[b]The company shall schedule the vacation leave of employees during the year taking into consideration the request of preference of the employees. PNCC then created a schedule of leaves for their employees. Petitioner objected to the implementation of the said memorandum. It insisted that the individual members of the union have the right to schedule their vacation leave. It opined that the unilateral scheduling of the employees' vacation leave was done to avoid the monetization of their vacation leave in December 2004.
Issue: WON the PNCC has the sole discretion to schedule the vacation leaves of its employees.
Held: PNCC has the sole discretion to schedule the vacation leaves of its employees. The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from that language, and from that language alone. Stated differently, where the language of a written contract is clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can be assigned to show that the words used should be understood in a different sense.
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII,
Section 1 (b) of the CBA categorically provides that the scheduling of vacation leaves ha ll
be under the option of the employer. Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being the law between the parties. In Faculty Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, this Court held that the CBA during its life time binds all the parties. The provisions of the CBA must be respected since its terms and conditions constitute the law between the parties. The parties cannot be allowed to change the terms they agreed upon on the ground that the same are not favorable to them.
The purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to give him additional salary and bounty. Accordingly, the vacation leave privilege was not intended to serve as additional salary, but as a non-monetary benefit. To give the employees the option not to consume it with the aim of converting it to cash at the end of the year would defeat the very purpose of vacation leave.
Pantranco North Express vs NLRC (1996) 259 SCRA 161
Facts:
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the Pantranco Employees Association-PTGWO. He continued in petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years' service. The basis of his retirement was the compulsory retirement provision of the collective bargaining agreement between the petitioner and the aforenamed union. On February 1990, private respondent filed a complaint for illegal dismissal against petitioner with NLRC. The complaint was consolidated with two other cases of illegal dismissal having similar facts and issues, filed by other employees, non-union members.
Issue: WON the CBA stipulation on compulsory retirement after twenty-five years of service is legal and enforceable.
Held: The CBA stipulation is legal and enforceable.
The bone of contention in this case is the provision on compulsory retirement after 25 years of service.
Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining Agreement 8 between petitioner company and the union states:
Section 1. The COMPANY shall formulate a retirement plan with the following main features:
(e) The COMPANY agrees to grant the retirement benefits herein provided to regular employees who may be separated from the COMPANY for any of the following reasons:
(5) Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of service to the COMPANY, whichever comes first, and the employee shall be compulsory retired and paid the retirement benefits herein provided."
The said Code provides: Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the Collective Bargaining Agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining or other agreement."
The Court agrees with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for early retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a reward for services rendered since it enables an employee to reap the
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at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer.
As a matter of fact, one of the advantages of early retirement is that the corresponding retirement benefits, usually consisting of a substantial cash windfall, can early on be put to productive and profitable uses by way of income-generating investments, thereby affording a more significant measure of financial security and independence for the retiree who, up till then, had to contend with life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early retirement provisions. And the same cannot be considered a diminution of employment benefits.
Being a product of negotiation, the CBA between the petitioner and the union intended the provision on compulsory retirement to be beneficial to the employees-union members, including herein private respondent. When private respondent ratified the CBA with the union, he not only agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when the CBA provision on compulsory retirement was applied to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law", which went into effect on January 7, 1993. Although passed many years after the compulsory retirement of herein private respondent, nevertheless, the said statute sheds light on the present discussion when it amended
Art. 287 of the Labor Code, to make it read as follows: Retirement. — Any employee may be retired upon reaching the retirement age establish in the collective bargaining agreement or other applicable employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment may retire . . ."
The aforequoted provision makes clear the intention and spirit of the law to give employers and employees a free hand to determine and agree upon the terms and conditions of retirement. Providing in a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be governed by such CBA. The law presumes that employees know what they want and what is good for them absent any showing that fraud or intimidation was employed to secure their consent thereto.
R&E Transport vs Latag (2004) G.R. 155214
Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored.
Issue: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
Held: The respondent is entitled to retirement benefits despite of the waiver of quitclaims.
There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in computing those benefits. As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides:
Retirement. — In the absence of a retirement plan or agreement providing for
Labor Standards – Case Digests
age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.
Gerlach vs Reuters Ltd., Phils., (2005) G.R. 148542 Facts:
Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices worldwide, hired Marilyn Odchimar Gerlach as its local correspondent. On October 1983, respondent Reuters implemented a local Retirement Benefit Plan (Plan) for its Philippine- hired employees. The Plan is funded by the company, but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. Petitioner was automatically covered by the Plan by reason of her age and length of service. However, she opted not to contribute to the fund. She worked in Reuters Philippines up to December 23, 1983. On October 12, 1988, she was directed to return to Manila and resume her post by December 15, 1988.
Petitioner received her retirement benefits under the Plan in the amount of P79,228.04, which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. The computation was based on her notional salary. However, she questioned the amount she received as well as her entitlement to a disturbance grant, contending that her retirement benefits must be computed on the basis of her actual salary abroad, not on her notional salary.
Issue: WON petitioner is allowed to claim for additional retirement benefits. Held: The petitioner is not entitled to the additional retirement benefits.
There are three kinds of retirement schemes. The first type is compulsory and contributory in character. The second type is one set up by agreement between the
employer and the employees in collective bargaining agreements or other agreements between them. The third type is one that is voluntarily given by the employer, expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. 28 It is this third type of retirement scheme which covers respondent's Plan.
Article 287 of the Labor Code reads: Article 287. Retirement. —
Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements."
The first paragraph of the above provisions deals with the retirement age of an employee established in (a) a collective bargaining agreement or (b) other applicable employment contract. The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have earned under (a) an existing law, (b) a collective bargaining or (c) other agreements.
Nonetheless, Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code, provides:
"Sec. 14. Retirement benefits. — (a) An employee who is retired pursuant to a bona fide 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 . "
Thus, in the instant case, respondent based petitioner's retirement benefits on its Plan and established policy, which is in accord with the above provision. Consequently, petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable.
The Court ruled that petitioner's retirement benefits must be based on her notional Philippine salary. It is very clear that from the very start of her first assignment overseas, respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary.
In fact, under the Plan, the company's contribution to the fund is 10% of the basic monthly salary of each participant. Respondent also informed petitioner of the amount of her notional Philippine salary whenever she was transferred to her next overseas assignment or when there were increases in her salary, both actual and notional. Significantly, respondent was able to prove that it has been its practice worldwide that the notional salary of an employee is its basis in computing its contribution to the retirement plan for a local employee detailed abroad. It follows that the amount of
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retirement benefits of a retiring employee assigned abroad is based on his notional salary.
Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R. 145561
Facts:
The case stems from the collective bargaining agreement between Honda and the respondent union that it granted the computation of 14th month pay as the same as 13th
month pay. Honda continues the practice of granting financial assistance covered every December each year of not less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking employees were ordered to return to work and management to accept them back under the same terms prior to the strike staged. Honda issued a
memorandum of the new computation of the 13th month and 14th month pay to be
granted to all its employees whereby the 31 long strikes shall be considered unworked days for purpose of computing the said benefits. The amount equivalent to ½ of the employees’ basic salary shall be deducted from these bonuses, with a commitment that in the event that the strike is declared legal, Honda shall pay the amount.
The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary arbitration where it ruled that the company’s implementation of the pro-rated computation is invalid.
Issue: WON the pro-rated computation of the 13th and 14th month pays and other
bonuses in question is valid and lawful. Held: The pro-rated computation is invalid.
The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was the first time they implemented such practice.
The payment of the 13th month pay in full month payment by Honda has become an
established practice. The length of time where it should be considered in practice is not being laid down by jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code.
The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay shall constitute a violation of Article 100 of the Labor Code.
Jaculbe vs Siliman University (2007) G.R. 156934 Facts:
Sometime in 1958, petitioner began working for respondent’s university medical center as a nurse. In a letter in December 1992, respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year of
service with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s retirement plan for its employees which provided that its members could be automatically retired “upon reaching the age of 65 or after 35 years of uninterrupted
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service to the university.” Respondent required certain documents in connection with
petitioner’s impending retirement.
A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing “company policy.”
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for “termination of service with preliminary injunction and/or restraining order.”
Issue: WON the respondent’s retirement plan imposing automatic retirement after 35 years of service contravenes the security of tenure clause in the 1987 Constitution and the Labor Code.
Held: Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure.
Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon