G.R. No. L-14893; May 31, 1961
ANGELINA ARANETA VDA. DE LIBOON, et al., plaintiffs-appellants, vs. LUZON STEVEDORING CO., INC., defendants-appellees.

FACTS

Angelina Araneta Vda. de Liboon, for herself and as guardian for her minor children, sued Luzon Stevedoring Co., Inc. for the balance of a retirement pension allegedly due from her deceased husband, Juan Liboon. The company had retired Liboon in 1952 and, by a 1955 agreement, granted him a benefit of P7,350, payable at P175 monthly from November 1953 to April 1957. The agreement explicitly stated that if Liboon died before April 30, 1957, the monthly payments would stop, and neither his estate nor his designated beneficiary would have any further claim. Liboon died on September 2, 1954. The company paid benefits until his death and made some payments to the widow thereafter but then ceased.
The plaintiffs alleged a cause of action on two primary grounds. First, they claimed a computational error, arguing the total benefit should have been P14,700. Second, they contended the condition terminating benefits upon the employee’s death was “onerous and inequitable” and contrary to law, morals, good customs, and public policy under Article 1347 of the Civil Code. The defendant moved to dismiss the complaint, arguing it stated no cause of action as the express terms of the agreement extinguished any obligation upon Liboon’s pre-1957 death.

ISSUE

Whether the complaint states a cause of action against the defendant company for the continued payment of the retirement pension after the employee’s death, despite a clear contractual condition to the contrary.

RULING

The Supreme Court affirmed the dismissal of the complaint, holding it stated no cause of action. The legal logic is anchored on the binding nature of the contractual terms and the nature of the benefit granted. The agreement (Annex A) was unambiguous: the pension was personal to Juan Liboon, payable for a fixed term, with a clear condition that payments would cease upon his death before April 1957. He died well before that date, thus triggering the condition and absolving the company of further obligation.
The Court rejected the appellants’ arguments. There was no proven computational mistake; the claim was based on a unilateral assertion. Critically, the Court found the contested condition not contrary to law, morals, good customs, or public policy. The pension was a gratuitous benefit granted by the company out of generosity for long service, not a vested, contributory plan where an employee’s contributions create a fund with survivorship rights. The appellants did not allege Liboon contributed to any pension fund. Since the benefit was purely gratuitous, the company could validly impose conditions on its grant. The Court also noted that the company’s act of making some payments after Liboon’s death was an act of benevolence that did not create a new obligation or waive the clear terms of the original agreement. Therefore, under the plain terms of the contract they invoked, the plaintiffs had no enforceable right to further payments.