Labor Law 2.docx

RETIREMENT FROM THE SERVICE ART. 302. Retirement – Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreement. Provided, however, That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provided for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of the not more than five (5) days of service incentive leaves.

DELFIN A. BRION, petitioner, vs. SOUTH PHILIPPINE UNION MISSION OF THE SEVENTH DAY ADVENTIST CHURCH, represented by PASTORS PATERNO DIAZ, ULYSSES CAMAGAY, MANUEL DONATO and WENDELL SERRANO, respondents. Facts: Petitioner Delfin A. Brion became a member of respondent South Philippine Union Mission of the Seventh Day Adventist Church (hereafter SDA) sometime in 1949 where he worked until he retired in 1983 (53 years). As was the practice of the SDA, petitioner was provided a monthly amount as a retirement benefit. He got into an argument with Samuel, another pastor, which resulted to his establishment of “Home Church”. Because of his actions, petitioner was excommunicated by the SDA and, on July 3, 1993, his name was dropped from the Church Record Book. As a consequence of his "disfellowship," petitioner's monthly retirement benefit was discontinued by the SDA. SDA Argument: The right to a pension never really vests in an employee, there being no fixed period for eligibility for retirement. The SDA insists that an employee must "devote his life to the work of the Seventhday Adventist Church" even after retirement to continue enjoying retirement benefits. There is, thus, no definite length of service provided as the SDA can withdraw retirement benefits at any time after "retirement," if it determines that a "retired employee" is not devoting his life to the work of the church. Furthermore, the SDA's eligibility requirement as to length of service is even more stringent than that required by law.

An underground mining employee upon reaching the age of fifty (50) years or more, but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers, who has served at least five (5) years as underground mine worker may retire and shall be entitled to all retirement benefits provided for in this Article.

Issue: Must the conditions for eligibility for retirement be met only at the time retirement?

Retail, services and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.

Retirement has been defined as a withdrawal from office, public station, business, occupation, or public duty. It is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees and/or consents to sever his employment with the former. In this connection, the modern socio-economic climate has fostered the practice of setting up pension and retirement plans for private employees, initially through their voluntary adoption by employers, and lately, established by legislation. Pension schemes, while initially humanitarian in nature, now concomitantly serve to secure loyalty and efficiency on the part of employees, and to increase continuity of service and decrease the labor turnover, by giving to the employees some assurance of security as they approach and reach the age at which earning ability and earnings are materially impaired or at an end.

Violation of this provision is hereby declared unlawful and subject to penal provisions provided under Article 288 of this Code. Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices.

Ruling: Yes. We rule that the conditions of eligibility for retirement must be met at the time of retirement at which juncture the right to retirement benefits or pension, if the employee is eligible, vests in him.

x----------------------------------------x G.R. No. 135136 May 19, 1999

It must be noted, however, that the nature of the rights conferred by a retirement or pension plan depends in large measure upon the provisions of such particular plan.

From the above, it can be gleaned that employer and employee are free to stipulate on retirement benefits, as long as these do not fall below the floor limits provided by law. Again, it has been held that "pension and retirement plans create a contractual obligation in which the promise to pay benefits is made in consideration of the continued faithful service of the employee for the requisite period. 9 In other words, before a right to retirement benefits or pension vests in an employee, he must have met the stated conditions of eligibility with respect to the nature of employment, age, and length of service. This is a condition precedent to his acquisition of rights thereunder. While it is true that "upon the expulsion of a priest or minister from a pastorate, all right to further salary cases," 13 this presupposes that the priest or minister is still on "active duty," so to speak. Here, petitioner has already retired. Hence, he already had a vested right to receive retirement benefits, a right which could not be taken away from him by expulsion or excommunication, this not being a ground for termination of retirement benefits under the SDA's retirement plan. In fact, under paragraph Z1025 of the SDA's General Conference Working Policy, retirement benefits terminate only with the decease of the beneficiary, an event which has not yet transpired here. The SDA must, thus, pay petitioner his retirement benefits despite his establishment of a rival church and his excommunication. x----------------------------------------x PREVIOUS LAW AND AMENDMENTS BY R.A. NO. 7641 (1993) AND R.A. NO. 8558 (1993) G.R. No. 82895 November 7, 1989 LLORA MOTORS, INC. and/or CONSTANTINO CARLOTA, JR., petitioners, vs. HON. FRANKLIN DRILON in his capacity as the Secretary of the Department of Labor and Employment, HON. DANIEL M. LUCAS, DOMINGO H. ZAPANTA and OSCAR N. ABELLA, in their capacity as Commissioners of the National Labor Relations Commission (NLRC) Manila, Second Division, HON. RICARDO N. OLAIREZ, in his capacity as the Labor Arbiter of the Regional Arbitration Branch No. I, San Fernando, La Union and PRIMITIVO ALVIAR, respondents. Facts: Sometime in September of 1968, private respondent Primitivo V. Alviar began his employment with petitioner Llora Motors, Inc. As a truck driver, Mr. Alviar rendered services to the company eight (8) hours a day (exluding overtime) seven days a week, and for his labor received a salary computed on a per trip basis plus emergency cost of living allowance (ECOLA). At the time he stopped working on 19 April 1985, Mr. Alviar was 65 Years of age. On 28 October 1985, private respondent Alviar filed with NLRC a complaint for "Separation Pay and NonPayment of Daily Wages" against petitioners Llora Motors and Constantino Carlota, Jr., the company

manager. In a Position Paper he filed in support of his complaint, Mr. Alviar claimed entitlement to, among other things, ECOLA underpayments as well as "retirement benefits," computed at one-half month's pay for every year of service. Petitioner alleged that all of the employment benefits claimed by private respondent Alviar had already been fully paid. On the matter of retirement benefits, it was contended that Mr. Alviar had not been dismissed by Llora Motors, private respondent abandoned his work since April 1985 and never reported to work again. Neither had Mr. Alviar been retired, petitioners claimed, "for the simple reason that respondent corporation does not have any retirement plan ... [or] any collective bargaining agreement with the employees for no union exists within the company because the employees, drivers included, received more than the standard benefits for their labor." Petitioners contended further that "records will show that complainant had received retirement benefits from the Social Security System when he retired therefrom in 1983." Labor Arbiter rendered a Decision awarding Alviar retirement benefits for 17 years.

Issue: Whether or not private respondent Alviar is legally entitled to receive retirement benefits from petitioner's, his former employers. Held: No. Our Labor Code has only one article that deals with the subject of "retirement from the service." Article 287 of the Code reads as follows: Article 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the Collective Bargaining Agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining or other agreement. (Emphasis supplied) Examination of Article 287 above shows that entitlement to retirement benefits may accrue either (a) under existing laws or (b) under a collective bargaining agreement or other employment contract. It is at once apparent that Article 287 does not itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws. In other words, Article 287 recognizes that existing laws already provide for a scheme by which retirement benefits may be earned or accrue in favor of employees, as part of a broader social security system that provides not only for retirement benefits but also death and funeral benefits, permanent disability benefits, sickness benefits and maternity leave benefits. 12 As is commonplace knowledge, the Social Security Act provides for retirement benefits which essentially consist of the right to receive a monthly pension for the rest of the covered employee's life provided that: (1) such employee had paid at least one hundred twenty

(120) monthly contributions prior to retirement; and (2) has reached the age of sixty (60) years (if his salary is less than P300.00 a month) or 65 years. The retirement scheme here 'established is compulsory and contributory in character on the part of both the employer and the employee, backed up by criminal sanctions and administered by a large and elaborate bureaucracy.

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G.R. No. 110861 November 14, 1994 Article 287 of the Labor Code recognizes that employers and employees may, by a colective bargaining or other agreement, set up a retirement plan in addition to that stablished by the Social Security law, but prescribes at the same time that such consensual additional retirement plan cannot be substituted for or reduce the retirement benefits available under the compulsory scheme established by the Social Security law. Such is the thrust of the second paragraph of Article 287 which directs that the employee shall be entitled to receive retirement benefits earned "under existing laws and any collective bargaining or other agreement." That there was some confusion in the mind of the Labor Arbiter in the case at bar between "termination pay" and "retirement benefits" would seem entirely possible: private respondent Alviar initially asked for "separation pay" and the Labor Arbiter awarded him "retirement benefits." It is important to keep the two (2) concepts of "termination pay" and "retirement benefits" separate and distinct from each other. Termination pay or separation pay is required to be paid by an employer in particular situations Identified by the Labor Code itself or by Implementing rule I. 13 Termination pay where properly due and payable under some applicable provision of the Labor Code or under Section 4 (b) of Implementing Rule 1, must be paid whether or not an additional retirement plan has been set up under an agreement with the employer or under an "established employer policy." Section 14 of Implementing Rule I may be seen to be saying is that where termination pay is otherwise payable to an employee under an applicable provision of the Labor Code, and an additional or consensual retirement plan exists, then payments under such retirement plan may be credited against the termination pay that is due, subject, however, to certain conditions. These conditions are: (a) that payments under the additional retirement plan cannot have the effect of reducing the amount of termination pay due and payable to less than one-half (1/2) month's salary for every year of service; and (b) the employee cannot be made to contribute to the termination pay that he is entitled to receive under some provision of the Labor Code; in other words, the employee is entitled to the full amount of his termination pay plus at least the return of his own contributions to the additional retirement plan. Clearly, there was in the instant case no consensual basis fro the required payment of additional retirement benefits. The Labor Arbiter and the NLRC had not declared private respondent Alviar to have been illegally dismissed by petitioners. neither was there any pretense on the part of private respondent Alviar that laborsaving devices had been installed, or that redundancy or retrenchment or cessation of operations had occurred in Llora Motors or that he was afflicted by some disabling disease, or that, being entitled to reinstatement, he could not be reinstated to this old position. Under these circumstances, the portion of the Labor Arbiter's award which required petitioners to pay an amount equivalent to a half month's pay for every year of service of Mr. Alviar cannot be justified either as (additional) retirement benefits or as termination pay and hence constituted an act without or in excess of jurisdiction.

ORO ENTERPRISES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and LORETO L. CECILIO, respondents. Facts: In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the 22nd March 1993 decision and 29th May 1993 order of respondent National Labor Relations Commission (NLRC) directing petitioner to pay private respondent Loreto Cecilio retirement pay in the amount of P61,500.00. Private respondent was first employed by petitioner in August of 1949. After working continuously with the company for forty one (41) years, private respondent manifested, on 03 September 1990, her intention to retire from work by filing with petitioner a "Claim for Retirement Pay." On 15 September 1990, petitioner wrote private respondent, informing her that it was in no financial position to give her any retirement benefit apart from the retirement pay she was already receiving from the Social Security System ("SSS"). Nonetheless, she was offered a house and lot located in San Jose, del Monte, Bulacan, in accordance with a "plan" which was then still being conceived by the company president for retiring employees. The offer did not materialize, nor did the proposed company plan come into being, for one reason or another. In the instant petition, Oro Enterprises ascribes grave abuse of discretion on the part of the NLRC in applying R.A. No. 7641. Petitioner argues that the law, which became effective only on 07 January 1993, cannot be given any such retroactive effect as to cover private respondent who, at the age of 65 years, retired from employment with petitioner on 03 September 1990. Issue: Whether or not R.A. 7641 can favorably apply to private respondent's case? Held: RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer — can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started.

it in his well-known definition of social justice in Calalang v. Williams, decided the same year. Thus: "Social justice is "neither communism, nor despositism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the component elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex." The present Civil Code, which took effect on August 13, 1950, has a chapter on labor contracts, the first article of which recognizes that the relations between capital and labor "are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good." Given the above findings, which must be accorded due respect, we cannot see our way clear to attributing to NLRC grave abuse of discretion in concluding thereby that private respondent's claim for retirement benefits should accordingly be held to fall within the ambit of Republic Act No. 7641. Grave abuse of discretion, albeit an elastic phrase, has always been understood as a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, such as, to exemplify, "where the power is exercised in an arbitrary or despotic manner. x-------------------------------------------------x COVERAGE The retirement pay law applies to private sector employees. It covers either full-time or part-time employees, regular or non-regular. It does not cover government employees and employees or retail, service and agricultural establishments or operations that regularly employ not more than ten (10) employees. x--------------------------------------------------x CONDITIONS FOR ENTITLEMENT Please refer to the case above >>> Brion vs South Philippine Union Mission of the Seventh Day of Adventist Church. x--------------------------------------------------x TWO KINDS OF RETIREMENT 1. 2.

Compulsory Optional

G.R. No. 120802 June 17, 1997

JOSE T. CAPILI, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, and UNIVERSITY OF MINDANAO, respondents. Facts: Petitioner Jose T. Capili, Jr., was employed by private respondent University of Mindanao (hereafter, UM) as a college instructor in November 1982. On 2 July 1993, the private respondent informed the petitioner that under the law and UM's retirement program he would be eligible for retirement when he would reach the age of 60 years on 18 August 1993. In his answer of 5 August 1993, the petitioner informed UM that pursuant to Section 4, Rule II, Book VI of the Rules Implementing the Labor Code, the that he was not opting to retire but would continue to serve until he reaches the compulsory retirement age of 65. In its reply of 10 August 1993 to the petitioner, UM reiterated its position that under the university's retirement plan, it could retire him. It argued that under Section 4 cited by the petitioner, the employee has the option only in the absence of a retirement plan. Perceiving the school's insistence as constructive dismissal the petitioner filed a complaint1 for illegal dismissal. He sought his reinstatement to his former position without loss of seniority rights with full back wages, wage differential, 13th month differential, moral and exemplary damages, and attorney's fees. 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. He further contended that Policy Instruction No. 25, issued on 1 June 1977, was abrogated by Republic Act No. 7641, which took effect on 7 January 1993; and that pursuant to the new Rule II, Book VI of the Omnibus Rules Implementing the Labor Code, which also took effect on 7 January 1993, he has the option whether or not to retire upon attaining the age of 60 years. Issues: 1. Whether an instructor of a private educational institution may be compelled to retire at the age of sixty (60) years. 2. Whether his subsequent acceptance of retirement benefits would estop him from pursuing his complaint questioning the validity of his forced retirement. Held: (1) No. (2) Yes. The applicable law on the matter is Article 287 of the Labor Code of the Philippines, as amended by R.A. No. 7641, which took effect on 7 January 1993. 17 As amended, the Article reads as follows: Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining agreement and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee. The option to retire at age 60 could be exercised by either the employee or the employer for private educational institutions. This power of the employer no longer exists under R.A. No. 7641, which unequivocally provides that the option to retire upon reaching the age of 60 years or more but not beyond 65 is the exclusive prerogative of the employee if there is no provision on retirement in a collective bargaining agreement or any other agreement or if the employer has no retirement plan. Nothing could be clearer from the provisions of the Plan than that it is not applicable to all employees of UM and its associated enterprises. It applies only to those who opted to become members thereof. Contracts take effect only between the parties thereto.

By his acceptance of retirement benefits the petitioner is deemed to have opted to retire under the third paragraph of Article 287 of the Labor Code, as amended by R.A. No. 7641. Thereunder he could choose to retire upon reaching the age of 60 years, provided it is before reaching 65 years, which is the compulsory age of retirement. Also worth noting is his statement that he "had long and unjustly been denied of his retirement benefits since August 18, 1993." Elsewise stated, he was entitled to retirement benefits as early as 18 August 1993

but was denied thereof without justifiable reason. This could only mean that he has already acceded to his retirement, effective on such date — when he reached the age of 60 years. WHEREFORE, the 31 March 1995 and 31 May 1995 Resolutions of the National Labor Relations Commission in NLRC CA No. M-002096-94 are AFFIRMED subject to the modification that the petitioner is hereby declared to be not covered by respondent University of Mindanao's Retirement Plan but is, nevertheless, deemed to have opted to retire when he reached the age of sixty years, pursuant to Article 287 of the Labor Code, as amended by R.A. No. 7641. x----------------------------------x

G.R. No. 118743 October 12, 1998 ERNESTO E. MARTINEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, GMCR, INC. (Formerly GLOBE MACKAY CABLE & RADIO CORP.), and MARK ANTHONY JAVIER, respondents. Facts: That on June 10, 1977, respondent GMCR, Inc. employed petitioner as assistant credit and collection manager. At the inception of petitioner's employment, respondent company made it clear that employees who were not eligible for membership in the bargaining unit and, therefore, not entitled to the benefits under the collective bargaining agreement, would be paid benefits which were at least equivalent to, if not higher than, those provided in the collective bargaining agreement. On September 22, 1981, respondent company promoted petitioner to credit and collection manager, a position he held until the day of his retirement. In the course of his employment, petitioner received annual salary increases based on merit and/or performance. Although the annual salary increases were not given on the exact due dates, they were retroactively applied to the start of the evaluation period. However, much to his surprise, petitioner received no salary increase for the period immediately prior to his retirement. Petitioner applied for optional retirement benefits under the collective bargaining agreement. He stated that since he would have been in the service of the company for fifteen years on June 10, 1992, he wished to retire effective July 16, 1992, on which date "the long term sick leave availment as per advice by the company's physician shall have expired. Issues: (1) Whether petitioner, who is a managerial employee, can claim retirement benefits under the collective bargaining agreement (2) Whether petitioner is barred from instituting this action on the ground of estoppel, having signed a document entitled "Release, Waiver and Quitclaim" in favor of respondent company.

Held: (1) Yes. Accordingly, managerial employees cannot, in the absence of an agreement to the contrary, be allowed to share in the concessions obtained by the labor union through collective negotiation. Otherwise, they would be exposed to the temptation of colluding with the union during the negotiations to the detriment of the employer. However, there is nothing to prevent the employer from granting benefits to managerial employees equal to or higher than those afforded to union members. There can be no conflict of interest where the employer himself voluntarily agrees to grant such benefits to managerial employees. In the case at bar, at the beginning of petitioner's employment, he was told that those who are not covered by the CBA would nevertheless be entitled to benefits which would be, if not higher, at least equivalent to those provided in the CBA. That private respondents made such a promise to petitioner is not denied by them. Thus, respondent company's agreement to extend the benefits of the CBA to petitioner constitutes the "applicable employment contract" under this provision of the Labor Code, pursuant to which petitioner may claim retirement benefits. (2) No. This document is an invalid waiver and cannot bar petitioner from bringing the present action. Unlike petitioner's waiver of the original date of his retirement, the consideration for which is the advance on his retirement benefits, the "Release, Waiver and Quitclaim" does not purport to have been made by petitioner for valuable consideration. Petitioner was, as a matter of right, entitled to his retirement benefits. Private respondents cannot condition their release to a quitclaim executed by petitioner.

The Secretary issued the assailed order upholding PALs action of unilaterally retiring Captain Collantes and recognizing the same as a valid exercise of its option under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. The Secretary further ordered that the basis of the computation of Captain Collantes retirement benefits should be Article 287 of the Labor Code (as amended by Republic Act No. 7641) and not Section 2, Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in the exercise of its option to retire pilots, PAL should first consult the pilot concerned before implementing his retirement. Issue: Whether petitioner should consult the pilot concerned before exercising its option to retire pilots Held: No. Surely, the requirement to consult the pilots prior to their retirement defeats the exercise by management of its option to retire the said employees. It gives the pilot concerned an undue prerogative to assail the decision of management. Due process only requires that notice be given to the pilot of petitioners decision to retire him. Hence, the Secretary of Labor overstepped the boundaries of reason and fairness when he imposed on petitioner the additional requirement of consulting each pilot prior to retiring him. Furthermore, when the Secretary of Labor and Employment imposed the added requirement that petitioner should consult its pilots prior to retirement, he resolved a question which was outside of the issues raised, thereby depriving petitioner an opportunity to be heard on this point. x----------------------------------x

x------------------------------------x EMPLOYER’S OPTION

G.R. No. 95940 July 24, 1996

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

PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent. Facts: The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and respondent Airline Pilots Association of the Philippines (ALPAP), the exclusive bargaining representative of all commercial airline pilots of petitioner, stemmed from petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. Contending, inter alia, that the retirement of Captain Collantes constituted illegal dismissal and union busting, ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE). Pursuant to Article 263 (g) of the Labor Code, the Secretary of the DOLE (hereafter referred to as Secretary) assumed jurisdiction over the labor dispute.

PANTRANCO NORTH EXPRESS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and URBANO SUÑIGA, respondents. Facts: 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 employ until August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years' service. The basis of his retirement was the compulsory retirement provision of the collective bargaining agreement between the petitioner and the aforenamed union. On February 15, 1990, private respondent filed a complaint4 for illegal dismissal against petitioner with the Sub-Regional Arbitration Branch of the respondent Commission in Dagupan City. The complaint was consolidated with two other cases of illegal dismissal5 having similar facts and issues, filed by the other employees, non-union members.

Issue: Is a Collective Bargaining Agreement provision allowing compulsory retirement before age 60 but after twenty five years of service legal and enforceable? Who has jurisdiction over a case involving such a question — the labor arbiter or arbitrators authorized by such CBA?

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.

Held: LA has jurisdiction. Applying the case of Sanyo Philippines, this Court ruled: In the instant case, both the union and the company are united or have come to an agreement regarding the dismissal of private respondents. No grievance between them exists which could be brought to a grievance machinery. The problem or dispute in the present case is between the union and the company on the one hand and some union and non-union members who were dismissed, on the other hand. The dispute has to be settled before an impartial body. The grievance machinery with members designated by the union and the company cannot be expected to be impartial against the dismissed employees. Due process demands that the dismissed workers grievances be ventilated before an impartial body. Since there has already been an actual termination, the matter falls within the jurisdiction of the Labor Arbiter. Applying the same rationale to the case at the bar, it cannot be said that the "dispute" is between the union and petitioner company because both have previously agreed upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his own who questioned the compulsory retirement. Thus, the case is properly denominated as a "termination dispute" which comes under the jurisdiction of labor arbiters.

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.

We agree with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for early retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a reward for services rendered since it enables an employee to reap the fruits of his labor — particularly retirement benefits, whether lump-sum or otherwise — at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer. As a matter of fact, one of the advantages of early retirement is that the corresponding retirement benefits, usually consisting of a substantial cash windfall, can early on be put to productive and profitable uses by way of income-generating investments, thereby affording a more significant measure of financial security and independence for the retiree who, up till then, had to contend with life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBA's with such early retirement provisions. And the same cannot be considered a diminution of employment benefits.

Facts: Progressive Development Corporation (PDC) is a corporation organized and existing under the laws of the Philippines and its co-petitioners Judy A. Roxas and Dante P. Verayo are its Senior Vice President and former Manager of its Human Resources Division, respectively.

x-------------------------x G.R. No. 138826

October 30, 2000

PROGRESSIVE DEVELOPMENT CORPORATION and/or MRS. JUDY A. ROXAS and DANTE P. VERAYO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, RHOLANDA ANDRES and ROY ROMANO, respondents.

In 1980 PDC implemented its Employees' Non-Contributory Retirement Plan (The Plan) which took effect on 1 April 1980. On 28 November 1994 PDC notified its employees who had rendered more than twenty (20) years of service in the Company of its decision to retire them effective 31 December 1994. On 7 December 1994, Jose Riego and private respondent Rholanda Andres, two (2) of those who were retired, filed a complaint for illegal retirement and unfair labor practices against petitioners.

It is also further argued that, being a union member, private respondent is bound by the CBA because its terms and conditions constitute the law between the parties. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.

Private respondent Andres was Chairman of the Board of Directors of PDW-LIKHA, a union of rank-and-file employees of PDC, while private respondent Romano was a member of the union. They contended that their retirement from PDC was done by the latter as a retaliatory measure for their union activities. They assailed the validity of The Plan under which they were retired claiming lack of knowledge thereof absent any collective bargaining agreement and any applicable employment contract.

A CBA incorporates the agreement reached after negotiations between employer and bargaining agent with respect to terms and conditions of employment. A CBA is not an ordinary contract. "(A)s a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations between labor and capital, (it) is not merely contractual in nature but impressed with public interest, thus it

Issue: Whether private respondents were illegally retired rests upon the determination of whether the retirement program of petitioner company is valid.

Held: The retirement plan under which private respondents were retired is valid for it forms part of the employment contract of petitioner company. Director Augusto G. Sanchez of the Bureau of Working Conditions of the DOLE recognized and affirmed the validity of The Plan. Thus Considering therefore the fact that your client's retirement plan now forms part of the employment contract since it is made known to the employees and accepted by them, and such plan has an express provision that the company has the choice to retire an employee regardless of age, with twenty (20) years of service, said policy is within the bounds contemplated by the Labor Code. Moreover, the manner of computation of retirement benefits depends on the stipulation provided in the company retirement plan This pronouncement made by no less than the DOLE must be given substantial weight, as what the Labor Arbiter did, in the absence of any contrary evidence. Moreover, the undisputed fact that a number of employees of petitioner company had availed of The Plan since its effectivity only confirms that The Plan has already been part of the employment contract of petitioner company for a long time. Private respondents, particularly Andres, may not now feign ignorance of The Plan considering that she was the chairman of the union of rank-and-file employees of petitioner company and, as such, was considered to be familiar with the policies of the company. x-------------------------------------------x G.R. No. 151021

May 4, 2006

CAINTA CATHOLIC SCHOOL and MSGR. MARIANO T. BALBAGO, Petitioners, vs. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION (CCSEU), Respondent. Facts: On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School (School) and the Cainta Catholic School Employees Union (Union) effective 1 January 1986 to 31 May 1989.

On 8 November 1993, the Union struck and picketed the School’s entrances. On 27 July 1994, the Union filed a complaint for unfair labor practice before the NLRC docketed as NLRC Case No. RAB-IV-7-6827-94-R, entitled, "Cainta Catholic School Employees Union v. Cainta Catholic School, et. al.," before Arbitration Branch IV. Upon motion, then Labor Arbiter Oswald Lorenzo ordered the consolidation of this unfair labor practice case with the above-certified case. Issue: (1) whether the retirement of Llagas and Javier is legal; (2) whether the School is guilty of unfair labor practice; and (3) whether the strike is legal. Held: Jurisprudence has answered the question in the affirmative a number of times and our duty calls for the application of the principle of stare decisis. As a consequence, we grant the petition and reverse the Court of Appeals. We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier, arising as it did from a management prerogative granted by the mutually-negotiated CBA between the School and the Union. Pursuant to the existing CBA, the School has the option to retire an employee upon reaching the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School, the last three (3) years of which must be continuous. Retirement is a different specie of termination of employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. While in all three cases, the employee to be terminated may be unwilling to part from service, there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former.

Article 287 of the Labor Code, as amended, governs retirement of employees, stating: On 15 October 1993, the School retired Llagas and Javier, who had rendered more than twenty (20) years of continuous service, pursuant to Section 2, Article X of the CBA, to wit: An employee may be retired, either upon application by the employee himself or by the decision of the Director of the School, upon reaching the age of sixty (60) or after having rendered at least twenty (20) years of service to the School the last three (3) years of which must be continuous. Three (3) days later, the Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-93.

Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee’s retirement benefits under any collective bargaining agreement and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not alleged that either Javier or Llagas had reached the compulsory retirement age of 60 years, but instead that they had rendered at least 20 years of service in the School, the last three (3) years continuous. Clearly, the CBA provision allows the employee to be retired by the School even before reaching the age of 60, provided that he/she had rendered 20 years of service. Would such a stipulation be valid? Jurisprudence affirms the position of the School. By their acceptance of the CBA, the Union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management. The questioned retirement provisions cannot be deemed as an imposition foisted on the Union, which very well had the right to have refused to agree to allowing management to retire retire employees with at least 20 years of service.

determination of just or authorized cause is rarely a simplistic question, but involves facts highly prone to dispute and subjective interpretation. On the other hand, the exercise by management of its retirement prerogative is less susceptible to dubitability as to the question whether an employee could be validly retired. The only factual matter to consider then is whether the employee concerned had attained the requisite age or number of years in service pursuant to the CBA or employment agreement, or if none, pursuant to Article 287 of the Labor Code. In fact, the question of the amount of retirement benefits is more likely to be questioned than the retirement itself. Evidently, it more clearly emerges in the case of retirement that management would anyway have the right to retire an employee, no matter the degree of involvement of said employee in union activities. We can thus can comfortably uphold the principle, as reiterated in Philippine Airlines, that the exercise by the employer of a valid and duly established prerogative to retire an employee does not constitute unfair labor practice. x---------------------------------x NEW RETIREMENT LAW GIVEN RETROACTIVE EFFECT

It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. Certainly, a CBA provision or employment contract that would allow management to subvert security of tenure and allow it to unilaterally "retire" employees after one month of service cannot be upheld. Neither will the Court sustain a retirement clause that entitles the retiring employee to benefits less than what is guaranteed under Article 287 of the Labor Code, pursuant to the provision’s express proviso thereto in the provision.

Please refer to the case of Oro Enterprise, Inc. vs NLRC x----------------------------------x AMOUNT OF RETIREMENT PAY

[G.R. No. 143686. January 15, 2002] The law and this Court frowns upon unfair labor practices by management, including so-called unionbusting. Such illegal practices will not be sustained by the Court, even if guised under ostensibly legal premises. But with respect to an active unionized employee who claims having lost his/her job for union activities, there are different considerations presented if the termination is justified under just or authorized cause under the Labor Code; and if separation from service is effected through the exercise of a duly accorded management prerogative to retire an employee. There is perhaps a greater imperative to recognize the management prerogative on retirement than the prerogative to dismiss employees for just or authorized causes. For one, there is a greater subjectivity, not to mention factual dispute, attached to the concepts of just or authorized cause than retirement which normally contemplates merely the attainment of a certain age or a certain number of years in the service. It would be easier for management desirous to eliminate pesky union members to abuse the prerogative of termination for such purpose since the

PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent. Facts: Please refer to the digest above. SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal retirement date may retire either at his option or at the option of the Company and when so retired he shall be entitled either (a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to such termination pay benefits to which he may be entitled under existing laws, whichever is the greater amount.

Held: The PAL Pilots Retirement Benefit Plan[11] is a retirement fund raised from contributions exclusively from petitioner of amounts equivalent to 20% of each pilots gross monthly pay.Upon retirement, each pilot stands to receive the full amount of the contribution. In sum, therefore, the pilot gets an amount equivalent to 240% of his gross monthly income for every year of service he rendered to petitioner. This is in addition to the amount of not less than P100,000.00 that he shall receive under the 1967 Retirement Plan. On the other hand, Article 287 of the Labor Code: Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: provided, however, That an employees retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared as the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. xxx xxx xxx. In short, the retirement benefits that a pilot would get under the provisions of the above-quoted Article 287 of the Labor Code are less than those that he would get under the applicable retirement plans of petitioner. x-------------------------------x RETIREMENT BENEFITS ASIDE FROM SEPARATION PAY G.R. No. 74007

July 31, 1987

UNIVERSITY OF THE EAST, petitioner, vs. HON. MINISTER OF LABOR AND U.E. FACULTY ASSOCIATION, respondents. Facts: On April 23, 1983 and May 4, 1983, the then president of the University of the East (UE) announced the phase-out of the College of Secretarial Education and the High School Department respectively, starting with the school year 1983-1984 on the grounds of lack of economic viability and financial losses. The respondent UE Faculty Association opposed the phase-out, contending that such action contravened the law because it constitutes union busting. The association also emphasized the alleged failure of the petitioner to present evidence substantiating the alleged losses. The parties tried to find a solution for the problems attending the phase-out but were unsuccessful. Hence, the private respondent filed a notice of strike with the Bureau of Labor Relations (BLR) on August 4, 1983, The BLR conducted several conciliation proceedings but when no amicable settlement was reached by the parties, the respondent Minister issued an order assuming jurisdiction over the case and directing the BLR to receive evidence in connection with the dispute. Finally, the respondent Minister ruled that the accrued benefits under the collective bargaining agreement (CBA) are not affected by the phase-out of the two departments. Hence, the petitioner is liable for the payment of separation pay in addition to the payment of retirement benefits to those entitled under the CBA. Petitioner whether or not the respondent Minister of Labor and Employment committed grave abuse of discretion amounting to lack of jurisdiction in awarding both retirement benefits and separation pay to the faculty members affected by the phase-out. The public respondent argues that the faculty members affected by the phase-out were awarded separation pay because the petitioner failed to show that their separation from employment was due to a valid or authorized cause; while the award for retirement benefits was by virtue of the provisions of the CBA, regardless of the cause of separation. Issue: Whether or not the respondent Minister of Labor and Employment committed grave abuse of discretion amounting to lack of jurisdiction in awarding both retirement benefits and separation pay to the faculty members affected by the phase-out.

Held: Yes. Under Article 284 of the Labor Code, the termination of employment of any employee arising from retrenchment to prevent losses shall entitle the employee affected thereby to separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. (Columbia Development Corporation v. Minister of Labor and Employment, 146 SCRA 421, 429).

The respondent Minister found that the petitioner failed to present evidence as to the university's actual losses and what caused them. It, therefore, failed to satisfy the burden under Article 278(b) of the Labor Code of proving that the termination of employees was for a valid or authorized cause, in this case to prevent losses. No evidence was presented to show that it was the operation of the two departments which resulted in financial losses. A complete statement of the university's finances was not submitted. The Minister of Labor further ruled that the private respondents concerned were entitled to separation pay and one-month pay in lieu of the required notice which the petitioner likewise failed to give. The employees were thus deprived of the opportunity to look for other employment.1avvphi1 The petitioner, however, takes exception to the respondent Minister's order that in addition to separation benefits, retirement benefits may also be awarded to the private respondent pursuant to the CBA. It maintains that the award of separation pay pursuant to the Termination Pay Law necessarily excludes retirement benefits. If there is no provision contained in the collective bargaining agreement to the effect that benefits received under the Termination Pay Law shall preclude the employee from receiving other benefits from the agreement, then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute. In the case at bar, there is no such provision. We cannot presume that it forms an implicit part of either the CBA or the law. Separation pay arising from a forced termination of employment and benefits given as a contractual right due to many years of faithful service are not necessarily antagonistic to each other, especially where there are strong equitable considerations as in this case. Clearly, the only situation contemplated in the CBA wherein an employee shall be precluded from receiving retirement benefits is when said employee is not separated from service but transferred instead from one college or department to another. There is no provision to the effect that teachers who are forcibly dismissed are not entitled to retirement benefits if the MOLE awards them separation pay. Furthermore, since the above provision has become in effect part of the petitioner's policy, the same should be enforced separately from the provisions of the Termination Pay Law. x--------------------------x G.R. No. 87653 February 11, 1992 CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A. GASPAN and NICARDO P. BLANQUISCO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND OTIS ELEVATOR COMPANY, respondents. Facts: The petitioners' services were terminated on the ground of retrenchment, and they received separation pay double that required by the Labor Code. Thereafter, they demanded retirement benefits,

invoking the Retirement Plan of the respondent company which they said was contractual rather than statutory. The petitioners were employees of private respondent Otis Elevator Company when they were informed of the termination of their employment in line with the need of the company "to streamline its operations, consolidate certain functions, reduce its manpower and cut non-essential spending."

Accordingly, petitioners were paid their separation pay based on Section 4, Article VII of the Collective Bargaining Agreement between the company and its employees providing thus: All employees in the bargaining unit separated without cause shall be granted separation pay of not less than one (1) month's latest basic rate for every year of service subject to the existing provisions of the Retirement Plan. The respondent company argued that separation pay and retirement benefits were mutually exclusive; hence, the petitioners could no longer claim the latter after having received the former. Issue: Having received the separation pay, were the petitioners still entitled to the retirement benefits?

Held: Yes. It is important at the outset to note the distinction between separation pay and retirement benefits. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code, which include retrenchment, and is computed at at least one month salary or at the rate of one-half month salary for every year of service, whichever is higher. We have held that it is a statutory right designed to provide the employee with the wherewithal during the period that he is looking for another employment Retirement benefits, where not mandated by law, may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. Retirement benefits are intended to help the employee enjoy the remaining years of his life, lessening the burden of worrying for his financial support, and are a form of reward for his loyalty and service to the employer. It is on the basis of these distinctions that the petitioners claim to be entitled not only to the separation pay they have already received but also to the retirement benefits provided for in the Retirement Plan of the respondent company. The petitioners are covered by the Retirement Plan because they have contributed to the retirement fund, have been separated by reason of the retrenchment, and have served the company for more than the prescribed minimum period of ten years.

In arriving at our conclusion, we are guided by the principle that any doubt concerning the rights of labor should be resolved in its favor, pursuant to the social justice policy. The Court feels that if the private respondent really intended to make the separation pay and the retirement benefits mutually exclusive, it should have sought inclusion of the corresponding provision in the Retirement Plan and the Collective Bargaining Agreement so as to remove all possible ambiguity regarding this matter. x--------------------------------x

Surprisingly, petitioners filed with the Labor Arbiter a complaint for payment of retirement benefits, damages and attorney’s fees against respondent, docketed as NLRC NCR Case No. 00-06-05153-98. They alleged that what each received was a separation pay, not retirement benefits. Issue: Whether the grant of ‘retirement benefits’ to petitioners as shown in their quitclaims precludes their availment of retirement benefits pursuant to their Collective Bargaining Agreement. Held: Yes. While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited, however, such interpretation cannot be made in this case in light of the clear lack of consensual and statutory basis of the grant of retirement benefits to petitioner.

G.R. No. 156317. April 26, 2005 CARLOS F. SALOMON, STEPHEN L. BATHAN, NICOLAS E. CAMARA, EMMANUEL B. DELA TORRE, LEONILO C. DONATO, SEGUNDO E. FERRER, JESUS L. GUELA, JR., AMADO P. LIONGSON, DEOGRACIAS C. MANALANZAN, GERUNDIO A. NATANAUAN, RICARDO D. PARZA, RICARDO R. SAMANIEGO, VALENTIN R. URREA, JR., FRANCISCO H. VILLANUEVA, Petitioners, vs. ASSOCIATE OF INTERNATIONAL SHIPPING LINES, INC., Respondents. Facts: The Association of International Shipping Lines, Inc., respondent, is a corporation engaged in the principal business of shipping and container and/or cargo services. As a result of a decline in the volume of cargo measuring activities and shipping transactions, respondent suffered substantial financial losses.

As prescribed by the parties’ CBA, are entitled only to either the separation pay, if they are terminated for cause, or optional retirement benefits, if they rendered at least 15 years of continuous services. Here, petitioners were separated from the service for cause. Consequently, pursuant to the CBA, what each actually received is a separation pay. Accordingly and considering their Releases and Quitclaims, they are no longer entitled to retirement benefits. It bears stressing that as held by the Labor Arbiter, the NLRC and the Court of Appeals, there is no provision in the parties’ CBA authorizing the grant to petitioners of retirement benefits in addition to their retrenchment pay; and that there is no indication that they were forced by respondent to sign the Releases and Quitclaims.

With this development, respondent adopted an organizational streamlining program that resulted in the closure of its Measuring Department and retrenchment or termination from the service of seventeen (17) workers. Among them were Carlos F. Salomon, Stephen L. Bathan, Nicolas E. Camara, Emmanuel B. Dela Torre, Leonilo C. Donato, Segundo E. Ferrer, Jesus L. Guela, Jr., Amado P. Liongson, Deogracias C. Manalanzan, Gerundio A. Natanauan, Ricardo D. Parza, Ricardo R. Samaniego, Jr., Valentin R. Urrea, Jr., and Francisco H. Villanueva, herein petitioners who occupied booking coordinator and measurer positions.

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

Aggrieved, petitioners filed with the National Conciliation and Mediation Board (NCMB) a complaint for illegal dismissal and payment of retirement benefits against respondent.

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

During the conciliation proceedings, respondent paid petitioners their retirement pay at the rate of 1 month salary per year of service. Additionally, they received their leave credits, and pro-rated 13th month pay. And after having been paid their retirement pay, they executed and signed separate Releases and Quitclaims. Consequently, the above case was considered closed and terminated.

UNJUSTIFIED DENIAL OF RETIREMENT BENEFITS G.R. No. 80502 May 7, 1990

Facts: Since 1966, private respondent had been employed by petitioner company then known as E. Razon, Inc. Sometime in 1979, Alfredo Romualdez, the youngest brother of the then First Lady, Imelda R. Marcos, acquired control of E. Razon, Inc. and renamed it Metroport Services, Inc. On February 26, 1986, after the February Revolution, petitioners regained control of the company.

On February 28, 1986, because of failing health and having qualified for compulsory retirement at age 65, private respondent, then the company's chief accountant, submitted a letter request for retirement. Petitioners withheld action on said request pending completion of the audit of company books undertaken by the accounting firm of Sycip, Gorres and Velayo. In the course of such audit, petitioners discovered that the following books of account allegedly in the custody of private respondent as chief accountant were missing. As a consequence thereof, petitioner Enrique Razon, Jr. issued on March 19, 1986 a memorandum terminating the services of private respondent on the ground of loss of trust and confidence. NLRC rendered a decision in favor of Nicolas. Petitioners contend that the NLRC gravely abused its discretion when it sustained the grant of retirement benefits to private respondent and held Enrique Razon, Jr. solidarily liable with Metroport Services, Inc. for the payment thereof. It is the perception of petitioners that management is vested with discretion to approve or disapprove an employee's claim for retirement benefits. They anchor this view of Article II (B) of the Retirement Plan which states that "(a)ny official and employee who is 65 years old, and upon discretion of management, shall be qualified or subject to compulsory retirement from the company with benefits as provided in this plan." Thus, when petitioners discovered the loss of vital books of account while in private respondent's custody and found him "guilty of breach of trust as chief accountant", they claim to have a valid ground to terminate private respondent's services and as a consequence to deny his claim for retirement pay. Issue: Whether the termination of private respondent's services is a valid ground to deny his claim for retirement pay.

Held: No. It must be stressed that the words "upon the discretion of management" are not synonymous with absolute or unlimited discretion. In other words, management discretion may not be exercised arbitrarily or capriciously especially with regards to the implementation of the retirement plan. We believe that upon acceptance of employment, a contractual relationship was established giving private respondent an enforceable vested interest in the retirement fund. Verily, the retirement scheme became an integral part of his employment package and the benefits to be derived therefrom constituted as it were a continuing consideration for services rendered, as well as an effective inducement for remaining with the firm. Having rendered twenty years of service with Metroport Services, Inc., it can be said that private respondent has already acquired a vested right to the retirement fund, a right which can only be withheld upon a clear showing of good and compelling reasons.

In the case at bar, petitioners' rejection of the subject claim cannot be justifiably sustained. The reported loss of confidence was due to the disappearance of certain books of account which petitioners directly attributed to private respondent. Petitioners were convinced that simply because private respondent could not produce the needed books on demand, he was no longer worthy of their trust and confidence. They abruptly dismissed him without giving him a chance to explain his side. In short, there was not the slightest pretense at fair play. Had petitioners been less hasty and conducted an investigation, they would have found out that on November 30, 1982, a fire gutted the western portion of petitioners' warehouse in front of Pier 5, destroying records, books, vouchers and general ledgers. The circumstances surrounding the fire were duly investigated and reported to the Commissioner of Internal Revenue. But whatever documents might have been salvaged from that conflagration were subsequently lost during the flood on July 25, 1985 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. x------------------------------------x EXTENSION OF SERVICE OF RETIREE

G.R. No. 89885 August 6, 1990 UST FACULTY UNION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, UNIVERSITY OF SANTO TOMAS NORBERTO CASTILLO, NORMA LERMA, TERESITA CENDANA and DIONISIO CABEZON respondents. Facts: On May 17, 1986, the UST Faculty Union (Union for short) and the University of Sto. Tomas (UST for short) entered into a collective bargaining agreement. On July 6, 1986, Tranquilina J. Mariño, a faculty member of the Faculty of Pharmacy, reached the retirement age of 65. She was allowed to continue her teaching stint until the end of schoolyear 1986-1987 and was further-allowed an extension of tenure for the schoolyear 1987-1988. However, she was denied extension of tenure for the schoolyear 1988-1989. In the same school year (1988-1989), Professor Francisco Bonifacio of the College of Education was denied extension of tenure after he reached the age of 65. Several faculty members of the Department of Civil Law were allegedly similarly denied extension of tenure. A complaint for unfair labor practice was lodged by the Union with the arbitration branch of the public respondent National Labor Relations Commission (NLRC). A decision was rendered by Labor Arbiter Bienvenido V. Hermogenes on December 15, 1988 dismissing the case for lack of merit. Issue: Whether or not a union has a right to intervene in the extension of the service of a retired employee.

Held: No. A reading of the aforesaid Section 1, Article XII of the Collective Bargaining Agreement shows the following: (1) that the compulsory age for retirement for a faculty member is 65 years; (2) upon having reached the age of 65 years they may be granted an extension of tenure unless they are manifestly inefficient or incompetent or are otherwise removed for cause; (3) that they shall continue to enjoy the usual benefits and privileges until the extension of their tenure is validly denied by the university in consultation with the Union or until they are validly separated from the service; and (4) that the period of extended service shall not be credited for purposes of retirement. It is important to state that upon the compulsory retirement of an employee or official in the public or private service his employment is deemed terminated. The matter of extension of service of such employee or official is addressed to the sound discretion of the employer. It is a privilege only the employer can grant. Under the foregoing rules, for a retiree to be granted extension, he must apply in writing to the Dean of the college to which he or she is affiliated. His application is subject to the decision of the Dean and Faculty Council en banc, a majority of the vote of which is required for a recommendation of the extension of the applicant to the Council of Regents and Academic Senate. The Council of Regents and Academic Senate will then meet separately and make the decision subject to the approval of the Father Rector. When the decision is for a denial of the extension of tenure of a retiree the decision should be made in consultation with the Union. However, such consultation is not necessary when the retiree is validly separated from the service. The Court agrees with the position of the UST that the required consultation with the Union as provided in the CBA should be interpreted to mean as one which is advisory in character and as such, the opinion of the Union is not binding on the UST authorities. The final say as to the denial of extension of a retiree still rests with the employer, the UST. Moreover, it appears that there are two (2) reasons why extension was not granted to Prof. Mariño namely: (1) she did not apply for an extension so no recommendation for her extension could have been granted; and (2) the subjects assigned to her do not require specialized knowledge and may be adequately handled by non-extendee regular faculty members.