METROPOLITAN BANK AND TRUST COMPANY, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, FELIPE A. PATAG AND BIENVENIDO C. FLORA, RESPONDENTS.

Metropolitan Bank and Trust Company versus National Labor Relations Commission

The Case

This is a petition for review on certiorari brought by Metropolitan Bank and Trust Company, or Metrobank, against the National Labor Relations Commission and two of its former officers, Felipe Patag and Bienvenido Flora. Metrobank asks the Supreme Court to set aside the decision and resolution of the Court of Appeals, which had affirmed the finding of the labor tribunals that the two retirees were entitled to additional retirement benefits under the bank's improved officers' benefits memorandum for 1998. The case matters because it is the Court's cleanest statement of the doctrine of company practice — the rule that a benefit voluntarily and consistently given by an employer over a significant period, though not required by law or contract, ripens into a vested right that cannot be unilaterally withdrawn or diminished.

Procedural History

Patag and Flora filed a consolidated complaint with the Labor Arbiter for underpayment of retirement benefits and damages. The Labor Arbiter dismissed the complaint. On appeal, the National Labor Relations Commission partially granted the appeal and directed Metrobank to pay the unpaid beneficial improvements under the 1998 Officers' Benefits Memorandum. Metrobank then went to the Court of Appeals by petition for certiorari. The Court of Appeals dismissed the petition and affirmed the Commission. Metrobank's motion for reconsideration was denied. Hence, this petition for review on certiorari before the Supreme Court.

Facts

Patag and Flora were former officers of Metrobank. Both availed of the bank's compulsory retirement plan under the 1995 Officers' Benefits Memorandum. Patag retired on February 1, 1998, as an Assistant Manager; Flora retired on April 1, 1998, as a Senior Manager. Both received retirement benefits computed at 185 percent of their gross monthly salary for every year of service, and both were paid in full.

Early in 1998, collective bargaining negotiations were ongoing between Metrobank and its rank and file employees for the period 1998 to 2000. Patag wrote the bank on February 2, 1998, and Flora wrote on March 25, 1998, each asking that their retirement benefits be computed at the new, increased rate should one be granted after the signing of the new collective bargaining agreement. Metrobank did not reply.

Since the 1986 to 1988 collective bargaining agreement, and continuing with each agreement thereafter, Metrobank had issued a memorandum granting similar or better benefits to its officers, retroactive to January 1 of the first year of the agreement's effectivity. When the 1998 to 2000 agreement was approved, Metrobank issued on June 10, 1998, a new Officers' Benefits Memorandum, raising the compulsory retirement benefit from 185 percent to 200 percent effective January 1, 1998 — but with the condition that the benefits shall be extended only to those who remain in service as of June 15, 1998. Flora asked for reconsideration of that condition; Metrobank denied it. Patag and Flora then demanded their unpaid retirement benefits, and Metrobank refused on the ground that they had already ceased to be officers as of June 15, 1998.

Issues

• Whether or not the repeated grant of improved officers' benefits, retroactive to January 1 and without any condition as to date of employment, ripened into a company practice that cannot be unilaterally withdrawn or diminished by Metrobank.
• Whether or not Patag and Flora may still recover the higher benefits under the 1998 Officers' Benefits Memorandum despite having compulsorily retired before its issuance and failing to meet its June 15, 1998 condition.
• Whether or not Patag and Flora are barred by estoppel or implied waiver, having unqualifiedly acknowledged and received full payment of their retirement benefits.
• Whether or not granting the claim would amount to unfair discrimination against other similarly situated retirees who did not file suit.

Applicable Provisions

Article 100 of the Labor Code provides:

Article 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

This is the statutory anchor of the ruling: the new condition effectively diminished a benefit the retirees were already enjoying under the bank's established practice.

Ruling

On the first issue, the Court held that a company practice exists where the giving of benefits has been done over a long period of time and is shown to have been consistent and deliberate. The test requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that the employees are not covered by the law requiring payment. Here, for about eleven years, from 1986 to 1997, Metrobank issued at least four memoranda coinciding with four collective bargaining agreements, granting officers benefits commensurate with or superior to those of the rank and file, always retroactive to January 1 and without any condition as to date of employment. That condition was imposed for the first time in the 1998 memorandum. The Court stressed that the regularity and deliberateness of the grant over a significant period is the common denominator, and that Metrobank presented no evidence of past retirees who retired before the memorandum's issuance but after the January 1 effectivity date and who were paid at the old rate.

On the second issue, the Court held that where there is an established employer practice of regularly, knowingly and voluntarily granting benefits over a significant period, despite the lack of legal or contractual obligation, the grant ripens into a vested right of the employees and can no longer be unilaterally reduced or withdrawn. The June 15, 1998 condition effectively reduced the benefits of employees who retired before the memorandum's issuance. The Court also noted that Metrobank imposed the condition only after receiving the retirees' requests, which it found suspicious.

On the third issue, the Court held that there was nothing in the receipts or vouchers indicating that the retirees acknowledged full receipt of all amounts due or waived their right to claim deficiencies. Quitclaims, waivers and releases are looked upon with disfavor as contrary to public policy, and the retirees' consistent demands before and after receipt of their partial benefits belied any intention to waive.

On the fourth issue, the Court held that the right to file a labor complaint is a personal right of each employee, not dependent on whether other similarly situated employees also file suit. Finally, the Court applied the rule that doubts in controversies between a laborer and his master are resolved in the former's favor.

Doctrine

A benefit voluntarily and consistently granted by an employer over a significant period of time, though not required by law or contract, ripens into a company practice and a vested right of the employees, which the employer cannot unilaterally withdraw or diminish without violating Article 100 of the Labor Code. The test is an indubitable showing of consistency and deliberateness — regularity of the grant over a significant period, knowing that the law does not require it. Quitclaims and receipts do not bar a claim for deficiencies where they do not expressly waive the right, and the right to sue is personal to each employee.

Disposition

The petition was denied and the decision and resolution of the Court of Appeals were affirmed; Metrobank was ordered to pay the retirees their unpaid beneficial improvements under the 1998 Officers' Benefits Memorandum.

Remember This

Memorize the line: a benefit voluntarily and consistently given over a significant period, though not required by law or contract, ripens into a vested right that cannot be unilaterally withdrawn or diminished. Examiners use this case on company practice, the prohibition against diminution of benefits under Article 100, and the invalidity of quitclaims in labor cases.