CEBU PORTLAND CEMENT COMPANY, PLAINTIFF AND APPELLANT, VS. MAMERTO DE JESUS, DEFENDANT AND APPELFEE.

This is an action instituted fay the Cebu Portland Cement Company to
recover from defendant Mamerto de Jesus the amount of P2i,600 alleged
to have been erroneously paid to the defendant. From the judgment of
the Court of First Instance of Manila, Honorable Arsenio Solidum.
presiding, dismissing the action, the plaintiff has prosecuted this
appeal. In the court1 below, the parties submitted a’ stipulation of
facts, the most important of which are as follows:

“2. That on December 12, 1957, the Board of
Directors of plaintiff’s company passed Resolution No. 143-57,
granting1 ‘benefits to employees of Cebu Portland Cement Company who
may wish to voluntarily separate from the service’. * * *

“3.
That defendant was one of plaintiff’s employee who elected to
‘voluntarily separate from the service’ pursuant to the aforesaid
resolution of plaintiff’s Board of Directors, although at the time the
said resolution was adopted, defendant was not yet subject to automatic
and compulsory retirement under Commonwealth Act 680 and subsequent
amendments, which retirement-law is applicable 1o employees in
government-owned corporations.

“4. That defendant filed his
application for voluntary separation from the service, pursuant to the
aforesaid Resolution No. 143-57, with plaintiff’s Board of Directors,
through its General Manager, on December 19, 1957, to be effective
February 3, 1958. * * *

“5. That on the same date,
plaintiff’s Board of Directors, acting on defendant’s aforesaid
application in compliance with one of the conditions in the aforesaid
Resolution No. 143-57, approved, and accepted, by way of Resolution No.
147-57 adopted at its meeting1, defendant’s aforesaid application. * *
* *

* * * * * * *

“8.
That the conditions-provided for in the aforesaid Resolution having
been complied with plaintiff paid the defendant, sometime February 24,
1958, a separation bonus in the sum of P21,600.00. in addition to
defendant’s retirement benefit under Commonwealth Act 186, as amended,
which was paid to him by the Government Service Insurance System, upon
which payments defendant was voluntarily retired from the service after
more than thirty-six years ‘if continuous and loyal service to-
plaintiff company.

“9. * * * The Auditor General, through the
Chief, Counsel and Administrative Officer, ruled, that the separation
bonus authorized under Section 1 of the aforesaid Board Resolution No.
1-13-57 was illegal p&r se If paid in addition to the retirement
benefits under Commonwealth Act No. 186 as amended. * * *

“10. That the aforesaid ruling of the Auditor General was
confirmed.on August 27, 1958 by the President of the Philippines,
Acting through Hon. Juan C. Pajo, the Executive Secretary to the
President. * * *

On June 8, 1959 plaintiff demanded from the defendant the refund of the
sum of P21,600, which the latter received as “separation bonus.”
Defendant, refused to make the refund so the present action was
brought,.

The resolution of the board,of directors of the plaintiff corporation reads as follows:

RESOLUTION NO. 143-57

“Whereas, in view of the reduction of the selling
price of APO cement occasioned by the reduced selling- price of other
locally manufactured cement, it becomes necessary for the best interest
of the CBPOC to effect reduction of personnel to offset the reduced
income of the Company;

“Whereas, , the said reduction of personnel should be effected by voluntary application; and

“Whereas,
it is deemed advisable to adopt a measure which would induce personnel
to voluntarily separate from the service of the Company;

NOW,
THEREFORE, RESOLVED, as it is hereby resolved to extend the following
benefits to. employees of the Cebu Portland Cement Company who may wish
to voluntarily separate from the service;

“i. To those
employees who are entitled to benefits under C. A. No. 186, as amended
by R. A.. Nos. 660 and 1616 . . . separation bonus of one (1) month
salary for every year cf service in the Government not exceeding twelve
(12) months salary,: Provided that in case an employee has rendered at
least thirty (30) years of service in the Cebu Portland Cement Company,
lie shall be’ entitled to separation bonus of one (1) month salary, for
every year of service not exceeding twenty-four (24) months salary.”

The court below ruled that as the plaintiff offered the defendant
the bonus while the latter Was not yet retireable, it should not be
permitted to recover what it has voluntarily : given in accordance with
the provision of,Art. 1423 of the New Civil Code. , ‘

The Auditor General and the Office of the President have rendered
similar opinions on the validity of the payment of-the so-called
retirement bonus granted to defendant Mamerto de Jesus, both
offices’are agreed that the grant of the separation bonus as above
described violates Section. 28(b) of Commonwealth Act No. 186, as
amended, wliieh provides, in part as follows: “No gratuity or benefit
shall be paid by an employer to an employee entitled to the retirement
benefit of this Act.”

Defendant-appellee Mamerto de Jesus received the retirement gratuity
allowed to him under Commonwealth Act No. 186 as an employee of the
Cebu, Portland Cement Company, so the “separation bonus” was in
addition to his gratuity pay. The resolution under which he was paid
the amount of 1*21,600 grants him what is known as a “separation
bonus.” As explained in the resolution, under the authority of which De
Jesus obtained the additional separation bonus of P21,6O0, the
separation bonus was . established in order to induce personnel to
voluntarily severe their connection with the company, and the reason
why it was desired that personnel be induced to voluntarily separate
from the company was the “reduced income of the company.” The amount of
P21,600 granted to De Jesus was not, therefore, a real separation
bonus;’as it purports to be, for the reason that “bonus” is. something
given in order to reward employees for their loyalty and industry
contributing to-the success of the business of the company and making
possible the realization of profits. Thus in the case of Philippine
Education Company vs. Court of Industrial Relations, 92 Phil., 381,
December 24, 1952, this .Court said: ;,

“* * * a bonus is an amount granted and paid to an
employee for his industry and loyalty which contributed to the success
of the employer’s’business and, made possible the-realization of
profits.”

The resolution granting the so-called separation bonus expressly
states that the “separation bonus” was offered as an inducement for
personnel to retire from the company because of reduced income. That
the so-called separation bonus was not given to reward loyalty and
efficiency resulting, in increase in income and profits, is also
evident from ,the last part of the resolution to the effect that
positions vacated by separation under the law shall not be again
filled, but that if filling is necessary, the filling shall be made
from personnel already within the employ of the company.

The principle upon which the court below dismissed the action, which
principle is contained in Article 1432 of: the New Civil Code, would be
applicable were, it not for the fact that an express provision of the
law prohibits the granting of one gratuity to a retiring employee. The
grant of the so-called “separation bonus” was made by the officials of
the Cebu Portland Cement Company, evidently unaware of the import of
the term “bonus”. The error notwithstanding, the law must be enforced
even.if it prejudiced the defendant-appellee under the principle ts at
mistakes of public officials cannot prejudice the State to the extent
of violating an express provision and policy of the law.’

Furthermore, Article 1306 of the Civil Code expressly provides that
while the contracting parties may establish such conditions and terms
as t^ey may deam convenient, in doing so they cannot make the
provisions or conditions of the contract contrary to law, morals, good
customs, “public order, or public ‘policy. As stated above,
Commonwealth. Act No. 186, as amended, prohibits the grant of gratuity
or benefit to an employee who has already received the retirement
benefits granted under the law. The policy of the law is to grant only
one, gratuity or retirement benefit. The resolution under which
defendant-appellee pbtained the separation bonus would grant a second
gratuity or benefit and is contrary both to the law as well as to the
policy of the state as expressed therein. It cannot, therefore, be
enforced.

Wherefore, the judgment appealed from ia hereby set aside and one
entered ordering the defendant-appellee to pay to the
plaintiff-appellant the amount of P21,600 illegally received under the
guise of a “separation bonus.” Without costs.

Bengzon, C. J., Padilla, Bautista Angelo, Concepcion, Reyes, J. B. L., Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concur.