LABREL CASE DIGESTS | ART 287

1
CASE TITLE : RODOLFO J. SERRANO (vs) SEVERINO SANTOS
TRANSIT and/or SEVERINO SANTOS
KEYWORD/S : optional retirement with quitclaim ; retirement pay
under protest
DOCTRINE : Under P.D. 851 or the SIL Law, the exclusion from its
coverage of workers who are paid on a purely commission basis is only with
respect to field personnel.

FACTS: Petitioner Serrano was hired as bus conductor by respondent
Severino Santos Transit, a bus company owned and operated by its co-
respondent Severino Santos. After 14 years of service, petitioner applied for
optional retirement from the company whose representative advised him that
he must first sign the already prepared Quitclaim before his retirement pay
could be released. As petitioners request to first go over the computation of
his retirement pay was denied, he signed the Quitclaim on which he wrote
U.P. (under protest) after his signature, indicating his protest to the amount
of P75,277.45 which he received, computed by the company at 15 days per
year of service. Petitioner soon after filed a complaint before the Labor Arbiter,
alleging that the company erred in its computation since the Retirement Pay
Law (RA No. 7641), his retirement pay should have been computed at 22.5
days per year of service to include the cash equivalent of the 5-day service
incentive leave (SIL) and
1
/12 of the 13
th
month pay which the company did not.
RESPONDENTS CONTENTION: The Quitclaim signed by petitioner barred
his claim and, in any event, its computation was correct since petitioner was
not entitled to the 5-day SIL and pro-rated 13
th
month pay for, as a bus
conductor, he was paid on commission basis. Respondents, noting that the
retirement differential pay amounted to only P1,431.15, explained that in the
computation of petitioners retirement pay, five months were inadvertently not
included because some index cards containing his records had been lost.

LAs Ruling: Labor Arbiter ruled in favor of petitioner.
In Labor Advisory on Retirement Pay Law, it was decisively made clear that
the law expanded the concept of one-half month salary from the usual one-
month salary divided by two. Half-months pay is expanded because it
means not just the salary for 15 days but also one-twelfth of the 13th-month
pay and the cash value of five-day service incentive leave. THIS IS THE
MINIMUM. The retirement pay package can be improved upon by voluntary
company policy, or particular agreement with the employee, or through a
collective bargaining agreement. Thus, having established that 22.5 days pay
per year of service is the correct formula in arriving at the complete retirement
pay of complainant.

NLRC Ruling: NLRC reversed the Labor Arbiters ruling and dismissed
petitioners complaint. It, however, ordered respondents to pay retirement
differential in the amount of P2,365.35. NLRC held that since petitioner was
paid on purely commission basis, he was excluded from the coverage of the
laws on 13
th
month pay and SIL pay, hence, the
1
/12 of the 13
th
month pay and
the 5-day SIL should not be factored in the computation of his retirement
pay. Petitioners motion for reconsideration was denied.

CA: The appellate court affirmed the NLRCs ruling holding that it was based
on substantial evidence, hence, should be respected. Petitioners MR was
denied.

ISSUE: Whether or not the 22.5 days pay per year of service is the correct
formula in arriving at the complete retirement pay of complainant

RULING: Republic Act No. 7641 amended Article 287 of the Labor Code by
providing for retirement pay to qualified private sector employees in the
absence of any retirement plan in the establishment. Admittedly, petitioner
worked for 14 years for the bus company which did not adopt any retirement
scheme. Even if petitioner as bus conductor was paid on commission basis
then, he falls within the coverage of R.A. 7641 and its implementing rules. As
thus correctly ruled by the Labor Arbiter, petitioners retirement pay should
include the cash equivalent of the 5-day SIL and
1
/12 of the 13
th
month pay.
For purposes of applying the law on SIL, as well as on retirement, the Court
notes that there is a difference between drivers paid under the boundary
system and conductors who are paid on commission basis. In practice, taxi
drivers do not receive fixed wages. They retain only those sums in excess of
the boundary or fee they pay to the owners or operators of the
vehicles. Conductors, on the other hand, are paid a certain percentage of the
bus earnings for the day. Under P.D. 851 or the SIL Law, the exclusion from
its coverage of workers who are paid on a purely commission basis is only
with respect to field personnel.
The petition is granted and the CA decision and resolution are reversed
and set aside. The Labor Arbiters decision is reinstated.

[RETIREMENT BENEFITS]


JEROME M. DAABAY, Petitioner, v. COCA-COLA BOTTLERS PHILS.,
INC., Respondent.

DOCTRINE: Art. 287 (retirement); Being intended as a mere measure of
equity and social justice, the NLRCs award was then akin to a financial
assistance or separation pay that is granted to a dismissed employee
notwithstanding the legality of his dismissal. A contrary rule would, as the
petitioner correctly argues, have the effect, of rewarding rather than punishing
the erring employee for his offense. And we do not agree that the punishment
is his dismissal only and that the separation pay has nothing to do with the
wrong he has committed. Of course it has.
KEYWORDS: entitlement to retirement benefits

The case stems from a complaint for illegal dismissal, illegal suspension,
unfair labor practice and monetary claims filed by Daabay against respondent
Coca-Cola Bottlers Phils., Inc. (Coca-Cola) and three officers of the company.
The records indicate that the employment of Daabay with Coca-Cola as Sales
Logistics Checker was terminated by the company in June 2005, following
receipt of information from one Cesar Sorin (Sorin) that Daabay was part of a
conspiracy that allowed the pilferage of company property.

The allegations of Sorin were embodied in an affidavit which he executed on
April 16, 2005. The losses to the company were also confirmed by an
inventory and audit conducted by Coca-Colas Territory Finance Head, Silvia
Ang. Such losses comprised of cases of assorted softdrinks, empty bottles,
missing shells and missing pallets valued at P20,860,913.00.

Coca-Cola then served upon Daabay a Notice to Explain with Preventive
Suspension, which required him to explain in writing his participation in the
scheme that was reported to involve logistics checkers and gate guards. In
compliance therewith, Daabay submitted an Explanation dated April 19, 2005
wherein he denied any participation in the reported

A formal investigation on the matter ensued. Eventually, Coca-Cola served
upon Daabay a Notice of Termination that cited pilferage, serious misconduct
and loss of trust and confidence as grounds. At the time of his dismissal,
Daabay had been a regular employee of Coca-Cola for eight years, and was
receiving a monthly pay of P20,861.00, exclusive of other benefits.

Daabay then filed the subject labor complaint against Coca-Cola and the
President and Plant Logistics Managers of Coca-Cola at the time of the
dispute.

Labor Arbiter: Daabay was illegally dismissed because his participation in the
alleged conspiracy was not proved by substantial evidence. In lieu of
reinstatement and considering the already strained relations between the
parties. ordered the payment to Daabay of backwages and separation pay or
retirement benefits, as may be applicable. ([P]750,996.00.)

Dissatisfied, Coca-Cola, appealed to the NLRC. Daabay filed a separate
appeal to ask for his reinstatement without loss of seniority rights, the payment
of backwages instead of separation pay or retirement benefits, and an award
of litigation expenses, moral and exemplary damages and attorneys fees.

NLRC: reversed the finding of illegal dismissal. That there was reasonable
and well-founded basis to dismiss [Daabay], not only for serious misconduct,
but also for breach of trust or loss of confidence arising from such company
losses. Daabays participation in the conspiracy was sufficiently established.
Several documents such as checkers receipts and sales invoices that made
the fraudulent scheme possible were signed by Daabay. The NLRC also found
fault in Daabay for his failure to detect the pilferage, considering that the
timely recording and monitoring as security control for the outgoing [sic] of
company products are necessarily connected with the functions, duties and
responsibilities reposed in him as Sales Logistics Checker. Notwithstanding
its ruling on the legality of the dismissal, the NLRC awarded retirement
benefits in favor of Daabay.

Coca-Colas partial motion for reconsideration to assail the award of retirement
benefits was denied by the NLRC explaining that there was a need to
humanize the severe effects of dismissal and tilt the scales of justice in favor
of labor as a measure of equity and compassionate social justice. Daabay
also moved to reconsider, but his motion remained unresolved by the NLRC.
Undaunted, Coca-Cola appealed to the CA.

CA: agreed with Coca-Cola that the award of retirement benefits lacked basis
considering that Daabay was dismissed for just cause.

Daabays motion for reconsideration was denied in a Resolution25 dated
December 9, 2011; hence, this petition.

(It bears stressing that although the assailed CA decision and resolution are
confined to the issue of Daabays entitlement to retirement benefits, Daabay
attempts to revive through the present petition the issue of whether or not his
dismissal had factual and legal bases. Thus, instead of confining itself to the
issue of whether or not Daabay should be entitled to the retirement benefits
that were awarded by the NLRC, the petition includes a plea upon the Court to
affirm ELA Magbanuas Decision, with the modification to include: (a) his
allowances and other benefits or their monetary equivalent in the computation
of his backwages; (b) his actual reinstatement; and (c) damages, attorneys
fees and litigation expenses.)

ISSUE: Whether or not Daabay is entitled to retirement benefits.

HELD: No. We emphasize that the appeal to the CA was brought not by
Daabay but by Coca-Cola, and was limited to the issue of whether or not the
award of retirement benefits in favor of Daabay was proper. A party who has
not appealed from a decision may not obtain any affirmative relief from the
appellate court other than what he had obtained from the lower court, if any,
whose decision is brought up on appeal. Considering that Daabay had not yet
appealed from the NLRCs Resolution to the CA, his plea for the modification
of the NLRCs findings was then misplaced. For the Court to review all matters
that are raised in the petition would be tolerant of what Daabay was barred to
do before the appellate court.

Daabay was declared by the NLRC to have been lawfully dismissed by Coca-
Cola on the grounds of serious misconduct, breach of trust and loss of
LABREL CASE DIGESTS | ART 287
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confidence. Our pronouncement in Philippine Airlines, Inc. v. NLRC on the
issue of whether an employee who is dismissed for just cause may still claim
retirement benefits equally applies to this case. We held:

At the risk of stating the obvious, private respondent was not separated from
petitioners employ due to mandatory or optional retirement but, rather, by
termination of employment for a just cause. Thus, any retirement pay provided
by PALs Special Retirement & Separation Program dated February 15, 1988
or, in the absence or legal inadequacy thereof, by Article 287 of the Labor
Code does not operate nor can be made to operate for the benefit of private
respondent. Even private respondents assertion that, at the time of her lawful
dismissal, she was already qualified for retirement does not aid her case
because the fact remains that private respondent was already terminated for
cause thereby rendering nugatory any entitlement to mandatory or optional
retirement pay that she might have previously possessed.

In ruling against the grant of the retirement benefits, we also take note of the
NLRCs lone justification for the award. Being intended as a mere measure of
equity and social justice, the NLRCs award was then akin to a financial
assistance or separation pay that is granted to a dismissed employee
notwithstanding the legality of his dismissal. Jurisprudence on such financial
assistance and separation pay then equally apply to this case.

A contrary rule would, as the petitioner correctly argues, have the effect, of
rewarding rather than punishing the erring employee for his offense. And we
do not agree that the punishment is his dismissal only and that the separation
pay has nothing to do with the wrong he has committed. Of course it has.
Indeed, if the employee who steals from the company is granted separation
pay even as he is validly dismissed, it is not unlikely that he will commit a
similar offense in his next employment because he thinks he can expect a like
leniency if he is again found out. This kind of misplaced compassion is not
going to do labor in general any good as it will encourage the infiltration of its
ranks by those who do not deserve the protection and concern of the
Constitution.
Clearly, considering that Daabay was dismissed on the grounds of serious
misconduct, breach of trust and loss of confidence, the award based on equity
was unwarranted.

Although retirement benefits, where not mandated by law, may still be granted
by agreement of the employees and their employer or as a voluntary act of the
employer, there is no proof that any of these incidents attends the instant
case.

WHEREFORE, the petition is DENIED.


Pinero v NLRC

Case Doctrine: An employee who is dismissed for cause is generally not
entitled to any financial assistance. Equity considerations, however, provide an
exception

Facts:Private respondent Dumaguete Cathedral College, Inc., an educational
institution, is the employer of the faculty and staff members comprising the
labor union Dumaguete Cathedral College Faculty and Staff Association-
National Federation of Teachers and Employees Union DUCACOFSA-
NAFTEU. On December 19, 1986, DUCACOFSA (then affiliated with the
National Alliance of Teachers and Allied Workers NATAW) and private
respondent entered into a Collective Bargaining Agreement (CBA) effective for
3 years. Upon the expiration of their CBA in 1989, the parties failed to
conclude another CBA which led DUCACOFSA (now affiliated with NAFTEU)
to file a notice of strike with the Department of Labor and Employment (DOLE)
on the ground of refusal to bargain.

On November 4, 1991, DUCACOFSA-NAFTEU conducted a strike in the
premises of private respondent without submitting to the DOLE the required
results of the strike vote obtained from the members of the
union. Consequently, on November 21, 1991, private respondent filed with the
DOLE a complaint to declare the strike illegal and to dismiss the some officers
of DUCACOFSA-NAFTEU, including the petitioner. On December 19, 1995,
the NLRC affirmed the decision of the Labor Arbiter, declaring the strike
illegal. In addition to the failure to comply with strike vote requirements, the
NLRC ratiocinated that the strike was illegal because DUCACOFSA-NAFTEU,
not being a legitimate labor organization, has no personality to hold a
strike. The union officers filed a Motion for Reconsideration but the same was
denied. CA affirmed the decision of NLRC. Petitioner Rosendo U. Piero filed
with this Court a petition for certiorari.

Issue: Whether or not petitioner should be dismissed on the ground of illegal
strike and not entitled to retirement benefits?

Ruling: Under the aforequoted provisions, the requisites for a valid strike are
as follows: (a) a notice of strike filed with the DOLE thirty days before the
intended date thereof or fifteen days in case of unfair labor practice; (b) strike
vote approved by a majority of the total union membership in the bargaining
unit concerned obtained by secret ballot in a meeting called for that purpose;
(c) notice given to the DOLE of the results of the voting at least seven days
before the intended strike. These requirements are mandatory and failure of a
union to comply therewith renders the strike illegal.

Pursuant to Article 264 of the Labor Code, any union officer who knowingly
participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to
have lost his employment status. In the case at bar, DUCACOFSA-NAFTEU
failed to prove that it obtained the required strike-vote among its members and
that the results thereof were submitted to the DOLE. The strike was therefore
correctly declared illegal, for non-compliance with the procedural requirements
of Article 263 of the Labor Code, and Piero properly dismissed from service.

The Court notes that petitioner Piero turned 60 years old and retired on
March 1, 1996 after 29 years of service, rendering his dismissal from service
moot and academic. However, in view of the propriety of his termination as a
consequence of the illegal strike, he is no longer entitled to payment of
retirement benefits because he lost his employment status effective as of the
date of the decision of the Labor Arbiter October 28, 1994. An employee
who is dismissed for cause is generally not entitled to any financial assistance.
Equity considerations, however, provide an exception. Equity has been
defined as justice outside law, being ethical rather than jural and belonging to
the sphere of morals than of law. It is grounded on the precepts of conscience
and not on any sanction of positive law, for equity finds no room for application
where there is law.

Although meriting termination of employment, Pieros infraction is not so
reprehensible nor unscrupulous as to warrant complete disregard of his long
years of service. Moreover, he has no previous derogatory records. Weighed
on the scales of justice, conscience and reason tip in favor of granting financial
assistance to support him in the twilight of his life after long years of service.
Under the circumstances, social and compassionate justice dictate that
petitioner Piero be awarded financial assistance equivalent to one-half (1/2)
months pay for every year of service computed from his date of employment
up to October 28, 1994 when he was declared to have lost his employment
status. Indeed, equities of this case should be accorded due weight because
labor law determinations are not only secundum rationem but also secundum
caritatem. #GANGAN


G.R. No. 144483 November 19, 2003
STA. CATALINA COLLEGE and SR. LORETA ORANZA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and HILARIA G.
TERCERO, respondents.

DOCTRINE:
Dismissals; Abandonment; Elements for a valid finding of
abandonment.For a valid finding of abandonment, two factors must be
present: (1) the failure to report for work, or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-employee relationship, with
the second element as the more determinative factor, being manifested by
some overt acts.
To prove abandonment, the employer must show that the employee
deliberately and unjustifiably refused to resume his employment without
any intention of returning.To prove abandonment, the employer must
show that the employee deliberately and unjustifiably refused to resume his
employment without any intention of returning. There must be a concurrence
of the intention to abandon and some overt acts from which an employee may
be deduced as having no more intention to work. The law, however, does not
enumerate what specific overt acts can be considered as strong evidence of
the intention to sever the employee-employer relationship.
Abandonment of work being a just cause for termination, petitioner was
under no obligation to serve written notice to respondent.Abandonment
of work being a just cause for terminating the services of Hilaria, petitioner
school was under no obligation to serve a written notice to her.
Separation Pay; An employee who is terminated for just cause is
generally not entitled to separation pay.It was error too for the CA to
conclude that since petitioner school did not award separation pay and
Hilarias share of her retirement contributions when she temporarily stopped
working after she left her teaching position in 1971, employer-employee
relation between them was not severed. It bears noting that an employee who
is terminated for just cause is generally not entitled to separation pay.
Moreover, the PERAA, petitioner schools substitute retirement plan, was only
established in 1972, such that when Hilaria abandoned her work in 1971, there
were no retirement contributions to speak of.
Retirement Benefits; Gratuity pay is separate and distinct from
retirement benefits; It is paid purely out of generosity.As for the ruling of
the CA affirming that of the NLRC that the P12,000.00 gratuity pay earlier
awarded to Hilaria should not be deducted from the retirement benefits due
her, the same is in order. Gratuity pay is separate and distinct from retirement
benefits. It is paid purely out of generosity. So Republic Planters Bank v.
NLRC holds: Gratuity pay x x x is paid to the beneficiary for the past services
or favor rendered purely out of the generosity of the giver or grantor. Gratuity,
therefore, is not intended to pay a worker for actual services rendered or for
actual performance. It is a money benefit or bounty given to the worker, the
purpose of which is to reward employees who have rendered satisfactory
service to the company.
Retirement benefits are a form of reward for employees loyalty to the
employer.Retirement benefits, on the other hand, are intended to help the
employee enjoy the remaining years of his life, releasing him from the burden
of worrying for his financial support, and are a form of reward for his loyalty to
the employer.


FACTS:
In June 1955, Hilaria was hired as an elementary school teacher at the Sta.
Catalina College (petitioner school) in San Antonio, ian, Laguna. In 197,
she applied for and was granted a one year leave of absence without pay on
LABREL CASE DIGESTS | ART 287
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account of the illness of her mother. After the expiration in 1971 of her leave of
absence, she had not been heard from by petitioner school.

In the meantime, she was employed as a teacher at the San Pedro Parochial
School during school year 198-1981 and at the Liceo de San Pedro, ian,
Laguna during school year 1981-1982.

In 1982, she applied anew2 at petitioner school which hired her
with a monthly salary of P6,567.95.

On March 22, 1997, during the 51st Commencement Exercises of petitioner
school, Hilaria was awarded a Plaque of Appreciation for thirty years of service
and P12,000.00 as gratuity pay. On May 31, 1997, Hilaria reached the
compulsory retirement age of 65. Retiring pursuant to Article 287 of the Labor
Code, as amended by Republic Act 7641, petitioner school pegged her
retirement benefits at P59,038.35, computed on the basis of fifteen years of
service from 1982 to 1997. Her service from 1955 to 1970 was excluded in the
computation, petitioner school having asserted that she had, in 1971,
abandoned her employment.

From the P59,038.35 retirement benefits was deducted the amount of
P28,853.95 representing reimbursement of the employers contribution to her
retirement benefits under the Private Education Retirement Annuity
Association (PERAA) which Hilaria had already received. Deducted too was
the amount of P12,000.00 representing the gratuity pay which was given to
her. The remaining balance of the retirement benefits due her thus amounted
toP18,185.26.

Hilaria insisted, however, that her retirement benefits should be computed on
the basis of her thirty years of service, inclusive of the period from 1955 to
1970; and that the gratuity pay earlier given to her should not be deducted
therefrom. She thus concluded that she was entitled to P190,539.90.

The parties failing to agree on the retirement benefits, Hilaria filed for non-
payment of retirement benefits against petitioner.

ISSUE:Whether Hilarias services for petitioner school during the period from
1955 to 1970 should be factored in the computation of her retirement benefits

HELD: No.
ABANDONMENT OF WORK
For a valid finding of abandonment, two factors must be present: (1) the failure
to report for work, or absence without valid or justifiable reason; and (2) a clear
intention to sever employer-employee relationship, with the second element as
the more determinative factor, being manifested by some overt acts.

It is not disputed that the approved one year leave of absence without pay of
Hilaria expired in 1971, without her, it bears repeating, requesting for
extension thereof or notifying petitioner school if and when she would resume
teaching. Nor is it disputed that she was rehired only in 1982 after filing anew
an application, without her proffering any explanation for her more than a
decade of absence. Under the circumstances, abandonment of work at
petitioner school in 1971 is indubitably manifest.

Abandonment of work being a just cause for terminating the services of
Hilaria, petitioner school was under no obligation to serve a written notice to
her. That Hilaria was in 1997 given a plaque of appreciation for thirty years of
service to the school and awardedP12,000.00 as gratuity pay should not be
taken against petitioners, for acknowledgment of the total number of years of
her service, which was discontinuous, should not obliterate the fact that she
abandoned her employment in 1971, albeit she was rehired in 1982.

GRATUITY PAY
As for the ruling of the CA affirming that of the NLRC that the P12,000.00
gratuity pay earlier awarded to Hilaria should not be deducted from the
retirement benefits due her, the same is in order. Gratuity pay is separate and
distinct from retirement benefits. It is paid purely out of generosity.

Gratuity pay x x x is paid to the beneficiary for the past services or favor
rendered purely out of the generosity of the giver or grantor. Gratuity,
therefore, is not intended to pay a worker for actual services rendered or for
actual performance. It is a money benefit or bounty given to the worker, the
purpose of which is to reward employees who have rendered satisfactory
service to the company.

Retirement benefits, on the other hand, are intended to help the employee
enjoy the remaining years of his life, releasing him from the burden of worrying
for his financial support, and are a form of reward for his loyalty to the
employer.

COMPUTATION OF RETIREMENT (Art 287)
Hence, Hilaria is entitled to receive P98,706.45 computed as follows:

One-half month salary = (15 days x latest salary per day) + (5 days leave x
latest salary per day) + (1/12 of 13th month pay)

= P4,512.30 + P1,504.10 + P547.33 = P6,563.73

Retirement Pay = number of years in service x one-half month salary
= 15 years x P6,580.43
= P98,455.95

Since petitioner school had already paid Hilaria P28,853.09 representing
employer contributions under the PERAA, the same should be deducted from
the retirement pay due her, to thereby leave a balance of P69,602.86 still due
her. #GAUNA

PANTRANCO NORTH EXPRESS, INC., vs. NATIONAL LABOR
RELATIONS COMMISSION and URBANO SUIGA

DOCTRINE: Under Article 287, 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.

Section 13, Rule I, Book VI of the Omnibus Rule Implementing the Labor Code
reads that in the absence of any collective bargaining agreement or other
applicable agreement concerning terms and condition of employment which
provides for retirement at an older age, an employee may be retired upon
reaching the age of sixty (60) years.

KEYWORDS: Retirement, Compulsory, CBA, Bus Conductor

FACTS: Private respondent Urbano Suiga was hired by petitioner in 1964 as
a bus conductor. He eventually joined the Pantranco Employees Association-
PTGWO. He continued in petitioner's employ until August 12, 1989, when he
was retired at the age of fifty-two (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. Private respondent received P49,300.00 as retirement
pay.

Suiga filed a complaint for illegal dismissal against petitioner with the Sub-
Regional Arbitration Branch of the respondent Commission in Dagupan City.

PETITIONERS CONTENTION: Petitioner contends that Article XI, Section 1
(e) (5) of the May 2, 1989 Collective Bargaining Agreement is valid and in
consonance with Article 287 of the Labor Code.

RULING OF THE LA: The LA ruled that Suiga, among others, was illegally
and unjustly dismissed and ordered the respondent to reinstate him to his
former or substantially equivalent position without loss of seniority rights with
full backwages and other benefits.

RULING OF THE NLRC: It affirmed the LAs ruling in toto.

ISSUE: Is a Collective Bargaining Agreement provision allowing compulsory
retirement before age 60 but after twenty five years of service legal and
enforceable?

RULING: YES. 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.

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.

A CBA incorporates the agreement reached after negotiations between
employer and bargaining agent with respect to terms and conditions of
employment. A CBA is not an ordinary contract. "(A)s a labor contract within
the contemplation of Article 1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, (it) is not merely contractual
in nature but impressed with public interest, thus it must yield to the common
good. As such, it must be construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction
upon it, giving due consideration to the context in which it is negotiated and
purpose which it is intended to serve."

Being a product of negotiation, the CBA between the petitioner and the union
intended the provision on compulsory retirement to be beneficial to the
employees-union members, including herein private respondent. When
private respondent ratified the CBA with the union, he not only agreed to the
CBA but also agreed to conform to and abide by its provisions. Thus, it cannot
be said that he was illegally dismissed when the CBA provision on compulsory
retirement was applied to his case.

Incidentally, we call attention to Republic Act No. 7641, known as "The
Retirement Pay Law," which went into effect on January 7, 1993. Although
passed many years after the compulsory retirement of herein private
respondent, nevertheless, the said statute sheds light on the present
LABREL CASE DIGESTS | ART 287
4
discussion when it amended Art. 287 of the Labor Code, to make it read as
follows:

"ART. 7. Retirement. Any employee may be retired upon reaching
the retirement age establish in the collective bargaining agreement or other
applicable employment contract.

xxx xxx xxx

In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five
(5) years in the said establishment may retire x x x."

The aforequoted provision makes clear the intention and spirit of the law to
give employers and employees a free hand to determine and agree upon the
terms and conditions of retirement. Providing in a CBA for compulsory
retirement of employees after twenty-five (25) years of service is legal and
enforceable so long as the parties agree to be governed by such CBA. The
law presumes that employees know what they want and what is good for them
absent any showing that fraud or intimidation was employed to secure their
consent thereto.

On this point then, public respondent committed a grave abuse of discretion in
affirming the decision of the labor arbiter. The compulsory retirement of
private respondent effected in accordance with the CBA is legal and binding.

R and E Transport v. Latag

Case doctrine: The question of whether a corporation is a mere alter ego is
one of fact. Piercing the veil of corporate fiction may be allowed only if the
following elements concur: (1) control -- not mere stock control, but complete
domination -- not only of finances, but of policy and business practice in
respect to the transaction attacked, must have been such that the corporate
entity as to this transaction had at the time no separate mind, will or existence
of its own; (2) such control must have been used by the defendant to commit a
fraud or a wrong to perpetuate the violation of a statutory or other positive
legal duty, or a dishonest and an unjust act in contravention of plaintiffs legal
right; and (3) the said control and breach of duty must have proximately
caused the injury or unjust loss complained of.
Ponente: PANGANIBAN, J .

Facts:

Pedro Latag was a regular employee of La Mallorca Taxi since
March 1961. When La Mallorca cesed its business operations, Latag
transferred to petitioner R&E Transport, Inc. Years after, Latag got sick and
when he recovered, he was no longer allowed to return to work on account of
his old age. Latag asked for his retirement pay, but was ignored, hence he
filed a case for payment of his retirement pay before the NLRC. Pedro Latag,
having died, was represented by Avelino Latag, his wife, in all the
proceedings.

LA rendered decision in favor of Latag. NLRC awarded less, since it did not
include the years of Latag in La Mallorca, considering only the years in R&E
Transport. CA sided with LA.

Issue: Whether or not the retirement pay of Latag should include his 23 years
of employment with La Mallorca in addition to his 14 years of service with R&E
Transport.

Held:

No. The Labor Arbiters conclusion that La Mallorca and R&E
Transport are one and the same entity was only based on mere surmises and
self-serving assertions of Respondent Avelina Latag. Evidence sufficiently
shows that 1) R & E Transport, Inc., was established only in 1978; 2) Honorio
Enriquez, its president, was not a stockholder of La Mallorca Taxi; and 3) none
of the stockholders of the latter company hold stocks in the former.

Furthermore, basic is the rule that the corporate veil may be pierced only if it
becomes a shield for fraud, illegality or inequity committed against a third
person. The question of whether a corporation is a mere alter ego is one of
fact. Piercing the veil of corporate fiction may be allowed only if the following
elements concur: (1) control -- not mere stock control, but complete
domination -- not only of finances, but of policy and business practice in
respect to the transaction attacked, must have been such that the corporate
entity as to this transaction had at the time no separate mind, will or existence
of its own; (2) such control must have been used by the defendant to commit a
fraud or a wrong to perpetuate the violation of a statutory or other positive
legal duty, or a dishonest and an unjust act in contravention of plaintiffs legal
right; and (3) the said control and breach of duty must have proximately
caused the injury or unjust loss complained of. Respondent has not shown by
competent evidence that one taxi company had stock control and complete
domination over the other or vice versa. In fact, no evidence was presented to
show the alleged renaming of La Mallorca Taxi to R & E Transport, Inc. The
seven-year gap between the time the former closed shop and the date when
the latter came into being also casts doubt on any alleged intention of
petitioners to commit a wrong or to violate a statutory duty. #lim

There was a quitclaim in this case signed by Avelina Latag, but the court
annulled it, stating that a quitclaim in which the consideration is scandalously
low and inequitable cannot be an obstacle to the pursuit of a workers
legitimate claim. Heres how SC computed it:
It is accepted that taxi drivers do not receive fixed wages, but retain only
those sums in excess of the boundary or fee they pay to the owners or
operators of their vehicles.
[34]
Thus, the basis for computing their benefits
should be the average daily income. In this case, the CA found that Pedro was
earning an average of five hundred pesos (P500) per day. We thus compute
his retirement pay as follows: P500 x 15 days x 14 years of service
equals P105,000. Compared with this amount, the P38,850 he received, which
represented just over one third of what was legally due him, was
unconscionable. #lim

AMELIA R. OBUSAN vs. PHILIPPINE NATIONAL BANK,
Keywords: Retirement
Doctrine: Article 287 of the Labor Code, as amended, applies only to a
situation where (1) there is no CBA or other applicable employment contract
providing for retirement benefits for an employee; or (2) there is a collective
bargaining agreement or other applicable employment contract providing for
retirement benefits for an employee, but it is below the requirement set by law.

Facts: Back in 1979, PNB hired petitioner Amelia R. Obusan, who eventually
became the Manager of the PNB Medical Office. At that time, PNB was a
government-owned or controlled corporation, whose retirement program for its
employees was administered by the GSIS.
On May 27, 1996, PNB was privatized. Consequent to the privatization, all
PNB employees, including Obusan, were deemed retired from the government
service.
Later, the PNB Board of Directors approved the PNB Regular Retirement Plan
(PNB-RRP) which provides that the normal retirement date of a Member shall
be the day he attains 60 years of age or has rendered 30 years of service. A
Member who has reached the normal retirement date shall have to
compulsor[il]y retire and shall be entitled to receive the retirement benefits
under the Plan.
PNB-RRP was registered with the Bureau of Internal Revenue and was
recognized by the union of PNB rank-and-file employees in the CBA it entered
with PNB.
PNB informed Obusan of her last day of employment after reaching the
mandatory retirement age of 60 years.
Obusan filed before the Labor Arbiter a complaint for illegal dismissal and
unfair labor practice, claiming that PNB could not compulsorily retire her at the
age of 60 years, with her having a vested right to be retired only at 65 years
old pursuant to civil service regulations.
Labor Arbiter rendered a decision,
13
dismissing Obusans complaint as he
upheld the validity of the PNB-RRP and its provisions on compulsory
retirement
NLRC dismissed Obusans appeal, and affirmed the assailed decision.
CA: PNB-RRPs lowering the compulsory retirement age to 6 years is not
violative of Article 287 of the Labor Code of the Philippines, as amended,
despite the issuance of the plan years after Obusan was hired.

Issue: W/N PNB can lower the compulsory retirement age to 60 years without
violating Article 287.

Held: Yes. Undisputed is the fact that, when complainant was hired, PNB was
still a government owned and controlled corporation. Accordingly, the Revised
Government Service Insurance Act [RGSI] of 1977, which established that the
compulsory retirement age for government employees to be 65 years governs
the employment of PNB employees. The same may apply only as long as PNB
remains a government owned and controlled corporation. From the time PNB
ceased to be such, it cannot be said that [the] RGSI Act of 1977 still applies.
Thus negating the claim of complainant to retire at age 65 under the said law.
The retirement age is primarily determined by the existing agreement or
employment contract. Absent such an agreement, the retirement age shall be
fixed by law. Article 287 of the Labor Code, as amended, applies only to a
situation where (1) there is no CBA or other applicable employment contract
providing for retirement benefits for an employee; or (2) there is a collective
bargaining agreement or other applicable employment contract providing for
retirement benefits for an employee, but it is below the requirement set by law.
The rationale for the first situation is to prevent the absurd situation where an
employee, deserving to receive retirement benefits, is denied them through the
nefarious scheme of employers to deprive employees of the benefits due them
under existing labor laws. The rationale for the second situation is to prevent
private contracts from derogating from the public law.

KIMBERLY CLARK PHILIPPINES VS DIMAYUGA

Doctrine: According to the Supreme Court, the initial retirement grant already
given to therespondents was already due to the privilege given by the
company to the employees. They areclearly not included anymore but
because of their request, the company made adjustments andreconsidered
their inclusion. So when the company announced an additional incentive, it
was clearthat the respondents are no longer covered by it because they are
no longer employees when it wasannounced. To have them included would be
additional burden to the employer. The nature a bonus arose from the financial
growth or good performance of the company, it is clearly not mandatory and
legally demandable by the employees when it is clear that no collective
bargaining agreement or law that mandates the grant

Facts: Respondents were employees of Kimberly-Clark Philippines, Inc.
(petitioner). On September 19, 2002, Nora tendered her resignation effective
October 21, 2002
[]
On October 7, 2002, Rosemarie tendered her resignation,
also effective October 21, 2002.
[2]


LABREL CASE DIGESTS | ART 287
5
Petitioner created a tax-free early retirement package for its employees as a
cost-cutting and streamlining measure.
Despite their resignation before the early retirement package was offered,
Nora and Rosemarie pleaded with petitioner that they be retroactively
extended the benefits thereunder, to which petitioner acceded.

On November 4, 2002, Maricar tendered her resignation effective December
1, 2002,
[7]
citing career advancement as the reason therefor. As at the time of
her resignation the early retirement package was still effective, she received a
total of P523,540.13 for which she signed a release and quitclaim.
[8]


On November 28, 2002, petitioner announced that in lieu of the merit increase
which it did not give that year, it would provide economic assistance, to be
released the following day, to all monthly-paid employees on regular status as
of November 16, 2002.
Still later or on January 16, 2003, petitioner announced that it would the grant
a lump sum retirement pay in the amount of P200,000, in addition to the early
retirement package benefit, to those who signed up for early retirement and
who would sign up until January 22, 2003.
[9]


respondents filed a Complaint, against petitioner and its Finance Manager
Fernando . Gomez (Gomez) whom respondents alleged to be responsible
for the withholding of [their] additional retirement benefits,
[11]
claiming
entitlement to the P200,000 lump sum retirement pay. Respondents Nora and
Rosemarie additionally claimed entitlement to the economic assistance.

LA: Not entitled. they having ceased to be employees of petitioner at the time
it was offered or made effective on January 16, 2003. He, however, granted
Maricars claim for the same pay, holding that she was entitled to it because at
the time she resigned from the company effective December 1, 2002, such
pay was already offered. Besides, the Labor Arbiter ruled, Maricar had a
vested right to it as she was given a formal notice of her entitlement to it by
petitioner,

NLRC: modified the Labor Arbiters Decision. petitioners refusal to give
Nora and Rosemarie the lump sum retirement pay was an act of
discrimination, more so because a certain Oscar Diokno, another employee
who presumably resigned also prior to January 16, 2003, was given said
benefit.

Issues: A re additional benefits/bonuses given to the employees due to the
gratuitous grant of the employer be required to the employees although it is
not included in CollectiveBargaining Agreement

Ruling: It is settled that entitlement of employees to retirement benefits must
specifically be granted under existing laws, a collective bargaining agreement
or employment contract, or an established employer policy.
[21]
No law or
collective bargaining agreement or other applicable contract, or an established
company policy was existing during respondents employment entitling them to
the P200,000 lump-sum retirement pay. Petitioner was not thus obliged to
grant them such pay.

Respondents citing the pronouncement in Businessday that:

x x x The law requires an employer to extend equal treatment to its
employees.

Respondents reliance on Businessday is misplaced. The factual milieu
in Businessday is markedly different from that of the present case. That case
involved theretrenched employees separation pay to which they are entitled
under Article 283 of the Labor Code. In the present case, Nora and
Rosemarie resigned prior to petitioners offer of the lump sum
retirement pay as an incentive to those employees who would voluntarily avail
of its early retirement scheme as a cost-cutting and streamlining measure. .

Petitioners decision to extend the benefit to some former employees who had
already resigned before the offer of the lump sum pay incentive was thus an
act of generosity which it is not obliged to extend to respondents. Apropos is
this Courts ruling in Businessday:

With regard to the private respondents claim for the mid-year bonus, it is
settled doctrine that the grant of a bonus is a prerogative, not an obligation,
of the employer. The matter of giving a bonus over and above the workers
lawful salaries and allowances is entirely dependent on the financial capability
of the employer to give it. The fact that the companys business was no longer
profitable (it was in fact moribund) plus the fact that the private respondents
did not work up to the middle of the year (they were discharged in May 1998)
were valid reasons for not granting them a mid-year bonus. Requiring the
company to pay a mid-year bonus to them also would in effect penalize the
company for its generosity to those workers who remained with the
company till the end of its days.
[24]
(Citations omitted) (Emphasis and
underscoring supplied)


Neither are Nora and Rosemarie entitled to the economic assistance which
petitioner awarded to all monthly employees who are under regular status as
of November 16, 22, they having resigned earlier or on October 21, 22.


MARCELINO A. MAGDADARO, vs. PHILIPPINE NATIONAL BANK

Facts: Marcelino A. Magdadaro (petitioner) was employed by Philippine
National Bank (respondent) since 8 January 1968. On 21 September 1998,
petitioner filed his application for early retirement under respondents Special
Separation Incentive Program (SSIP). Petitioner was then holding the position
of Senior Assistant Manager of respondents ranch Operations and
Consumer Finance Division for the Visayas. Petitioner stated in his application
that 31 December 1999 was his preferred effective date of retirement.

Respondent approved petitioners application for early retirement but made it
effective on 31 December 1998. Petitioner protested the acceleration of his
retirement. He received, under protest, his retirement and separation benefits
amounting to P908,950.44. On 18 October 1999, petitioner filed a complaint
for illegal dismissal and payment of moral, exemplary and actual damages
against respondent before the Regional Arbitration Branch No. VII of the
National Labor Relations Commission (NLRC), Cebu City.

The Ruling of the Labor Arbiter and the NLRC
In a Decision dated 3 August 2000, the Labor Arbiter ruled that respondent
had the discretion and prerogative to set the effective date of retirement under
the SSIP. The Labor Arbiter ruled that respondents insistence on the date of
effectivity of petitioners retirement was not tantamount to illegal dismissal. The
Labor Arbiter ruled that there was no dismissal to speak of because petitioner
voluntarily availed of the SSIP. Still, the Labor Arbiter granted petitioners
preferred date of retirement and awarded him additional retirement benefits.
oth petitioner and respondent appealed from the Labor Arbiters Decision.

In its 4 March 2003 Decision,

the NLRC affirmed the Labor Arbiters Decision.
However, the NLRC considered petitioners retirement on 31 December 1998
as tantamount to illegal dismissal. The NLRC ruled that while it recognized
respondents prerogative to change petitioners retirement date, management
prerogative should be exercised with prudence and without malice.
Petitioner and respondent filed their respective motions for reconsideration. In
its 24 July 2003 Resolution,

the NLRC denied both motions for reconsideration
for lack of merit.
Respondent filed a petition for certiorari before the Court of Appeals.

The Ruling of the Court of Appeals
The Court of Appeals granted the petition. The Court of Appeals ruled that the
NLRC acted with grave abuse of discretion in affirming the decision of the
Labor Arbiter, while at the same time finding that petitioners retirement was
tantamount to illegal dismissal.

The Court of Appeals held that petitioner voluntarily applied for the SSIP. The
Court of Appeals ruled that petitioner could not claim to have been illegally
dismissed just because the date of effectivity of his retirement did not conform
to his preferred retirement date.

Petitioner filed a motion for reconsideration. In its 6 December 2004
Resolution, the Court of Appeals denied the motion.

Issue: The only issue in this case is whether petitioner was illegally dismissed
from employment.

Held: The petition has no merit.
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.
Retirement is provided for under Article 287 of the Labor Code, as amended
by Republic Act No. 7641, or is determined by an existing agreement between
the employer and the employee.
In this case, respondent offered the SSIP to overhaul the bank structure and to
allow it to effectively compete with local peer and foreign banks. SSIP was not
compulsory on employees. Employees who wished to avail of the SSIP were
required to accomplish a form for availment of separation benefits under the
SSIP and to submit the accomplished form to the Personnel Administration
and Industrial Relations Division (PAIRD) for approval.
Petitioner voluntarily availed of the SSIP. He accomplished the application
form and submitted it to the PAIRD. He only questioned the approval of his
retirement on a date earlier than his preferred retirement date.
The Labor Arbiter ruled that petitioner was not illegally dismissed from the
service. Even the NLRC ruled that petitioner could no longer withdraw his
application for early retirement under the SSIP. However, the NLRC ruled that
respondent could not accelerate the petitioners retirement date. The NLRC
ruled that it could not imagine how petitioners continued employment until 31
December 1999 would impair the delivery of bank services and attribute bad
faith on respondent when it accelerated petitioners retirement.
We do not agree. Whether petitioners early retirement within the SSIP period
will improve or impair the delivery of bank services is a business decision
properly within the exercise of management prerogative. More importantly, the
SSIP provides:

7. Management shall have the discretion and prerogative in approving the
applications filed under the Plan, as well as in setting the effectivity dates
for separation within the implementation period of the Plan. (Emphasis
supplied)
It is clear that it is within respondents prerogative to set the date of effectivity
of retirement and it may not be necessarily what is stated in the application.