J.P. HEILBRONN COMPANY, PETITIONER, VS. NATIONAL LABOR UNION, RESPONDENT.

The National Labor Union had, prior to August, 1950, Bade various
demands upon J. P. Heilbronn Company, one of which (No. 6) is that
involved in the present case and reads as follows:

“Retirement gratuity based on one month’s salary for
every year of service to the following (a) those attaining 60 years of
age; (b) those incapacitated for work due to illness; and (c) those who
resign after 10 years of satisfactory service.”

The demands having been referred to the Court of Industrial
Relations, that court, through one of its associate Judges, Rendered a
decision dated August 21, 1950, the dispositive of which says:

“POR LAS CONCIDERACIONES EXPUESTAS, el Tribunal
concede temporalmente la demanda No. 8 de la peticion de la union
recurrente, y ordena a la compania recurrida para que dentro del plazo
de noventa (90) dias contados desde la fecha del recibo de la copia de
esta decision, adopte y Here a cabo un plan de pension para sus
empleados y obruros, el que debe someterlo al Tribunal para su
couocimiento e informacion, cuyo plan debera estar baaado sobre la
situacion finaneiera en que se encuentra la recurrida, y a las
condiciones espee ficadas en la demanda No. & de la peticion,
sujeto a cualesquier leyes que se promulgen en relacion con la Ley de
la Republica Ho. 532, y las rocomendaciones de la Comisipn creada por
virtud de dicha ley, que se refieren particular y esclusiramente a la
compafiia recurrida, en euyo caso, estas son las que nan de prevalecer.”

Upon motion for reconsideration, the court, sitting in banc,
affirmed the decision but with the modification that the presentation
of the pension 6r retirement plan be held in abeyance until Congress
should enact a law on that latter “in order,” says the court, “to
establish a permanent policy and to avoid confusion,” such legislation
being then expected because of the approval of Republic Act No. 532 creating a commission to make a comprehensive study of a
legislation pension plan for industrial employees and laborers. But as
two years passed without the expected being enacted, the court, at the
instance of the labor union, entered an order dated January 6, 1953,
requiring the company to present within 90 days the retirement plan
called for in the original decision of August 21, 1950.

Contending that the Court of Industrial Relations committed a
serious abuse of discretion and acted without authority in promulgating
this last order, the company filed the present petition for certiorari
to have the said order set aside.

It is the contention of the petitioner that “until such time as the
Philippine Congress enacts a law requiring the payment of pensions (assuming that such law is valid), the Court of industrial Relations
has no power to require an employer to pay a pension to his employees.”
however, has already held (in the case of Philippine Education Company,
Inc. vs. Court of Industrial Relations et al., G. R. No.
L-5679, decided November 28, 1953) that such power is conferred upon
that tribunal by Commonwealth Act No. 103, this on the theory that
pension payments and retirement plans are embraced in wages and
conditions of employment and are, therefore, proper subjects of
collective bargaining between! employer and employees. Said the Court
in that case:

“The power to allow retirement gratuity or pay is
conferred on the Court of Industrial Relations by Sections 1, 4, 13 and
20 of Com. Act No.103. It was upheld by the Supreme Court in Leyte Land
Transportation Company vs. Leyte farmers and Laborers Union, supra,
and applied by the Court of industrial Relations in a number of other
cases. Pension payments and retirement plans are embraced in ‘wages’
arid conditions of employment, and are proper, subjects of collective
bargaining. See 12 A. L. R. 2d 274, 275 for American decisions adopting
this view. The only limitations are that the award be reasonable and
compatible with the employer’s right to a reasonable profit on its
capital. The question of reasonableness is a question of fact to be
considered in the new trial herein ordered, same as the reasonableness
of the increase in wages.”

But while the power of the Industrial Court to allow retirement
gratuity is thus recognized overlooked that the power is expressly, it
should not be made subject to the limitation “that the award be
reasonable and compatible with the employer’s right to a reasonable
profit on its capital.” This limitation necessarily imposes upon the
court the duty of inquiring into the question of how much the business
of the employer could afford to give to the employees by way of pension
or gratuity. It does not appear that such inquiry has been undertaken
in the present base since no evidence was required on the union’s
demand for gratuity or pension. In the circumstances, we feel that for
a fair settlement of the present controversy a new trial is in order.

The order appealed from requires the company within 90 days to
“adopt and carry out” a pension plan based on petitioner’s financial
situation and on the conditions specified in Demand No. 8. In so far as
the order requires the presentation of a mere plan for the payment of
gratuities there could be no objection thereto in view of what has
already been stated regarding the power of the court in such matters.
But in so far as the order requires petitioner to adopt and carry out
such plan before ii has been approved by the court after proper
investigation and hearing, the same must be regarded as arbitrary and
without factual basis.

Wherefore, the order complained of is modified in the sense that the
petitioner is only required to present a pension plan for approval
after due investigation and hearing, the case being for that purpose
ordered remanded to the court below. Without costs.

Paras, C.J., Pablo, Bengzon, Padilla, Montemayor, Jugo, Bautista Angelo, Concepcion, and Reyes, J.B.L., JJ., concur.