G.R. No. 188659 ; February 13, 2013
HEIRS OF MANUEL H. RIDAD, APOLINARIO G. BACTOL, EMERITA C. GULINAO and LYDIA S. JUSAY, Petitioners, vs. GREGORIO ARANETA UNIVERSITY FOUNDATION, Respondent.

FACTS

Petitioners were former officers and employees of respondent Gregorio Araneta University Foundation (GAUF). In 1984, GAUF implemented a Reorganization, Retrenchment, and Restructuring (RRR) Program due to serious business losses, which was approved by the Minister of Labor. Petitioners were retrenched under this program but were subsequently re-hired in January 1984. Upon their eventual retirement between 2000 and 2001, GAUF computed their retirement benefits under its company policy, reckoning their service length from their re-employment date in January 1984. Petitioners signed quitclaims upon receipt.
Petitioners later filed a complaint before the Labor Arbiter, contending that the computation of their retirement benefits should be based on their original hiring dates, not their 1984 re-hire dates. They also claimed they were not paid separation benefits during the 1984 retrenchment and sought the inclusion of honoraria in their 13th-month pay computation. The Labor Arbiter partially granted their claim, ordering GAUF to pay additional retirement benefits for the pre-1984 service period, offset by certain receivables. The National Labor Relations Commission (NLRC) affirmed this decision.

ISSUE

Whether petitioners are entitled to have their retirement benefits computed from their original dates of hiring, including the period prior to their 1984 retrenchment and re-employment.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision dismissing the complaint. The Court upheld the validity of the 1984 RRR Program, which had been consistently recognized in prior jurisprudence as a legitimate retrenchment due to GAUF’s financial reverses. The legal logic centers on the doctrine of res judicata and the nature of the compromise agreement that settled the 1984 separation.
The Court found that the 1984 retrenchment was a valid termination of employment. Consequently, petitioners’ receipt of separation benefits at that time—which were applied to offset their outstanding obligations to GAUF, such as tuition fees and land amortizations, as per a court-approved compromise agreement—extinguished any claim for further benefits for that period. Their re-employment in January 1984 constituted a new employment contract. Therefore, the reckoning point for computing their subsequent retirement benefits under GAUF’s policy is correctly their re-employment date. The quitclaims they signed were valid, as they were executed voluntarily, for a reasonable consideration, and petitioners failed to prove any vitiating circumstances like fraud or deceit. The Court also found no merit in the claim regarding honoraria for the 13th-month pay, as these are not part of the basic salary.