ARMANDO M. TOLENTINO (DECEASED), HEREIN REPRESENTED BY HIS SURVIVING SPOUSE MERLA F. TOLENTINO AND CHILDREN NAMELY: MARIENELA, ALYSSA, ALEXA, AND AZALEA, ALL SURNAMED TOLENTINO,…

Tolentino versus Philippine Airlines

The Case

This is a labor case about a pilot who joined an illegal strike, defied the Secretary of Labor's return-to-work order, lost his employment status, was later rehired as a new hire, and resigned less than a year afterward. His surviving spouse and children, substituting for him after his death, sued Philippine Airlines for separation pay, retirement benefits under the collective bargaining agreement, the return of his equity in the pilots' retirement fund, and damages. The case matters because it fixes the rule that retirement benefits are a reward for service and presuppose a genuine retirement, so a worker who simply lost his employment status through his own illegal act cannot later claim them, and prior service cannot be added to a rehire as a new employee.

Procedural History

The complaint was filed with the Labor Arbiter, who dismissed it, holding that Tolentino was validly dismissed for joining the illegal strike and defying the return-to-work order, and that as a new hire who resigned less than a year later he could not add his earlier seniority or benefits. The petitioners appealed to the National Labor Relations Commission, which affirmed the dismissal of all claims, and denied their motion for reconsideration. The petitioners then filed a petition for certiorari with the Court of Appeals, which affirmed the Commission with one modification: it ordered Philippine Airlines to pay Tolentino's accrued vacation leave equivalent to twenty-seven calendar days of salary, reasoning that the collective bargaining agreement mentions only separation from the company and is silent on forfeiture, and that doubt in labor contracts is resolved in favor of the worker. Both sides moved for partial reconsideration, the petitioners pressing retirement benefits, the return of equity, and damages, and the airline attacking the vacation pay award. The Court of Appeals denied the petitioners' motion. The petitioners then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Tolentino was hired by Philippine Airlines as a flight engineer in October 1971 and rose to the rank of captain. He was a member of the Airline Pilots Association of the Philippines, which had a collective bargaining agreement with the company. In June 1998 the union went on strike. The Secretary of Labor issued an order directing all striking officers and members to return to work within twenty-four hours and directing management to accept them under the same terms and conditions as before the strike. Some pilots, including Tolentino, continued the strike. When he and the others returned on 26 June 1998, the company refused to readmit them, and they filed a complaint for illegal lockout.

In July 1998 Tolentino reapplied and was rehired as a newly hired pilot, voluntarily undergoing the six-month probationary period. In June 1999 the Secretary of Labor issued a resolution declaring the strike illegal for being procedurally infirm and in open defiance of the return-to-work order, and declaring that those who participated in defiance of the order had lost their employment status. The Supreme Court affirmed that resolution in April 2002. In July 1999, less than a year after his rehire, Tolentino resigned.

He later worked for a foreign airline and, upon returning, informed the company of his intention to collect separation and retirement benefits under the collective bargaining agreement. The company refused. He filed a complaint for non-payment of holiday pay, rest day pay, separation pay, and retirement benefits, with damages and attorney's fees. He died during the proceedings, and his spouse and children substituted for him.

Issues

• Whether or not the heirs are entitled to Tolentino's retirement benefits under the collective bargaining agreement with Philippine Airlines.
• Whether or not the heirs are entitled to the return of Tolentino's equity in the retirement fund under the Philippine Airlines Pilots' Retirement Benefit Plan.
• Whether or not the heirs are entitled to damages and attorney's fees.

Applicable Provisions

Article 282 of the Labor Code, which the Court cites as the just cause for dismissal when an employee knowingly defies a return-to-work order, provides in the relevant part:

An employer may terminate an employment for any of the following causes: Grave misconduct; Willful disobedience of the employer or his representative in connection with his work.

This is the provision the Court invokes in holding that defying the Secretary of Labor's order is an illegal act amounting to a just cause for dismissal.

Article VII of the Philippine Airlines and Airline Pilots Association of the Philippines Retirement Plan Rules and Regulations, Section 1, on normal retirement, provides:

Any member who completes twenty years of service as a pilot for PAL or has flown 20,000 hours for PAL shall be eligible for normal retirement.

This is the provision the petitioners invoke, arguing that Tolentino's more than twenty years of service from 1971 qualified him for normal retirement.

Section 3 of the same Article, on resignation benefit, provides:

Any Member who completes five years of continuous service with the Company may retire at his option.

This is the provision the Court applies to Tolentino's resignation, since he had completed less than one year of continuous service after his rehire.

Section 6.1 of the Philippine Airlines Pilots' Retirement Benefit Plan provides:

The Plan will be wholly financed by the Company. No contributions will be required from the participants of the Plan.

This is the provision the Court uses to reject the claim that the retirement fund came from salary deductions and that Tolentino was entitled to a return of equity.

Ruling

On the first issue, the Court denied the claim for retirement benefits. An employee who knowingly defies a return-to-work order issued by the Secretary of Labor commits an illegal act which is a just cause to dismiss under Article 282 of the Labor Code, and from the moment a worker defies such an order he is deemed to have abandoned his job. Tolentino did not deny his participation in the strike or his failure to comply promptly with the order, so he did not retire; he simply lost his employment status. Retirement is the result of a bilateral act, a voluntary agreement between employer and employee, and here there was none. The Court also held that his rehire as a new hire was a valid exercise of management prerogative absent anti-union motivation, and that his earlier service could not be added to the new employment because the first employment had already been finally terminated for just cause. When he resigned in July 1999 he had completed less than one year of service, short of the five years of continuous service required for the resignation benefit. The Court stressed that retirement benefits given before the mandatory retirement age are a reward for services rendered, and it would be contrary to that rationale to reward an employee terminated for just cause.

On the second issue, the Court held that while the two benefits are separate and distinct, Tolentino was entitled to neither. The retirement fund was wholly financed by the company, with no contributions from the pilots, and the full equity is released only to a pilot who actually retires after satisfying the requisites. Tolentino never retired, so he was not entitled to any amount from that fund. The Court also upheld the company's personnel policy that a dismissed employee forfeits his entitlements to company benefits and privileges.

On the third issue, the Court found no reversible error in the denial of damages and attorney's fees, as there was no basis for any of the damages claimed. Finally, since the company did not question the award of accrued vacation leave, the Court did not review it.

Doctrine

An employee who knowingly defies a return-to-work order of the Secretary of Labor commits an illegal act constituting a just cause for dismissal under Article 282 of the Labor Code, and from that moment he is deemed to have abandoned his job and lost his employment status. Retirement is a bilateral act, a voluntary agreement between employer and employee, so one who merely lost his employment status through his own illegal act did not retire and cannot claim retirement benefits, which are a reward for service. Prior service cannot be added to a rehire as a new employee, because the first employment was finally terminated for just cause; the length of service for retirement purposes is reckoned from the date of rehire. Under a retirement plan, the requisites must be present at the time the employee resigns or retires, and where the plan is wholly financed by the employer with no employee contributions, the return of equity belongs only to a pilot who actually retires.

Disposition

The petition was denied, and the Decision and Resolution of the Court of Appeals were affirmed, so the heirs recovered only the accrued vacation leave pay and nothing more.

Remember This

Memorize this line: no retirement, no retirement benefits, because retirement is a bilateral and voluntary act and its benefits are a reward for service. Examiners use this case to test the consequences of defying a return-to-work order, the no-tacking rule for rehired new employees, and the distinction between resignation benefits and equity in a non-contributory retirement fund.