ADELO C. RIVERA, PLAINTIFF-APPELLANT, VS. SAN MIGUEL BREWERY CORPORATION, INC., DEFENDANT-APPELLEE.

This is an appeal from the decision dated December 10, 1965 of the Court of First Instance
of Misamis Oriental in civil case 2480.

On June 18, 1964
Adelo C. Rivera – litigating as pauper – filed with
the municipal (now city) court of Cagayan de Oro a com­plaint against the San Miguel Brewery
Corporation, Inc. (herein­after referred to as the Company) for collection of
separation pay and recovery of a sum of money, including actual, moral and
exemplary damages and attorney’s fees. 
On July 15, 1964,
the Company filed its answer, traversing the material allegations of the complaint.

On July 25, 1964 Rivera filed a request for admission of, inter
alia, the fact that the plaintiff (Rivera),
like the other secu­rity guards of the Company, is not and was never a member
of any labor union with which the Company has or had a collective bargaining
agreement.

On November 25, 1964
the city court of Cagayan de Oro
rendered judgment, as follows:

“This Court, after a careful consideration of the documentary
evidence, oral and writ­ten arguments of the parties as well, finds that the
defendant has already paid its obligation to the plaintiff in accordance with
law; hence, for lack of merit, this case is hereby dismissed with costs against
the plaintiff.”

Rivera appealed to the Court of First Instance of Misamis Oriental.

Instead of filing another answer, the Company, in its ma­nifestation
of January 26, 1965,
adopted as its answer that which it filed on July 15, 1964 with the city court.

On August 6, 1965,
when the case was called for a pre­trial conference, the parties submitted a
stipulation of facts, quo­ted verbatim as follows:

“ON THE FIRST CAUSE OF ACTION

“1.  For the first cause of action, the plaintiff
is of legal age, resident of Corrales Avenue, Cagayan
de Oro City and the defendant is a domestic
corporation with principal office at Manila, Phi­lippines and a plant at Cagayan de Oro City;

“2.  Plaintiff was employed by the defendant
Corporation on December 8, 1952
as a security guard up to and including September
16, 1963, ap­proximately 10 years and 9 months;

“3.  On September 16, 1963 plaintiff was separated
for physical disability due to illness as shown by a letter of termination
dated September 17, 1963 from the employer signed by Mr. Vicente Pardo, Manager of the Cagayan
Coca-Cola Plant which is already marked in the records of this case as Exhibit
C for the plaintiff;

“4.  At the time of plaintiff’s separation from the
service he was receiving a daily wage of P5.90 and in accordance with the
Health, Wel­fare and Retirement Plan (Exhibit 1) [hereinafter referred to as
the private plan] of the defendant particularly Article 9 (Exhibit 1-A for the
Defen­dant), plaintiff was paid a total of P930.35 as retirement as shown in
Exhibits A and B for the Plaintiff which exhibits are also admitted by the
defendant.

“ON THE SECOND CAUSE OF ACTION

“For the second cause of action paragraph 1 as submitted in
the first cause of action, the employer-employee relation is likewise
admitted.  As also stated in the first
cause of action the statement of accounts embodied in Exhibits A and B for the
plaintiff are likewise admitted; and as also admitted in the first cause of
action the cause of termination of the employee is as stated in Exhibit C for
the plaintiff, the letter termination; That the employee was not a member of
the labor union; That the amount of P331.40 representing the Defendant’s
contribution to the Social Security System during the period from September
1957 to March 1963 was deducted from Plaintiff’s retirement benefits in
accordance with Article 15 (Ex­hibit 1-B) of the Defendant’s Health, Welfare
and Retirement Plan (Exhibit 1 for the Defendant); and That the Health, Welfare
and Retirement Plan Exhibit 1 of the defendant is fully company fi­nanced, no
contribution whatsoever from plaintiff was ever required.”

On December 10, 1965
the Court of First Instance of Mi­samis Oriental
rendered judgment, as follows:

“WHEREFORE, after a careful evaluation of the facts and the
law respecting the matter, judgment is hereby rendered in favor of the
defendant Company and against the plaintiff dismissing the latter’s complaint
with costs against him.”

In this appeal to us, Rivera poses only one question of law –
which is, whether the Company had the right to deduct the amount of P331.40
from his retirement benefits and/or separation pay and thus recover its
contribution to the Social Security System – but assigns two errors, to wit:

1.   
The lower court erred in holding
that section 9 of the Social Security Act authorizes the employer to deduct
from its employee’s separation pay and/or retirement pay whatever it
contributed to the Social Security System in so far as the coverage of the said
employee is concerned.

2.   
The lower court erred in giving
force and validity to Article XV of the Company’s private plan, notwithstanding
the provisions of section 19 of Republic Act 1161 as amended by Republic Acts
1792 and 2658.

The appellant’s case must fall on both counts.

For unmistakable is the import of section 9 of the Social
Security Act^[1]
which expressly provides, inter alia,
that

“. . . [P]rivate plans which are
existing and in force at the time of compulsory coverage shall be integrated
with the plan of the System in such a way that where the employer’s
contributions to his private plan is [sic] more than that
required of him in this Act, he shall pay to the Sytem
only the contribution required of him and he shall conti­nue his contributions
to such private pIan less his contribution to the
System so that the employer’s total contribution to his private benefit
plan and to the Social Security System shall be the same as his contribution to
his private plan before the compul­sory coverage; Provided, further,
That any changes, adjustments, modifications, eliminations or improvements in
the benefits to be available under the remaining private plan, which may be
necessary to adopt by reason of the reduced contribution thereto as a result of
the integration, shall be sub­ject to agreements between the employers and
employees concerned . . .” (emphasis supplied)

The Company has a private benefit plan – its Health, Wel­fare and
Retirement Plan – which is wholly company-financed be­cause the employees do
not contribute to its maintenance.  The
Company has integrated its private plan with that of the Social Se­curity
System.  It remitted to the latter the
contributions required of it for and in behalf of its employees – including the
appellant Rivera – but at the same time it has maintained its own private
plan.  It is not controverted
that the Company’s contributions to its private benefit plan are greater than
that required of it under the Social Security Act.  It has, therefore, the right to deduct its
contributions to the System from the benefits accruing to its em­ployees under
its private, plan.

In the case at bar, the total of the retirement benefits due to
Rivera under the private plan of the Company was P1,261.75.  But since the latter had paid the amount of
P331.40 as its contribution to the Social Security System for and in behalf of
Rivera, it has therefore the right to deduct the latter amount from the to­tal
amount of the retirement benefits, leaving a balance of P930.35, which latter
sum was paid to Rivera.  Otherwise, the
Company would be paying to the System and to its private plan, both for the
benefit of Rivera, the total amount of P1,593.15 – a fact situation not
envisaged by the aforequoted section 9 (of the Social
Security Act) which emphatically stresses “that the employer’s total
contribution to his private benefit plan and to the Social Security Sys­tem shall
be the same as his contribution to his private plan before the compulsory
coverage.”

Besides, the authority of the Company to effect the said
deduction is neither unilateral nor without basis.  In compliance with the directive set forth in
section 9, supra, that “any changes, adjustments, modifications,
eliminations, or improvements in the benefits to be available under the
remaining private benefit-plan, which may be necessary to adopt by reason of
the reduced contri­bution thereto as a result of the integration, shall be
subject to agreements between the employers and employees”, the Company
incorporated into its private plan Article XV which provides:

“The benefits provided in these Rules shall be reduced by
such amounts as would be sufficient to compensate the company for its (i.e.,
employer’s) contribution for the account of each employee to the Social
Security System.  However, beginning
with the Company’s contributions corresponding to the month of April, 1953 the
Company’s contribution to the Social Security System shall no longer be
deducted from the benefits provided in these rules.” (empha­sis supplied)

The private plan was set up by the Company pursuant to a
collective bargaining agreement it entered into with the union which represents
the majority of its employees.  It can
therefore be considered as an integral part of the said collective bargaining
agree­ment dealing exclusively with the health, welfare and retire­ment of the
employees.  As such, it is binding on all
employees of the Company – whether or not union members – because a collec­tive
bargaining agreement is the law of the plant.^[2]
Statutory law firmly supports this holding because the labor organization desig­nated
or selected by a majority of the employees in an appropriate bargaining unit is
the “exclusive representative of all the employees in such unit for
the purpose of collective bargaining.”^[3]

The appellant stresses the fact that he is not a member of the
labor union, and in the process impliedly argues that Article XV of the private
plan is not binding on him.  Assuming
that he is correct, that is, he is not bound by the terms of the private plan,
then it is only just and logical that its benefits be withheld like­wise froth
him.  But decisional law frowns upon
this, the cases being unanimous that

“When a collective bargaining contract is entered into by the
union representing the employees and the employer, even the non-member
employees are entitled to the benefits of the contract.  To accord its benefits only to members of the
union without any valid reason would constitute undue discrimination against
non-members.”^[4]

The rationale behind the extension of the
benefits of a collective bargaining agreement even to non-union members – as
underscored by the abovecited jurisprudential
touchstone – is to preclude undue discrimination against them.  This same ruling does not and should not in
turn justify any discriminatory treatment against union mem­bers, a result
which is certain to follow if the appellant were to receive the benefits
flowing from the private plan of the Company, sans the burden imposed on
the recipient by the aforequoted Arti­cle XV.  His readiness to receive the benefits
accruing to him un­der the said private plan should be matched by his
willingness to bear the burdens concomitant thereto, one of which is the reduc­tion
of the benefits owing to him up to the amount sufficient to compensate the
Company for its (employer’s) contributions (for his account) to the Social
Security System.

Finally, the appellant’s stand that Article XV of the Company’s
private plan flies in the teeth of section 19 of the Social Security Act, is
untenable.  This section expressly
provides:

“Employer’s contribution – Beginning as of the last day
of the month when an employee’s compulsory coverage takes effect and every
month thereafter during his employment, his employer shall pay, with respect to
such covered employee, the employer’s contribution in accordance with the
schedule indicated in Section eighteen a this Act.  Notwithstanding any contract to the contrary,
an employer shall not deduct, directly or indirectly, from the compensation of
his employees covered by the System or otherwise recover from them the
employer’s contribution with respect to such employees.”

It is clear, from a close scrutiny of the
last sentence of the abovecited section, that what is
prohibited is the deduction of the emplo­yer’s contribution from the
compensation of his employees, or the recovery from said employees of the
employer’s contribution to the System with respect to their coverage.  Stated otherwise, what is enjoined is any
employer’s scheme to make his employees shoulder his burden of paying to the
System the employer’s contribution required by the Social Security Act.^[5]

There is no such scheme, in the case at bar, of passing the
employer’s burden because the retirement pay of the appellant is not in
the category of a compensation, but is a fringe benefit
pro­ceeding from the Company’s private plan. 
Moreover, the Compa­ny does not seek to recover from the appellant the former’s con­tribution with respect to the latter.  It is merely deducting the same from what it
pays to the private plan which it has set up and is singlehandedly
maintaining, and which it has integrated with the System.

For, indeed, to allow the appellant to enjoy the full amount of
retirement pay under the private plan and all the benefits due to him under the
Social Security Act without spending any single centavo – and conversely, to
prohibit the Company from making the corresponding deduction from such benefits
of its contributions to the Social Security System in behalf of the appellant –
is to sanction an inequitable situation that runs roughshod over the
universally accepted maxim against unjust enrichment: “nemo
cum alterius detrimenti
locupletari potest.”

ACCORDINGLY, the judgment a quo is
affirmed.  No costs.

Concepcion, C.J., Reyes, JBL, Dizon, Makalintal, Zaldivar, Sanchez, Angeles, and
Fernando, JJ., concur.

^[1]
Republic Act 1161 as amended by Republic Acts 1792, 2658 and 3839.

^[2]
J.I. Case Co. vs. NLRB, 321 U.S.
332 (1944).

^[3]
Republic Act 875, sec. 12(a).

^[4]
National Brewery & Allied Industries Labor Union vs. San Mi­guel
Brewery, et al., L-18170, Aug. 31, 1963; Internatio­nal Oil Factory Workers’
Union vs. Martinez, L-15560, Dec. 31, 1960; PRISCO vs. PRISCO
Workers’ Union, L-9288, Dec. 29, 1958; LASEDECO vs. Caledonia Pile
Workers’ Union, L-4877, Feb. 26, 1952; Leyte Land Transp. vs. Leyte Farmers’
& Laborers’ Union, 80 Phil. 842, May 12, 1948.

^[5] See
secs. 18 and 19 of Republic Act 1161 as amended by
Republic Acts 1792, 2658 and 3839.