GR L 75347; (December, 1987) (Digest)
G.R. No. L-75347 and G.R. No. 75628, December 11, 1987
FORD PHILIPPINES SALARIED EMPLOYEES ASSOCIATION, et al. vs. NATIONAL LABOR RELATIONS COMMISSION, et al. and FORD PHILIPPINES, INC., et al. vs. NATIONAL LABOR RELATIONS COMMISSION, et al.
FACTS
Ford Philippines, Inc. and Ensite Ltd. established company-funded Employees’ Retirement Plans with an “integration provision.” This provision stated that the plan benefits were integrated with and in lieu of statutory termination pay and benefits under collective bargaining agreements (CBAs). In 1984, both companies ceased operations and terminated all employees. Separation benefits totaling approximately P50,000,000 were paid, with about P13,000,000 sourced from the Retirement Fund, leaving a residue of around P10,000,000.
The labor unions filed a complaint, assailing the validity of the P13,000,000 deduction from the Retirement Fund for separation pay. The Labor Arbiter upheld the deduction and ordered the distribution of the remaining fund residue. The unions appealed the validity of the deduction but also filed a motion seeking the immediate distribution of the fund residue pending appeal. The NLRC subsequently authorized the issuance of a writ of execution for the distribution of the P10,117,016.20 residue.
ISSUE
The primary issues were: (1) whether the deduction of P13,000,000 from the Retirement Fund for separation benefits was valid under the plan’s integration provision, and (2) whether the NLRC correctly authorized the execution for the distribution of the remaining fund residue.
RULING
The Supreme Court affirmed the NLRC’s resolutions. On the first issue, the deduction was valid. The Court emphasized that the Retirement Plans were exclusively company-funded and contained a clear integration clause. This clause explicitly provided that plan benefits were “integrated with and in lieu of” statutory and CBA-mandated termination benefits. Since the companies paid full separation benefits, partly from operating funds and partly from the Retirement Fund, this action was in strict compliance with the contractual terms of the plan agreed upon by the parties. The companies merely applied the fund according to its stipulated purpose.
On the second issue, the Court upheld the writ of execution for the fund residue but with qualifications. The residue represented the remaining plan assets after lawful deductions and was due for distribution to the employee-participants. However, the execution could only cover the shares of union members who were party litigants, excluding non-union managerial and supervisory employees. Furthermore, the 10% attorney’s fees for union counsel, as awarded by the Labor Arbiter, was proper and could be deducted directly from the award to the union members, as the companies in this instance were merely complying with a legal order. The Court modified the award to include interest from September 30, 1985, until actual payment.