CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A. GASPAN AND NICARDO P. BLANQUISCO, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND OTIS ELEVATOR COMPANY, RESPONDENTS.

The petitioners’ services were terminated on the ground of
retrenchment, and they received separation pay double that required by the
Labor Code. Thereafter, they demanded
retirement benefits, invoking the Retirement Plan of the respondent company
which they said was contractual rather than statutory. The question eventually submitted to the
labor authorities was, Having received the separation pay, were the petitioners
still entitled to the retirement benefits? The Labor Arbiter said they were, but the NLRC reversed him. The issue is now before us for final
resolution.

The petitioners were employees of private respondent Otis
Elevator Company when they were informed of the termination of their employment
in line with the need of the company “to streamline its operations,
consolidate certain functions, reduce its manpower and cut non-essential
spending.” The separate letters addressed to the petitioners advised them
that –

In lieu of notice, you shall be paid one month’s equivalent salary,
plus your regular allowances, counted from such date, and you shall be covered
with the normal benefits for that period. You shall also be paid your earned and/or unused sick leave and vacation
leave, including your pro-rata 13th month pay. And for every year of service with the Company, you shall be paid one
month’s basic salary or your retirement benefits, if applicable to you,
whichever is higher.^[1]

Accordingly, petitioners were paid their separation pay, computed
as follows:

The separation pay was based on Section 4, Article VII of the
Collective Bargaining Agreement between the company and its employees providing
thus:

All employees in the bargaining unit separated without cause shall
be granted separation pay of not less than one (1) month’s latest basic rate
for every year of service subject to the existing provisions of the Retirement
Plan.

In justifying their subsequent demand for retirement benefits
before the Labor Arbiter, the petitioners invoked Section 1, Article XIV, of
the CBA in relation to Section 5.2, Article V, of the company’s Retirement
Plan, which provides:

The COMPANY shall maintain the present group retirement plan which
is attached hereto as Annex “A” and made an integral part of this
contract. (Sec. 1, Art. XIV).

x   x x

5.2 A Participant who is
terminated from employment and who has rendered at least ten (10) years of
service shall be entitled to receive in lump sum all or a portion of his
accrued benefit credits as of his date of termination, in accordance with the
following schedule:

They also cited the case of their co-employees Cleodeveo Soriano,
Jr. and Patriciano Destajo, Jr., whose services were terminated on the ground
of redundancy in 1983 and 1982, respectively, and were both given separation
pay and retirement benefits.

For its part, the respondent company argued that separation pay
and retirement benefits were mutually exclusive; hence, the petitioners could
no longer claim the latter after having received the former.

The Labor Arbiter ruled in favor of the petitioners mainly on the
ground that the company was estopped from withholding retirement benefits from
them after having granted similar benefits to the employees earlier
mentioned. He held that a different
treatment of the petitioners would constitute discrimination because
“benefits accorded to other employees must likewise be extended to the
rest who are similarly situated.”^[2]

In  reversing the appealed
decision, the NLRC declared that the case cited by the petitioners was
exceptional and could not be considered a precedent. Moreover –

The CBA provision is very clear that while the employees separated
without cause are entitled to a separation pay of not less than one (1) month’s
latest basic rate for every year of service, this is made merely subject to
and not in addition to the existing provisions of Section 5.2 of the
Article V of the Retirement Plan. In
other words, no logical inference can be made that the benefits under Section
5.2 of Article V of the Retirement in addition to the one (1)
month’s latest basic rate for every year of service. (sic) Therefore, the offer of appellant perfectly fits well
within the contemplation of the parties as envisaged in the aforementioned
provisions of the CBA and the Retirement Plan.^[3]

It is important at the outset to note the distinction between
separation pay and retirement benefits.

Separation pay is required in the cases enumerated in Articles
283 and 284 of the Labor Code, which include retrenchment, and is computed at
at least one month salary or at the rate of one-half month salary for every
year of service, whichever is higher. We have held that it is a statutory right designed to provide the
employee with the wherewithal during the period that he is looking for another
employment.^[4]

Retirement benefits, where not mandated by law, may be granted by
agreement of the employees and their employer or as a voluntary act on the part
of the employer. Retirement benefits are
intended to help the employee enjoy the remaining years of his life, lessening
the burden of worrying for his financial support, and are a form of reward for
his loyalty and service to the employer.^[5]

It is on the basis of these distinctions that the petitioners
claim to be entitled not only to the separation pay they have already received
but also to the retirement benefits provided for in the Retirement Plan of the
respondent company.

In rejecting this contention, the private respondent insists that
the retirement benefits are subject to the provisions of the Retirement Plan
under Section 4 of the CBA. Moreover,
under the Omnibus Implementing Rules of the Labor Code, retired employees whose
services are terminated shall receive the corresponding retirement benefits or
separation pay, whichever is higher.^[6]
This clearly indicates that one benefit should exclude the other.

The petitioners are covered by the Retirement Plan because they
have contributed to the retirement fund, have been separated by reason of the
retrenchment, and have served the company for more than the prescribed minimum
period of ten years.

In Batangas Laguna Tayabas Bus Co. v. Court of Appeals,^[7]
Justice Martin started his ponencia thus: “The issue in this petition is whether an employee who has
already received his separation pay can still recover retirement benefits from
his employer.” Resolving the question affirmatively, the Court declared in
part:

But petitioner contends that private respondent can only avail
himself of either separation pay or retirement benefits but not both, citing in
support thereof, the ruling of this Court in the case of Cipriano vs. San
Miguel Corporation, 24 SCRA 703. The
foregoing ruling cannot be made to apply to the present suit because in said
case it is so expressly provided in the Labor Agreement that:

“Regular employees who are separated from the service of the
company for any reason other than misconduct or voluntary resignation shall be
entitled to either 100% of the benefits provided in Section 2, Article VIII
hereof regardless of their length of service in the company or to the severance
pay provided by law, whichever is the greater amount.”

Thus, in said case the employee was
entitled to either the amount prescribed in the plan or the severance pay
provided by law whichever is the greater amount. In the present case, there is nothing in the labor agreement
entered into by the petitioner with Batangas Transportation Employees
Association of which private respondent is a member barring the latter from
recovering whatever benefits he is entitled to under the law in addition to the
gratuity benefits under the labor agreement between him and his
employer. Neither is there any
provision in the Termination Pay Law (Republic Act No. 1052, as amended by Republic
Act No. 1787) that an employee who receives his termination pay upon separation
from the service without cause is precluded from recovering any other benefits
agreed upon by him and his employer. In the absence of any such prohibition, both in the aforesaid Labor
Agreement and the Termination Pay Law the private respondent has the right
to recover from the petitioner whatever benefits he is entitled to under the
Termination Pay Law in addition to the other benefits conferred upon him by the
aforesaid labor agreement.*

The same issue was squarely raised in University of the East v.
Minister of Labor,^[8]
where the award of both separation pay and retirement benefits to the employees
was assailed by the employer on the ground that “there could only be one mode
of termination of employment with respect to one and the same employee.”
Through Justice Gutierrez, the Court reaffirmed the above-quoted ruling in the
BLTB case and held as follows:

Therefore, if there is no provision contained in the collective
bargaining agreement to the effect that benefits received under the Termination
Pay Law shall preclude the employee from receiving other benefits from the
agreement, then said employee is entitled to the benefits embodied in the
agreement in addition to whatever benefits are mandated by statute. In the case at bar, there is no such
provision. We cannot presume that it
forms an implicit part of either the CBA or the law. Separation pay arising from a forced termination of employment
and benefits given as a contractual right due to many years of faithful service
are not necessarily antagonistic to each other, especially where there are
strong equitable considerations as in this case.*

We have carefully examined the record, and particularly the
Collective Bargaining Agreement and the Retirement Plan, and have found no
specific prohibition against the payment of both benefits to the
employee.

Maintaining that the above cases have no application to the case
at bar, the company calls attention to Book VI, Section 14, Rule 1, of the
Omnibus Rules Implementing the Labor Code, which provides as follows:

(a) An employee who
is retired pursuant to a bonafide retirement plan or in accordance with the
applicable individual or collective agreement or established employer policy
shall be entitled to all the retirement benefits provided therein or to
termination pay equivalent to at least one-half month salary for every year of
service, whichever is higher, a fraction of at least six (6) months being
considered as one whole year.

However, it overlooks sub-section (c) of the same Section 14,
which clearly provides that:

(c) This Section shall
apply where the employee retires at the age of sixty (60) years or more.

The private respondent has not shown that the petitioners were sixty
years or older at the time of their separation and therefore covered by the
said section. Having itself invoked
that provision, the company had the obligation to prove that the petitioners
came under its terms.

The private respondent’s argument that the petitioners did not
retire but were terminated in employment is, in our view, plain
nitpicking. It cannot be seriously
contended that if an employee dies before he can retire (at a time when he is
already eligible for retirement), his beneficiaries are entitled to the
retirement pay he would have himself earned. The effective cause of separation is death, for which his heirs are
entitled to death benefits, but they are also paid retirement benefits as a
consequence of such death.

This is not to say that one whose services are terminated not
only because he has retired but for another cause resulting in retirement is
always entitled to both separation pay and retirement benefits. It should be obvious that if, say, an
employee is dismissed for dishonesty, he is not entitled to separation pay or,
for that matter, even retirement benefits. But in the case before us, the petitioners have been separated for
cause, in the sense that they have committed an offense warranting their
removal. They were separated for
reasons not imputable to them, as the letter above quoted categorically
declared:

Finally, we want to assure you that your retrenchment is through no
fault of your own but mainly due to prevention of further losses. In behalf of the Company, we express our
sincere appreciation for your services and loyalty and wish you every success
in your future undertakings.^[9]

In arriving at our conclusion, we are guided by the principle
that any doubt concerning the rights of labor should be resolved in its favor, pursuant
to the social justice policy. The
Court feels that if the private respondent really intended to make the
separation pay and the retirement benefits mutually exclusive, it should have
sought inclusion of the corresponding provision in the Retirement Plan and the
Collective Bargaining Agreement so as to remove all possible ambiguity
regarding this matter.

We may presume that the counsel of the respondent company was
aware of the prevailing doctrine embodied in the cases earlier cited. Knowing this, he should have made it a point
to categorically provide in the Retirement Plan and the CBA that an employee
who had received separation pay would no longer be entitled to retirement
benefits. Or to put it more plainly,
collection of retirement benefits was prohibited if the employee had
already received separation pay.

The private respondent argues that it had paid the petitioners
more than what the law requires by giving them separation pay at the rate of
one month instead of one-half month for every year of service. The suggestion is that the company had been
more than liberal and that to require it to pay the retirement benefits as well
would be a strain on its benevolence.

The petitioners are not pleading for generosity but demanding
their rights. These rights are embodied
in the Collective Bargaining Agreement, which was the result of negotiations
between the company and the employees.

Bargaining is a process where the parties discuss their demands
and counter-demands and, after haggling, agree on what is essentially a
compromise reflecting the concessions mutually given by the parties to arrive
at a common understanding. The
resultant contract provides for demandable rights, not withdrawable doles. When the employer signs a collective
bargaining agreement, it recognizes the rights of the workers and does
not merely concede certain privileges to them out of the goodness of its
heart.

The private respondent asserts in its statement of facts that it
gave the petitioners a choice between accepting the separation pay and the
retirement benefits and they opted for the former. This is not borne by the record. In its letter advising the petitioners of the termination of their services,
the company merely informed them that they would be given separation pay
or retirement benefits, whichever was higher. The petitioners received the separation pay because they felt they were
entitled thereto but they did not thereby waive their rights to the retirement
benefits.

We realize that the retirement benefits of the petitioners come
up to a substantial figure, considering their respective lengths of service
with the company. These benefits, added
to the separation pay they have already received, make up a tidy sum indeed. The point, however, is that the petitioners
are entitled to this amount under the provisions of the CBA and the Retirement
Plan freely entered into by the parties. These instruments are binding agreements, not being contrary to law,
morals, good customs, public order or public policy, and must therefore be
upheld.

WHEREFORE, the petition is GRANTED. The decision of the respondent National
Labor Relations Board is REVERSED and a new judgment is hereby rendered
directing the payment of retirement benefits to the petitioners in accordance
with the Retirement Plan of the respondent company and its Collective
Bargaining Agreement with its employees.

SO ORDERED.

Narvasa, (Chairman), Griño-Aquino, and Medialdea, JJ., concur.

^[1]
Records, pp. 40-42.

^[2]
Rollo, p. 17.

^[3]
Ibid., pp. 49-50.

^[4]
Santos v. NLRC, 154 SCRA 166, 172.

^[5]
Laginlin v. WCC, 159 SCRA 91, 99.

^[6]
Section 14(a), Rule I, Book VI, Omnibus Rules Implementing the Labor Code.

^[7]
71 SCRA 470.

* Emphasis supplied.

^[8]
152 SCRA 676, 682.

* Emphasis supplied

^[9]
Records, pp. 40-42.