LABOR RELATIONS RETIREMENT CASES

[G.R. No. 143686. January 15, 2002] PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent.

On the other hand, Article 287 of the Labor Code only mandates the employers, in the absence of a retirement plan to pay 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.

FACTS Petitioner PAL unilaterally retired airline pilot Captain Albino Collantes under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. Contending 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 assumed jurisdiction over the labor dispute. On June 13, 1998, the Secretary issued the assailed order upholding PAL’s 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 1. 2.

Whether or not the Article 287 of the Labor Code should be the basis of the computation of Capt. Collantes’ retirement benefits. Whether or not the Secretary can compel the company to consult the pilot concerned before retirement is implemented.

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. HELD IN #2 The SC held that such additional requirement would constitute as amendment to the PAL-ALPAP Retirement Plan. The option of an employer to retire its employees is recognized as valid. 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. There should be no unfair labor practice committed by management if the retirement of private respondents were made in accord with the agreed option. 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. Petition is granted.

HELD IN #1 The SC held that it is the PAL-ALPAP Retirement Plan that should be the basis of the computation of retirement benefits.

[G.R. No. 151021 May 4, 2006] CAINTA CATHOLIC SCHOOL and MSGR. MARIANO T. BALBAGO, Petitioners, vs. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION (CCSEU), Respondent.

The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states: FACTS SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a pilot for PAL or has flown 20,000 hours for PAL shall be eligible for normal retirement. The normal retirement date is the date on which he completes twenty (20) years of service, or on which he logs his 20,000 hours as a pilot for PAL. The member who retires on his normal retirement shall be entitled to either (a) a lump sum payment of P100,000.00 or (b) to such termination pay benefits to which he may be entitled to under existing laws, whichever is the greater amount. SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal retirement date may retire either at his option or at the option of the Company and when so retired he shall be entitled either (a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to such termination pay benefits to which he may be entitled under existing laws, whichever is the greater amount. A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime of his life and at the peak of his career, compared to one who retires at the age of 60 years old. Based on this peculiar circumstance that PAL pilots are in, the parties provided for a special scheme of retirement different from that contemplated in the Labor Code. Conversely, the provisions of Article 287 of the 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 service. In any event, petitioner contends that its pilots who retire below the retirement age of 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement Plan but also an equity of the retirement fund under the PAL Pilots’ Retirement Benefit Plan, entered into between petitioner and respondent on May 30, 1972.

On 15 October 1993, petitioner school retired Llagas and Javier, President and Vice-president of respondent union, respectively, 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. Because of the foregoing, the union filed a Notice of Strike with the NCMB and later staged a strike and picketed in the school’s entrance. Later, the union filed a complaint for unfair labor practice against petitioner school before the NLRC.

The School avers that the retirement of Llagas and Javier was clearly in accordance with a specific right granted under the CBA. The School justifies its actions by invoking our rulings in Pantranco North Express, Inc. v. NLRC and Bulletin Publishing Corporation v. Sanchez that no unfair labor practice is committed by management if the retirement was made in accord with management prerogative or in case of voluntary retirement, upon approval of management. The Union, on the other hand, argues that the retirement of the two union officers is a mere subterfuge to bust the union. ISSUE Whether or not the retirement of Llagas and Javier is legal. HELD

The PAL Pilots’ Retirement Benefit Plan is a retirement fund raised from 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 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.

The SC held that the termination of employment of Llagas and Javier was valid, 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 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: 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. By their acceptance of the CBA, the Union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management. The questioned retirement provisions cannot be deemed as an imposition foisted on the Union, which very well had the right to have refused to agree to allowing management to retire retire employees with at least 20 years of service. It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. Certainly, a CBA provision or employment contract that would allow management to subvert security of tenure and allow it to unilaterally ―retire‖ employees after one month of service cannot be upheld. Neither will the Court sustain a retirement clause that entitles the retiring employee to benefits less than what is guaranteed under Article 287 of the Labor Code, pursuant to the provision’s express proviso thereto in the provision. Yet the CBA in the case at bar contains no such infirmities which must be stricken down. Twenty years is a more than ideal length of service an employee can render to one employer. Under ordinary contemplation, a CBA provision entitling an employee to retire after 20 years of service and accordingly collect retirement benefits is ―reward for services rendered since it enables an employee to reap the fruits of his labor — particularly retirement benefits, whether lump-sum or otherwise — at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer.‖ A CBA may validly accord management the prerogative to optionally retire an employee under the terms and conditions mutually agreed upon by management and the bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age. Petition is granted.

for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s retirement plan for its employees which provided that its members could be automatically retired ―upon reaching the age of 65 or after 35 years of uninterrupted service to the university.‖ Respondent required certain documents in connection with petitioner’s impending retirement. A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing ―company policy.‖ On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for ―termination of service with preliminary injunction and/or restraining order.‖ On November 18, 1993, respondent compulsorily retired petitioner. The labor arbiter rendered a decision finding respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full back wages. On appeal, the NLRC reversed the labor arbiter’s decision and dismissed the complaint. the CA affirmed the NLRC. Issue: Whether or not the respondent’s retirement plan imposing automatic retirement after 35 years of service contravenes the security of tenure clause in the 1987 Constitution and the Labor Code. Ruling: Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. The rules and regulations of the plan show that participation therein was not voluntary at all. Rule III of the plan, on membership, stated: SECTION 1 – MEMBERSHIP, All full-time Filipino employees of the University will automatically become members of the Plan, provided, however, that those who have retired from the University, even if rehired, are no longer eligible for membership in the Plan. A member who continues to serve the University cannot withdraw from the Plan. SECTION 2 – EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day a person is hired on a full-time basis by the University. SECTION 3 – TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shall be upon the death of the member, resignation or termination of employee’s contract by the University, or retirement from the University. Meanwhile, Rule IV, on contributions, stated: The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff. A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave without pay should pay his contributions to the Plan. However, a member, who has been on leave without pay should pay his contributions based on his salary plus the University’s contributions while on leave or the full amount within one month immediately after the date of his reinstatement. Provided[,] further that if a member has no sufficient source of income while on leave may pay within six months after his reinstatement.

Alpha Jaculbe vs. Silliman University G.R. No. 156934 March 16, 2007

It was through no voluntary act of her own that petitioner became a member of the plan. In fact, the only way she could have ceased to be a member thereof was if she stopped working for respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word ―shall‖ ineluctably pointed to the conclusion that employees had no choice but to contribute to the plan (even when they were on leave).

Facts: Sometime in 1958, petitioner began working for respondent’s university medical center as a nurse. In a letter in December 1992, respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year of service with the university and was due

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. The truth was that petitioner had no choice but to participate in the plan, given that the

only way she could refrain from doing so was to resign or lose her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of need instead of any genuine acquiescence to the employer. This was clearly just such an instance.

[G.R. No. 140960. January 20, 2003] LUDO & LUYM CORPORATION, petitioner, vs. FERDINAND SAORNIDO as voluntary arbitrator and LUDO EMPLOYEES UNION (LEU) representing 214 of its officers and members, respondents.

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

FACTS

R&E Transport, Inc. & Honorio Enriquez vs. Avelina Latag G.R. No. 155214 February 13, 2004 Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag. Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim. Ruling: The respondent is entitled to retirement benefits despite of the waiver of quitclaims. There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in computing those benefits. The findings of the NLRC that Pedro must be credited only with his service to R & E Transport, Inc., because the evidence shows that the aforementioned companies are two different entities. After a careful and painstaking review of the evidence on record, the court supports the NLRC's findings. As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away. Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least onehalf (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves The rules implementing the New Retirement Law similarly provide the abovementioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary. It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.

In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by LUDO. These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees of LUDO every time the latter needed additional manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of the rank-and-file employees. On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees, the amount of which vary according to the length of service rendered by the availing employee. Thereafter, the union requested LUDO to include in its members’ period of service the time during which they rendered arrastre services to LUDO through the CLAS so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.

Petitioner contends that the money claim in this case is barred by prescription. Respondents, for their part, aver that the three-year prescriptive period is reckoned only from the time the obligor declares his refusal to comply with his obligation in clear and unequivocal terms. In this case, respondents maintain that LUDO merely promised to review the company records in response to respondents’ demand for adjustment in the date of their regularization without making a categorical statement of refusal.

ISSUE Whether or not the claims of respondent union have already prescribed. HELD The SC held that the claims of respondent union have not prescribed. The cause of action accrues until the party obligated refuses to comply with his duty. Being warded off by promises, the workers not having decided to assert their rights, their causes of action had not accrued. Since the parties had continued their negotiations even after the matter was raised before the Grievance Procedure and the voluntary arbitration, the respondents had not refused to comply with their duty. They just wanted the complainants to present some proofs. The complainant’s cause of action had not therefore accrued yet. In fact, the respondents’ promised to correct their length of service and grant them the back CBA benefits if the complainants can prove they are entitled rendered the former in estoppel, barring them from raising the defense of laches or prescription. To hold otherwise would amount to rewarding the respondents for their duplicitous representation and abet them in a dishonest scheme against their workers. Petition is denied.

Accessories Specialist Inc., a.k.a. Arts 21 Corporation vs. Alabanza July 23, 2008 Nachura, J. Labor Law. Promissory estoppel may arise from the making of a promise, eventhough without consideration, if it was intended that the promise should be reliedupon, as in fact it was relied upon, and if a refusal to enforce it would virtuallysanction the perpetration of fraud or would result in other injustice. The principle of promissory estoppel is a recognized exception to the threeyear prescriptive periodenunciated in Article 291 of the Labor Code.Labor Law. The posting of a bond is indispensable to the perfection of an appeal incases involving monetary awards from the decision of the Labor Arbiter. The filing of the bond is not only mandatory but also a jurisdictional requirement that must becomplied with in order to confer jurisdiction upon the NLRC.

Facts: On September 27, 2002, respondent Alabanza filed a complaint againstpetitioners Arts 21 and Hashimoto for and in behalf of her husband for non-paymentof salaries, separation pay and 13th month pay.Respondent’s husband was the Vice-President, Manager and Director of Arts21 and had been with the company from 1975 to 1997. He was compelled by theowner, Hashimoto, to file his involuntary resignation on October 17, 1997 on theground that Arts 21 allegedly suffered losses. Respondent’s husband demandedpayment of his money claims upon resignation but was told that rank and fileemployees will be paid first and thus waited for his turn. Respondent’s husbandmade several demands but Arts 21 just kept on assuring him that he will be paid hismoney claims. Respondent’s husband died on August 5, 2002 with his claims stillunpaid.Petitioners invoke Art. 291 of the Labor Code and contend that respondent’shusband voluntarily resigned in October, 1997, thus the cause of action has alreadyprescribed since the case was filed in 2002 only, beyond the three-year-periodwithin which money claims should be filed. The Labor Arbiter rendered a decision ordering petitioner to pay respondentover P4M. Petitioners filed an appeal along with a motion to reduce bond, attachingreceipts for cash bond amounting to P290K and appeal fee for P170.00. The motionwas denied and petitioners were given 10 days within which to file the requiredbond. Petitioners filed a motion for reconsideration which the NLRC denied orderingthe dismissal of the appeal for non-perfection thereof due to non-compliance withthe bond requirement. The resolution became final and executory and a writ of execution was issued by the Labor Arbiter upon motion by respondent. Petitioners filed a petition for certiorari with the Court of Appeals praying for the issuance of a TRO and a writ of preliminary injunction. The petition was dismissed. Issue No. 1: WON the cause of action of respondent has already prescribed/ Held: NO. Ratio: Based on the findings of facts of the Labor Arbiter, it was petitioner Arts 21which was responsible for the delay in the institution of the complaint. Whenpetitioner’s husband filed his resignation he immediately asked for the payment of his money claims. However, the management of Arts 21 promised him that hewould be paid immediately after the claim of the rank-and-file employees had beenpaid. Jones relied on this representation. Promissory estoppel may arise from the making of a promise, even thoughwithout consideration, if it was intended that the promise should be relied upon, asin fact it was relied upon, and if a refusal to enforce it would virtually sanction theperpetration of fraud or would result in other injustice. The principle of promissoryestoppel is a recognized exception to the threeyear prescriptive period enunciatedin Article 291 of the Labor Code.In order to make out a claim of promissory estoppel, a party bears the burdenof establishing the following elements: (1) a promise was reasonably expected toinduce action or forbearance; (2) such promise did, in fact, induce such action orforbearance; and (3) the party suffered detriment as a result. All the requisites arepresent in this case. The Court, therefore, finds ample justification not to follow theprescriptive period imposed under Art. 291 of the Labor Code. Great injustice will becommitted if respondent’s claims will be brushed aside on a mere technicality,especially when it was petitioner’s own action that prevented respondent frominterposing the claims within the required period. Issue No. 2: WON the posting of the complete amount of the bond in an appeal from thedecision of the Labor Arbiter to the NLRC is an indispensable requirement for theperfection of the appeal despite the filing of a motion to reduce the amount of theappeal bond. Held: YES. Ratio: Article 223 of the Labor Code mandates that in case of a judgment of theLabor Arbiter involving a monetary award, an appeal by the employer to the NLRCmay be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission, in the amountequivalent to the monetary award in the judgment appealed from. The posting of a bond is indispensable to the perfection of an appeal in casesinvolving monetary awards from the decision of the Labor Arbiter. The filing of the bond is not only mandatory but also a jurisdictionalrequirement that must be complied with in order to confer jurisdiction upon theNLRC. Non-compliance therewith renders the decision of the Labor Arbiter final andexecutory. This requirement is intended to assure the workers that if they prevail inthe case, they will receive the money judgment in their favour upon the dismissal of the employer’s appeal. It is

intended to discourage employers from using an appealto delay or evade their obligation to satisfy their employees’ just and lawful claims. The failure of petitioners to comply with the requirement of posting a bondequivalent in amount to the monetary award is fatal to their appeal. Section 6 of theNew Rules of Procedure of the NLRC mandates, among others, that no motion toreduce bond shall be entertained except on meritorious grounds and upon theposting of a bond in a reasonable amount in relation to the monetary award. TheNLRC has full discretion to grant or deny their motion to reduce the amount of theappeal bond. The finding of the NLRC that petitioners did not present sufficient justification for the reduction thereof is generally conclusive upon the Court absenta showing that the denial was tainted with bad faith.Furthermore, appeal is not a constitutional right, but a mere statutoryprivilege. Parties who seek to avail themselves of it must comply with the statutesor rules allowing it. Petition DENIED.