Tan should be made similarly entitled to her Here, aside from the fact that the filing of the motion was justified, the respondent
retirement pay, which was inadvertently excluded by the Labor Arbiter, immediately submitted a supersedeas bond15 with its motion for reconsideration of
pursuant to the timely motion to render judgment nunc pro tuncshe filed the NLRC resolution dismissing its appeal. In Ong v. Court of Appeals,16 we ruled
before the Labor Arbiter and which was consistently raised all the way up to that the aggrieved party may file the appeal bond within the ten-day reglementary
this Honorable Court, in order to effect a complete disposition of the instant period following the receipt of the resolution of the NLRC to forestall the finality of
case.10 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
In short, petitioners raise for our resolution these issues: (1) Did the Court of Appeals the posting of the bond is an indispensable requirement to perfect such an appeal, a
err in granting the petition and directing the NLRC to act on the Motion to Reduce relaxation of the appeal bond requirement could be justified by substantial compliance
Bond and to give due course to the appeal? and (2) Are the petitioners entitled to with the rule.
benefits under Rep. Act No. 7641?
Article 223 of the Labor Code provides that an appeal from a decision of the Labor
On the first issue, petitioners contend that (1) errors in the computation of the Arbiter must be made within ten calendar days from receipt of a copy of the decision
monetary award are properly a subject of appeal and should be ventilated at the by the aggrieved party; and if the decision involves a monetary award, an appeal by
appropriate time, not in a mere motion to reduce bond; and (2) the posting of a bond the aggrieved party may be perfected only upon the posting of a cash or surety bond
is an indispensable requirement to perfect an employer’s appeal. 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
Respondent counters that in case the monetary award is being disputed, an appeal Procedure of the NLRC provides that the Commission may, in justifiable cases and
may still be filed without the appeal bond, provided that a motion to reduce bond is upon motion of the aggrieved party, reduce the amount of the bond. Further, the filing
filed within the reglementary period. of the motion to reduce bond does not stop the running of the period to perfect
appeal.

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 Time and again, this Court has ruled that while the above-mentioned rule treats the
find Nationwide Security and Allied Services, Inc. v. NLRC11 and Rosewood filing of a cash or surety bond in the amount equivalent to the monetary award in the
Processing, Inc. v. NLRC12 inapplicable to this case. 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
In Nationwide Security, the petitioners therein filed a motion to reduce bond instead of merits.18
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 The special circumstances in this case, upon which the motion to reduce the bond
affirming the decision of the NLRC, the Court noted that petitioners had funds from its was predicated, justify the relaxation of the appeal bond requirement. However,
other businesses to post the required bond. Further, the errors raised in the motion considering that the claim for retirement benefits was made sometime in 1999 to
dealt with matters that would go into the merits of the case and were thus more support the petitioners during the twilight years of their lives, there is no doubt that a
appropriate in an appeal. remand of the case to the NLRC will only unduly delay the determination of their
entitlement to such benefits. Moreover, since the case calls for the resolution of a
question of law, we consider it more appropriate to resolve the appeal at this juncture, ...
rather than remand the case to the NLRC.
Having determined the applicable implementing rules, we now proceed to resolve
We come now to the second issue. The petitioners contend that despite their whether the respondent is a private corporation or a public corporation; and
compulsory membership in the GSIS, they are still covered by Rep. Act No. 7641 for consequently, whether the petitioners are employees in the private sector or in the
the following reasons: (1) the respondent is registered with the Securities and public sector.
Exchange Commission as a non-stock and non-profit corporation; hence, it is a
private entity and its employees are employees in the private sector; and (2) the On this score, the case of Feliciano v. Commission on Audit,19 finds strong
petitioners are not included in the exemptions from coverage of Rep. Act No. 7641. relevance. Although with different factual circumstances, the Court discussed therein
the two classes of corporations recognized by the 1987 Constitution. The first refers
Respondent PTSI counters that as an employer in the public sector, it is not covered to private corporations created under a general law; the second refers to government-
by Rep. Act No. 7641 which applies only to employees in the private sector. It relies owned or controlled corporations created by special charters. We also reiterated that
on Section 3, Rule I of the Amended Rules Implementing Title II, Book IV of the Labor under Section 14 of the Corporation Code, "[a]ll corporations organized under this
Code, to wit: Code shall file with the Securities and Exchange Commission articles of incorporation
…"
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 The respondent was incorporated on March 11, 1960 as a non-profit, benevolent and
or activity of any kind and uses the services of another person who is under his non-stock corporation under the Corporation Code.20 Having been created under the
orders as regards the employment. 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
(b) An employer shall belong to either: 1987 Constitution provides:

(1) The public sector covered by the GSIS, comprising the National SECTION 2. (1) The civil service embraces all branches, subdivisions,
Government, including government-owned or controlled corporations, the instrumentalities, and agencies of the Government, including government-owned or
Philippine Tuberculosis Society, the Philippine National Red Cross, and the controlled corporations with original charters.
Philippine Veterans Bank; or
Extant on the records is the respondent’s admission that although its employees are
(2) The private sector covered by the SSS, comprising all employers other compulsory members of the GSIS, said employees are not governed by the Civil
than those defined in the immediately preceding paragraph. 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
Respondent’s reliance on the afore-quoted rules is unfounded. The definition of a private corporation organized under the Corporation Code, and the petitioners are
public sector employer as quoted above is relevant only for purposes of coverage covered by the Labor Code and not by the Civil Service Law.
under the Employees’ Compensation and State Insurance Fund. Instead, it is the
implementing rules of Title II, Book VI of the Labor Code, which provides for the
coverage and exemptions of retirement benefits. Thus: 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.
SECTION 1. General Statement on Coverage. – This Rule shall apply to all
employees in the private sector, regardless of their position, designation or status and Even assuming that by virtue of their compulsory inclusion in the GSIS, the petitioners
irrespective of the method by which their wages are paid, except to those specifically became employees in the public sector, they are still entitled to the benefits of Rep.
exempted under Section 2 hereof. As used herein, the term "Act" shall refer to Act No. 7641 since they are not covered by the Civil Service Law and its regulations.
Republic Act No. 7641 which took effect on January 7, 1993. 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.
SEC. 2. Exemption. – This Rule shall not apply to the following employees: Act No. 7641 has been delineated as follows:

2.1 Employees of the National Government and its political subdivisions, including RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector,
Government-owned and/or –controlled corporations, if they are covered by the Civil regardless of their position, designation or status and irrespective of the method by
Service Law and its regulations. 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 albeit belatedly, with its motion for reconsideration of the NLRC resolution dismissing
service of another. its appeal. Such act only demonstrates that the respondent filed the appeal in good
faith. We could not speculate and say that respondent did not intend to pay the
The law does not cover employees of retail, service and agricultural establishments or petitioners their retirement benefits in case the appeal is dismissed.
operations employing not more than (10) employees or workers and employees of the
National Government and its political subdivisions, including Government-owned On the matter of petitioner Dr. Finaflor C. Tan, records show she has two causes of
and/or controlled corporations, if they are covered by the Civil Service Law and its action: (1) non-payment of terminal leave pay; and (2) non-payment of retirement
regulations. (Underscoring ours.) benefits.23 While the Labor Arbiter ruled that she is entitled to the commutation into
cash of her unused leave credits which is the equivalent of her terminal leave pay, the
Neither do we find merit in the respondent’s argument that the rationale behind the former did not include her in the award of retirement benefits. This was properly
enactment of Rep. Act No. 7641 justifies the exclusion of employees in the public raised in the Motion to Render Judgment Nunc Pro Tunc24 filed by the petitioners on
sector, who are already enjoying retirement benefits under the GSIS law, from the October 29, 1999 before the NLRC. We see no cogent reason why she should be
New Retirement Law. excluded from the over-all award of retirement benefits considering that she has
participated in the proceedings before the Labor Arbiter.
We direct the respondent’s attention to Section 2 of Rep. Act No. 7641, to wit:
WHEREFORE, this petition is PARTIALLY GRANTED. The Decision dated June 13,
2002 of the Court of Appeals in CA-G.R. SP No. 59597, directing the NLRC to act on
SEC. 2. Nothing in this Act shall deprive any employee of benefits to which he may be the Motion to Reduce Bond and to give due course to the Appeal, as well as its
entitled under existing laws or company policies or practices. Resolution denying the petitioners’ motion for reconsideration, are MODIFIED.

In addition, Rule II of the Rules Implementing Book VI of the Labor Code provides as Consequently, it is DECLARED that the petitioners are entitled to retirement benefits
follows: under Rep. Act No. 7641. In addition to retirement benefits, petitioner Dr. Finaflor C.
Tan is entitled to the commutation into cash of her unused leave credits which is the
SEC. 8. Relation to agreements and regulations. – Nothing in this Rule shall justify equivalent of her terminal leave pay. Likewise, the petitioners are entitled to attorney’s
an employer from withdrawing or reducing any benefits, supplements or payments as fees, equivalent to 10% of the total monetary award.
provided in existing laws, individual or collective agreements or employment practices
or policies. Let this case be remanded to the Labor Arbiter for the computation of the retirement
benefits and terminal leave pay above-mentioned. No pronouncement as to costs.
...
SO ORDERED.
In Juco v. NLRC,22 we clarified that employees of government-owned and controlled
corporations with special charters are covered under the Civil Service. On the other
hand, employees of government-owned and controlled corporations under the
Corporation Code are governed by the provisions of the Labor Code.

The Philippine Tuberculosis Society, Inc. (PTSI) belongs to the latter category and,
therefore, covered by Rep. Act No. 7641 which is an amendment to the Labor Code.
The accommodation under Rep. Act No. 1820 extending GSIS coverage to PTSI
employees did not take away from petitioners the beneficial coverage afforded by
Rep. Act No. 7641. Hence, the retirement pay payable under Article 287 of the Labor
Code as amended by Rep. Act No. 7641 should be considered apart from the
retirement benefit claimable by the petitioners under the social security law or, as in
this case, the GSIS law.

As to the alleged prolonged refusal by the respondent to pay the petitioners their
retirement benefits, we do not think that the respondent’s stance was entirely in bad
faith. The respondent harbored the honest belief that their compulsory coverage in
the GSIS converted it into a public corporation excluded from the coverage of Rep.
Act No. 7641. As noted by this Court, the respondent even filed a supersedeas bond,
G.R. No. 80502 May 7, 1990 WHEREFORE, premises considered, respondent Metro Port
Services, Inc. or Enrique Razon, Jr., in case of the company's
ENRIQUE RAZON, JR. and METROPORT SERVICES, INC., petitioners, vs. failure to pay, is hereby ordered to pay complainant Nicolas S.
NATIONAL LABOR RELATIONS COMMISSION and NICOLAS S. Gartoza the foIlowing amounts:
GARZOTA, respondents.
P 60,000.00 — for retirement pay
FERNAN, C.J.:
P 60,000.00—for loyalty bonus
In this petition for certiorari, petitioners Enrique Razon, Jr. and Metroport Services,
Inc. seek to set aside the resolution dated August 28, 1987 of the National Labor P 11,400.00 —cash conversion of accrued
Relations Commission affirming the decision of the Labor Arbiter which ordered vacation leave, or a
petitioners to pay private respondent Nicolas S. Garzota his retirement pay, loyalty
bonus and cash conversion of accrued vacation leave in the total amount of total of P 131,400.00. 5
P131,400.00.
On appeal, the National Labor Relations Commissions sustained the Labor Arbiter in
Since 1966, private respondent had been employed by petitioner company then its resolution of August 28, 1987. 6 Hence, the instant petition.
known as E. Razon, Inc. Sometime in 1979, Alfredo Romualdez, the youngest brother
of the then First Lady, Imelda R. Marcos, acquired control of E. Razon, Inc. and
renamed it Metroport Services, Inc. 1 Petitioners contend that the NLRC gravely abused its discretion when it sustained the
grant of retirement benefits to private respondent and held Enrique Razon, Jr.
solidarily liable with Metroport Services, Inc. for the payment thereof.
On February 26, 1986, after the February Revolution, petitioners regained control of
the company. 2
It is the perception of petitioners that management is vested with discretion to
approve or disapprove an employee's claim for retirement benefits. They anchor this
On February 28, 1986, because of failing health and having qualified for compulsory view of Article II (B) of the Retirement Plan which states that "(a)ny official and
retirement at age 65, private respondent, then the company's chief accountant, employee who is 65 years old, and upon discretion of management, shall be qualified
submitted a letter request for retirement. Petitioners withheld action on said request or subject to compulsory retirement from the company with benefits as provided in
pending completion of the audit of company books undertaken by the accounting firm this plan." Thus, when petitioners discovered the loss of vital books of account while
of Sycip, Gorres and Velayo. 3 in private respondent's custody and found him "guilty of breach of trust as chief
accountant", they claim to have a valid ground to terminate private respondent's
In the course of such audit, petitioners discovered that the following books of account services and as a consequence to deny his claim for retirement pay. 7
allegedly in the custody of private respondent as chief accountant were missing: [a]
general ledgers for the years l981 and l983; [b] cash disbursement books for 1981 to It must be stressed that the words "upon the discretion of management" are not
1983; [c] cash receipt books for 1981 to 1983; [d] bills register for 1981 to 1983; [e] synonymous with absolute or unlimited discretion. In other words, management
cash vouchers for 1981 to 1984; [f] journal vouchers for 1981 to 1984; and [g] sales discretion may not be exercised arbitrarily or capriciously especially with regards to
register for 1983 to 1984. 4 the implementation of the retirement plan. We believe that upon acceptance of
employment, a contractual relationship was established giving private respondent an
As a consequence thereof, petitioner Enrique Razon, Jr. issued on March 19, 1986 a enforceable vested interest in the retirement fund. Verily, the retirement scheme
memorandum terminating the services of private respondent on the ground of loss of became an integral part of his employment package and the benefits to be derived
trust and confidence. therefrom constituted as it were a continuing consideration for services rendered, as
well as an effective inducement for remaining with the firm. 8
Meanwhile, the Philippine Ports Authority awarded the management and operation of
the arrastre services at the South Harbor to a new company, the Marina Port Having rendered twenty years of service with Metroport Services, Inc., it can be said
Services, Inc., which hired private respondent. The latter has since been connected that private respondent has already acquired a vested right to the retirement fund, a
with said firm. right which can only be withheld upon a clear showing of good and compelling
reasons.
Acting on private respondent's complaint for illegal dismissal and unpaid retirement
benefits, the Labor Arbiter on January 30, 1987, rendered the following decision:
In the case at bar, petitioners' rejection of the subject claim cannot be justifiably WHEREFORE, the assailed resolution of the National Labor Relations Commission
sustained. The reported loss of confidence was due to the disappearance of certain dated August 20, 1987 is hereby AFFIRMED in toto. Costs against petitioners. SO
books of account which petitioners directly attributed to private respondent. ORDERED.
Petitioners were convinced that simply because private respondent could not produce
the needed books on demand, he was no longer worthy of their trust and confidence.
They abruptly dismissed him without giving him a chance to explain his side. In short,
there was not the slightest pretense at fair play. Had petitioners been less hasty and
conducted an investigation, they would have found out that on November 30, 1982, a
fire gutted the western portion of petitioners' warehouse in front of Pier 5, destroying
records, books, vouchers and general ledgers. The circumstances surrounding the
fire were duly investigated and reported to the Commissioner of Internal Revenue.
But whatever documents might have been salvaged from that conflagration were
subsequently lost during the flood on July 25, 1985. 9

Thus, the resulting dismissal of private respondent was in itself marked by


arbitrariness and lack of due process. Petitioners cannot now be allowed to use that
as their legal excuse for denying the employee's legitimate claim for retirement pay.

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

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

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

Under Sec. 31 of the Corporation Code, "directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or who are
guilty of gross negligence or bad faith in directing the affairs of the corporation . . .
shall be liable jointly and severally for all damages resulting therefrom suffered by the
corporation, its stockholders or members or other persons." The manner of dismissal
of private respondent by petitioner Enrique Razon, Jr. smacks of high-handedness,
caprice and arbitrariness. No regard was given to private respondent's long and
faithful service to the corporation, nor opportunity afforded him to explain the loss
imputed to him through a properly-conducted investigation. The willingness and
alacrity on the part of petitioner Enrique Razon, Jr. to terminate the services of private
respondent without taking into consideration private respondent's service to the
company and without affording him his right to due process, to our mind, suffice to
taint the act complained of with bad faith.
G.R. No. 120802 June 17, 1997 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.
JOSE T. CAPILI, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
and UNIVERSITY OF MINDANAO, respondents. On 18 April 1994,7 Labor Arbiter Newton Sancho held for UM and dismissed the
complaint. He ruled:
DAVIDE, JR., J.:
There is no question that UM [University of Mindanao] has an
The pivotal issue in this petition is whether an instructor of a private educational existing retirement plan which fixed 60 years as an age for "normal
institution may be compelled to retire at the age of sixty years. A corollary issue is retirement." It applies to all its employees and that of its associated
whether his subsequent acceptance of retirement benefits would estop him from enterprises, including the non-members thereof as a matter of
pursuing his complaint questioning the validity of his forced retirement. school policy. As such, the option to retire complainant lies on the
administration of UM.
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, Complainant's reliance on R.A. No. 7641 is evidently misplaced. It
the private respondent informed the petitioner that under the law and UM's retirement only provides for retirement pay to qualified private sector
program he would be eligible for retirement when he would reach the age of 60 years employees in the absence of any retirement plan of the
on 18 August 1993. In his answer of 5 August 1993, the petitioner informed UM that establishment. Given UM's retirement plan or school policy of
pursuant to Section 4, Rule II, Book VI of the Rules Implementing the Labor Code, the retiring its teachers upon reaching the age of 60, said law does not
that he was not opting to retire but would continue to serve until he reaches the clearly operate in his favor.
compulsory retirement age of 65. In its reply of 10 August 1993 to the petitioner, UM
reiterated its position that under the university's retirement plan, it could retire him. It That at least four (4) teachers had been allowed to work beyond
argued that under Section 4 cited by the petitioner, the employee has the option only their 60th birthday does not make them an exception to UM's policy
in the absence of a retirement plan. on the matter. They did so on a case-to-case and semestral basis
to which UM consented in the exercise of its management
Perceiving the school's insistence as constructive dismissal, and recalling at least four prerogative.
other faculty members who were allowed to teach beyond their sixtieth birth
anniversary, the petitioner filed a complaint1 for illegal dismissal before the Regional The charge that he was discriminated against through "forced"
Arbitration Branch No. XI of the NLRC in Davao City. He sought his reinstatement to retirement because of his propensity to question certain school
his former position without loss of seniority rights with full back wages, wage policies or regulations cannot be given credence. For want of
differential, 13th month differential, moral and exemplary damages, and attorney's corroborative evidence, it is simply self-serving!
fees.2
Ditto his money claims. UM has proofs that he had been fully paid
In its position paper,3 UM invoked Article 287 of the Labor Code which provides that thereof.
any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract. It The petitioner appealed8 from the decision to the respondent Commission on 10 May
contended that it has a retirement plan, known as the University of Mindanao & 1994, or thirteen days after he received the Labor Arbiter's decision. He argued that
Associated Enterprises Retirement Plan, under which it could retire the petitioner the Labor Arbiter erred in ruling that private respondent's retirement plan applies to all
upon his reaching the age of 60. UM also cited Policy Instruction No. 25 issued by the its employees and that he had been fully paid his monetary claims.
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. The private respondent moved to dismiss the appeals9 for having been filed out of
time, as the same should have been filed within ten days from petitioner's receipt of
the Arbiter's decision, or, at the latest, on 7 May 1994.
In his position paper4 the petitioner maintained that private respondent's retirement
plan applies only to members thereof, pursuant to Articles II and III of its Rules and
Regulations,5 and that since he is not a member of the Plan, he is not covered by it. On 21 November 1994, the private respondent filed a Manifestation with
He further contended that Policy Instruction No. 25, issued on 1 June 1977, was Motion 10 alleging that on 6 October 1994, the petitioner "received his retirement pay
abrogated by Republic Act No. 7641, which took effect on 7 January 1993; and that and other accrued benefits" due from the private respondent, thus making the appeal
pursuant to the new Rule II, Book VI of the Omnibus Rules Implementing the Labor 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 respondent university his retirement benefits (Annex "1" to Respondent's
moot and academic, and that having "long and unjustly been denied of his retirement Manifestation).
benefits since August 18, 1993 [he could not] be expected to remain idle."
Complainant's counter-manifestation that this was only "partial acceptance" of
On 19 January 1995, the respondent NLRC dismissed the appeal for having been his retirement benefits is belied by the computation of his retirement benefits
filed out of time, it appearing that since the petitioner received a copy of the assailed based on his length of service in the sum of P67,344.42, plus other fringe
decision on 27 April 1994, he had only until 7 May 1994 to file his appeal; however, benefits or in the total sum of P75,338.10. Deducting therefrom the sum of
considering that 7 May 1994 was a Saturday, he had until 9 May 1994, the next P60,015.45 which was partially released to him, he received the balance of his
working day, to file the appeal. He filed the appeal only on 10 May 1994. 12 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).
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 Except for the notation on the exclusion of incremental proceeds of his benefits
barangay elections were held on the said date. 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
In its resolution of 31 March 1995, 14 the NLRC reconsidered the order of 19 January reservation that receipt of the balance of his retirement was without prejudice to
1995 and decided the case on its merits. In disposing of the appeal, it made the his claims in the instant case.
following observations and conclusions:
Complainant therefore by his own act of accepting the proceeds of his
After a careful review of the respective arguments of the parties, We find no retirement benefits as originally offered to him by respondent is now estopped
serious inconsistency between the company retirement plan of the university from further pursuing his claims in the instant case. Besides, the main cause of
and the provision of Article 287 of the Labor Code, as amended by R.A. 7641. action of complainant in suing respondent is the charge of illegal or constructive
Both speak of fixing the normal retirement age at 60 in the absence of a dismissal. There being no concrete and convincing proof that complainant was
retirement plan or agreement. The retirement plan of the university allows illegally dismissed, the present action must equally fail. Thus, the issue as to
retirement at a later or beyond 60 by mutual assent and on a case-to-case whether or not complainant was forced to prematurely retire by respondent is
basis. Whereas, R.A. 7641, has fixed 65 as the compulsory retirement date. now moot and academic in view of the subsequent acceptance by complainant
of his retirement benefits from respondent.
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 It then dismissed the appeal for lack of merit and affirmed the Labor Arbiter's decision,
Rules of Article 287 prior to its amendment by R.A. 7641, has equally fixed the subject to the foregoing modification.
retirement benefit to at least one-half (1/2) month for every year of service.
Petitioner's motion for reconsideration 15 of the above resolution having been denied
The contention of complainant that respondent's retirement plan is inapplicable in the resolution 16 of 31 May 1995, the petitioner filed this petition. He alleges that
for being a non-member is beside the point. Respondent has expressly the respondent Commission committed grave abuse of discretion amounting to
assented to the extension of the retirement plan to complainant thereby serving excess or lack of jurisdiction.
as the "consensual basis" for the applicability of the retirement plan to
complainant. (See Llora Motors, Inc. vs. Drilon, 179 SCRA 176, November 7, (i) . . . WHEN IT RENDERED ITS RESOLUTIONS IN A MANNER VIOLATIVE
1989, citing Allied Investigation Bureau, Inc. vs. Ople, 91 SCRA 265). OF SUBSTANTIAL DUE PROCESS.

The ultimate question, however, is that will complainant be forced by the (ii) . . . WHEN IT RENDERED THE QUESTIONED RESOLUTION. . .
respondent to retire at age 60 or on his 60th birthday if he refuses to accept the DISMISSING THE APPEAL IN CONTRAVENTION TO THE RULING OF THE
same. SUPREME COURT IN THE CASE OF ZURBANO, SR. VS. NLRC (229
SCRA 563) AND OTHERS.
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 (iii) . . . IN HOLDING THAT THE PETITIONER BY ACCEPTING THE
accept the same. This is so because the law (R.A. 7641) has fixed age 65 as PROCEEDS OF HIS RETIREMENT BENEFITS IS ESTOPPED FROM
the compulsory age of retirement. PURSUING HIS CLAIMS.

It, however, appears that this particular issue has become moot and academic. The first assigned error consists of the last two errors, which boil down to the issue of
During the pendency of the case, complainant has accepted and received from 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 The article provides for two types of retirement: (a) compulsory and (b) optional. The
of 65. first takes place at age 65, while the second is primarily determined by the collective
bargaining agreement or other employment contract or employer's retirement plan. In
In its comment, the Office of the Solicitor General agrees with the petitioner that the the absence of any provision on optional retirement in a collective bargaining
latter's acceptance of retirement benefits does not amount to estoppel or render the agreement, other employment contract, or employer's retirement plan, an employee
appeal moot and academic, and hence, the NLRC committed reversible error and may optionally retire upon reaching the age of 60 years or more, but not beyond 65
grave abuse of discretion in perfunctorily dismissing petitioner's appeal solely on the years, provided he has served at least five years in the establishment concerned.
ground of estoppel. It nevertheless disagreed with the NLRC's conclusion that the That prerogative is exclusively lodged in the employee.
petitioner could not be forced to retire at age 60. It is of the view that petitioner's
forced retirement at the age of 60 is valid and that petitioner's not being a member of It may be noted that before the effectivity of R.A. No. 7641, Article 287 of the Labor
the retirement plan is of no moment, since all employees of UM are covered by it. Code did not specifically provide for the retirable age of employees in the private
These notwithstanding, the OSG concurred in the dispositive portion of the NLRC's sector, thus:
resolution.
Art. 287. Retirement. — Any employee may be retired upon
On the other hand, the private respondent submits that the NLRC was correct in reaching the retirement age established in the collective bargaining
holding that petitioner's voluntarily acceptance of his retirement benefits amounted to agreement or other applicable employment contract.
a waiver of his claims, and that his retirement was in accordance with UM's retirement
policy. In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and
We resolved to give due course to the petition and required the parties to submit their other collective bargaining or other agreement.
respective memoranda. Only the petitioner and private respondent submitted their
memoranda. The OSG manifested that it be excused from filing a memorandum and Section 13, Rule I, book VI of the Omnibus Rules Implementing the Labor Code
that its comment be treated as its memorandum. provided:

The applicable law on the matter is Article 287 of the Labor Code of the Philippines, Sec. 13. In the absence of any collective bargaining agreement or
as amended by R.A. No. 7641, which took effect on 7 January 1993. 17 As amended, other applicable agreement concerning terms and conditions of
the Article reads as follows: employment which provides for retirement at an older age, an
employee may retire upon reaching the age of sixty (60) years.
Art. 287. Retirement. —
Notably, the option to retire at 60 years was the employee's prerogative.
Any employee may be retired upon reaching the retirement age established in However, the Department of Labor and Employment had provided a
the collective bargaining agreement or other applicable employment contract. separate rule for employees of private educational institutions. Policy
Instruction No. 25 promulgated on 1 June 1977 by the Secretary of Labor
In case of retirement, the employee shall be entitled to receive such retirement provided as follows:
benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements: Provided, however, That an For purposes of applying the retirement provisions of the Labor
employee's retirement benefits under any collective bargaining agreement and Code in private educational institutions, and in consideration of the
other agreements shall not be less than those provided herein. unique characteristics and peculiar problems and work situations of
such institutions, the following rules are hereby issued for the
In the absence of a retirement plan or agreement providing for retirement information and guidance of all concerned:
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 I — If there is a retirement plan under a collective agreement or
hereby declared the compulsory retirement age, who has served at least five employer policy in private educational institutions, any teacher
(5) years in the said establishment, may retire and shall be entitled to and/or employee who retires or is retired from the service pursuant
retirement pay equivalent to at least one-half (1/2) month salary for every year to the same shall be entitled to all the retirement benefits provided
of service, a fraction of at least six (6) months being considered as one whole therein.
year.
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 and eligibility must be strictly construed against UM and its associated
employee may retire or be retired from the service upon reaching enterprises. 23 UM cannot now be heard to claim that the plan applies to all its
the age of sixty (60) years and shall be paid the equivalent of at employees or to those who did not even opt to become members thereof.
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 The validity then of UM's "retirement" of the petitioner upon the latter's 60th birth
being considered as one whole year. 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
It is clear therefrom that in the absence of a collective bargaining agreement but before 18 August 1993. The burden to prove such a fact was on UM, but the
or company policy providing for a retirement plan, the option to retire at age record fails to show that UM has discharged that burden.
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 UM's belated attempt to prove that it is a school policy to retire employees who reach
provides that the option to retire upon reaching the age of 60 years or more the age of 60, pursuant to UM's Retirement Policies dated 16 December 1990 24 and
but not beyond 65 is the exclusive prerogative of the employee if there is no Updated Retirement Policy dated 3 August 1993, 25cannot sway this Court in UM's
provision on retirement in a collective bargaining agreement or any other favor. These documents are mere scraps of paper, they being only xerox copies. They
agreement or if the employer has no retirement plan. 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 UM's comment in
The foregoing brings us to the next point of inquiry, viz., whether private respondent this case.
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 The foregoing notwithstanding, a supervening event worked against the petitioner. On
insists that it has a retirement plan under the title University of Mindanao & 30 April 1994, after receiving the Labor Arbiter's decision but before filing his appeal
Associated Enterprises Retirement Plan, 18 which became effective on 1 July 1968, from that decision, the petitioner received partial payment of his retirement pay and
and that the petitioner is covered by it. On the other hand, the petitioner contends that other accrued benefits from respondent
the Plan covers only those who opted to become members thereof. 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-
We agree with the petitioner. Indeed, under UM's Retirement Plan only members are Manifestation 27 he declared:
covered by it. It defines Member as
COMPLAINANT-APPELLANT. . . most respectfully maintains that
an employee, as herein defined, who chooses to contribute to the the partial acceptance of the retirement benefits does not render
Fund as provided for in Article IV, Section 1 hereof. Only Members the instant case moot and academic. The complainant-appellant
shall be entitled to any of the benefits provided for under this Plan who had long and unjustly been denied of his retirement benefits
and to any of the Company's contributions as provided for in since August 18, 1993 cannot be expected to remain idle.
Articles IV and V hereof. 19
By his acceptance of retirement benefits the petitioner is deemed to have opted to
As to eligibility for membership therein of employees hired after the retire under the third paragraph of Article 287 of the Labor Code, as amended by R.A.
effectivity of the Plan, it explicitly provides as follows: 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.
[A]ny employee hired after the effective date may become a
Member of the Plan on the date he becomes a permanent full-time Also worth noting is his statement that he "had long and unjustly been denied of his
employee if he chooses to contribute to the Fund in accordance retirement benefits since August 18, 1993." Elsewise stated, he was entitled to
with Article IV, Section I, hereof. 20 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
Nothing could be clearer from the above provisions of the Plan than that it is not retirement, effective on such date — when he reached the age of 60 years.
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 WHEREFORE, the 31 March 1995 and 31 May 1995 Resolutions of the National
parties thereto. 21 Since the Plan was prepared and approved only by the Labor Relations Commission in NLRC CA No. M-002096-94 are AFFIRMED subject
responsible officials of UM and its associated enterprises, namely, the Presidents of to the modification that the petitioner is hereby declared to be not covered by
UM, Mt. Apo Science Foundation, and Davao Savings and Loan Association, 22 the respondent University of Mindanao's Retirement Plan but is, nevertheless, deemed to
Plan may thus be described as a contract of adhesion. Hence, the above provisions have opted to retire when he reached the age of sixty years, pursuant to Article 287 of
on requirements of membership the Labor Code, as amended by R.A. No. 7641.
No pronouncement as to costs.

SO ORDERED.
G.R. No. 156934 March 16, 2007 1) did respondent’s retirement plan imposing automatic retirement after 35
years of service contravene the security of tenure clause in the 1987
ALPHA C. JACULBE, Petitioner, vs. SILLIMAN UNIVERSITY,Respondent. Constitution and the Labor Code?

DECISION 2) did respondent commit illegal dismissal by retiring petitioner solely by


reason of such provision in its retirement plan?
CORONA, J.:
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
Petitioner comes to us via this petition for review on certiorari1 to challenge a guaranty of security of tenure. Article 287 of the Labor Code provides:
decision2 of the Court of Appeals (CA) and the resolution3 affirming it.
ART. 287. Retirement - Any employee may be retired upon reaching the retirement
Sometime in 1958, petitioner began working for respondent’s university medical age established in the collective bargaining agreement or other applicable
center as a nurse.4 employment contract. xxx

In a letter dated December 3, 1992,5 respondent, through its Human Resources By its express language, the Labor Code permits employers and employees to fix the
Development Office, informed petitioner that she was approaching her 35th year of applicable retirement age at below 60 years.13
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 However, after reviewing the assailed decision together with the rules and regulations
automatically retired "upon reaching the age of 65 or after 35 years of uninterrupted of respondent’s retirement plan, we find that the plan runs afoul of the constitutional
service to the university."6 Respondent required certain documents in connection with guaranty of security of tenure contained in Article XIII, also known as the provision on
petitioner’s impending retirement. Social Justice and Human Rights.

A brief exchange of letters7 between petitioner and respondent followed. Petitioner The CA, in ruling against petitioner, premised its decision to uphold the retirement
emphatically insisted that the compulsory retirement under the plan was tantamount plan on her voluntary participation therein:
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 The petitioner in this case may, however, argue that the Pantranco case is not
respondent stood pat on its decision to retire her, citing "company policy." 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
On November 15, 1993, petitioner filed a complaint in the National Labor Relations as agreed in an existing CBA, whereas in the present case, the private respondent
Commission (NLRC) for "termination of service with preliminary injunction and/or compulsorily retired the petitioner not based on a CBA but on the retirement scheme
restraining order."9 On November 18, 1993, respondent compulsorily retired provided for in the private respondent’s retirement plan. Nonetheless, this argument
petitioner. 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
After the parties submitted their position papers, the labor arbiter rendered a decision employment contract to fix retirement age.
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 The records disclose that the private respondent’s Retirement Plan has been in effect
denied petitioner’s motion for reconsideration.12 In the assailed decision and for more than 30 years. The said plan is deemed integrated into the employment
resolution, the CA affirmed the NLRC. 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
Hence, this petition. was effected, no questions or disagreement have been raised, until the same was
made to apply to the petitioner. xxx14 (emphasis ours)
The issues for our consideration are:
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: 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
SECTION 1 – MEMBERSHIP 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
All full-time Filipino employees of the University will automatically become terms shortly thereafter, as the CA would have us believe.
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. 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
xxx xxx xxx 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
SECTION 2 – EFFECTIVITY OF MEMBERSHIP 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
Membership in the Plan starts on the day a person is hired on a full-time basis by the statutory retirement age of 65 was laid out clearly in black and white and was
University. therefore in accord with Article 287.

SECTION 3 – TERMINATION OF MEMBERSHIP 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
Termination of membership in the Plan shall be upon the death of the member, plan, which was simply untrue. The truth was that petitioner had no choice but to
resignation or termination of employee’s contract by the University, or participate in the plan, given that the only way she could refrain from doing so was to
retirement from the University.15 (emphasis ours). 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
Rule IV, on contributions, stated: instead of any genuine acquiescence to the employer. This was clearly just such an
instance.
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 Not only was petitioner still a good eight years away from the compulsory retirement
from the basic salaries of the faculty and staff. 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
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 As already stated, an employer is free to impose a retirement age less than 65 for as
based on his salary plus the University’s contributions while on leave or the full long as it has the employees’ consent. Stated conversely, employees are free to
amount within one month immediately after the date of his reinstatement. Provided[,] accept the employer’s offer to lower the retirement age if they feel they can get a
further that if a member has no sufficient source of income while on leave may pay better deal with the retirement plan presented by the employer. Thus, having
within six months after his reinstatement.16 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.
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 At this point, reinstatement is out of the question.1awphi1.nét Petitioner is now 71
petitioner’s "voluntary contributions" were evidence of her willing participation therein. years old and therefore well over the statutory compulsory retirement age. For this
It was through no voluntary act of her own that petitioner became a member of the reason, we grant her separation pay in lieu of reinstatement. It is also for this reason
plan. In fact, the only way she could have ceased to be a member thereof was if she that we modify the award of backwages in her favor, to be computed from the time of
stopped working for respondent altogether. Furthermore, in the rule on contributions, her illegal dismissal on November 18, 1993 up to her compulsory retirement age.
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 WHEREFORE, the petition is hereby GRANTED. The decision of the Court of
leave). 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.
G.R. No. 188154 October 13, 2010 For its part, respondent UNIPROM averred that Cercado was automatically covered
by the retirement plan when she agreed to the company’s rules and regulations, and
LOURDES A. CERCADO, Petitioner, vs. UNIPROM, INC., Respondent. that her retirement from service was a valid exercise of a management prerogative.

DECISION After submission of the parties’ position papers, the LA rendered a decision7 finding
petitioner to be illegally dismissed. Respondent company was ordered to reinstate her
with payment of full backwages.
NACHURA, J.:
The National Labor Relations Commission (NLRC) affirmed the LA’s decision, adding
Assailed in this Petition for Review on Certiorari1 are the July 31, 2007 Decision2 and that there was no evidence that Cercado consented to the alleged retirement plan of
the May 26, 2009 Resolution3of the Court of Appeals (CA) in CA-G.R. SP No. 87508, UNIPROM or that she was notified thereof.8
declaring as valid the unilateral retirement of petitioner by respondent.
On certiorari, the CA set aside the decisions of the LA and the NLRC. The decretal
The Facts portion of the Decision reads:

Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, WHEREFORE, the petition is GRANTED. The Decision of the Labor Arbiter and the
Inc. (UNIPROM) on December 15, 1978 as a ticket seller assigned at Fiesta Carnival, assailed Resolutions of the NLRC are NULLIFIED and SET ASIDE. Judgment is
Araneta Center, Quezon City. Later on, she was promoted as cashier and then as hereby rendered declaring respondent’s retirement as valid and legal being in
clerk typist. conformity with petitioners’ Retirement Plan.9

On April 1, 1980, UNIPROM instituted an Employees’ Non-Contributory Retirement The CA ruled that UNIPROM’s retirement plan was consistent with Article 287 of the
Plan4 which provides that any participant with twenty (20) years of service, regardless Labor Code, which provides that "any employee may be retired upon reaching the
of age, may be retired at his option or at the option of the company. retirement age established in the collective bargaining agreement or other applicable
employment contract." The CA applied the doctrine laid down in Progressive
On January 1, 2001, UNIPROM amended the retirement plan in compliance with Development Corporation v. NLRC10 wherein the phrase "may be retired" in Article
Republic Act (R.A.) No. 7641.5Under the revised retirement plan,6 UNIPROM 287 of the Labor Code was interpreted to mean that an option is given to an employer
reserved the option to retire employees who were qualified to retire under the to retire an employee, and such option is within the discretion of the employer to
program. exercise.

Sometime in December 2000, UNIPROM implemented a company-wide early The CA further noted that Cercado cannot feign ignorance of the retirement plan
retirement program for its 41 employees, including herein petitioner, who, at that time, considering that she was already working with the company when it took effect in
was 47 years old, with 22 years of continuous service to the company. She was 1980.
offered an early retirement package amounting to ₱171,982.90, but she rejected the
same. 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
UNIPROM exercised its option under the retirement plan, and decided to retire retirement plan; and 2) whether petitioner was validly retired pursuant thereto.
Cercado effective at the end of business hours on February 15, 2001. A check of
even date in the amount of ₱100,811.70, representing her retirement benefits under The petition is meritorious.
the regular retirement package, was issued to her. Cercado refused to accept the
check.
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
UNIPROM nonetheless pursued its decision and Cercado was no longer given any age, agrees to sever his or her employment with the former.12
work assignment after February 15, 2001. This prompted Cercado to file a complaint
for illegal dismissal before the Labor Arbiter (LA), alleging, among others, that
UNIPROM did not have a bona fide retirement plan, and that even if there was, she Article 287 of the Labor Code, as amended by R.A. No. 7641,13 pegs the age for
did not consent thereto. 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 cases14 as a valid In the above-discussed cases, the retirement plans in issue were the result of
exercise of management prerogative. negotiations and eventual agreement between the employer and the employees. The
plan was either embodied in a CBA, or established after consultations and
In this case, petitioner was retired by UNIPROM at the age of 47, after having served negotiations with the employees’ bargaining representative. The consent of the
the company for 22 years, pursuant to UNIPROM’s Employees’ Non-Contributory employees to be retired even before the statutory retirement age of 65 years was thus
Retirement Plan,15 which provides that employees who have rendered at least 20 clear and unequivocal.
years of service may be retired at the option of the company. At first blush,
respondent’s retirement plan can be expediently stamped with validity and justified Unfortunately, no similar situation obtains in the present case. In fact, not even an iota
under the all encompassing phrase "management prerogative," which is what the CA of voluntary acquiescence to UNIPROM’s early retirement age option is attributable to
did. But the attendant circumstances in this case, vis-à-vis the factual milieu of the petitioner.
string of jurisprudence on this matter, impel us to take a deeper look.
The assailed retirement plan of UNIPROM is not embodied in a CBA or in any
In Pantranco North Express, Inc. v. NLRC,16 the Court upheld the retirement of employment contract or agreement assented to by petitioner and her co-employees.
private respondent pursuant to a Collective Bargaining Agreement (CBA) allowing On the contrary, UNIPROM’s Employees’ Non-Contributory Retirement Plan was
Pantranco to compulsorily retire employees upon completing 25 years of service to unilaterally and compulsorily imposed on them. This is evident in the following
the company. Interpreting Article 287, the Court ruled that the Labor Code permits provisions of the 1980 retirement plan and its amended version in 2000:
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 ARTICLE III
CBA itself that incorporated the agreement between the employer and the bargaining ELIGIBILITY FOR PARTICIPATION
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 Section 1. Any regular employee, as of the Effective Date, shall automatically become
retirement of employees after twenty-five (25) years of service is legal and a Participant in the Plan, provided the Employee was hired below age 60.
enforceable so long as the parties agree to be governed by such CBA."
Verily, petitioner was forced to participate in the plan, and the only way she could
Similarly, in Philippine Airlines, Inc. (PAL) v. Airline Pilots Association of the have rejected the same was to resign or lose her job. The assailed CA Decision did
Philippines (APAP),17 the retirement plan contained in the CBA between PAL and not really make a finding that petitioner actually accepted and consented to the plan.
APAP was declared valid. The Court explained that by their acceptance of the CBA, The CA simply declared that petitioner was deemed aware of the retirement plan on
APAP and its members are obliged to abide by the commitments and limitations they account of the length of her employment with respondent. Implied knowledge,
had agreed to cede to management. 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 employer’s
The foregoing pronouncements served as guiding principles in the recent Cainta early retirement age option involves a concession of the former’s constitutional right
Catholic School v. Cainta Catholic School Employees Union (CCSEU),18 wherein the to security of tenure.
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. 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
In Progressive Development Corporation v. NLRC,19 although the retirement plan sever his or her employment with the former.20
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 Acceptance by the employees of an early retirement age option must be explicit,
Employment that it was expressly made known to the employees and accepted by voluntary, free, and uncompelled. While an employer may unilaterally retire an
them. 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,
It is axiomatic that a retirement plan giving the employer the option to retire its but not the adoption and institution of the retirement plan containing such option. For
employees below the ages provided by law must be assented to and accepted by the the option to be valid, the retirement plan containing it must be voluntarily assented to
latter, otherwise, its adhesive imposition will amount to a deprivation of property by the employees or at least by a majority of them through a bargaining
without due process of law. representative.
The following pronouncements in Jaculbe v. Silliman University21 are elucidating: SO ORDERED.

[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 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.1avvphi1

We disagree with the CA’s conclusion that the retirement plan is part of petitioner’s
employment contract with respondent. It must be underscored that petitioner was
hired in 1978 or 2 years before the institution of UNIPROM’s 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 respondent’s submission that petitioner’s consent to the


retirement plan may be inferred from her signature in the personnel action
forms22 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 petitioner’s
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 Court’s 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 jurisprudence24 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.
G.R. No. 151021 May 4, 2006 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-
CAINTA CATHOLIC SCHOOL and MSGR. MARIANO T. BALBAGO, Petitioners, vs. President; Fe Villegas (Villegas), Treasurer; and Maria Luisa Santos (Santos),
CAINTA CATHOLIC SCHOOL EMPLOYEES UNION (CCSEU), Respondent. 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,
DECISION auditors; Filomeno Dacanay and Adelina Andres, P.R.O.s; and Danilo Amigo and
Arturo Guevarra, business managers.6
TINGA, J.:
On 15 October 1993, the School retired Llagas and Javier, who had rendered more
The main issue for resolution hinges on the validity of a stipulation in a Collective than twenty (20) years of continuous service, pursuant to Section 2, Article X of the
Bargaining Agreement (CBA) that allows management to retire an employee in its CBA, to wit:
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 An employee may be retired, either upon application by the employee himself or by
the question in the affirmative a number of times and our duty calls for the application the decision of the Director of the School, upon reaching the age of sixty (60) or after
of the principle of stare decisis. As a consequence, we grant the petition and reverse having rendered at
the Court of Appeals.
least twenty (20) years of service to the School the last three (3) years of which must
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, be continuous.7
assailing the Decision1 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
19973 of the National Labor Relations Commission (NLRC), Third Division in NLRC Three (3) days later, the Union filed a notice of strike with the National Conciliation
NCR CC No. L-000028-93 (NLRC RAB-IV-7-6827-94-R), as well as the and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-93.
Resolution4 dated 6 December 2001.
On 8 November 1993, the Union struck and picketed the School’s entrances.
The antecedent facts follow:
On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued an
On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into Order certifying the labor dispute to the National Labor Relations Commission
between Cainta Catholic School (School) and the Cainta Catholic School Employees (NLRC). The dispositive portion reads:
Union (Union) effective 1 January 1986 to 31 May 1989. This CBA provided, among
others, that: "WHEREFORE, PREMISES CONSIDERED, this Office hereby certifies the labor
dispute at the Cainta Catholic School to the National Labor Relations Commission for
ARTICLE IX compulsory arbitration, pursuant to Article 263(g) of the Labor Code as amended."

DURATION OF AGREEMENT "Accordingly, all striking teachers and employees are directed to return to work within
24 hours from receipt of this Order and the School Administrator to accept all
returning employees under the same terms and conditions prevailing prior to the
This Collective Bargaining Agreement shall become effective and binding upon the strike."
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. "Furthermore, the effects of the termination of Ms. Rosalinda Llagas and Paz A.
Javier are hereby suspended. In line with this Order, the School Administration is
ordered to reinstate them to their former positions without loss of seniority rights and
If no new agreement is reached by the parties at the expiration of this agreement, all privileges pending determination of the validity of their dismissal."
the provisions of this Agreement shall remain full force and in effect, up to the time a
new Agreement shall be executed.5
"Both parties are further directed to cease and desist from committing any acts that
might aggravate the situation."
Msgr. Mariano Balbago (Balbago) was appointed School Director in April 1987. From
this time, the Union became inactive.
"SO ORDERED."8 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
On 20 December 1993, the School filed a petition directly with the NLRC to declare Commission is GRANTED. Judgment is hereby RENDERED directing private
the strike illegal. 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
On 27 July 1994, the Union filed a complaint9 for unfair labor practice before the allowances and other benefits or their monetary equivalent from 9 June 1997 up to
NLRC docketed as NLRC Case No. RAB-IV-7-6827-94-R, entitled, "Cainta Catholic the time of their actual reinstatement; 2) to pay Rosalinda Llagas: a) separation pay
School Employees Union v. Cainta Catholic School, et. al.," before Arbitration Branch equivalent to one (1) month pay for every year of service, in lieu of reinstatement, with
IV. Upon motion, then Labor Arbiter Oswald Lorenzo ordered the consolidation of this full backwages, inclusive of allowances and other benefits or their monetary
unfair labor practice case with the above-certified case. 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
On 31 January 1997, the NLRC rendered a Resolution favoring the School. 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
Three (3) issues were passed upon by the NLRC, namely: (1) whether the retirement monetary equivalent from the time her compensation was withheld from her up to the
of Llagas and Javier is legal; (2) whether the School is guilty of unfair labor practice; time of her death; b) separation pay equivalent to one (1) month’s salary for every
and (3) whether the strike is legal. 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.

The NLRC ruled that the retirement of Llagas and Javier is legal as the School was
merely exercising an option given to it under the CBA.10 The NLRC dismissed the Private respondents are also ordered to pay petitioner union attorney’s fees
unfair labor practice charge against the School for insufficiency of evidence. equivalent to five percent (5%) of the total judgment award.
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 The petition for contempt, however, is DISMISSED for lack of merit.
employment status.11
No pronouncement as to costs.
The Union moved for reconsideration but it was denied in a Resolution dated 30 April
1997. SO ORDERED.13

Hence, on 9 July 1997, the Union filed a petition for certiorari before this Court In reversing the decision of the NLRC, the Court of Appeals construed the retirement
docketed as G.R. No. 129548. The Court issued a temporary restraining order (TRO) of Llagas and Javier as an act amounting to unfair labor practice when viewed against
against the enforcement of the subject resolutions effective as of 23 July 1997. The the backdrop of the relevant circumstances obtaining in the case. The appellate court
School, however, filed a motion for clarification considering that it had already pointed out, thus:
enforced the 31 January 1997 NLRC Resolution.
The two happened to be the most vocal, dynamic and influential of all union officers
On 28 July 1997, ten (10) regular teachers, who were declared to have lost their and members and they held considerable suasion over the other employees.
employment status under the aforesaid NLRC Resolution reported back to work but Rosalinda Llagas objected to the signing of the prepared form distributed by the
the School refused to accept them by reason of its pending motion for clarification. school, as a consequence of which, no one accomplished the form, and opposed the
This prompted the Union to file a petition for contempt against Balbago and his formation of the high school faculty club as the teachers already had sufficient
agents before this Court, docketed as G.R. No. 130004, which was later on representation through the union. Paz Javier, on the other hand, demanded that she
consolidated with G.R. No. 129548. 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
Pursuant to the ruling of this Court in St. Martin Funeral Homes v. NLRC,12 the case of the high school teachers. They were therefore a new and different breed of union
was referred to the Court of Appeals and re-docketed as CA-G.R. SP No. 50851. leaders – assertive, militant and independent – the exact opposite of former union
president Victor Javier who seemed to be passive, cooperative and pacific. The
On 20 August 2001, the Court of Appeals rendered a decision giving due course and school saw the two as threats which it could not control, and faced with a very
granting the petition to annul and set aside the 31 January 1997 and 30 April 1997 uncomfortable situation of having to contend with an aggressive union which just
Resolutions of the NLRC; while dismissing the petition for contempt for lack of merit. dominated the high school faculty club (except for Joel Javeniar, all of the faculty
The decretal portion of the decision reads: club’s 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 The retirement of Rosalinda Llagas has become inevitable because, being a
managerial employee by reason of her position as Dean of Student Affairs, she
It is not difficult to see the anti-union bias of the school. One of the first acts of private accepted the Union presidency. She lost the trust and confidence on her by the
respondent Msgr. Balbago immediately after his assumption of office as school SCHOOL as she occupied a managerial position as Dean of Student Affairs. . . Being
director was to ask for a moratorium on all union activities. With the union in inactive also the union president, she has allowed her loyalties to be divided between the
status, the school felt secure and comfortable but when the union reactivated, the administration and the union.
school became apprehensive and reacted by retiring the union’s two topmost officers
by invoking the provisions of the CBA. When the union furnished the school, through As to Paz Javier, her retirement was decided upon after an evaluation shows that she
counsel, a copy of a proposed CBA on 3 November 1993, the school in a cavalier was not performing well as her students were complaining about her brusque attitude
fashion ignored it on the pretext that the union no longer enjoyed the majority status and bad language, aside from being habitually absent and late. 23
among the employees x x x14
At the outset, only questions of law are entertained by this Court through a petition for
The appellate court concluded that the retirement of the two (2) union officers was review on certiorari. There are, however, well-recognized exceptions such as in this
clearly to bust the reactivated union. case when the factual findings of the NLRC and the Court of Appeals are
contradictory.24 A re-evaluation of the records of this case is necessary for its proper
Having established that the School committed unfair labor practice, the Court of resolution.
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 The key issue remains whether the forced retirement of Llagas and Javier was a valid
held that minor disorders or isolated incidents of perceived coercion attending the exercise of management prerogative. Undoubtedly, the retirement of the two (2) union
strike do not categorize it as illegal: officers triggered the declaration of strike by the Union, and the ruling on whether the
strike was legal is highly dependent on whether the retirement was valid.
We studied carefully the available records and found that the existence of force
during the strike was certainly not pervasive and widespread, or consistently and We are impelled to reverse the Court of Appeals and affirm the validity of the
deliberately resorted to as a matter of policy, so as to stamp the strike with illegality, or termination of employment of Llagas and Javier, arising as it did from a management
to cause the loss of employment of the guilty party x x x 16 prerogative granted by the mutually-negotiated CBA between the School and the
Union.
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 Pursuant to the existing CBA,25 the School has the option to retire an employee upon
appellate court modified its ruling granting them separation pay instead of reaching the age limit of sixty (60) or after having rendered at least twenty (20) years
reinstatement because of their retirement or death.17 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
Thereafter, petitioners filed this petition for review on certiorari raising three main or authorized causes under Articles 282 and 283 of the Labor Code. While in all three
issues, summarized as: (1) whether the School’s decision to retire Llagas and Javier cases, the employee to be terminated may be unwilling to part from service, there are
constitutes unfair labor practice; (2) whether the strike was legal; and (3) whether eminently higher standards to be met by the employer validly exercising the
some union officers ordered dismissed are entitled to backwages.18 prerogative to dismiss for just or authorized causes. In those two instances, it is
indispensable that the employer establish the existence of just or authorized causes
for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the
The School avers that the retirement of Llagas and Javier was clearly in accordance result of a bilateral act of the parties, a voluntary agreement between the employer
with a specific right granted under the CBA. The School justifies its actions by and the employee whereby the latter after reaching a certain age agrees and/or
invoking our rulings in Pantranco North Express, Inc. v. NLRC19and Bulletin consents to sever his employment with the former.26
Publishing Corporation v. Sanchez20 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. Article 287 of the Labor Code, as amended, governs retirement of employees, stating:

The Union, relying on the findings made by the Court of Appeals,21 argues that the ART. 287. Retirement. –
retirement of the two union officers is a mere subterfuge to bust the union.22
Any employee may be retired upon reaching the retirement age established in the
The NLRC, however, gave another justification to sustain the validity of the two union collective bargaining agreement or other applicable employment contract.
officers’ forcible retirement, viz:
In case of retirement, the employee shall be entitled to receive such retirement charged PAL with illegal dismissal and union-busting. While the Secretary of Labor
benefits as he may have earned under existing laws and any collective bargaining upheld the unilateral retirement, it nonetheless ruled that PAL should first consult with
agreement and other agreements: Provided, however, That an employee’s retirement the pilot to be retired before it could exercise such option. The Court struck down that
benefits under any collective bargaining agreement and other agreements shall not proviso, ruling that "the requirement to consult the pilots prior to their retirement
be less than those provided herein. 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
In the absence of a retirement plan or agreement providing for retirement benefits of management."
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 By their acceptance of the CBA, the Union and its members are obliged to abide by
compulsory retirement age, who has served at least five (5) years in the said the commitments and limitations they had agreed to cede to management. The
establishment, may retire and shall be entitled to retirement pay equivalent to at least questioned retirement provisions cannot be deemed as an imposition foisted on the
one-half (1/2) month salary for every year of service, a fraction of at least six (6) Union, which very well had the right to have refused to agree to allowing management
months being considered as one whole year. to retire retire employees with at least 20 years of service.

The CBA in the case at bar established 60 as the compulsory retirement age. It should not be taken to mean that retirement provisions agreed upon in the CBA are
However, it is not alleged that either Javier or Llagas had reached the compulsory absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor
retirement age of 60 years, but instead that they had rendered at least 20 years of contract, is not merely contractual in nature but impressed with public interest. If the
service in the School, the last three (3) years continuous. Clearly, the CBA provision retirement provisions in the CBA run contrary to law, public morals, or public policy,
allows the employee to be retired by the School even before reaching the age of 60, such provisions may very well be voided. Certainly, a CBA provision or employment
provided that he/she had rendered 20 years of service. Would such a stipulation be contract that would allow management to subvert security of tenure and allow it to
valid? Jurisprudence affirms the position of the School. 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
Pantranco North Express, Inc. v. NLRC, cited by petitioners, finds direct application in less than what is guaranteed under Article 287 of the Labor Code, pursuant to the
this case. The CBA involved in Pantranco allowed the employee to be compulsorily provision’s express proviso thereto in the provision.
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 Yet the CBA in the case at bar contains no such infirmities which must be stricken
Pantranco at the age of 52, after 25 years of service. Interpreting Article 287, the down. There is no essential difference between the CBA provision in this case and
Court ruled that the Labor Code permitted employers and employees to fix the those we affirmed in Pantranco and Progressive. Twenty years is a more than ideal
applicable retirement age at below 60 years of age. Moreover, the Court also held length of service an employee can render to one employer. Under ordinary
that there was no illegal dismissal since it was the CBA itself that incorporated the contemplation, a CBA provision entitling an employee to retire after 20 years of
agreement reached between the employer and the bargaining agent with respect to service and accordingly collect retirement benefits is "reward for services rendered
the terms and conditions of employment; hence, when the private respondent ratified since it enables an employee to reap the fruits of his labor — particularly retirement
the CBA with his union, he concurrently agreed to conform to and abide by its benefits, whether lump-sum or otherwise — at an earlier age, when said employee, in
provisions. Thus, the Court asserted, "[p]roviding in a CBA for compulsory retirement presumably better physical and mental condition, can enjoy them better and
of employees after twenty-five (25) years of service is legal and enforceable so long longer."30
as the parties agree to be governed by such CBA."27
We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate
A similar set of facts informed our decision in Progressive Development Corporation that under Article 287 of the Labor Code, a CBA may validly accord management the
v. NLRC.28 The CBA therein stipulated that an employee "with [20] years of service, prerogative to optionally retire an employee under the terms and conditions mutually
regardless of age, may be retired at his option or at the option of the company." The agreed upon by management and the bargaining union, even if such agreement
stipulation was used by management to compulsorily retire two employees with more allows for retirement at an age lower than the optional retirement age or the
than 20 years of service, at the ages of 45 and 38. The Court affirmed the validity of compulsory retirement age. The Court of Appeals gravely erred in refusing to consider
the stipulation on retirement as consistent with Article 287 of the Labor Code. this case from the perspective of Pantranco, or from the settled doctrine enunciated
therein.
Philippine Airlines, Inc. v. Airline Pilots Association of the Phils.29 further bolsters the
School’s position. At contention therein was a provision of the PAL-ALPAP Retirement What the Court of Appeals did instead was to favorably consider the claim of the
Plan, the Plan having subsequently been misquoted in the CBA mutually negotiated Union that the real purpose behind the retirement of Llagas and Javier was to "bust"
by the parties. The Plan authorized PAL to exercise the option of retirement over the union, they being its president and vice-president, respectively. To that end, the
pilots who had chosen not to retire after completing 20 years of service or logging appellate court favorably adopted the citation by the Union of the American
over 20,000 hours for PAL. After PAL exercised such option over a pilot, ALPAP
case of NLRB v. Ace Comb, Co.,31 which in turn was taken from a popular local labor There is another point that militates against the Union. A ruling in its favor is
law textbook. The citation stated that "[f]or the purpose of determining whether or not tantamount to a concession that a validly drawn management prerogative to retire its
a discharge is discriminatory, it is necessary that the underlying reason for the employees can be judicially interfered on a showing that the employee in question is
discharge be established. The fact that a lawful cause for discharge is available is not highly valuable to the union. Such a rule would be a source of mischief, even if
a defense where the employee is actually discharged because of his union narrowly carved out by the Court, for it would imply that an active union member or
activities."32 officer may be, by reason of his/her importance to the union, somehow exempted
from the normal standards of retirement applicable to the other, perhaps less vital
Reliance on NLRB v. Ace Comb, Co. was grossly inapropos. The case did not involve members of the union. Indeed, our law’s protection of the right to organize labor does
an employee sought to be retired, but one who cited for termination from employment not translate into perpetual job security for union leaders by reason of their leadership
for cause, particularly for violating Section 8(a)(3) of the National Labor Relations Act, role alone. Should we entertain such a notion, the detriment is ultimately to the union
or for insubordination. Moreover, the United States Court of Appeals Eighth Circuit, itself, promoting as it would a stagnating entrenched leadership.
which decided the case, ultimately concluded that "here the evidence abounds that
there was a justifiable cause for [the employee’s] discharge,"33 his union activities We can thus can comfortably uphold the principle, as reiterated in Philippine
notwithstanding. Certainly, the Union and the Court of Appeals would have been Airlines,34 that the exercise by the employer of a valid and duly established
better off citing a case wherein the decision actually concluded that the employee was prerogative to retire an employee does not constitute unfair labor practice.
invalidly dismissed for union activities despite the ostensible existence of a valid
cause for termination. 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.
Nonetheless, the premise warrants considering whether management may be
precluded from retiring an employee whom it is entitled to retire upon a determination The School insisted that Llagas and Javier were actually managerial employees, and
that the true cause for compulsory retirement is the employee’s union activities. it was illegal for the Union to have called a strike on behalf of two employees who
were not legally qualified to be members of the Union in the first place.35 The Union,
The law and this Court frowns upon unfair labor practices by management, including on the other hand, maintains that they are rank-and-file employees.
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 Article 212(m) of the Labor Code defines a managerial employee as "one who is
employee who claims having lost his/her job for union activities, there are different vested with powers or prerogatives to lay down and execute management policies
considerations presented if the termination is justified under just or authorized cause and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
under the Labor Code; and if separation from service is effected through the exercise employees, or to effectively recommend such managerial actions." The functions of
of a duly accorded management prerogative to retire an employee. There is perhaps the Dean of Student Affairs, as occupied by Llagas, are enumerated in the Faculty
a greater imperative to recognize the management prerogative on retirement than the Manual. The salient portions are hereby enumerated:
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 a. Manages the High School Department with the Registrar and Guidance
of a certain age or a certain number of years in the service. It would be easier for Counselors (acting as a COLLEGIAL BODY) in the absence of the Director
management desirous to eliminate pesky union members to abuse the prerogative of or Principal.
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 b. Enforces the school rules and regulations governing students to maintain
interpretation. discipline.

On the other hand, the exercise by management of its retirement prerogative is less xxxx
susceptible to dubitability as to the question whether an employee could be validly
retired. The only factual matter to consider then is whether the employee concerned g. Plans with the Guidance Counselors student leadership training programs
had attained the requisite age or number of years in service pursuant to the CBA or to encourage dynamic and responsible leadership among the students and
employment agreement, or if none, pursuant to Article 287 of the Labor Code. In fact, submits the same for the approval of the Principal/Director.
the question of the amount of retirement benefits is more likely to be questioned than
the retirement itself. Evidently, it more clearly emerges in the case of retirement that
management would anyway have the right to retire an employee, no matter the xxxx
degree of involvement of said employee in union activities.
i. Studies proposals on extra-curricular or co-curricular activities and projects performed by the employees concerned are neither managerial nor supervisory in
proposed by teachers and students and recommends to the nature. Yet on this point, we defer to the factual finding of the NLRC, the proximate
Principal/Director the necessary approval. trier of facts, that Llagas and Javier were indeed managerial and supervisory
employees, respectively.1avvphil.net
j. Implements and supervises activities and projects approved by the
Principal/Director so that the activities and projects follow faithfully the Having established that Llagas is a managerial employee, she is proscribed from
conditions set forth by the Principal/Director in the approval. joining a labor union,38 more so being elected as union officer. In the case of Javier,
a supervisory employee, she may join a labor union composed only of supervisory
k. Assists in the planning, supervising and evaluating of programs of co- employees.39 Finding both union officers to be employees not belonging to the rank-
curricular activities in line with the philosophy and objectives of the School and-file, their membership in the Union has become questionable, rendering the
for the total development of the students. Union inutile to represent their cause.

l. Recommends to the Principal policies and rules to serve as guides to Since the strike has been declared as illegal based on the foregoing discussion, we
effective implementation of the student activity program.36 need not dwell on its legality with respect to the means employed by the Union.

xxxx 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
It is fairly obvious from a perusal of the list that the Dean of Student Affairs exercises satisfied with the disposition of the NLRC that mandates that Llagas and Javier (or
managerial functions, thereby classifying Llagas as a managerial employee. her heirs) receive their retirement benefits.

Javier was occupying the position of Subject Area Coordinator. Her duties and WHEREFORE, the petition is GRANTED. The Resolution dated 31 January 1997 of
responsibilities include: the National Labor Relations Commission in NLRC NCR CC No. L-000028-93 is
REINSTATED.
1. Recommends to the principal’s consideration the appointment of faculty
members in the department, their promotion, discipline and even SO ORDERED.
termination;

2. Recommends advisory responsibilities of faculty members;

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


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

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


teachers in the department the principal and/or director.37

Supervisory employees, as defined in Article 212(m) are those who, in the interest of
the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment.

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

We can concede, as the Court of Appeals noted, that such job descriptions or
appellations are meaningless should it be established that the actual duties
G.R. No. 95940 July 24, 1996 3. Urbano Suñiga

PANTRANCO NORTH EXPRESS, INC., petitioner, vs. NATIONAL LABOR P 27,375.00 — Backwages, Aug. 16/89 to
RELATIONS COMMISSION and URBANO SUÑIGA, respondents. March 31/90 (P3,650.00 x 7.5 mos.)

PANGANIBAN, J.:p 1,368.75 — 13th month pay for 1989


(P16,425.00 over 12)
Is a Collective Bargaining Agreement provision allowing compulsory retirement before ——————
age 60 but after twenty five years of service legal and enforceable? Who has P 28,743.75
jurisdiction over a case involving such a question — the labor arbiter or arbitrators 2,874.37 — 10% attorney's fees
authorized by such CBA? ——————
P 31,618.12 — Total as of March 31/90 plus
additional backwages and
The foregoing questions are presented in the instant petition for Certiorari seeking the other benefits but not to
nullification of the Resolution1promulgated September 28, 1990 by the National Labor exceed 3 years and the
Relations Commission2 in an illegal dismissal case brought by private respondent. In corresponding attorney's fees.
its assailed Resolution, the public respondent affirmed the decision of the Labor
Arbiter Ricardo N. Olairez dated March 26, 19903 declaring that the compulsory
retirement of private respondent constituted illegal dismissal, ordering his The amounts already received by complainants shall be considered as advanced
reinstatement and granting him backwages. payment of their retirement pay which shall be deducted when they shall actually
retire or (be) separated from the service.
The Antecedent Facts
The order of reinstatement is immediately executory even pending appeal.
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually
joined the Pantranco Employees Association-PTGWO. He continued the petitioner's Petitioner appealed to public respondent, which issued the questioned Resolution
employ until August 12, 1989, when he was retired at the age of fifty-two (52) after affirming the labor arbiter's decision in toto. Hence, this petition.
having rendered twenty five years' service. The basis of his retirement was the
compulsory retirement provision of the collective bargaining agreement between the The Issues
petitioner and the aforenamed union. Private respondent received P49,300.00 as
retirement pay. Petitioner raises the following issues for decision:

On February 15, 1990, private respondent filed a complaint4 for illegal I. The National Labor Relations Commission gravely abused its discretion in
dismissal against petitioner with the Sub-Regional Arbitration Branch of the holding that the Labor Arbiter has jurisdiction over the case.
respondent Commission in Dagupan City. The complaint was consolidated
with two other cases of illegal dismissal5 having similar facts and issues,
filed by the other employees, non-union members. 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 Zuniga
After hearings were held and position papers submitted, on March 26, 1990, (sic) was illegally dismissed.
Labor Arbiter Olairez rendered his decision, the dispositive portion of which
reads:
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
WHEREFORE, with all the foregoing considerations, we find the enforceable. If it is, private respondent has been validly retired. Otherwise, petitioner
three complainants illegally and unjustly dismissed and we hereby is guilty of illegal dismissal. The answer to said question will settle the issue of the
order the respondent to reinstate them to their former or validity of the questioned resolution of the public respondent.
substantially equivalent positions without loss of seniority rights with
full backwages and other benefits, computed as follows:

xxx xxx xxx


longer file a case of illegal dismissal because the discharge is
premised on the interpretation or enforcement of the company
The Court's Ruling policies (sic).

On the key issue, the Court finds the petition meritorious, thus warranting reversal of Second, Respondent voluntarily submitted the case to the
the questioned Resolution. 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
First Issue: Jurisdiction of Labor Arbiter 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
Petitioner contends that the labor arbiter had no jurisdiction because the dispute cake and eat it too. . . .
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 The Court agrees with the public respondent's affirmance of the arbiter's decision in
261 of the Labor Code, which provides: respect of the question of jurisdiction.

Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary In Sanyo Philippines Workers Union — psslU vs. Cañizares,7 a case cited by the
Arbitrators. — The Voluntary Arbitrator or panel of Voluntary petitioner, this Court ruled:
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 . . . Hence, only disputes involving the union and the company shall
arising from the interpretation or enforcement of company be referred to the grievance machinery or voluntary arbitrators.
personnel policies referred to in the immediately preceding Article.
Accordingly, violations of a Collective Bargaining Agreement, In the instant case, both the union and the company are united or
except those which are gross in character, shall no longer be have come to an agreement regarding the dismissal of private
treated as unfair labor practice and shall be resolved as grievances respondents. No grievance between them exists which could be
under the Collective Bargaining Agreement. For purposes of this brought to a grievance machinery. The problem or dispute in the
Article, gross violations of a Collective Bargaining Agreement shall present case is between the union and the company on the one
mean flagrant and/or malicious refusal to comply with the economic hand and some union and non-union members who were
provisions of such agreement. dismissed, on the other hand. The dispute has to be settled before
an impartial body. The grievance machinery with members
The Commission, its Regional Offices and the Regional Directors of designated by the union and the company cannot be expected to
the Department of Labor and Employment shall not entertain be impartial against the dismissed employees. Due process
disputes, grievances or matters under the exclusive and original demands that the dismissed workers grievances be ventilated
jurisdiction of the Voluntary Arbitrator or panel of Voluntary before an impartial body. Since there has already been an actual
Arbitrators and shall immediately dispose and refer the same to the termination, the matter falls within the jurisdiction of the Labor
Grievance Machinery or Voluntary Arbitration provided in the Arbiter.
Collective Bargaining Agreement.
Applying the same rationale to the case at the bar, it cannot be said that the "dispute"
The Labor Arbiter believed otherwise. In his decision6 , he stated,: 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,
In our honest opinion we have jurisdiction over the complaint on the the case is properly denominated as a "termination dispute" which comes under the
following grounds: jurisdiction of labor arbiters.

First, this is a complaint of illegal dismissal of which original and Therefore, public respondent did not commit a grave abuse of discretion in upholding
exclusive jurisdiction under Article 217 has been conferred to the the jurisdiction of the labor arbiter over this case.
Labor Arbiters. The interpretation 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 Second Issue: Private Respondent's
dismissal. Otherwise, an employee who was on AWOL, or who Compulsory Retirement Is
committed offenses contrary to the personnel policies (sic) can no Not Illegal Dismissal
The bone of contention in this case is the provision on compulsory retirement after 25 Additionally, the Solicitor General and the petitioner contend that a CBA provision
years of service. Article XI, Section 1(e)(5) of the May 2, 1989 Collective Bargaining lowering compulsory retirement age to less than sixty (60) is not contrary to law
Agreement8 between petitioner company and the union states: 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
Sec. 1. The COMPANY shall formulate a retirement plan with the the CBA provision in question cannot be considered a dismissal following this Court's
following main features: ruling in Soberano vs. Clave,10a the relevant portions of which read as follows:

xxx xxx xxx 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
(e) The COMPANY agrees to grant the retirement benefits herein latter after reaching a certain age agrees and/or consents to severe
provided to regular employees who may be separated from the his employment with the former. On the other hand, dismissal refers
COMPANY for any of the following reasons: 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
xxx xxx xxx is only the employer who decides when to terminate the services of
an employee. . . . Moreover, concomitant with the provisions on
(5) Upon reaching the age of sixty (60) years or upon the retirement in a Labor Agreement is a stipulation regarding
completing twenty-five (25) years of service to the COMPANY, retirement benefits pertaining to a retired employee. Here again,
whichever comes first, and the employee shall be compulsorily the retirement benefits are subject to stipulation by the parties
retired and paid the retirement benefits herein provided. 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
Petitioner contends that the aforequoted provision is valid an in consonance with employee in their collective bargaining agreement are not
Article 287 of the Labor Code. The respondent Commission holds otherwise. dismissals. . . . To further fortify the aforesaid conclusion, it is
noteworthy that even the New Labor Code recognizes this
The said Code provides: distinction when it treats retirement from service under a separate
title from that of a dismissal or termination of employment, aside
from expressly recognizing the right of the employer to retire any
Art. 287. Retirement — Any employee may be retired upon
employee who has reached the retirement age established in the
reaching the retirement age established in the Collective Bargaining
collective bargaining agreement or other applicable employment
Agreement or other applicable employment contract.
contract and the latter to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining
In case of retirement, the employee shall be entitled to receive such or other agreement (Art. 277, New Labor Code).
retirement benefits as he may have earned under existing laws and
any collective bargaining or other agreement.
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
The Solicitor General, in his Manifestation in Lieu of Comment,9 agrees with below 60 years. Moreover, providing for early retirement does not constitute
petitioner's contention that the law leaves to the employer and employees the fixing of diminution of benefits. In almost all countries today, early retirement, i.e., before age
the age of retirement. He cites Section 13, Rule I, Book VI of the Omnibus Rules 60, is considered a reward for services rendered since it enables an employee to reap
Implementing the Labor Code, which reads: the fruits of his labor — particularly retirement benefits, whether lump-sum or
otherwise — at an earlier age, when said employee, in presumably better physical
Retirement — In the absence of any collective bargaining and mental condition, can enjoy them better and longer. As a matter of fact, one of the
agreement or other applicable agreement concerning terms and advantages of early retirement is that the corresponding retirement benefits, usually
conditions of employment which provides for retirement at an older consisting of a substantial cash windfall, can early on be put to productive and
age, an employee may be retired upon reaching the age of sixty profitable uses by way of income-generating investments, thereby affording a more
(60) years. 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 CBA's with such early retirement
Arguing that the law on compulsory retirement age is open-ended, as indicated by the
provisions. And the same cannot be considered a diminution of employment benefits.
use of the word "may", the Solicitor General maintains that there is no prohibition
against parties fixing a lower age for retirement. 10
It is also further argued that, being a union member, private respondent is bound by The aforequoted provision makes clear the intention of spirit of the law to give
the CBA because its terms and conditions constitute the law between the employers and employees a free hand to determine and agree upon the terms and
parties. 11 The parties are bound not only to the fulfillment of what has been conditions of retirement. Providing in a CBA for compulsory retirement of employees
expressly stipulated but also to all the consequences which, according to their nature, after twenty-five (25) years of service is legal and enforceable so long as the parties
may be in keeping with good faith, usage and law. 12 It binds not only the union but agree to be governed by such CBA. The law presumes that employees know what
also its members. 13 Thus, the Solicitor General 14 said: they want and what is good for them absent any showing that fraud or intimidation
was employed to secure their consent thereto.
Private respondent cannot therefore claim illegal dismissal when he
was compulsorily retired after rendering twenty-five (25) years of On this point then, public respondent committed a grave abuse of discretion in
service since his retirement is in accordance with the CBA. affirming the decision of the labor arbiter. The compulsory retirement of private
respondent effected in accordance with the CBA is legal and binding.
We again concur with the Solicitor General's position. A CBA incorporates the
agreement reached after negotiations between employer and bargaining agent with WHEREFORE, premises considered, the petition is granted and the questioned
respect to terms and conditions of employment. A CBA is not an ordinary contract. Resolution is hereby set aside. No costs.
"(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 SO ORDERED.
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. 287. Retirement — Any employee may be retired upon


reaching the retirement age established 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 . . . .
G.R. No. 117174 November 13, 1996 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
CAPITOL WIRELESS, INC., petitioner, vs. HONORABLE SECRETARY MA. NIEVES
R. CONFESOR and KILUSANG MANGGAGAWA NG CAPWIRE KMC- Petitioner argues that what it implemented was not retrenchment but redundancy
NAFLU, respondents. program, as such, respondent Secretary of Labor should not have relied
upon Asiaworld Publishing House Inc. v. Ople 6 in holding that the dismissed
BELLOSILLO, J.: 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 petitioner's basis in deciding those to be covered by the
Petitioner Capitol Wireless, Inc., and respondent Kilusang Manggagawa ng Capwire redundancy program was the area serviced by the couriers. All areas outside the
KMC-AFLU (Union) entered into a Collective Bargaining Agreement (CBA) on 15 vicinity of its bead office, which were the areas of delivery of the dismissed
November 1990 covering a period of five (5) years. Towards the end of the third year employees, were declared redundant.
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. 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
As a consequence, respondent Union filed a notice of strike with National Concillation laid down the principle that in selecting the employees to be dismissed a fair and
and Mediation Board (NCMB) on the ground of bargaining deadlock and unfair labor reasonable criteria must be used, such as but not limited to: (a) less preferred status
practice, specifically, for illegal dismissal and violations of the CBA. Conciliation (e.g., temporary employee), (b) efficiency and (c) seniority. Although the case
proceedings were conducted by the NCMB but the same yielded negative results. On of Asiaworld dealt with retrenchment, still the principle is applicable to the present
20 August 1993 respondent Union went on strike. On the same day, respondent case because in effecting the dismissals petitioner had to select from among its
Secretary assumed jurisdiction over the controversy. employees.

In the coference held on 14 September 1993 the parties agreed to confine the scope We agree with respondent Secretary of Labor in her observation and conclusion that
of the dispute to the following issues: (a) unfair labor practice, consisting of CBA the implementation by petitioner of its redundancy program was inconsistent with
violations and acts inimical to the worker's right to self-organization; (b) redundancy, established principles of procedural due process. She elaborated on this point in her
affecting the dismissed employes; and (c) CBA deadlock, which includes all items resolution of the motion for reconsideration.
covered by respondent Union's proposals. Thus —

On 2 May 1994 respondent Secretary of Labor resolved the controversy in this Whether it is redundancy or retrenchment, no employee may be
manner: (1) the parties were ordered to modify the fourth and fifth years ofthe CBA in dismissed without observance of the rudiments of good faith. This
accordance with the dispositions she found just and equitable1 the same to be is the point of our assailed order. If the Company (were) really
retroactive to 1 July 1993 and effective until 30 June 1995 or until superseded by a convinced of the reasons for dismissal, the least it could have done
new agreement; (2) all other provisions of the existing CBA were deemed retained but to the employees affected was to observe fair play and
all new demands of respondent Union that were not passed upon by her were transparency in implementing the decision to dismiss. To stress, the
deemed denied; (3) the dismissal of the eight (8) employees on teh ground of redundancy was implemented without the Company so much
redundancy was uphled, but due to defective implementation by petitioner the leatter apprising the Union of any fair and reasonable criteria for
was ordered to pay each of the former an indemnity equivalent to two (2) month's implementation.
salary based on their adjusted rate for the fourth year in addition to the separation
benefits due to 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 As a matter of fact, this Office called the parties to a conference on
lack of merit. 2 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
On 28 July 1994 the motion for reconsideration of petitioner was of record, the Company submitted quitclaims which do not contain
denied. any amounts purportedly executed by five of the eight dismissed
employees. More importantly, the minutes of the conference show
Petitioner imputes grave abuse of discretion on respondent Secretary of Labor for that within two days thereafter, the Company committed to submit a
holding that it failed to accord due process to the dismissed employees; in not 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 . . . Wenphil, however, simply provides the authority to impose the
complied within this commitment. indemnity; it is not meant to be definitive as to the amount of
indemnity applicable in all cases, this being dependent on the
As has been made clear, even this Office recognized that an particular circumstances of a case. Indeed, in the later case
authorized cause for dismissal did exist; what it could not of Maritime Seahorse v. NLRC, G.R. No. 84712, 5 May 1989, the
countenance is the means employed by the Company in making Supreme Court applied the Wenphil doctrine but awarded an
the cause effective. But no matter what kind of justification the indemnity of P5,000.00. Clearly, there is a recognition that the
Company presents now, this has become moot, academic and amount of indemnity to be awarded is subject to the discretion of
irrelevant. The same should have been communicated to the the agency making the award, considering all attendant
affected employees prior to or simultaneously with the circumstances. 9
implementation of the redundancy, or at the very least, before the
assailed order was rendered. 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
In any event, the explanation being advanced by the Company now demands. In particular, R.A. 7641 grants to the employee retirement pay equivalent to
purportedly based on areas of assignment — loses significance 21.82 days per year of service only but respondent Secretary of Labor granted the
from the more compelling viewpoint of efficiency and seniority. For equivalent of 22.5 days. To this, six (6) more days were granted for compulsory
instance, during the period covered by the Company's own time retirement and three (3) days for optional retirement. The existing provisions of the
and motion analysis, Rogelio Varona delivered 96 messages but CBA, the respective proposals of the parties, and the award of respondent Secretary
was dismissed; Resurrecion Bordeos delivered only an average of of Labor are reproduced hereunder —
75 but was retained. In terms of seniority, the Company itself states
the "Ms. Bordeos holds the same position/area as Rogelio Varona, EXISTING PROVISIONS OF THE CBA
however, she was retained because she is more senior than the
latter." The Company should look at its own evidence again. a. Normal Retirement —
Bordeos had only 16 years of service. Varona had 19, Nieves 18,
and Valle, Basig and Santos 17, yet all five were dismissed.
Compulsory upon reaching 60 years of age or
after 35 years of continuous service, whichever
One should also consider that the redundancy was implemented at comes first, provided that those who reach 55 or
the height of bargaining negotiations. The bargaining process could have 10 years of uninterrupted service may be
have been the best opportunity for the Company to apprise the retired at employee's or Company's option.
Union of the necessity for redundancy. For unknown reasons, the
Company did not take advantage of it. Intended or not, the
redundancy reinforced the conditions for a deadlock, giving the PETITIONER'S PROPOSAL
Union members the impression that it was being used by the
Company to obtain a bargaining leverage. 7 a. Normal Retirement —

Petitioner argues next that granting that procedural due process was not afforded the 60 years old — R.A. 7641
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 b. Optional Retirement —
cases, that where the dismissal of an employee is for a just cause but without due
process, the employer must indemnify the dismissed employee.
55 years old or 10 years of continuous service
1/2 month's basic salary for every year of
Petitioner must have failed to read the full text of Wenphil or simply chose to ignore continuous service plus 1 day equivalent pay
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 UNION'S PROPOSAL
of Reta v. NLRC, 8 the Court saw fit to impose P10,000.00 as penalty for the
employer's failure to comply with the due process requirement. The ratiocination of a. Normal Retirement —
respondent Secretary of Labor should have put petitioner's argument at rest —
150% of basic salary
b. Optional Retirement — In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and
50% of basic salary commencing in the 5th year any collective bargaining agreement and other agreements:
of service. provided, however, That an employee's retirement benefits under
any collective bargaining and other agreements shall not be less
than those provided herein.
SECRETARY'S AWARD
In the absence of a retirement plan or agreement providing for
a. Compulsory Retirement — retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond
An employee shall be compulsorily retired upon sixty-five (65) years which is hereby declared the compulsory
reaching the age of sixty (60), or after thirty-five retirement age, who has served at least five (5) years in the said
(35) years of continuous service, whichever establishment, may retire and shall be entitled to retirement pay
comes first. 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
An employee shall be entitled to a retirement one whole year.
benefit of 1/2 month salary plus six (6) days
multiplied by the number of years in service. Unless the parties provide for broader inclusions, the term "one-half
(1/2) month salary" shall mean fifteen (15) days plus one-twelfth
b. Optional Retirement — (1/12) of the 13th month pay and the cash equivalent of not more
than five (5) days of service incentive leaves . . . . (emphasis
supplied).
At his option, an employee may entire upon
reaching the age of fifty-five (55) or more if he
has served for at least five (5) years; provided, The records fail to disclose that petitioner bothered to inform the Court how it arrived
however, that any employee who is under fifty- at 21.82 days as basis in the computation of the retirement pay. Anyway, it is clear in
five (55) years old may retire if he has rendered the law that the term "one-half (1/2) month salary" means 22.5 days: 15 days plus 2.5
at least ten (10) years of continuous service. 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
Such an employee shall be entitled to a requirements of the law.
retirement benefit of 1/2 month salary plus three
(3) days multiplied by the number of years in
service. 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
For purposes of computing compulsory and establishes the minimum retirement benefits as it recognizes that an employee may
optional retirement benefits and to align the receive more under existing laws and any CBA or other agreements. Besides,
current retirement plan with the minimum respondent Secretary of Labor had to break the bargaining deadlock. After taking into
standards of Art. 287 of the Labor Code, as account all the circumstances, public respondent found it expedient to strike a
amended by R.A. 7641, and Sec. 5 (5.2) of its reasonable middle ground between the parties' respective positions. Unless there are
implementing rules, "1/2 month salary" means cogent reasons, and we do not find any, this Court will not alter, modify or reverse the
22.5 days salary, exclusive of leave conversion factual findings of the Secretary of Labor because, by reason of her official position,
benefits. she is considered to have acquired expertise as her jurisdiction is confined to specific
matters. 10
Article 287 of the Labor Code, as amended by R.A. 764l, provides —
As we perceive it, by design or otherwise, petitioner's arguments only scratch the
Art. 287. Retirement. — Any employee may be retired upon surface, so to speak. They do not extend beneath, as our studies of jurisprudence
reaching the retirement age established in the collective bargaining and the law disclose. Otherwise, the baselessness of the instant petition and the
agreement or other applicable employment contract. absence of any abuse 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 "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
R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, petitioners, vs. AVELINA P. of [Latag], the dispositive portion of which reads:
LATAG, representing her deceased husband, PEDRO M. LATAG, respondents.
‘WHEREFORE, judgment is hereby rendered ordering x x x LA MALLORCA TAXI, R
DECISION & E TRANSPORT, INC. and their owner/chief executive officer HONORIO
ENRIQUEZ to jointly and severally pay MRS. AVELINA P. LATAG the sum of
₱277,500.00 by way of retirement pay for her deceased husband, PEDRO M. LATAG.
PANGANIBAN, J.:
‘SO ORDERED.’
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 "On January 21, 2000, [Respondent Avelina Latag,] with her then counsel[,] was
when they are contrary to those of the NLRC or of the labor arbiter. invited to the office of [petitioners’] counsel and was offered the amount of
₱38,500.00[,] which she accepted. [Respondent] was also asked to sign an already
prepared quitclaim and release and a joint motion to dismiss the case.
The Case
"After a day or two, [respondent] received a copy of the January 10, 2000 [D]ecision
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to of the Labor Arbiter.
nullify the June 3, 2002 Decision2 and the August 28, 2002 Resolution3 of the Court
of Appeals in CA-GR SP No. 67998. The appellate court disposed as follows:
"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
"WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed which states:
Order of public respondent NLRC is SET ASIDE. The March 14, 20014 [D]ecision of
the Labor Arbiter a quo is REINSTATED."5
‘WHEREFORE, the decision stands and the Labor Arbitration Associate of this Office
is directed to prepare the Writ of Execution in due course.
The challenged Resolution denied petitioners’ Motion for Reconsideration.
‘SO ORDERED.’
The Factual Antecedents
"On January 21, 2000, [petitioners] interposed an appeal before the NLRC. On March
The antecedents of the case are narrated by the CA as follows: 14, 2001, the latter handed down a [D]ecision[,] the decretal portion of which
provides:
"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 ‘WHEREFORE, in view of the foregoing, respondents’ Appeal is hereby DISMISSED
[petitioner] R & E Transport, Inc. x x x. He was receiving an average daily salary of for failure to post a cash or surety bond, as mandated by law.
five hundred pesos (₱500.00) as a taxi driver.
‘SO ORDERED.’
"[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. "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)
"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 Respondent appealed to the CA, contending that under Article 223 of the Labor Code
NLRC. and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an employer’s
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 Factual Findings of the NLRC

The CA held that the labor arbiter’s May 23, 2000 Order had referred to the earlier Petitioners maintain that the CA erred in disregarding the factual findings of the NLRC
January 10, 2000 Decision awarding respondent ₱277,500 as retirement benefit. 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.
According to the appellate court, because petitioners’ appeal before the NLRC was Petitioners add that the appellate court should have refrained from tackling issues of
not accompanied by an appropriate cash or surety bond, such appeal was not fact and, instead, limited itself to those of jurisdiction or grave abuse of discretion on
perfected. The CA thus ruled that the labor arbiter’s January 10, 2000 Decision and the part of the NLRC.
May 23, 2000 Order had already become final and executory.
The power of the CA to review NLRC decisions via a Rule 65 petition is now a settled
Hence, this Petition.7 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
Issues 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
Petitioners submit the following issues for our consideration: 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
"I the power to pass upon the evidence, if and when necessary, to resolve factual
issues.13

Whether or not the Court should respect the findings of fact [of] the NLRC as against
[those] of the labor arbiter. 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
"II 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
Whether or not, in rendering judgment in favor of petitioners, the NLRC committed NLRC are contrary to those of the labor arbiter, the evidentiary facts may be reviewed
grave abuse of discretion. by the appellate court.16 Such is the situation in the present case; thus, the doors to
a review are open.17
"III
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
Whether or not private respondent violated the rule on forum-shopping.
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
"IV enough basis for the appellate court’s reversal of the NLRC Decision.

Whether or not the appeal of petitioners from the Order of the labor arbiter to the Number of Creditable Years of Service for Retirement Benefits
NLRC involves [a] monetary award."8
Petitioners do not dispute the fact that the late Pedro M. Latag is entitled to retirement
In short, petitioners raise these issues: (1) whether the CA acted properly when it benefits. Rather, the bone of contention is the number of years that he should be
overturned the NLRC’s factual findings; (2) whether the rule on forum shopping was credited with in computing those benefits. On the one hand, we have the findings of
violated; and (3) whether the labor arbiter’s Order of May 23, 2000 involved a the labor arbiter,20 which the CA affirmed. According to those findings, the 23 years
monetary award. 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
The Court’s Ruling NLRC21 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.
The Petition is partly meritorious.

After a careful and painstaking review of the evidence on record, we support the
First Issue:
NLRC’s findings. The labor arbiter’s conclusion -- that La Mallorca Taxi and R & E
Transport, Inc., are one and the same entity -- is negated by the documentary legal duty, or a dishonest and an unjust act in contravention of plaintiff’s legal right;
evidence presented by petitioners. Their evidence22 sufficiently shows the following and (3) the said control and breach of duty must have proximately caused the injury
facts: 1) R & E Transport, Inc., was established only in 1978; 2) Honorio Enriquez, its or unjust loss complained of."26
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 Respondent has not shown by competent evidence that one taxi company had stock
the NLRC appreciated in its Decision, it seems that mere surmises and self-serving control and complete domination over the other or vice versa. In fact, no evidence
assertions of Respondent Avelina Latag formed the bases for the labor arbiter’s was presented to show the alleged renaming of "La Mallorca Taxi" to "R & E
conclusions as follows: 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
"While [Pedro M. Latag] claims that he worked as taxi driver since March 1961 since petitioners to commit a wrong or to violate a statutory duty. This lacuna in the
the days of the La Mallorca Taxi, which was later renamed R & E Transport, Inc., evidence compels us to reverse the Decision of the CA affirming the labor arbiter’s
[petitioners] limit the employment period to 14 years. finding of fact that the basis for computing Pedro’s retirement pay should be 37 years,
instead of only 14 years.
"Resolving this matter, we note [respondent’s] ID (Annex "A", [Latag] position paper),
which appears to bear the signature of Miguel Enriquez on the front portion and the Validity of the Quitclaim and Waiver
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 As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the appellate
Latag, with SSS No. 03-0772155, is February 1961. 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 to say that
"Viewed against [petitioners’] non-disclaimer [sic] that La Mallorca preceded R & E all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate
Taxi, Inc.[;] x x x that both entities were/are owned by the Enriquez family, with workers’ rights and benefits, and look with disfavor upon quitclaims and waivers that
[petitioner] Honorio [Enriquez] as the latter’s President[; and] x x x that La Mallorca bargain these away.
was a different entity (page 2, [petitioners’] position paper), we are of the conclusion
that [Latag’s] stint with the Enriquez family dated back since February 1961 and thus, Courts have stepped in to annul questionable transactions, especially where there is
he should be entitled to retirement benefits for 37 years, as of the date of the filing of clear proof that a waiver, for instance, was wangled from an unsuspecting or a gullible
this case on December 12, 1998."23 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 worker’s rights, and
Furthermore, basic is the rule that the corporate veil may be pierced only if it the acceptance of benefits therefrom does not amount to estoppel.28 Moreover, a
becomes a shield for fraud, illegality or inequity committed against a third quitclaim in which the consideration is "scandalously low and inequitable" cannot be
person.24 We have thus cautioned against the inordinate application of this doctrine. an obstacle to the pursuit of a worker’s legitimate claim.29
In Philippine National Bank v. Andrada Electric & Engineering Company,25 we said:
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E
"x x x [A]ny application of the doctrine of piercing the corporate veil should be done Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No.
with caution. A court should be mindful of the milieu where it is to be applied. It must 7641,30 provides:
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 "Art. 287. Retirement. - x x x
wrongdoing must be clearly and convincingly established; it cannot be presumed.
Otherwise, an injustice that was never unintended may result from an erroneous
application. "x x x x x x x x x

xxx xxx xxx "In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
"The question of whether a corporation is a mere alter ego is one of fact. Piercing the compulsory retirement age, who has served at least five (5) years in said
veil of corporate fiction may be allowed only if the following elements concur: (1) establishment, may retire and shall be entitled to retirement pay equivalent to at least
control -- not mere stock control, but complete domination -- not only of finances, but one-half (1/2) month salary for every year of service, a fraction of at least six (6)
of policy and business practice in respect to the transaction attacked, must have been months being considered as one whole year.
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
"Unless the parties provide for broader inclusions, the term one half-month salary We cannot fault respondent for her tenacity. Besides, to disallow her appeal would not
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the be in keeping with the policy of labor laws41 to shun highly technical procedural laws
cash equivalent of not more than five (5) days of service incentive leaves. in the higher interest of justice.

x x x x x x x x x" (Italics supplied) Third Issue:

The rules implementing the New Retirement Law similarly provide the above- Monetary Award
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 month32 and the Petitioners’ contention is that the labor arbiter’s January 10, 2000 Decision was
service incentive pay;33 hence, his retirement pay should be computed on the sole supplanted by the Compromise Agreement that had preceded the former’s official
basis of his salary. release42 to, and receipt43 by, the parties. It appears from the records that they had
entered into an Amicable Settlement on January 21, 2000; that based on that
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums settlement, respondent filed a Motion to Dismiss on January 24, 2000, before the
in excess of the "boundary" or fee they pay to the owners or operators of their labor arbiter who officially released on the same day his Decision dated January 10,
vehicles.34 Thus, the basis for computing their benefits should be the average daily 2000; that upon receipt of a copy thereof, respondent filed a Manifestation and Motion
income. In this case, the CA found that Pedro was earning an average of five hundred to Set Aside the Motion to Dismiss; and that the labor arbiter subsequently
pesos (₱500) per day. We thus compute his retirement pay as follows: ₱500 x 15 calendared the case for conference, held hearings thereon, and required the parties
days x 14 years of service equals ₱105,000. Compared with this amount, the to exchange positions -- by way of comments, replies and rejoinders -- after which he
₱38,850 he received, which represented just over one third of what was legally due handed down his May 23, 2000 Order.
him, was unconscionable.
Under the circumstances, the case was in effect reopened by the proceedings held
Second Issue: 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
Was There Forum Shopping? the New Rules of Procedure of the NLRC,44 which therefore correctly held as follows:

Also assailed are the twin appeals that two different lawyers filed for respondent "x x x Thus, the further hearings conducted thereafter, to determine the validity of
before the CA. Petitioners argue that instead of accepting her explanation, the complainant’s manifestation and motion are but mute confirmation that indeed the 10
appellate court should have dismissed the appeals outright for violating the rule on January 2000 decision in this case has not as yet attained finality. Finally, the
forum shopping. 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
Forum shopping is the institution of two or more actions or proceedings grounded on supplanted and rendered functus officio by the herein parties’ acts. Thus, when the
the same cause, on the supposition that one or the other court would render a Labor Arbiter a quo found in his appealed order that the amount of ₱38,850.00 is
favorable disposition.35 Such act is present when there is an identity of parties, rights ‘unconscionable viewed against the amount awarded in the decision,’ the same
or causes of action, and reliefs sought in two or more pending cases.36 It is usually became appealable independently of the 10 January 2000 decision, which has not
resorted to by a party against whom an adverse judgment or order has been issued in attained finality, in the first place."45
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 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
We find, as the CA38 did, that respondent has adequately explained why she had parties had rendered the January 10, 2000 Decision functus oficio, then it follows that
filed two appeals before the appellate court. In the August 5, 2002 Affidavit39 that she the monetary award stated therein was reinstated -- by reference -- by the
attached as Annex "A" to her Compliance to Show Cause Order with Comment on aforementioned Order. The appeal from the latter should perforce have followed the
petitioners’ Motion for Reconsideration,40 she averred that she had sought the procedural requirements under Article 223 of the Labor Code.
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 As amended, this provision explicitly provides that an appeal from the labor arbiter’s
the original counsel had filed a similar Petition. 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 ₱105,000 less the ₱38,850
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 pay for every year of service whichever is higher plus one month
compensation in addition to said separation pay in lieu of notice.
UNIVERSITY OF THE EAST, petitioner, vs. HON. MINISTER OF LABOR AND U.E.
FACULTY ASSOCIATION, respondents. In addition to the termination pay, the University is likewise directed to pay
retirement benefits to all affected faculty members who, in accordance with
GUTIERREZ, JR., J.: the collective bargaining agreement, are retireable prior to or at the time of
the phase-out. (Rollo, p. 59).
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 The petitioner filed a motion for reconsideration but the same was denied on February
concerned retirement benefits in accordance with their collective bargaining 14, 1986. Hence, it filed this petition raising the sole issue of whether or not the
agreement, in addition to the payment of separation pay according to the Termination respondent Minister of Labor and Employment committed grave abuse of discretion
Pay Law. amounting to lack of jurisdiction in awarding both retirement benefits and separation
pay to the faculty members affected by the phase-out.
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 The petitioner maintains that there can only be one mode of termination of
School Department respectively, starting with the school year 1983-1984 on the employment with respect to one and the same employee. It argues that the faculty
grounds of lack of economic viability and financial losses. 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,
The respondent UE Faculty Association opposed the phase-out, contending that such (99 SCRA 549) where this Court ruled that retirement from service is distinct from
action contravened the law because it constitutes union busting. The association also dismissal or termination of employment and that retirements which are agreed upon
emphasized the alleged failure of the petitioner to present evidence substantiating the by the employer and the employee in their collective bargaining agreement are not
alleged losses. dismissals as contemplated under the termination pay law.

The parties tried to find a solution for the problems attending the phase-out but were The public respondent argues that the faculty members affected by the phase-out
unsuccessful. Hence, the private respondent filed a notice of strike with the Bureau of were awarded separation pay because the petitioner failed to show that their
Labor Relations (BLR) on August 4, 1983, The BLR conducted several conciliation separation from employment was due to a valid or authorized cause; while the award
proceedings but when no amicable settlement was reached by the parties, the for retirement benefits was by virtue of the provisions of the CBA, regardless of the
respondent Minister issued an order assuming jurisdiction over the case and directing cause of separation.
the BLR to receive evidence in connection with the dispute.
We rule for the respondents.
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 Under Article 284 of the Labor Code, the termination of employment of any employee
evidence or allegation that the departments concerned had contributed the most to arising from retrenchment to prevent losses shall entitle the employee affected
the university's financial losses and neither was there evidence that their closure thereby to separation pay equivalent to one (1) month pay or at least one-half (1/2)
would reverse the trend. The public respondent further found violations of Articles 278 month pay for every year of service, whichever is higher. (Columbia Development
and 284 of the Labor Code because the petitioner did not serve the necessary one Corporation v. Minister of Labor and Employment, 146 SCRA 421, 429).
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 The respondent Minister found that the petitioner failed to present evidence as to the
agreement (CBA) are not affected by the phase-out of the two departments. Hence, university's actual losses and what caused them. It, therefore, failed to satisfy the
the petitioner is liable for the payment of separation pay in addition to the payment of burden under Article 278(b) of the Labor Code of proving that the termination of
retirement benefits to those entitled under the CBA. The dispositive portion of the employees was for a valid or authorized cause, in this case to prevent losses. No
questioned order provides: 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
WHEREFORE, respondent University of the East is hereby directed to pay was not submitted. The Minister of Labor further ruled that the private respondents
all affected faculty members of the College Secretarial Education and the concerned were entitled to separation pay and one-month pay in lieu of the required
High School Department a separation pay of one month or one-half month 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 Art. VIII-8.2. In case of unusual circumstances, such as decrease in
addition to separation benefits, retirement benefits may also be awarded to the enrollment, or the closure of any College or Department of the University,
private respondent pursuant to the CBA. It maintains that the award of separation pay etc., which may warrant the reduction of the number of faculty members in
pursuant to the Termination Pay Law necessarily excludes retirement benefits. any rank, faculty members whose services are terminated shall be granted
the retirement benefits, if they are entitled thereto, provided that the services
In the case of Batangas Laguna Tayabas Bus Co. v. Court of Appeals (71 SCRA 470, of those with less years of service shall be terminated first. Those who have
482-483) we ruled: 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
But petitioner contends that private respondent can only avail himself of services. This retirement privilege, however, shall not apply to faculty
either separation pay or retirement benefits but not both, citing in support members who may be transferred from one College or Department to
thereof, the ruling of this Court in the case of Cipriano v. San Miguel. (24 another of the University. (Rollo, p. 115).
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:
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
Regular employees who are separated from the service of the from service but transferred instead from one college or department to another. There
company for any reason other than misconduct or voluntary is no provision to the effect that teachers who are forcibly dismissed are not entitled to
resignation shall be entitled to either 100% of the benefits provided retirement benefits if the MOLE awards them separation pay. Furthermore, since the
in Section 2, Article VIII hereof regardless of their length of service above provision has become in effect part of the petitioner's policy, the same should
in the company or to the severance pay provided by law, whichever be enforced separately from the provisions of the Termination Pay Law. As we have
is the greater amount. ruled in Philippine Overseas Drilling and Oil Development Corporation v. Ministry of
Labor, (1 46 SCRA 79, 89):
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 Be that as it may, the finding of the respondent Director, that there was a
amount. In the present case, there is nothing in the labor agreement entered company policy to grant separation benefit or pay equivalent to one (1)
into by petitioner with the Batangas Transportation Employees Association of month pay for every year of service to employees who were similarly
which private respondent is a member barring the latter from recovering situated as private respondent, is supported by substantial evidence which
whatever benefits he is entitled to under the law in addition to the gratuity means "such relevant evidence as a reasonable mind might accept as
benefits under the labor agreement between him and his employer. Neither adequate to support a conclusion." (Ang Tibay v. CIR, 69 Phil. 635; Canete
is there any provision in the Termination Pay Law (Republic Act No. 1052, as v. Workmen's Compensation Commission, May 8, 1985, 136 SCRA 302,
amended, by Republic Act No. 1787) that an employee who receives his 208). Documents to this effect were presented by private respondent at the
termination pay upon separation from the service without cause is precluded hearing on January 24, 1980 as Annexes "D" thru "D-7" of his position paper.
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 Having found that there was a company policy to that effect, respondent
from the petitioner whatever benefits he is entitled to under the Termination Director correctly held that private respondent was legally entitled to a
Pay Law in addition to other benefits conferred upon him by the aforesaid separation benefit or pay equivalent to one (1) month pay for every year of
labor agreement. 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-
Therefore, if there is no provision contained in the collective bargaining agreement to 273; Marcopper Mining Corporation v. Ople, June 11, 1981, 105 SCRA 75,
the effect that benefits received under the Termination Pay Law shall preclude the 83; Oceanic Pharmacal Employees Union (FFW) v. Inciong, November 7,
employee from receiving other benefits from the agreement, then said employee is 1979, 94 SCRA 270, 275). After having served petitioner for ten years,
entitled to the benefits embodied in the agreement in addition to whatever benefits private respondent deserved his separation benefit or pay.
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 The case of Soberano v. Clave, supra, cited by herein petitioner does not apply to the
right due to many years of faithful service are not necessarily antagonistic to each case at bar. In Soberano, the employees concerned either voluntarily retired or were
other, especially where there are strong equitable considerations as in this case. retired upon reaching the age of sixty pursuant to their collective bargaining
Article VII-8.2 of the CBA provided: 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 All employees in the bargaining unit separated without cause shall
be granted separation pay of not less than one (1) month's latest
CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A. GASPAN and basic rate for every year of service subject to the existing provisions
NICARDO P. BLANQUISCO, petitioners, vs. NATIONAL LABOR RELATIONS of the Retirement Plan.
COMMISSION AND OTIS ELEVATOR COMPANY, respondents.
In justifying their subsequent demand for retirement benefits before the Labor Arbiter,
CRUZ, J.: 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 petitioners' services were terminated on the ground of retrenchment, and they
received separation pay double that required by the Labor Code. Thereafter, they The COMPANY shall maintain the present group retirement plan
demanded retirement benefits, invoking the Retirement Plan of the respondent which is attached hereto as Annex "A"and made an integral part of
company which they said was contractual rather than statutory. The question this contract. (Sec. 1, Art. XIV).
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 xxx xxx xxx
they were, but the NLRC reversed him. The issue is now before us for final resolution.
5.2. A Participant who is terminated from employment and who has
The petitioners were employees of private respondent Otis Elevator Company when rendered at least ten (10) years of service shall be entitled to
they were informed of the termination of their employment in line with the need of the receive in lump sum all or a portion of his accrued benefit credits as
company "to streamline its operations, consolidate certain functions, reduce its of his date of termination, in accordance with the following
manpower and cut non-essential spending." The separate letters addressed to the schedule:
petitioners advised them that —
Years of Service Vested Percentage
In lieu of notice, you shall be paid one month's equivalent salary, Upon Termination of Benefit Credits
plus your regular allowances, counted from such date, and you
shall be covered with the normal benefits for that period. You shall Less than 10 years NIL
also be paid your earned and/or unused sick leave and vacation 10 to less than 15 50%
leave, including your pro-rata 13th month pay. And for every year of 15 to less than 20 75%
service with the Company, you shall be paid one month's basic 20 years and over 100%
salary or your retirement benefits, if applicable to you, whichever is
higher. 1
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
Accordingly, petitioners were paid their separation pay, computed as follows: and 1982, respectively, and were both given separation pay and retirement benefits.

Basic monthly Years in Separation For its part, the respondent company argued that separation pay and retirement
salary service Pay benefits were mutually exclusive; hence, the petitioners could no longer claim the
latter after having received the former.
Conrado M. Aquino P 4,300 22 P 94,600
Napoleon B. Aromin 10,350 22 227,700 The Labor Arbiter ruled in favor of the petitioners mainly on the ground that the
Roberto A. Gaspan 3,800 19 72,200 company was estopped from withholding retirement benefits from them after having
Nicardo P. Blanquisco 8,800 13 110,500 granted similar benefits to the employees earlier mentioned. He held that a different
treatment of the petitioners would constitute discrimination because "benefits
The separation pay was based on Section 4, Article VII of the Collective Bargaining accorded to other employees must likewise be extended to the rest who are similarly
Agreement between the company and its employees providing thus: 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 the ruling of this Court in the case of Cipriano vs. San Miguel Corporation, 24
without cause are entitled to a separation pay of not less than one SCRA 703. The foregoing ruling cannot be made to apply to the present suit
(1) month's latest basic rate for every year of service, this is made because in said case it is so expressly provided in the Labor Agreement that:
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, Regular employees who are separated from the service of
no logical inference can be made that the benefits under Section the company for any reason other than misconduct or
5.2 of Article V of the Retirement in addition to the one (1) month's voluntary resignation shall be entitled to either 100% of the
latest basic rate for every year of service. (sic) Therefore, the offer benefits provided in Section 2, Article VIII hereof regardless
of appellant perfectly fits well within the contemplation of the parties of their length of service in the company or to the severance
as envisaged in the aforementioned provisions of the CBA and the pay provided by law, whichever is the greater amount.
Retirement Plan. 3
Thus, in said case the employee was entitled to either the amount prescribed
It is important at the outset to note the distinction between separation pay and in the plan or the severance pay provided by law whichever is the greater
retirement benefits. amount. In the present case, there is nothing in the labor agreement entered
into by the petitioner with Batangas Transportation Employees Association of
Separation pay is required in the cases enumerated in Articles 283 and 284 of the which private respondent is a member barring the latter from recovering
Labor Code, which include retrenchment, and is computed at at least one month whatever benefits he is entitled to under the law in addition to the gratuity
salary or at the rate of one-half month salary for every year of service, whichever is benefits under the labor agreementbetween him and his employer. Neither is
higher. We have held that it is a statutory right designed to provide the employee with there any provision in the Termination Pay Law (Republic Act No. 1052, as
the wherewithal during the period that he is looking for another employment. 4 amended by Republic Act No. 1787) that an employee who receives big
termination pay upon separation from the service without cause is precluded
Retirement benefits, where not mandated by law, may be granted by agreement of from recovering any other benefits agreed upon by him and his employer. In
the employees and their employer or as a voluntary act on the part of the employer. the absence of any such prohibition, both in the aforesaid Labor Agreement
Retirement benefits are intended to help the employee enjoy the remaining years of and the Termination Pay Law the private respondent has the right to recover
his life, lessening the burden of worrying for his financial support, and are a form of from the petitioner whatever benefits he is entitled to under the Termination
reward for his loyalty and service to the employer. 5 Pay Law in addition to the other benefits conferred upon him by the aforesaid
labor agreement. *
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 The same issue was squarely raised in University of the East v. Minister of
provided for in the Retirement Plan of the respondent company. 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."
In rejecting this contention, the private respondent insists that the retirement benefits Through Justice Gutierrez, the Court reaffirmed the above-quoted ruling in
are subject to the provisions of the Retirement Plan under Section 4 of the CBA. the BLTB case and held as follows:
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 Therefore, if there is no provision contained in the collective bargaining
benefit should exclude the other. 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
The petitioners are covered by the Retirement Plan because they have contributed to addition to whatever benefits are mandated by statute. In the case at bar, there
the retirement fund, have been separated by reason of the retrenchment, and have is no such provision. We cannot presume that it forms an implicit part of either
served the company for more than the prescribed minimum period of ten years. 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
In Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 7 Justice Martin started faithful service are not necessarily antagonistic to each other, especially where
his ponencia thus: "The issue in this petition is whether an employee who has already there are strong equitable considerations as in this case. **
received his separation pay can still recover retirement benefits from his employer."
Resolving the question affirmatively, the Court declared in part: We have carefully examined the record, and particularly the Collective Bargaining
Agreement and the Retirement Plan, and have found no specific prohibition against
But petitioner contends that private respondent can only avail himself of either the payment of both benefits to the employee.
separation pay or retirement benefits but not both, citing in support thereof,
Maintaining that the above cases have no application to the case at bar, the company pay and the retirement benefits mutually exclusive, it should have sought inclusion of
calls attention to Book VI, Section 14, Rule 1, of the Omnibus Rules Implementing the the corresponding provision in the Retirement Plan and the Collective Bargaining
Labor Code, which provides as follows: Agreement so as to remove all possible ambiguity regarding this matter.

(a) An employee who is retired pursuant to a bonafide retirement We may presume that the counsel of the respondent company was aware of the
plan or in accordance with the applicable individual or collective prevailing doctrine embodied in the cases earlier cited. Knowing this, he should have
agreement or established employer policy shall be entitled to all the made it a point to categorically provide in the Retirement Plan and the CBA that an
retirement benefits provided therein or to termination pay equivalent employee who had received separation pay would no longer be entitled to retirement
to at least one-half month salary for every year of service, benefits. Or to put it more plainly, collection of retirement benefits was prohibited if the
whichever is higher, a fraction of at least six (6) months being employee had already received separation pay.
considered as one whole year.
The private respondent argues that it had paid the petitioners more than what the law
However, it overlooks sub-section (c) of the same Section 14, which clearly provides requires by giving them separation pay at the rate of one month instead of one-half
that: 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
(c) This Section shall apply where the employee retires at the age strain on its benevolence.
of sixty (60) years or more.
The petitioners are not pleading for generosity but demanding their rights. These
The private respondent has not shown that the petitioners were sixty years or older at rights are embodied in the Collective Bargaining Agreement, which was the result of
the time of their separation and therefore covered by the said section. Having itself negotiations between the company and the employees.
invoked that provision, the company had the obligation to prove that the petitioners
came under its terms. 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 private respondent's argument that the petitioners did not retire but were the concessions mutually given by the parties to arrive at a common understanding.
terminated in employment is, in our view, plain nitpicking. It cannot be seriously The resultant contract provides for demandable rights, not withdrawable doles. When
contended that if an employee dies before he can retire (at a time when he is already the employer signs a collective bargaining agreement, it recognizes the rights of the
eligible for retirement), his beneficiaries are entitled to the retirement pay he would workers and does not merely concede certain privileges to them out of the goodness
have himself earned. The effective cause of separation is death, for which his heirs of its heart.
are entitled to death benefits, but they are also paid retirement benefits as a
consequence of such death. 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
This is not to say that one whose services are terminated not only because he has opted for the former. This is not borne by the record. In its letter advising the
retired but for another cause resulting in retirement is always entitled to both petitioners of the termination of their services, the company merely informed them
separation pay and retirement benefits. It should be obvious that if, say, an employee that they would be given separation pay or retirement benefits, whichever was higher.
is dismissed for dishonesty, he is not entitled to separation pay or, for that matter, The petitioners received the separation pay because they felt they were entitled
even retirement benefits. But in the case before us, the petitioners have not been thereto but they did not thereby waive their rights to the retirement benefits.
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 We realize that the retirement benefits of the petitioners come up to a substantial
above quoted categorically declared: 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
Finally, we want to assure you that your retrenchment is through no indeed. The point, however, is that the petitioners are entitled to this amount under
fault of your own but mainly due to prevention of further losses. In the provisions of the CBA and the Retirement Plan freely entered into by the parties.
behalf of the Company, we express our sincere appreciation for These instruments are binding agreements, not being contrary to law, morals, good
your services and loyalty and wish you every success in your future customs, public order or public policy, and must therefore be upheld.
undertakings. 9
WHEREFORE, the petition is GRANTED. The decision of the respondent National
In arriving at our conclusion, we are guided by the principle that any doubt concerning Labor Relations Board is REVERSED and a new judgment is hereby rendered
the rights of labor should be resolved in its favor, pursuant to the social justice policy. directing the payment of retirement benefits to the petitioners in accordance with the
The Court feels that if the private respondent really intended to make the separation
Retirement Plan of the respondent company and its Collective Bargaining Agreement
with its employees.

SO ORDERED.