G.R. No. 90664 ; February 7, 1991
SABAS B. VILLENA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and BATANGAS, LAGUNA, TAYABAS BUS CO., respondents.

FACTS

Sabas B. Villena, a managerial employee with 32 years of service at Batangas, Laguna, Tayabas Bus Company (BLTBCo.), was handed a letter on April 30, 1987, advising him of his immediate compulsory retirement effective that same day. The company cited continuous business losses and invoked the compulsory retirement provision of its Collective Bargaining Agreement (CBA). Villena, then 57 years old, was ordered to turn over his assets and leave the premises immediately. His demand for clarification on the benefits and the legality of his separation was ignored by the company.
Villena filed a complaint for illegal dismissal. During conciliation, BLTBCo. admitted it failed to give the required 30-day notice and offered to pay retirement benefits computed solely on his basic salary, totaling P66,370. Villena contested this, arguing his gross compensation, including allowances and company assistance totaling P3,750 monthly, should be the basis, entitling him to P123,750. The labor arbiter and the NLRC ruled in favor of the company’s computation, prompting Villena to elevate the case to the Supreme Court via certiorari.

ISSUE

Whether the NLRC committed grave abuse of discretion in upholding Villena’s compulsory retirement and in computing his benefits based only on his basic salary.

RULING

Yes. The Supreme Court annulled the NLRC decision. The Court ruled that Villena’s separation was an illegal dismissal disguised as compulsory retirement. As a managerial employee, he was excluded from the CBA’s coverage; thus, its compulsory retirement clause could not be applied to him. The company’s claim of business losses as justification for retrenchment was unsubstantiated, requiring proof which was never presented. Furthermore, the dismissal violated due process due to the lack of prior notice.
Consequently, Villena, illegally dismissed three years before the compulsory retirement age of 60, was entitled to full backwages, allowances, and benefits for those three years. Upon reaching age 60, he is entitled to normal retirement benefits. The basis for computing all these benefits must be his gross compensation, including all regular allowances and the company assistance, not merely his basic salary, as these formed part of his wage for services rendered. The company’s failure to prove a bona fide retirement plan applicable to managerial staff meant the benefits must be computed under the more favorable rule provided by law.