GR 87653; (February, 1992) (Digest)
G.R. No. 87653 February 11, 1992
CONRADO M. AQUINO, NAPOLEON B. AROMIN, ROBERTO A. GASPAN and NICARDO P. BLANQUISCO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND OTIS ELEVATOR COMPANY, respondents.
FACTS
Petitioners were employees of Otis Elevator Company whose services were terminated due to retrenchment. They received separation pay computed at one month’s basic salary for every year of service, which was double the statutory rate under the Labor Code. The payment was made pursuant to the Collective Bargaining Agreement (CBA), which provided separation pay “subject to the existing provisions of the Retirement Plan.” Subsequently, petitioners demanded retirement benefits under the company’s Retirement Plan, which was integrated into the CBA. The plan stipulated that a participant terminated after at least ten years of service is entitled to a vested percentage of accrued benefit credits.
The company refused, arguing that separation pay and retirement benefits were mutually exclusive, and that petitioners, having received the former, were no longer entitled to the latter. The Labor Arbiter ruled for the petitioners, citing estoppel as the company had granted both benefits to two other employees terminated earlier. The National Labor Relations Commission (NLRC) reversed, holding that the CBA provision made separation pay subject to, not in addition to, the Retirement Plan, and that the cited prior cases were exceptional.
ISSUE
Were the petitioners, having received separation pay due to retrenchment, still entitled to claim retirement benefits under the company’s Retirement Plan integrated in the CBA?
RULING
Yes. The Supreme Court granted the petition and ordered the payment of retirement benefits. The legal logic rests on the binding nature of the CBA and the Retirement Plan as contracts. The Court distinguished the statutory purpose of separation pay (to provide financial support during job search) from the contractual nature of retirement benefits (a reward for loyalty and service). The company’s argument that the benefits were mutually exclusive, based on an Omnibus Rules provision stating an employee gets “retirement benefits or separation pay, whichever is higher,” was unavailing.
The Court found that the CBA and the integrated Retirement Plan created demandable contractual rights. The Retirement Plan’s Section 5.2 explicitly entitled a terminated participant with sufficient service to a vested benefit. The CBA clause making separation pay “subject to” the Retirement Plan did not mean the benefits were alternative; it simply subjected the separation pay clause to the Plan’s provisions. The petitioners’ acceptance of separation pay did not constitute a waiver of their distinct right to retirement benefits under the contract. The company’s prior grant of both benefits to other employees, while noted, was not the controlling factor. The decisive point was that the petitioners’ entitlement arose from the negotiated agreements, which are binding obligations, not mere acts of corporate liberality.