G.R. No. 143686 ; January 15, 2002
PHILIPPINE AIRLINES, INC., petitioner, vs. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, respondent.

FACTS

The labor dispute originated from Philippine Airlines, Inc.’s (PAL) unilateral retirement of pilot Captain Albino Collantes under Section 2, Article VII of the 1967 PAL-ALPAP Retirement Plan. The Airline Pilots Association of the Philippines (ALPAP) contested this as illegal dismissal and union busting, filing a Notice of Strike. The Secretary of Labor assumed jurisdiction and, in an Order dated June 13, 1998, upheld PAL’s action as a valid exercise of its option under the Retirement Plan. However, the Secretary ruled that the retirement benefits must be computed based on Article 287 of the Labor Code, as amended by R.A. No. 7641 , rather than the Plan’s formula, and additionally ordered PAL to consult the pilot concerned before implementing such retirement.

ISSUE

The core issues were whether the Secretary of Labor could legally: (1) impose the computation of retirement benefits under Article 287 of the Labor Code over the specific scheme in the 1967 PAL-ALPAP Retirement Plan; and (2) require PAL to consult the pilot before exercising its retirement option under said Plan.

RULING

The Supreme Court partially granted PAL’s petition. On the first issue, the Court affirmed the Secretary’s ruling, applying the second paragraph of Article 287 of the Labor Code, which mandates that retirement benefits under any collective bargaining agreement shall not be less than those provided under the Code. Therefore, the higher benefit standard of the Labor Code governed, and the Secretary correctly adjusted Captain Collantes’ benefits to comply with this mandatory floor. On the second issue, the Court reversed the appellate decision and the Secretary’s order requiring prior consultation. The Court held that the Retirement Plan clearly granted PAL a unilateral option to retire a pilot after the normal retirement date. Imposing a consultation requirement altered the contractual agreement and unduly restricted management’s prerogative. Due process only necessitates notice to the pilot of the retirement decision, not prior consultation, which would effectively give the pilot a veto power. The Secretary resolved an issue beyond those raised, depriving PAL of due process on this specific point. The Court modified the Order, deleting the consultation directive but affirming the use of Article 287 for benefit computation.