G.R. No. L-6454 November 29, 1954
J.P. HEILBRONN COMPANY, petitioner, vs. NATIONAL LABOR UNION, respondent.

FACTS

The National Labor Union made various demands upon J.P. Heilbronn Company, including Demand No. 8 for a retirement gratuity based on one month’s salary for every year of service for employees (a) attaining 60 years of age, (b) incapacitated due to illness, and (c) resigning after 10 years of satisfactory service. The Court of Industrial Relations (CIR), in a decision dated August 21, 1950, granted this demand temporarily and ordered the company to adopt and carry out a pension plan for its employees within 90 days, based on its financial situation and the conditions in Demand No. 8, subject to any laws or recommendations related to Republic Act No. 532 . Upon motion for reconsideration, the CIR en banc affirmed but modified the decision, holding the presentation of the pension plan in abeyance until Congress enacted a law on the matter, as Republic Act No. 532 had created a commission to study a pension plan. After two years without such legislation, the CIR, at the labor union’s instance, issued an order on January 6, 1953, requiring the company to present the retirement plan within 90 days as per the original 1950 decision. The company filed this petition for certiorari, contending the CIR committed a grave abuse of discretion and acted without authority in issuing the 1953 order.

ISSUE

Whether the Court of Industrial Relations has the power to require an employer to adopt and carry out a pension or retirement plan for its employees.

RULING

Yes, the Court of Industrial Relations has the power to require an employer to adopt a pension plan, as such power is conferred by Commonwealth Act No. 103 , with pension payments and retirement plans being embraced in “wages” and conditions of employment and proper subjects of collective bargaining. However, this power is subject to the limitation that the award must be reasonable and compatible with the employer’s right to a reasonable profit on its capital, necessitating an inquiry into what the employer’s business can afford. In this case, the CIR’s order of January 6, 1953, requiring the company to adopt and carry out a pension plan within 90 days, was modified. The Supreme Court held that while the order requiring the presentation of a plan was valid, the portion requiring the company to adopt and carry out the plan before court approval after proper investigation and hearing was arbitrary and without factual basis. The case was remanded to the CIR for the petitioner to present a pension plan for approval after due investigation and hearing.