G.R. No. 75347. December 11, 1987
FORD PHILIPPINES SALARIED EMPLOYEES ASSOCIATION; ENSITE LIMITED SALARIED EMPLOYEES UNION; FORD PHILIPPINES WORKERS UNION; FORD ENSITE WORKERS UNION; AND FORD PHILIPPINES PARTS Dā¦
PADILLA, J.:
These two (2) cases are considered jointly because they involve
related issues.
In G.R. No. 75347, the
petition for certiorari seeks to set aside the Resolution of the NLRC en
banc, dated 19 June 1986, in NLRC case no. 11-4073-84, together with NLRC
Resolutions, dated 28 January 1986, and 4 December 1985, and the Decision of
Labor Arbiter Virginia Son, dated 25 June 1985, insofar as said Resolutions and
Decision upheld the validity of the deduction of P13,000.000.00 from the
Retirement Fund, for payment of separation benefits to the Ford and Ensite Unions, for the benefit of their members.
On the other hand, in
G.R. No. 75628, the petition for certiorari, with a prayer for issuance of restraining order and
preliminary injunction, seeks to set aside the Resolutions dated 20 May 1986
and 19 June 1986, issued by the NLRC en banc also in NLRC case
no. 11-4073-84, insofar as said Resolutions authorized the issuance of a writ
of execution in favor of the Ford and Ensite Unions,
against their respective employer-companies, for the amount of P10,117,016.20.
The facts are as follows:
In 1971 and 1978, Ford
Philippines, Inc (Ford, for short) and Ensite Ltd.
[Phil. Branch] (Ensite, for short), established their
respective Employees’ Retirement Plans (Plans or Plan, for short)[1], exclusively funded from the companies’ own contributions, and for
which, the Bank of the Philippine Islands (BPI) was appointed as irrevocable trustee[2]. Both Plans contain an “integration
provision” which authorizes the companies to integrate the employees’
retirement, death and disability benefits under the Plans, with and in lieu of
statutory benefits under the provisions on termination pay and retirement
benefits in the Labor Code as well as other similar laws,
and analogous benefits granted under present or future collective bargaining
agreements and other employees’ benefit plans.
The “integration provision” is found in Article XIII, Section
5 of the two (2) Plans, to wit:
“To the fullest extent, the retirement, death, and disability
benefits accorded participants under the terms of this Plan shall be deemed integrated with and in lieu of, statutory benefits in the New Labor
Code, as well as other similar laws, as now or hereafter amended, analogous
benefits granted under present or future Collective Bargaining Agreements, and
other employee benefit plans providing analogous benefits which may be imposed
by future legislations. In the event
private benefits due under the plan are less than those due and demandable
under the provisions of the termination pay law and/or present or future
Collective Bargaining Agreement and/or future plans of similar nature imposed
by law, the company shall respond for the
difference.” (Retirement/Pension Plan as amended, August 1, 1983)
Since the establishment and effectivity
of the Retirement Plans, the employees’ termination, retirement and other
analogous benefits have been paid out of the Retirement Fund, pursuant to the
“integration provision”[3].
In 1984, Ford and Ensite ceased
operations in the Philippines,
resulting in the termination of all their employees. The employees were correspondingly paid their
full separation benefits totalling about P50,000,000.00 or an
average of around P45,454.00 for each employee.
Of the P50,000,000.00, an estimated amount of P37,000,000.00 was drawn
from the companies’ operating funds and the sum of about P13,000,000.00 was
deducted from and paid out of the accumulated P25,000,000.00 (more or less)
Retirement Fund. After the amount of P13,000,000.00 was withdrawn from the Retirement Fund, there
remained a balance of around P10,000,000.00, which under the Plan should be
distributed among all the employees[4].
However, before the actual distribution of the Fund residue, the
different labor unions, Ford Salaried Union, Ford Workers Union and Ensite Salaried Union,
filed a complaint dated 19 November 1984 before the Ministry of Labor and
Employment (now Department of Labor and Employment, National Capital Region),
assailing the validity of the deduction of P13,000,000.00
from the Retirement Fund, which were used for separation benefits[5].
For their part, Ford and Ensite
maintained that the deduction of the P13,000,000.00
from the Retirement Fund is in accord with the “integration
provision” of the Plans as well as the various CBAs
entered into between management and the different unions involved.
After due hearing, Labor
Arbiter Virginia Son rendered a Decision dated 25 June 1985[6]: 1) upholding the validity of the deduction of P13,000,000.00 from the Retirement Fund; 2) ordering Ford and Ensite to distribute among the unions their respective
shares in the remaining assets of the Fund, including investments in real
estate and stocks, after liquidation of the Fund, ten percent (10%) of which
shall be paid to the unions’ counsel as attorney’s fees.
On 8 July 1985,
the unions appealed to the NLRC from the abovecited
decision of the Labor Arbiter, insofar as
it sustained the validity of the deduction by the companies from the
Retirement Fund of said P13,000,000.00 for employees’
separation benefits. But, pending the
appeal, the unions filed with the Labor Arbiter on 20 August 1985 a “Motion for
Clarification”. The unions informed
the Labor Arbiter that there is reportedly a Fund residue of P8,300,000.00 (later clarified by the
companies to be P10,117,016.20) which, according to the unions, may be
distributed, even pending their appeal before the NLRC, as said appeal
allegedly involved only the deduction of P13,000,000.00. In the same Motion, the unions prayed for the
issuance of an order directing the immediate distribution of the P8,300,000.00 (P10,117,016.20) among all the employees[7].
Without acting on the Motion, Labor Arbiter Son called both
parties to a series of conferences.
During one such conference, Labor Arbiter Son proposed the
immediate distribution of the Fund residue by the companies, preferably before
Christmas of 1985, provided the unions would agree to withdraw their appeal
then pending before the NLRC in the matter of the amount deducted from the
Fund. Ford and Ensite
agreed to the proposal. However, the
unions reserved their final decision on whether or not to agree with the
proposal until they had an exact quantification by the companies of the Fund
residue. Hence, Ford and Ensite, through counsel, disclosed that the Fund residue is
actually P10,117,016.20, not P8,300,000.00.[8]
But, eventually, the
unions rejected the Labor Arbiter’s proposal, for they believed that they would
lose out if they were to abandon
their appeal. On 15
November 1985, the
unions filed a motion for
execution, relative to the Fund residue, before the NLRC [Second Division][9]. However, the companies opposed said
motion for execution on the ground that “to establish the remaining
balances in the retirement funds, so that they could be ripe for liquidation,
there must be a final resolution as to what are the exact amounts thereof; that
execution was not possible at that point in time because the Labor Unions’
appeal had prevented the final determination of the amount involved”[10].
On 4
December 1985, NLRC
(Second Division) promulgated a Resolution
affirming the decision of Labor Arbiter Son “with modification”. The dispositive
portion of said Resolution reads:
“WHEREFORE, the appealed decision is, as it is hereby,
modified. Consequently, respondents are
hereby ordered to pay in full the retirement pay, the amount to be taken from
the retirement plan, to those
complainants who are entitled to retirement pay and to shoulder whatever
balances to be paid according to the Retirement Plan (Art. XVII, Sec. 5).
In all other aspects, the decision is hereby affirmed.
SO ORDERED”[11]
Affirmed were the right of the companies to deduct separation
benefits from the Retirement Fund pursuant to the “integration
provision”, and the order to distribute the Fund residue among the employees
after liquidation of the Fund. But, as to the
modifying portion of the aforequoted dispositive portion of the Resolution, it seemed both
superfluous and confusing, considering that the employees’ separation benefits
(inadvertently referred to by NLRC as “retirement benefits”) were
already long fully paid[12].
Because of the superfluous modifying portion of the Resolution,
the unions filed a Motion for Clarification and/or Reconsideration on 9 December 1985. They particularly inquired as to what portion
of the Decision of the Labor Arbiter was modified, and why retirement benefits
were being ordered to be paid, and asking for reconsideration of the Resolution
sustaining the companies’ right to pay the employees’ separation benefits from
the Retirement Fund[13].
The Motion for Clarification and/or Reconsideration was elevated
by the Second Division to the NLRC en banc, which in turn issued
a Resolution dated 4 February 1986, denying
the motion for lack of merit, and at the same time stating that the Decision of
the Second Division of the Commission (NLRC) in its entirety clearly orders the
respondents (companies) to pay the complainants the remaining amount of the
retirement fund, after deducting the separation pay as provided for in the
integration provision[14].
On 13
February 1986, the
unions filed a Second (Urgent) Motion for Reconsideration with a prayer for
oral argument, which prayer for oral argument was granted. Oral arguments were held on 6 March
1986 before the NLRC
en banc. During the oral
arguments, the unions called the attention of the NLRC regarding their then
pending motion for execution earlier filed on 15 November 1985, for the distribution of the Fund residue[15].
On 20 May
1986, NLRC en
banc issued a Resolution granting the unions’ Motion for Execution with
specific order for Ford and Ensite to set aside 10%
of the Fund residue as attorney’s fees for the unions’ counsel.
The dispositive
portion of the Resolution states:[16]
“Wherefore, the complainants’ motion for issuance of a writ of
execution is hereby granted.
“Accordingly, let a writ of execution be issued for P10,117,016.20, ten percent (10%) of which is to set (sic)
aside by the respondent company for the complainant’s counsel as attorney’s
fees in accordance with the Decision of Labor Arbiter Virginia G. Son dated 25 June 1985.”
On 5 June 1986,
Ford and Ensite filed a motion for reconsideration of
the foregoing resolution. On 19 June 1986, the NLRC en banc
issued another Resolution[17] denying the companies’ Motion for
Reconsideration relative to the execution over the Fund residue, and at the
same time dismissing the unions’ Urgent Motion for Reconsideration concerning
the deduction from the Fund of the separation benefits of the employees.
Hence, these two (2) petitions, separately filed by Ford
Philippines Salaried Employees Association et al. (G.R. No. 75347) and Ford Philippines
and Ensite Ltd. (G.R. No. 75628).
The issue in G.R. no. 75347 is whether or not the companies’
action in charging the Retirement Fund for payment of the employees’ separation
benefits is valid, while the issue in G.R. No. 75628 is whether or not the
issuance of a writ of execution against the companies, for the distribution of
the Fund residue of P10,117,016.20 to the employees is
legal.
The unions contend that the “integration provision” in
the Retirement Plan authorizing Ford and Ensite to
integrate the retirement, death and disability benefits under the Plan with and
in lieu of statutory benefits under the provisions on termination pay and
retirement benefits in the Labor Code, is applicable only in cases of death,
disability or retirement, but not to termination of employment due to closure
of business.
Article XIII, Section 5 of the Retirement Plan, otherwise known
as the integration provision is again hereunder quoted:
“x x x”
“Section 5. To the fullest extent the retirement, death
and disability benefits accorded participants under the terms of this Plan
shall be deemed integrated with and in lieu of, statutory benefits under the
provisions on termination pay and retirement benefits in the New Labor Code, as
well as other similar laws, as now or hereafter amended, analogous benefits
granted under present or future Collective Bargaining Agreements, and other employee
benefit plans providing analogous benefits which may be imposed by future
legislations. In the event private
benefits due under the Plan are less than those due and demandable under the
provisions of the termination pay law and/or
present or future Collective bargaining Agreement and/or future benefit plans
of similar nature imposed by law, the Company shall respond for the difference[18]“. (Annex A)
A careful perusal of the foregoing provision shows that the
retirement, death and disability benefits paid under the Plan are deemed
integrated with and in lieu of termination benefits required to be paid under
the Labor Code, which in turn includes instances where the employees are
terminated due to closure of business.
The pertinent provision
of the Labor Code is found in Article 283 which reads:
“Art. 283. Closure of establishment and reduction of
personnel. – – x x x in
cases of closures or cessation of operations of establishment or undertaking
not due to serious business lossess or financial
reverses, the separation pay shall be equivalent to one(1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher.
A fraction of at least six (6) months shall be considered one (1) whole
year.”
Consequently, the deduction of P13,000,000.00
from the Retirement Fund, utilized for the payment of separation benefits is
well in accord with the “integration provision”, and, as such, cannot
be seriously assailed.
Likewise, the fact that the “integration provision” was
incorporated in the respective CBAs of the companies
and the unions, is a clear manifestation that the same
was acceptable to, and accepted by the employees, and that they recognized the
right of the companies to charge the Retirement Fund for payment of separation
benefits. The pertinent provisions of
the different Collective Bargaining Agreements (CBAs)
entered into between management and the various unions provide the following[19]:
FORD SALARIED UNION CBA
ENSITE SALARIED UNION CBA ā
“Section 4(3). Retirement and Termination. – The severance and/or retirement benefits
stipulated in the preceding three sections include and are in lieu of any
severance or termination pay provided by law.
The Company may pay the foregoing retirement or severance benefits from
a fund established for that purpose.”
FORD WORKERS’ UNION CBA
FORD DEPOT UNION CBA
ENSITE WORKERS’ UNION CBA ā
“Section 4. (15.05). The severance or disability benefits
stipulated in the preceding section include and are in lieu of any severance or
termination pay provided by law.”
The fact that, since the
establishment and effectivity of the Retirement
Plans, it had been the policy and practice of the companies to charge
termination, retirement and analogous benefits for separated employees to the
Retirement Fund[20], without a single complaint or
dissent on the part of the unions or any employee, for that matter, is a
manifestation on the part of the unions that separation benefits (not
necessarily retirement benefits) are covered by the “integration
provision” of the Retirement Plans and are chargeable to and deductible
from the Retirement Fund.
The
purpose of the Plans or Fund, as
provided in Article 1, Section 2 of the Retirement Plans, is “to assist
the employees financially in providing for their retirement years”[21]. This
purpose, however, is subject to the terms and conditions set forth in the
Plan. And one such condition is the
integration of separation benefits with and in lieu of the retirement,
death, and disability benefits under the Plan.
Such being the case, and considering that the Retirement Plan should be
interpreted in its entirety so as to give meaning to all the provisions
therein, the phrase retirement years should not be literally construed
as referring only to cases of employees’ retirement from the companies, but
should be broadly interpreted as inclusive of all other instances of employees’
separation from the companies, such as, by reason of death, disability or closure
of business.
Furthermore, the
companies cannot be charged with “diversion of funds” for deducting
the separation benefits from the Retirement Fund, because payment of separation
benefits is among the liabilities contemplated in Section 3, Article 1 of the
Plan, which reads:
“x x x.
“Section 3. Exclusive Benefit of the Employees
x x x
Under no circumstances, prior to the satisfaction of all
liabilities with respect to the participants and their beneficiaries under the
plan, shall any income or corpus of the Trust Fund or any Funds contributed
to the Trust Fund by the Company be diverted to or used for purposes other than
for the exclusive benefit of the Plan
participants and their beneficiaries.” (emphasis
supplied)
It cannot also be said
that, by deducting the separation benefits from the Retirement Fund, the
companies are paying the employees who have earned vested rights under the
plan, with separation benefits out of their own money, and that in effect, a
“recovery” is made by the companies of their contribution to the
Plan.
The Retirement Fund was fully
and solely funded by Ford and Ensite, that is,
without contributions from any of their employees. And the “vested right” of the
employees in the Plan simply means that they are entitled to the Fund even in
cases of their voluntary resignation from the companies. But, as
it happened, the companies closed down, thereby pre-empting any
voluntary resignation on the part of the employees. Still, the employees are paid full separation
benefits.
Based on the foregoing, the NLRC and the Labor Arbiter were
justified in sustaining the companies’ action in charging the Retirement Fund
for payment of the employees’ separation benefits occasioned by the companies’
closure of business in the Philippines.
With regard to the issue in G.R. No. 75628, Ford and Ensite allege that the Resolution of 20 May 1986 granting the unions’ Motion for
Execution relative to the non-controverted amount of
P10,117,016.20 is void, having been allegedly issued
after the NLRC had lost jurisdiction over the case. The companies contend that the NLRC
Resolution dated 4 February 1986 denying the unions’ first motion for
reconsideration, is a final resolution of all the issues in the case, so that
when the unions filed their second urgent motion for reconsideration, dated 13
February 1986, the NLRC could not and should not have legally entertained the
same, because under the Interim Guidelines of the Rules of Court, second
motions for reconsideration of final orders or judgments are not allowed.
The contention of the companies is without merit, because the
Fund residue of P10,117,016.20 was never the subject
of any motion for reconsideration, much less a second motion for
reconsideration on the part of the unions.
Instead, said amount had been the subject only of the Urgent
Manifestation and Motion for Writ of Execution, and the Urgent Motion for
Resolution of Motion for Writ of
Execution, respectively filed by the unions on 15 November and 9 December 1985,
both before the NLRC. In any event, the
filing of a second motion for reconsideration is not barred under the Labor Code
or the NLRC Rules. Administrative and
quasi-judicial bodies, like the NLRC, are not bound by the technical rules of
procedure in the adjudication of cases filed before them[22].
Ford and Ensite admit that the Retirement Fund indeed has a balance
of P10,117,016.20.
Likewise, they recognize the right of the employees to receive their
respective shares in the Fund residue, pursuant to Article XI, Section 3 of the
Retirement Plan, to wit:
“Section 3. In the event of termination of the Plan, no
future obligation shall be payable under the Fund. The Trustee shall pay all debts or claims
then outstanding against the trust.
Thereafter, the Trustee shall distribute the property held in the Fund
to the pensioners, participants and their beneficiaries on the basis of the
mortality and other present value tables approved by the company”[23].
The companies’
alternative excuse that it is “actuarially impossible” for them to
compute the individual shares of the employees in the Fund residue, is likewise
untenable. This is because the residue amounting
to P10,117,016.20
is obviously identifiable up to the last centavo. Not only that. The companies have in their possession all
the necessary documents upon which the computations can be based, to wit: list of all the entitled
employees; their respective service records; and books of accounts in
the possession of the trustee bank (BPI).
Moreover, in one of their conciliation conferences in 1985,
before Labor Arbiter Son, the companies agreed to the distribution of the Fund residue
if only the unions would withdraw their appeal.
The fact that the companies agreed to such a proposal (which however was
eventually rejected by the unions as they would allegedly lose out if their
appeal were abandoned), is also an indication that the computations of the
employees’ individual shares in the Fund residue were already prepared and
ready at that time, or that at least the companies were then prepared and
willing to immediately make the desired computations on the basis of the
pertinent documents in their possession.
With regard to the automatic deduction by the companies of 10% of
the Fund residue for attorney’s fees of the unions’ counsel, based on the
Decision of Labor Arbiter Son, we find no rule of law or tenet of judicial
ethics violated thereby. Considering
that the workplaces of the employees have been closed simultaneously with the
companies’ closure of business, it would be almost impossible for the unions’ counsel
to be able to personally collect attorney’s fees from his clients who are
presently spread out here and abroad.
Being the custodian of the Fund residue duly belonging to the
employees, and from which Fund, the attorney’s fees of unions’ counsel are to
be paid, the companies are in a proper position to
effect the automatic deduction of the attorney’s fees of the unions’
counsel. By doing so, the companies will not be acting as agents of the
unions, but merely complying with a legal
order of the labor court.
The questioned
motion for execution should, however, include only the individual shares of the
members of the unions which are party litigants in these cases, and should not
include the shares of employees who are non-union members, such as the
managerial, supervisory and other non-rank-and-file employees. The 10% attorney’s fees of the unions’
counsel should also be charged exclusively against the individual shares of the
union members in the Fund residue.
With regard to the motion for supplemental relief of the unions’
counsel, dated 23 March 1987, praying that Ford Philippines, Inc. should be
ordered to pay the former the amount of ten percent (10%) of P5,700,000.00 (corresponding to the employees’ share in the
selling price of the real estate of Ford Philippines Inc. located in Sucat Road) which were allegedly distributed to the
employees without the knowledge of the unions’ counsel[24], the same is denied for being
unsubstantiated.
WHEREFORE, the petition in G.R. No. 75347 is DENIED. The Resolutions of the NLRC en banc,
dated 19 June 1986 in NLRC Case no. 11-4073-84, together with NLRC Resolutions,
dated 28 January 1986, and 4 December 1985, insofar as they sustain the
companies’ right and action of deducting the amount of P13,000,000.00 from the
Retirement Fund as separation benefits for the employees, are AFFIRMED.
In G.R. No.75628, the temporary restraining order dated 25 August 1986 is LIFTED. The Resolutions of the NLRC dated 20 May 1986
and 19 June 1986, insofar as they authorize the issuance of a writ of execution in favor of the
unions, are AFFIRMED, as above
qualified, with the modification that the writ of execution issued as to the
union members’ shares in the amount of P10,117,016.20,
shall include the corresponding interests earned from 30 September 1985, up to
the actual payment of such award.
SO ORDERED.
Yap (Chairman), Melencio-Herrera,
Paras, and Sarmiento, JJ., concur.
[1]
Petition, G.R. No. 75628, Annex “A”
[2]
Id., p. 5.
[3]
Id., p. 6
[4]
Petition, G.R. No. 75628, pp. 6-7
[5]
Id., p. 7
[6]
Id., Annex “C”
[7]
Petition, G.R. No. 75347, pp. 5-8
[8]
Id., pp. 7-8
[9]
Id., p. 8
[10]
Petition, G.R. No. 75628, p. 9
[11]
Petition, G.R. No. 75628, Annex “G”
[12]
Id., p. 202
[13]
Petition, G.R. No. 75347, p. 9
[14]
Petition, G.R. No. 75628, Annex “H”
[15]
Petition, G.R. No. 75347, p. 10
[16]
Petition, G.R. No. 75628, p. 90
[17]
Petition, G.R. No. 75628, Annex “L”
[18]
Petition, G.R. No. 75628, Annex “A”
[19]
Petition, G.R. No. 75628, pp. 49-50
[20]
Id., p. 6
[21]
Id., Annex “A”
[22]
Manila Doctors’ Hospital, vs. NLRC, No. 64897, February 28, 1985, 135 SCRA 262
[23]
Petition, G.R. No. 75628, Annex “A”
[24]
Rollo, p. 225