G.R. No. 171587; October 13, 2009
EASTERN SHIPPING LINES, INC., Petitioner, vs. FERRER D. ANTONIO, Respondent.

FACTS

Respondent Ferrer D. Antonio was employed by petitioner Eastern Shipping Lines, Inc. as a seaman starting in 1981, last serving as a 3rd Engineer. In February 1996, he suffered a work-related back injury in Japan, was advised to rest, and was later declared fit to work by the company doctor. However, petitioner did not reinstate him. Having passed the licensure exam for 2nd Engineer, respondent sought assignment to that position but was not given a posting. Facing financial need, he applied for optional retirement benefits under the company’s gratuity plan in January 1997. Petitioner denied his application, citing that his “shipboard employment history and track record” did not meet the company’s standard.
The Labor Arbiter ruled in favor of Antonio, finding constructive dismissal and ordering payment of retirement benefits, moral and exemplary damages, and attorney’s fees. The NLRC affirmed this decision. The Court of Appeals also affirmed but reduced the moral damages and deleted exemplary damages, holding that while the benefit was a gratuity, the denial was arbitrary as Antonio had met the plan’s minimum requirement of 3,650 days of service.

ISSUE

Whether respondent is entitled to the optional retirement gratuity provided in the company plan.

RULING

No. The Supreme Court reversed the Court of Appeals. The company’s optional retirement benefit is a gratuity, not a demandable obligation, and its grant is discretionary on the part of the employer. The Court held that the grant of such a benefit is an act of liberality by the employer, contingent upon the employee meeting not just the minimum eligibility requirements but also the company’s internal standards of performance and track record. Since the benefit is not based on law or contract but on a voluntary plan, the employer retains the prerogative to determine who qualifies based on its set criteria.
The legal logic is that for a retirement benefit to be compulsory and demandable, it must be founded on law, a collective bargaining agreement, or a contract. Here, the benefit was a unilateral act of the company, a gratuity offered at its discretion. The Court found no evidence of bad faith or arbitrariness in the company’s exercise of this discretion, as its requirement of a satisfactory “track record” was a valid standard. However, in the interest of compassionate justice, considering Antonio’s long years of service without a derogatory record, the Supreme Court awarded him financial assistance in the amount of ₱100,000.00 as equitable relief.