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Reyes vs. NLRC et al.

Doctrine: Computation of Retirement Pay and 13th month pay should be based on the basic salary excluding allowances and
monetary benefits/commissions however, such benefits may be considered part of basic salary if by individual/collective agreement
or by company practice or policy such is treated as integrated in the basic salary.

Facts: Reyes was a salesman at Universal Robina’s Grocery Division in Davao City. He became unit manager of Sales Department-
South Mindanao and remained such until his retirement.

Reyes disagreed with the manner the company computed his separation pay. Insisting that his retirement benefits and 13th month
pay must be based on the average monthly salary which consists of basic salary and average monthly commission, he refused to
accept payment. Instead he filed a case for recovery of these monetary claims.

Labor Arbiter: Sales commission is part of the basic salary of a unit manager

NLRC: Modified the decision of the Labor Arbiter by excluding the overriding commission in the computation of the retirement benefits
and 13th month pay

Issue: Should the overriding commission be included in the computation of the retirement benefits and 13th month pay?

Ruling: NO. The court distinguished its conflicting decisions between Philippine Duplicators Case and Boie-Takeda Case. In
Philippine Duplicators Case, the salesmen’s commissions, comprising a predetermined percentage of the selling price of the goods
sold by each salesman, were properly included in the term basic salary for purposes of computing the 13th month pay. The
salesmen’s commission are not overtime payments, nor profit-sharing payments nor any other fringe benefit, but a portion of the
salary structure which represents an automatic increment to the monetary value initially assigned to each unit of work rendered by a
salesman.

In Boie-Takeda Case, the so-called commissions paid to or received by medical representatives of Boie-Takeda Chemicals or by the
rank and file employees of Philippine Fuji Xerox Co., were excluded from the term basic salary because these were paid to the
medical representatives and rank-and-file employees as productivity bonuses, which are generally tied to the productivity, or capacity
for revenue production, of a corporation and such bonuses closely resemble profit-sharing payments and have no clear direct or
necessary relation to the amount of work actually done by each individual employee. Further, commissions paid by the Boie-Takeda
Company to its medical representatives could not have been sales commissions in the same sense that Philippine Duplicators paid
the salesmen their sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at all.

In this case, SC ruled that commissions should be excluded. Petitioner filed for optional retirement upon reaching the age of 60.
However, the basis in computing his retirement benefits is his latest salary rate as the commissions he received are in the form of
profit-sharing payments specifically excluded by Section 5 of Rule II of the Rules Implementing the New Retirement Law.

Aside from the fact that as unit manager petitioner did not enter into actual sale transactions, but merely supervised the salesmen
under his control, the disputed commissions were not regularly received by him. Only when the salesmen were able to collect from
the sale transactions can petitioner receive the commissions. Conversely, if no collections were made by the salesmen, then
petitioner would receive no commissions at all. In fine, the commissions which petitioner received were not part of his salary structure
but were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually performed. The
collection made by the salesmen from the sale transactions was the profit of private respondent from which petitioner had a share in
the form of a commission.

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Arco Metal Products Co., Inc., et al., vs. Samahan ng MgaManggagawasa Arco Metal-NAFLU

Doctrine: If giving of full benefits (13th month pay, Vacation Leave, and sick leave) regardless of actual service they rendered within a
year becomes a company practice, such practice cannot be withdrawn by employer anytime because it violates the principle of non-
diminution of benefits.

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner’s
rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three
union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months.
Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same
benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates
the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National
Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary arbitration.

VOLUNTARY ARBITRATOR: Ruled in favor of petitioner. The giving of benefits irrespective of the actual service has not ripened into
a practice.

CA: Petitioner had an existing voluntary practice of paying such benefits in full to its employees.

Ordered petitioner to pay benefits in full irrespective of actual services rendered within a year.

Issue: WON the prorated payment of the benefits constitute a violation under Art. 100 of the Labor Code.

Ruling: YES. SC ruled in favor of the respondents. The voluntary grant of the benefits has been an established company practice. It
has been a company practice which grants full benefits to its employees regardless of the length of service rendered.

From a reading of the Collective Bargaining Agreement (CBA), there is no doubt that in order to be entitled to the full monetization of
sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The other benefits were also to be
computed in proportion to the length of service of the employee.

However Arco, in the past years, had made payments to some employees who did not render one year service without pro-rating. In
those years, it had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the
length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an
established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary company practice.

Indeed, if it wants to prove that it merely erred in giving full benefits, it could have easily presented other proofs, such as the names of
other employees who did not fully serve for one year and thus were given prorated benefits.

The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote
their welfare,” and “to afford labor full protection.” Said mandate in turn is the basis of Article 4 of the Labor Code which states that “all
doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in
favor of labor.

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Universal Robina Sugar Milling Corp. vs. Caballeda

Doctrine: An employee cannot be said to have voluntarily retired if the company forced employee to retire. In such situation, the
employee is deemed illegally dismissed. Despite employee received the retirement benefits and signed a quitclaim, he is not
precluded from filing a case for illegal dismissal against the employer.

Facts: Respondent Agripino Caballeda worked as welder for Universal Robina Sugar Milling Corporation (URSUMCO) from March
1989 until June 23, 1997 while respondent Alejandro Cadalin worked for URSUMCO as crane operation from 1976 up to June 15,
1997.

John Gokongwei, Jr. President of URSUMCO issued a memorandum establishing the company policy on Compulsory Retirement. All
employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall be considered retired on May 31, 1991.
Subsequently, on December 9, 1992, Republic Act No. 7641 was enacted into law and it took effect on January 7, 1993, amending
Article 287 of the Labor Code.

In 1993, the company and NFL (bargaining agent) entered into a CBA, under which the retirement benefits of the members of the
collective bargaining unit shall be in accordance with law.

Meanwhile, Caballeda and Cadalin, having reached the age of 60, were allegedly forced to retire pursuant to the company
Memorandum earlier issued.They both accepted their retirement benefits. Later on, Agripino filed a complaint for illegal dismissal
because his compulsory retirement was in violation of the provisions of RA 7641 and, was in effect, a form of illegal dismissal.

LABOR ARBITER: Declared URSUMCO guilty of illegal dismissal.

NLRC: Reversed and held that Alejandro voluntarily retired because he submitted his application.

Dismissed the complaint for illegal dismissal.

CA: Declared that URSUMCO illegally dismissed the respondents since the Memorandum unilaterally imposed upon the respondents
compulsory retirement at the age of 60. Found that there is no existing CBA or employment contract between the parties that
provides for early compulsory retirement.

Issue:

Whether RA 7641 can be given retroactive effect? YES

Whether or not Agripino Caballeda and Alejandro Cadalin voluntarily retired from the service? NO

Ruling: First issue: RA 7641, as a social legislation, has retroactive effect. 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 wellbeing 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.

The Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect:

the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had
complied with the requirements for eligibility for such retirement benefits under the statute.

It is evident from the records that when respondents were compulsorily retired from the service, R.A. 7641 was already in full force
and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under the law for
such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive application
of R.A. 7641 in this case.

E.R.D.DIMAUNAHAN – EH409 3
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Second Issue: Respondents were compulsorily retired. 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 age of retirement is primarily determined by the existing agreement between the employer and the employees.
However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended,
the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years.

The age of retirement is primarily determined by the existing agreement between the employer and the employees. However, in the
absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally
mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years. That prerogative
is exclusively lodged in the employee.

In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement age nor does it
provide for an optional retirement plan. It merely provides that the retirement benefits accorded to an employee shall be in
accordance with law. Thus, we must apply Art.287 of the Labor Code which provides for two types of retirement:

compulsory (65); and

optional (CBA, employment contract, retirement plan; 60 years or more, but not beyond 65 years, provided he has served at least five
years in the establishment concerned. NB: That prerogative is exclusively lodged in the employee)

Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing
them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. In this case,
petitioners failed to establish all the requisites that would render a quitclaim valid. Furthermore, petitioners have the burden of proof
that the quitclaim was voluntarily entered to.

Absent any convincing proof of voluntariness in the submission of the documentary requirements and the execution of the quitclaim,
we cannot simply assume that respondents were not subjected to the very same pressure. Respondents vigorously pursued this case
all the way up to the Supreme Court. Without doubt, this is a manifestation that respondents had no intention of relinquishing their
employment, wholly incompatible to petitioners' assertion that respondents voluntarily retired. Respondents did not voluntarily retire
but were forced to retire, tantamount to illegal dismissal.

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear from the decisions of the
LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential on his retirement benefits. On the other hand,
Agripino was actually and totally deprived of his retirement benefit.

The court finds no reversible error and, thus, sustain the ruling of the CA that respondents did not voluntarily retire but were rather
forced to retire, tantamount to illegal dismissal.

E.R.D.DIMAUNAHAN – EH409 4
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Cercado vs. Uniprom, Inc

Facts: Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, Inc. (UNIPROM) on December 15, 1978
as a ticket seller assigned at Fiesta Carnival, Araneta Center, Quezon City. Later on, she was promoted as cashier and then as clerk
typist. On April 1, 1980, UNIPROM instituted an Employees’ Non-Contributory Retirement Plan4 which provides that any participant
with twenty (20) years of service, regardless of age, may be retired at his option or at the option of the company. On January 1, 2001,
UNIPROM amended the retirement plan in compliance with Republic Act (R.A.) No. 7641.5 Under the revised retirement plan,6
UNIPROM reserved the option to retire employees who were qualified to retire under the program. Sometime in December 2000,
UNIPROM implemented a company-wide early retirement program for its 41 employees, including herein petitioner, who, at that time,
was 47 years old, with 22 years of continuous service to the company. She was offered an early retirement package amounting to ₱
171,982.90, but she rejected the same.

Labor Arbiters decision: The petitioner was illegally dismissed. Respondent company was ordered to reinstate her with payment of full
backwages.

NLRC Decision: The National Labor Relations commission affiremd the LA decision.

Court of Appeal: CA set aside the decision of the LA and NLRC.

Issue: WON UNIPROM has a bona fide retirement plan; and WON petitioner was validly retired pursuant thereto.

Ruling: No, petitioner was not yet retired because she did not consented to the said agreement. 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.

Article 287 of the Labor Code, as amended by R.A. No. 7641,13 pegs the age for compulsory retirement at 65 years, while the
minimum age for optional retirement is set at 60 years. An employer is, however, free to impose a retirement age earlier than the
foregoing mandates. This has been upheld in numerous cases14 as a valid exercise of management prerogative.

We reiterate the well-established meaning of retirement in this jurisdiction: Retirement is the result of a bilateral act of the parties, a
voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or
her employment with the former.

Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an employer
may unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be
exercised pursuant to a mutually instituted early retirement plan. In other words, only the implementation and execution of the option
may be unilateral, but not the adoption and institution of the retirement plan containing such option. For the option to be valid, the
retirement plan containing it must be voluntarily assented to by the employees or at least by a majority of them through a bargaining
representative.

UNIPROM is guilty of illegal dismissal. Petitioner is thus entitled to reinstatement without loss of seniority rights and to full backwages
computed from the time of her illegal dismissal in February 16, 2001 until the actual date of her reinstatement. If reinstatement is no
longer possible because the position that petitioner held no longer exists, UNIPROM shall pay backwages as computed above, plus,
in lieu of reinstatement, separation pay equivalent to one-month pay for every year of service. This is consistent with the
preponderance of jurisprudence24 relative to the award of separation pay in case reinstatement is no longer feasible.

E.R.D.DIMAUNAHAN – EH409 5
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Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al.

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983, respectively,
by RMN. They eventually became account managers, soliciting advertisements and servicing various clients of RMN. On September
15, 2002, the respondents’ services were terminated as a result of RMN’s reorganization/restructuring; they were given their
separation pay – ₱ 631,250.00 for Ybarola, and ₱ 481,250.00 for Rivera. Sometime in December 2002, they executed
release/quitclaim affidavits. Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims, including attorney’s fees.
They indicated that their monthly salary rates were ₱ 60,000.00 for Ybarola and ₱ 40,000.00 for Rivera. On July 18, 2007, Labor
Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment of additional separation pay to the
respondents – ₱ 490,066.00 for Ybarola and ₱ 429,517.55 for Rivera. The labor arbiter adjusted the separation pay award based on
the respondents’ Certificates of Compensation Payment/Tax Withheld showing that Ybarola and Rivera were receiving an annual
salary of ₱ 482,477.61 and ₱ 697,303.00, respectively.

NLRC ruling: The NLRC set aside the labor arbiters decision and dismissed the complaint for lack of merit.

CA Ruling: The CA set aside the NLRC disposition. It reinstated the Labor Arbiters decision.

Issue: WON Domingo Ybarola and Alfonzo Rivera are entitled for additional separation pay.

Ruling: Yes, they are entitled for the additional separation pay. We find the motion for reconsideration unmeritorious. The motion
raises substantially the same arguments presented in the petition and we find no compelling justification to grant the reconsideration
prayed for.

The petitioners insist that the respondents’ commissions were not part of their salaries, because they failed to present proof that they
earned the commission due to actual market transactions attributable to them. They submit that the commissions are profit-sharing
payments which do not form part of their salaries. We are not convinced. If these commissions had been really profit-sharing bonuses
to the respondents, they should have received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera received ₱
372,173.11 and ₱ 586,998.50 commissions, respectively, in 2002. The variance in amounts the respondents received as
commissions supports the CA’s finding that the salary structure of the respondents was such that they only received a minimal
amount as guaranteed wage; a greater part of their income was derived from the commissions they get from soliciting
advertisements; these advertisements are the "products" they sell. As the CA aptly noted, this kind of salary structure does not
detract from the character of the commissions being part of the salary or wage paid to the employees for services rendered to the
company.

In this case, as the CA noted, the separation pay the respondents each received was deficient by at least ₱ 400,000.00; thus, they
were given only half of the amount they were legally entitled to. To be sure, a settlement under these terms Is not and cannot be a
reasonable one, given especially the respondents’ length of service – 25 years for Ybarola and 19 years for Rivera.
Eleazar S. Padillo, vs. Rural Bank of Nabunturan, Inc. took out retirement/ insurance plans with Philippine
American Life and General Insurance Company (Philam
Doctrine: Article 297 of the Labor Code clearly presupposes Life) for all its employees in anticipation of its possible
that it is the employer who terminates the services of the closure and the concomitant severance of its personnel. In
employee found to be suffering from any disease and whose this regard, the Bank procured Philam Plan Certificate of Full
continued employment is prohibited by law or is prejudicial Payment No. 88204, Plan Type 02FP10SC, Agreement No.
to his health as well as to the health of his co-employees. It PP98013771 (Philam Life Plan) in favor of Padillo for a
does not contemplate a situation where it is the employee benefit amount of P100,000.00 and which was set to mature
who severs his or her employment ties. on July 11, 2009.

The age and tenure requirements under Article 300 of the During the latter part of 2007, Padillo suffered a mild stroke
Labor Code are cumulative and non-compliance with one due to hypertension which consequently impaired his ability
negates the employee's entitlement to the retirement to effectively pursue his work. In particular, he was
benefits under Article 300 of the Labor Code altogether. diagnosed with Hypertension S/ P CVA (Cerebrovascular
Accident) with short term memory loss, the nature of which
Facts: The late Padillo, was employed by respondent Rural had been classified as a total disability. He wrote a letter
Bank of Nabunturan, Inc. as its SA Bookkeeper. Due to addressed to respondent Oropeza expressing his intention
liquidity problems which arose sometime in 2003, the Bank

E.R.D.DIMAUNAHAN – EH409 6
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to avail of an early retirement package. Despite several

follow-ups, his request remained unheeded. 1.No. Article 297 does not apply in this case, considering
that it was the petitioner and not the Bank who severed the
On October 3, 2007, Padillo was separated from employment relations. As borne from the records, the clear
employment due to his poor and failing health as reflected in import of Padillo's September 10, 2007 letter and the fact
a Certification dated December 4, 2007 issued by the Bank. that he stopped working before the foregoing date and never
Not having received his claimed retirement benefits, Padillo reported for work even thereafter show that it was Padillo
a complaint for the recovery of unpaid retirement benefits. who voluntarily retired and that he was not terminated by the
Bank.
LA dismissed Padillo's complaint but directed the Bank to
pay him the amount of P100,000.00 as financial assistance, A plain reading of the [Article 297 of the Labor Code] clearly
treated as an advance from the amounts receivable under presupposes that it is the employer who terminates the
the Philam Life Plan. LA found Padillo disqualified to receive services of the employee found to be suffering from any
any benefits under Article 300 . Dissatisfied with the LA's disease and whose continued employment is prohibited by
ruling, Padillo elevated the matter to the NLRC. law or is prejudicial to his health as well as to the health of
his co-employees. It does not contemplate a situation where
NLRC's Fifth Division reversed and set aside the LA's ruling it is the employee who severs his or her employment ties.
and ordered respondents to pay Padillo the amount of Thus, given the inapplicability of Article 297 of the Labor
P164,903.70 as separation pay, on top of the P100,000.00 Code to the case at bar, it necessarily follows that
Philam Life Plan benefit. Relying on the case of Abaquin petitioners' claim for separation pay anchored on such
Security and Detective Agency, it applied the Labor Code provision must be denied.
provision on termination on the ground of disease —
particularly, Article 297— holding that while Padillo did NLRC's application of Abaquin was gravely misplaced
resign, he did so only because of his poor health condition. considering its dissimilar factual milieu with the present
Respondents moved for reconsideration but the same was case. In Abaquin, that the Court merely awarded termination
denied by the NLRC in its Resolution dated March 31, 2010. pay on the ground of disease in favor of security guard
Aggrieved, respondents filed a petition for certiorari with the Antonio Jose because he belonged to a "special class of
CA. employees . . .

CA rendered a decision setting aside the Resolutions, deprived of the right to ventilate demands collectively. In this
thereby reinstating the Decision but with modification. It case, it cannot be said that Padillo belonged to the same
directed the respondents to pay Padillo the amount of class of employees prohibited to self-organize. Therefore,
P50,000.00 as financial assistance exclusive of the absent this equitable peculiarity, termination pay on the
P100,000.00 Philam Life Plan benefit which already matured ground of disease under Article 297 of the Labor Code and
on July 11, 2009.Padillo could not, absent any agreement the Court's ruling in Abaquin should not be applied.
with the Bank, receive any retirement benefits pursuant to
Article 300 of the Labor Code considering that he was only No. Art 300 of LC provides that in the absence of any
fifty-five (55) years old when he retired. It likewise found the applicable agreement, an employee must (1) retire when he
evidence insufficient to prove that the Bank has an existing is at least sixty (60) years of age and (2) serve at least (5)
company policy of granting retirement benefits to its aging years in the company to entitle him/her to a retirement
employees. It pronounced that separation pay on the ground benefit of at least one-half (1/2) month salary for every year
of disease under Article 297 of the Labor Code should not of service, with a fraction of at least six (6) months being
be given to Padillo because he was the one who initiated the considered as one whole year. Notably, these age and
severance of his employment and that even before tenure requirements are cumulative and non-compliance
September 10, 2007, he already stopped working due to his with one negates the employee's entitlement to the
poor and failing health retirement benefits under Article 300 of the Labor Code
altogether.
Issues:
1.Whether or not The Labor Code provision on termination All told, in the absence of any applicable contract or any
on the ground of disease under Article 297 apply in this evolved company policy, Padillo should have met the age
case. and tenure requirements set forth under Article 300 of LC to
be entitled to the retirement benefits provided therein.
2.Whether or not PADILLO is qualified to receive any Unfortunately, while Padillo was able to comply with the five
retirement benefits under Article 300 (5) year tenure requirement — as he served for twenty-nine
(29) years — he, however, fell short with respect to the sixty
Ruling:

E.R.D.DIMAUNAHAN – EH409 7
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(60) year age requirement given that he was only fifty-five light of the dictates of social justice, holds that the CA's
(55) years old when he retired. financial assistance award should be increased from
P50,000.00 to P75,000.00, still exclusive of the P100,000.00
Nevertheless, the Court concurs with the CA that financial benefit receivable by the petitioners under the Philam Life
assistance should be awarded but at an increased amountin Plan which remains undisputed.

E.R.D.DIMAUNAHAN – EH409 8
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Grace Christian Highschool, represented by its Principal, Dr. James Tan vs. Filipinas A. Lavandera

Doctrine: ONE-HALF (1/2) MONTH SALARY means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th
month pay and the remaining 5 days for [SIL].

Facts: Filipinas was employed by (GCHS) as high school teacher since June 1977, with a monthly salary of P18,662.00 as of May 31,
2001. On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of service incentive leave (SIL)
pay, separation pay, service allowance, damages, and attorney's fees against GCHS and/or its principal, Dr. James Tan. She alleged
that on May 11, 2001, she was informed that her services were to be terminated effective May 31, 2001, pursuant to GCHS'
retirement plan which gives the school the option to retire a teacher who has rendered at least 20 years of service, regardless of age,
with a retirement pay of one-half (1/2) month for every year of service. At that time, Filipinas was only 58 years old and still physically
fit to work. She pleaded with GCHS to allow her to continue teaching but her services were terminated, contrary to the provisions of
Republic Act No. (RA) 7641, otherwise known as the "Retirement Pay Law."

GCHS denied that they illegally dismissed Filipinas. They asserted that the latter was considered retired on May 31, 1997 after having
rendered 20 years of service pursuant to GCHS' retirement plan and that she was duly advised that her retirement benefits in the
amount of P136,210.00 based on her salary at the time of retirement, i.e., P13,621.00, had been deposited to the trustee-bank in her
name. Nonetheless, her services were retained on a yearly basis until May 11, 2001 when she was informed that her year-to-year
contract would no longer be renewed.

Labor Arbiter (LA) dismissed the illegal dismissal complaint for lack of merit. The LA found that GCHS has a retirement plan.
Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be deficient vis-à-vis those provided under
RA 7641, and, accordingly, awarded Filipinas retirement pay differentials based on her latest salary as follows:P18,662.00/30 =
P622.06/day. P622.06 x 22.5 = P13,996.35 x 20 = P279,927.00 - Amount deposited in trust P136,210.00 = Retirement benefits
differential P143,717.00

The LA, however, denied Filipinas' claims for service allowance, salary increase, and damages for lack of sufficient bases, but
awarded her attorney's fees equivalent to five percent (5%) of the total award, or the amount of P7,185.85.

NLRC set aside the LA's award, and ruled that Filipinas' retirement pay should be computed based on her monthly salary at the time
of her retirement on May 31, 1997, i.e., P13,621.00. Moreover, it held that under Article 287 of the Labor Code,as amended by RA
7641, the retirement package consists of 15 days salary, plus 13th month pay and SIL pay pro-rated to their one-twelfth (1/12)
equivalent. NLRC awarded Filipinas retirement pay differentials in the amount of P27,057.20.

CA affirmed with modification the NLRC's Decision. It held that "one-half month salary" equates it to "22.5 days" which is "arrived at
after adding 15 days plus 2.5 days representing one-twelfth of the 13th month pay, plus 5 days of [SIL]. Accordingly, it computed
Filipinas' retirement benefits differential as follows: Monthly salary P13,624.00 ÷ 30 days = 454.13 x 22.5 days = P10,218.00 x 20
years = P204,360.00 - Amount deposited in trust 136,210.00 = Retirement benefits differential P68,150.00

Issue: WON the CA committed reversible error in using the multiplier "22.5.days" in computing the retirement pay differentials of
Filipinas.

Ruling: NO. RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, states that "an employee's
retirement benefits under any collective bargaining [agreement (CBA)] and other agreements shall not be less than those provided"
under the same — that is, 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 — and that "[u]nless 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."

GCHS computed Filipinas' retirement pay without including one-twelfth (1/12) of her 13th month pay and the cash equivalent of her
five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas' retirement benefits should be computed in accordance with
Article 287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement scheme. They differ, however, in the
resulting benefit differentials due to divergent interpretations of the term "one-half (1/2) month salary" as used under the law.

E.R.D.DIMAUNAHAN – EH409 9
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The Court, in the case of Elegir v. Philippine Airlines, Inchas recently affirmed that "one-half (1/2) month salary means 22.5 days: 15
days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for [SIL]." The Court sees no
reason to depart from this interpretation.

Section 5.2, Rule II of the Implementing Rules of Book VI of the Labor Code, as amended, promulgated to implement RA 7641,
further clarifies what comprises the "1/2 month salary" due a retiring employee. 5.2 Components of One-half (1/2) Month Salary. —
For the purpose of determining the minimum retirement pay due an employee under this Rule, the term "one-half month salary" shall
include all the following: (b) The cash equivalent of not more than five (5) days of service incentive leave. The rules are, thus, clear
that the whole 5 days of SIL are included in the computation of a retiring employees' pay.
Goodyear Philippines Inc. vs. Angus pay, damages, and attorney’s fees. The Labor Arbiter upheld the
validity of Angus’ termination and declared that it was already a
Doctrine: Retirement Pay and Separation Pay are not mutually payment of separation due to redundancy. The National Labor
exclusive in the absence of a specific prohibition in the Relations Commission affirmed the decision of the Labor Arbiter.
Retirement Plan or the Collecting Bargaining Agreement.
The Court of Appeals partially granted Angus’ petition, saying
Facts: Angus was employed by Goodyear as Secretary to the that she is entitled to separation pay in addition to the retirement
Manager of Quality and Technology from 1966-2001. Goodyear pay.
implemented cost-saving measures which included the
streamlining of its workforce. On September 9, 2001, Angus Issue: WON Angus is entitled both separation pay and early
received a letter from Goodyear through Ramos, the Human retirement benefit
Resource Director, stating that the position he is holding is
already redundant and is no longer necessary. The letter also Ruling: Yes. Retirement pay and separation pay are not
provides that as company practice, termination due to mutually exclusive. Retirement benefits are a form of reward to
redundancy or retrenchment is paid at 45 days pay per year of the employee’s loyalty and service to the employer and are
service. Moreover, considering that Angus has rendered 34.92 earned under existing laws, CBA, or company policies.
years of service to the company and have reached the minimum Separation pay is the amount given to the employee to provide
age of 55 to qualify early retirement, the management has during the period that he is looking for another employment and
decided to grant Angus early retirement benefit at 47 days per is recoverable only in instances enumerated in Article 298 and
year of service. Goodyear, in summarizing the benefits of 299 of the Labor Code or in illegal dismissal when reinstatement
Angus, stated that he will receive 47 days’ pay per year of is not feasible. One of the grounds in Article 298 is when the
service (which will come form the Pension Fund), fractions of employee is terminated due to redundancy, therefore she is
13th and 14th months pay, longevity pay, emergency leave and entitled to separation pay.
any earned and unused vacation or sick leave.
The Court held in several cases that an employee is entitled to
Angus responded to their letter, requesting that although he recover both separation pay and retirement benefits in the
agrees with Management’s decision for Angus to avail the early absence of a specific prohibition in the Retirement Plan of CBA.
retirement benefit, he asks for an additional 3 days for every An employee’s right to receive separation pay in addition to
year of service which will total to 50 days. An Establishment retirement benefits depends upon the provisions of the
Termination Report was filed by Goodyear with the Department company’s Retirement Plan and/or CBA.
of Labor and Employment. Angus accepted the checks which
covered only 47 days’ pay per year of service and other The provision in Goodyear’s CBA, “The parties finally agree that
company benefits. However, he annotated on the an employee shall be entitled to only one (1) benefit, whichever
acknowledgement receipt that he received the same under is higher”is not substantial evidence of the prohibition because it
protest and acceptance will be on the condition that she will be does not appear to be a substantial part of the CBA. Assuming
given an additional 3 days’ pay per year of service. Since Angus that it is, there was no proof that the CBA Goodyear presented
refused to sign the Release and Quitclaim, Goodyear took back as evidence is the same CBA material to the case. Upon
the checks. examination of the 2001-2004 CBA, there was no prohibition of
restriction on the availment of benefits under the company’s
Ramos wrote a letter to Angus, stating among others that the Retirement Plan and separation pay.
company has already offered her the most favorable separation
benefits due to redundancy. On January 17, 2002, Angus finally Lastly, a quitclaim cannot bar an employee from demanding
accepted the check amounting to P1,958,927.89 and likewise benefits he is legally entitled.
executed a Release and Quitclaim. Angus filed before the Labor
Arbiter a complaint for illegal dismissal with claims of separation
Banco De Oro Unibank vs. Sagaysay

E.R.D.DIMAUNAHAN – EH409 10
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Doctrine: A retirement plan based on a company policy of the bank, considering that he has previously worked for two
implemented prior to the hiring of an employee is deemed to other banks.
have been accepted upon employment
The Court of Appeals reversed the ruling of NLRC, saying that
Facts: On May 16, 2006, Guillermo Sagasyay was hired by there was no negotiation between BDO and Sagaysay and
Banco De Oro (BDO) as Senior Accounting Assistant as a therefore there was no mutual agreement. It stated that
result of a merger with united Overseas Bank with BDO as the Sagaysay was forced to participate in the retirement plan.
surviving bank. Guillermo was employed in UOB for two years
and in Metrobank for twenty-eight (28) years. Issue: WON the June 1, 1994 retirement plan is valid and
effective against Sagaysay.
On January 8, 2010, BDO informed Sagaysay that he will be
formally retired on September 1, 2010 pursuant to the Ruling: Yes. According to Article 287 of the Labor Code, The
company’s retirement plan which mandates its retirement age provisions will only be applied in absence of a retirement plan
at sixty (60) years old. Since he had an outstanding loan and or agreement providing for retirement benefits of employees in
his children were still in college, Sagaysay requested that his the establishment. The Labor Code permits the employers and
services be extended up to May 16, 2011 so that he could employees to fix applicable retirement age, provided that the
render at least five (5) years of employment which would benefits under the Collective Bargaining Agreement or any
consequently entitle him to 50% of his basic pay for every year other agreements shall not be less than those provided by the
of service upon his retirement. Code.

BDO did not grant his wishes. As of his last day of work, he In the previous Cases decided by the Court, the retirement
was earning a monthly salary of P28,048.00. Sagaysay signed plans were adopted after the employees were hired by their
a Release, Waiver and Quitclaim for an in consideration of employer. Therefore they may contest to the validity of the
P98,376.14. The quitclaim stated that in consideration of the same unless they consented to its implementation. However,
amount given to him, he released and discharged the bank, its in the present case, the retirement plan came before the hiring
affiliates and subsidiaries from any action, suit, claim, or of Sagaysay.
demand in connection with his employment.
Sagaysay was sufficiently informed of the retirement plan. It
Sagaysay filed a complaint for illegal dismissal with has been twelve (12) years from the inception of the retirement
reinstatement and payment of backwages, moral damages, plan, which was prior to the hiring of Sagaysay, up to the
exemplary damages, and attorney’s fee against BDO before present, no employee questioned the retirement plan. Further,
the Labor Arbiter. He claimed that his family suffered damages by accepting the employment offer of BDO, Sagaysay was
amounting to P2,225,403.00, the amount which he would have deemed to have assented to all existing rules, regulations and
received if he was made to retire at the age of sixty-five (65). policy of the bank, including the retirement plan. BDO also
BDO on its part said that he was already paid the amount of issued a memorandum on June 1, 2009 regarding the
P98,376.14 and stressed that Sagaysay was not dismissed implementation of its retirement program, reiterating that the
but retired from service. normal retirement date was the first day of the month following
the employees sixtieth (60th) birthday, this memorandum was
The Labor Arbiter (LA) stressed that Sagaysay was illegally addressed to all employees and officers. Having knowledge of
dismissed and that he was forced to avail of an optional the retirement plant, he had every opportunity to question the
retirement age of sixty (60) which was contrary to the same, but he did not. Lastly, the most convincing detail that
provisions of Article 287 of the Labor Code. In addition, the LA Sagaysay assented to the retirement plan was his e-mails to
said that he did not freely assent to the retirement plan and he the bank. In those e-mails, he did not contest to the validity of
was only made to sign a quitclaim in exchange for a small the retirement plan and even recognized its provisions, he
consideration. even requested that his services be extended.

BDO appealed to the NLRC arguing that Sagaysay freely The Cercado Case, which was heavily relied upon by the
assented to its retirement plan. The NLRC reversed the ruing Court of Appeals is inapplicable. In the Cercado case, the
of the LA and explained that BDO’s retirement plan was petitioner was employed two years before the adoption of the
effecting as early as June 1, 1994. When Sagaysay was employer’s retirement plan, logically, her employment contract
employed on May 16, 2006, the retirement plan was already in did not include the retirement plan. The Court in the Cercado
full force and effect. NLRC concluded that when Sagaysay case held that because of the automatic application of the
accepted his employment with BDO, he assented to the retirement plan to the current employees without they
provisions of the retirement plan. NLRC found it difficult to voluntary consent, the employee was forced to participate.
believe that Sagaysay did not famliarize the retirement policy Further, in the case relied upon by the CA, the employee
refused the early retiremet package provided by the employer,

E.R.D.DIMAUNAHAN – EH409 11
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from the beginning she was adamant that she did not consent be said that he was naive in dealing with his employer and that
to the retirement plan of her employer. In the case at bar, he failed to exercise his free and voluntary will when faced
Sagaysay signed a quitclaim and received at amount of with the documents relating to his retirement.
P98,376.14.

Given that Sagaysay is a seasoned banker, spending 34 years

of his life working in different banking establishments, it cannot
MAUREEN P. PEREZ vs. COMPARTS INDUSTRIES, INC. prayed for separation pay in the form of optional retirement
benefits either under the Retirement Plan for CII officers or
Doctrine: (1) Termination of employment by the employee under the CBA for rank-and-file employees. The NLRC-RAB
does not entitle the employee to separation pay. (2) Unilateral No. VII ruled in favor of Perez. The NLRC ordered CII to pay
act of retirement by the employee does not bind the employer Perez the amount of P100,000. Perez appealed before the
with the provision of the company’s Retirement Plan. Court of Appeals, who also dismissed her appeal and affirmed
the ruling of the NLRC.
Facts: Perez started her employment with Comparts Industries
Inc. (CII) on July 16, 1988, she was eventually appointed as Issues:
Marketing Manager and held that position from 1998 up to (1) Whether Perez is entitled to separation pay
January 2009, the date she resigned from work. Prior to the
resignation of Perez, she manifested her intention to avail of (2) Whether Perez is entitled to the optional retirement benefits
the optional retirement program since she was already
qualified to retire under it. Her application was denied. While Ruling:
vacationing to the United States, she again filed for optional
retirement to take advantage of a job offered to her in the No. Termination of employment by the employee, as in this
States, but her application was denied. instance, does not entitle the employee to separation pay.
Separation pay is the amount which an employee receives at
CII defended their denial saying that in the Retirement Plan, the time of his severance from employment, designed to
CII has the option to grant or deny the application for optional provide the employee with the wherewithal during the period
retirement and considering that it is experience financial crisis, that he is looking for another employment and is recoverable
it has no choice but to disallow her intention. Her request for only in instances enumeration under Articles 298 and 299 of
reconsideration was likewise denied. Perez had to go to the the Labor Code or in illegal dismissal cases when
United States to attend to her mother who suffered a mild reinstatement is not feasible.
stroke, so she applied for optional retirement again. CII
informed her that they could only give her P100,000 as gratuity No. Being a managerial employee, she is covered only by the
for her twenty years of service as this was the only amount Retirement Plan of CII Officers which provides for a normal
they could afford. retirement benefit and also an optional or early retirement.
This normal retirement benefit shall be sum equal to 22.5 days
Perez received a letter from CII stating their acceptance of Pay for every year of Credited Service in accordance with the
resignation, the same letter contained their deinal of Perez’ Collective Bargaining Agreement, whichever is greater. The
claim for optional retirement benefits, stating that CII has no Retirement Plan of CII Officers also provides for an
policy or rules on optional retirement benefits and that it has optional/early retirement benefit. However, in this provision, it
been affected by global crisis. Another reason for their denial was provided that it should be with the consent of the
was that the Labor Code does not grant separation pay to company. As the CA correctly ruled, a Retirement Plan in a
voluntary resigning employees. Further, they content that CII company partakes the nature of a contract. Consequently, CII
cannot invoke the provisions of the CBA because the CBA has to give consent for the optional retirement to operate. in
containing optional retirement benefits is only for the rank-and- this case, Perez’ application was denied several times since
file employees. CII still needed her services. Her unilateral act of retiring
without the consent of CII does not bind the latter with the
Perez filed a complaint before the NLRC-RAB No. VII for provisions of the retirement plan. Therefore, CII is not liable to
discrimination, moral damages, and attorney’s fees and further give Perez the optional retirement benefits provided therein.

E.R.D.DIMAUNAHAN – EH409 12
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De La Salle Araneta University vs Juanito Bernardo

Facts:

Bernardo has been a part-time employee of the DLS-AU. At the age of 65, the age of retirement, Bernardo was granted another term of
employment. Bernardo's contract with the university only ceased when he reached the age of 75, the compulsory retirement age. He asserts
his right to claim his retirement benefits.

Issue:

Whether or not Bernardo is entitled to the retirement benefits.

Held:

Bernardo is entitled to the retirement benefits. According to Article 302 of the Labor Code, as amended by RA No 7641, any employee may
be retired upon reaching the retirement age and that he shall be entitled to receive retirement benefits under the existing laws. Further,
according to section 1 of Book VI Rule 2 of the Rules Implementing the Labor Code, the same rule shall apply to all employees in the private
sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid, except to those
specifically exempted under Section 2 hereof. The exemptions do not cover the part-time employees.

Applying the principle of expressio unio est expulsio alterius which is that the express mention of one person, thing, or consequence implies
the exclusion of all others, Bernardo's claim for retirement benefits cannot be denied on the ground that he was a part-time employee.

E.R.D.DIMAUNAHAN – EH409 13
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Catotocan vs. Lourdes School of Quezon City

Facts: In 1971, EdithaCatotocanas music teacher in Lourdes School of Quezon. By the school year 2005-2006, she had already
served for thirty-five (35) years. LSQC has a retirement plan providing for retirement at sixty (60) years old, or separation pay
depending on the number of years of service. On November 25, 2003, LSQC issued an addendum on its retirement policy which
adds that normal retirement will commence after completing “30 years of service” to the school. On March 23, 2004, Catotocan
opposed to the new retirement policy. LSQC retired Catotocan sometime in June 2006 after completing 35 years of service. Full
retirement benefits were given to her. Catotocan's retirement, effective June 2006, was communicated to her on January 27, 2006. In
the same letter, Catotocan was told that if she desires, she may signify in writing her intent to continue serving the school on a
contractual basis. She responded by submitting a "Letter of Intent" on February 14, 2006.

On May 11, 2006, LSQC appointed Catotocan as a Grade School Guidance Counselor for the school year 2006-2007 under a
contractual status effective June 1, 2006 until March 31, 2007. On August 16, 2006, Catotocan, together with other "retirees" who
were re-hired, wrote the LSQC Rector to request that they be included in the Valucare Health Maintenance Plan of the school, under
the scheme that they will shoulder the cost of the health plan through salary deduction.The Rector, Fr. Acuin, granted the request.
Again, on February 15, 2008, Catotocan re-applied as Guidance Counselor for school year 2008-2009.On April 9, 2008, LSQC
appointed her to the same post effective May 12, 2008 until April 3, 2009. In a Letter dated January 29, 2009, Catotocan at age 59 re-
applied for the position of GS Guidance Counselor, but LSQC no longer considered her application for the position.

On June 25, 2009, Catotocan file a complaint for illegal dismissal and monetary claims before the LA. LA,NLRC and CA ruled that the
respondent’s acts constituted implied consent to the school’s retirement policy and therefore barred from questioning its legality.
Catotocan asserts that her acceptance of retirement benefits will not stop her from pursuing an illegal dismissal complaint against

Issue: WON the illegal dismissal complaint of Catotocan will prosper.

Ruling: NO. Catotocan is already estopped from questioning the legality of the new retirement policy. Her voluntary acts and
enjoyment of the monetary benefits with the new retirement plan cannot be considered that she was illegally dismissed or have been
forced to retire. Her filing of illegal dismissal case was just an afterthought subsequent to LSQC’s denial of her fourth re-application
for the Guidance Counselor position.

Retirement plan allowing employers to retire employees who have not yet reached the compulsory retirement age of 65 yrs are not
per se void.

Only in the absence of such an agreement shall the retirement age be fixed by law, which provides for a compulsory retirement age at
65 years, while the minimum age for optional retirement is set at 60 years. Thus, retirement plans, as in LSQC's retirement plan,
allowing employers to retire employees who have not yet reached the compulsory retirement age of 65 years are not per se
repugnant to the constitutional guaranty of security of tenure. The Labor Code permits employers and employees to fix the applicable
retirement age at 60 years or below subject to the consent of employees, provided that the employees' retirement benefits under any
CBA and other agreements shall not be less than those provided therein.

2.Notice of the employer’s decision to retire an employee is sufficient.

Indeed, acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. However,
We already had the occasion to strike down the added requirement that an employer must first consult its employee prior to retiring
him, as this requirement unduly constricts the exercise by management of its option to retire the said employee. Due process only
requires that notice of the employer's decision to retire an employee be given to the employee.

3. Her voluntary acts constitutes implied consent to the new retirement policy

While it may be true that Catotocan was initially opposed to the idea of her retirement at an age below 60 years, it must be stressed
that Catotocan's subsequent actions after her "retirement" are actually tantamount to her consent to the addendum to the LSQC's
retirement policy to wit:

her repeated application and availment of re-hiring program she received all of her retirement benefits upon acceptance of the
retirement benefits, there was no notation that she is accepting the retirement benefits under protest or without prejudice to the filing
of an illegal dismissal case.

E.R.D.DIMAUNAHAN – EH409 14
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Philippine Airlines vs. Hassaram

Doctrine: The determination factor in choosing which

retirement scheme to apply is the one which has superior Laya vs. Court of Appeals
benefits.
Facts: An employee in the private sector who did not expressly
Facts: Hassaram a former pilot of PAL filed for illegal dismissal agree to the terms of an early retirement plan cannot be
against PAL and the payment of retirement benefits. He separated from the service before he reaches the age of 65
claimed that he had applied for retirement from PAL in August years. The employer who retires the employee prematurely is
200 after rendering 24 years of service as a pilot, but that his guilty of illegal dismissal, and is liable to pay his backwages
application was denied. Labor Arbiter ruled that Article 287 of and to reinstate him without loss of seniority and other
the Labor Code should be applied, since the statute provided benefits, unless the employee has meanwhile reached the
better benefits than the PAL-ALPAP. NLRC ruled in favor of mandatory retirement age under the Labor Code, in which
PAL on account of Hassaram’s receipt of retirement benefits case he is entitled to separation pay pursuant to theterms of
under the plan was sufficient to discharge his claim for the plan, with legal interest on the backwages and separation
retirement pay. CA ruled in favor of Hassaram that he is pay reckoned from the finality of the decision.
entitled to receive retirement benefits pursuant to Article 287
of the Labor Code. PAL asserts that its own company Issue: Whether or not the petitioner was validly retired by PVB
retirement plans – both the PAL Pilots Retirement Benefit Plan at age 60?
and the 1967 PAL-ALPAP Retirement Plan – should have
formed part of Hassaram’s retirement pay, because the Plan Ruling: He was not validly retired.
was a retirement fund wholly financed by the company. The petitioner's letter of appointment pertinently stated:
Hassaram insists that the amount he received from the Plan 3. As a Senior Officer of the Bank, you are entitled to the
represented only a return of his share in a distinct and following executive benefits:
separate provident fund established for PAL Pilots. •Car Plan limit of ₱700,000.00, without equity on your
part; a gasoline subsidy of 300 liters per month and
Issue: subject further to The Car Plan Policy of the Bank.
• Membership in a professional organization in relation to
WON the amount received by Hassaram under the Plan your profession and/or assigned functions in the Bank.
should be deemed part of his retirement pay. • Membership in the Provident Fund Program/Retirement
Program.
WON Hassaram is entitled to receive retirement benefits • Entitlement to any and all other basic and fringe benefits
under Article 287 of the Labor Code. enjoyed by the officers; core of the Bank relative to
Insurance covers, Healthcare Insurance, vacation and sick
Ruling: Plan must be considered part of his retirement pay, leaves, among others.68
combined with the retirement benefits under the CBA between
PAL and ALPAP, this scheme would allow Hassaram to
receive superior retirement benefits, thereby rendering Article Obviously, the mere mention of the retirement plan in the letter
287 of the Labor Code inapplicable. of appointment did not sufficiently inform the petitioner of the
contents or details of the retirement program. To construe
1.) Yes, it is deemed part of his retirement pay. from the petitioner's acceptance of his appointment that he
had acquiesced to be retired earlier than the compulsory age
The provisions of the plan clearly provides that it is the of 65 years would, therefore, not be warranted. This is
company that contributes to a “retirement fund” for the account because retirement should be the result of the bilateral act of
of the pilots. These contributions comprise benefits received both the employer and the employee based on their voluntary
by the latter upon retirement, separation from service, or agreement that the employee agrees to sever his employment
disability. upon reaching a certain age.69

2.) No, Article 287 is not applicable. That the petitioner might be well aware of the existence of the
retirement program at the time of his engagement did not
Art 287 is applicable only to a situation where (1) there is no suffice. His implied knowledge, regardless of duration, did not
CBA or other applicable employment contract providing for equate to the voluntary acceptance required by law in granting
retirement benefits for an employee. Or (2) there is a CBA or an early retirement age option to the employee. The law
other applicable employment contract providing for a demanded more than a passive acquiescence on the part of
retirement benefits for an employee, but is below the the employee, considering that his early retirement age option
requirement set by law.

E.R.D.DIMAUNAHAN – EH409 15
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involved conceding the constitutional right to security of tenure.

Maria De Leon Transportation, Inc. vs. Macuray and just than the CA's pronouncement of one-half month's
salary per year of service, which the Court finds insufficient.
Facts: Macuray was employed as a bus driver of petitioner, a This is considering that petitioner has been paying its
company engaged in paid public transportation; that he plied drivers commission equivalent to less than the minimum
the Laoag-Manila-Laoag route; that he received a monthly wage for the latter's work, and in respondent's case, it has
pay/commission of P20,000.00; that, in November 2009, delayed payment of the latter's compensation for three
petitioner's dispatcher did not assign a bus to him, for no months. On the other hand, petitioner's lax policies
apparent reason; that for a period of one month, he continually regarding the coming and going of its drivers, as well as the
returned to follow up if a bus had already been assigned to fact that respondent's layovers are considerable — it
him; that finally, when he returned to the company premises, appears that throughout his employment, respondent
the bus dispatcher informed him that he was already spends a good number of days each month not driving for
considered AWOL (absent without leave), without giving any petitioner, which thus allows him to accept other work
reason therefor; that he went back to follow up his status for outside — makes up for deficiencies in the parties'
about six months in 2010, but nobody attended to him; that he compensation arrangement.
was not given any notice or explanation regarding his ||| 
employment status; that he felt betrayed by the petitioner,
after having served the latter for 18 years; that he considered
himself illegally dismissed; that during this time, he was
already 62 years old, but he received no benefits for his
service; that he was being charged for the cost of gasoline for
the bus he would drive; and that petitioner owed him three
months' salary for the year 2009.

Issue: Whether or not the respondent is entitled of retirement

pay?

Ruling: Yes, the respondent is entitled to them considering

that he was never dismissed from work, either for cause or by
resignation or abandonment. As far as petitioner is concerned,
he merely went on a company-sanctioned sabbatical. It just so
happened that during this sabbatical, he reached the
retirement age of 60; by this time, he is already 67 years old.
By filing the labor case, he may have pre-empted the payment
of his retirement benefits; but it is a clear demand for
retirement benefits nonetheless. Understandably, respondent
may have already expected that he would not be paid
retirement benefits since he stopped reporting for work in
2009, when he took his sabbatical; for him, such move might
have been construed as a resignation or abandonment by his
employer, the petitioner, and rightly so — for this is precisely
petitioner's defense in this case.||| 

In the absence of a retirement plan or agreement

in Maria De Leon Transportation, Inc., the Court hereby
declares that respondent is entitled to one month's salary
for every year of service, that is:

P10,000.00 x 18 years = P180,000.00

Retirement compensation equivalent to one

month's salary for every year of service is more equitable

E.R.D.DIMAUNAHAN – EH409 16