Labor Cases

G.R. No.
181806
March 12, 2014
WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner,

vs.
WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF
ASSOCIATION, Respondent.
DECISION
DEL CASTILLO, J.:
A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and
a legitimate labor organization concerning the terms and conditions of
employment. Like any other contract, it has the force of law between the parties and,
thus, should be complied with in good faith. Unilateral changes or suspensions in the
implementation of the provisions of the CBA, therefore, cannot be allowed without the
consent of both parties.
1
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the
September 25, 2007 Decision and the February 5, 2008 Resolution of the Court of
Appeals (CA) in CA-G.R. SP No. 97053.
3
Factual Antecedents
Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational
institution duly organized and existing under the laws of the Philippines. Respondent
Wesleyan University-Philippines Faculty and Staff Association, on the other hand, is a
duly registered labor organization acting as the sole and exclusive bargaining agent of
all rank-and-file faculty and staff employees of petitioner.
6
In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May
31, 2008.
9
10
On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty.
Maglaya), issued a Memorandum providing guidelines on the implementation of
vacation and sick leave credits as well as vacation leave commutation. The pertinent
portions of the Memorandum read:
11
1. VACATION AND SICK LEAVE CREDITS

Vacation and sick leave credits are not automatic. They have to be earned.
Monthly, a qualified employee earns an equivalent of 1.25 days credit each for VL
and SL. Vacation Leave and Sick Leave credits of 15 days become complete at
the cut off date of May 31 of each year. (Example, only a total of 5 days credit will
be given to an employee for each of sick leave [or] vacation leave, as of month
end September, that is, 4 months from June to September multiplied by 1.25
days). An employee, therefore, who takes VL or SL beyond his leave credits as of
date will have to file leave without pay for leaves beyond his credit.
2. VACATION LEAVE COMMUTATION
Only vacation leave is commuted or monetized to cash. Vacation leave
commutation is effected after the second year of continuous service of an
employee. Hence, an employee who started working June 1, 2005 will get his
commutation on May 31, 2007 or thereabout.
12
On August 25, 2005, respondents President, Cynthia L. De Lara (De Lara) wrote a
letter to Atty. Maglaya informing him that respondent is not amenable to the unilateral
changes made by petitioner. De Lara questioned the guidelines for being violative of
existing practices and the CBA, specifically Sections 1 and 2, Article XII of the CBA, to
wit:
13
14
15
ARTICLE XII
VACATION LEAVE AND SICK LEAVE
SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty and
staff who are entitled to receive shall enjoy fifteen (15) days vacation leave with pay
annually.
1.1 All unused vacation leave after the second year of service shall be converted into
cash and be paid to the entitled employee at the end of each school year to be given
not later than August 30 of each year.
SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and staff
shall enjoy fifteen (15) days sick leave with pay annually.
16
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during
which petitioner advised respondent to file a grievance complaint on the implementation
of the vacation and sick leave policy. In the same meeting, petitioner announced its
plan of implementing a one-retirement policy, which was unacceptable to respondent.
17
18
Ruling of the Voluntary Arbitrator

Unable to settle their differences at the grievance level, the parties referred the matter to
a Voluntary Arbitrator. During the hearing, respondent submitted affidavits to prove that
there is an established practice of giving two retirement benefits, one from the Private
Education Retirement Annuity Association (PERAA) Plan and another from the CBA
Retirement Plan. Sections 1, 2, 3 and 4 of Article XVI of the CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY
SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be

automatic for all full-time, regular staff and tenured faculty of the University, except the
University President. Membership in the Plan shall commence on the first day of the
month coincident with or next following his statement of Regular/Tenured Employment
Status.
SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory retirement date of
each Member shall be as follows:
a. Faculty The last day of the School Year, coincident with his attainment of age
sixty (60) with at least five (years) of unbroken, credited service.
b. Staff Upon reaching the age of sixty (60) with at least five (5) years of
unbroken, credited service.
SECTION 3. OPTIONAL RETIREMENT DATE - A Member may opt for an optional
retirement prior to his compulsory retirement. His number of years of service in the
University shall be the basis of computing x x x his retirement benefits regardless of his
chronological age.
SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum
equivalent to 100% of the members final monthly salary for compulsory retirement.
For optional retirement, the vesting schedule shall be:
xxxx
19
On November 2, 2006, the Voluntary Arbitrator rendered a Decision declaring the oneretirement policy and the Memorandum dated August 16, 2005 contrary to law. The
dispositive portion of the Decision reads:
20
WHEREFORE, the following award is hereby made:

1. The assailed University guidelines on the availment of vacation and sick leave
credits and vacation leave commutation are contrary to law. The University is
consequently ordered to reinstate the earlier scheme, practice or policy in effect
before the issuance of the said guidelines on August 16, 2005;
2. The "one retirement" policy is contrary to law and is hereby revoked and
rescinded. The University is ordered x x x to resume and proceed with the
established practice of extending to qualified employees retirement benefits
under both the CBA and the PERAA Plan.
3. The other money claims are denied.
21
Ruling of the Court of Appeals
Aggrieved, petitioner appealed the case to the CA via a Petition for Review under Rule
43 of the Rules of Court.
On September 25, 2007, the CA rendered a Decision finding the rulings of the
Voluntary Arbitrator supported by substantial evidence. It also affirmed the nullification
of the one-retirement policy and the Memorandum dated August 16, 2005 on the ground
that these unilaterally amended the CBA without the consent of respondent. Thus:
22
23
WHEREFORE, the instant appeal is DISMISSED for lack of merit.

SO ORDERED.
24
Petitioner moved for reconsideration but the same was denied by the CA in its February
5, 2008 Resolution.
25
Issues
Hence, this recourse by petitioner raising the following issues:
a.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary
Arbitrators ruling that the Affidavits submitted by Respondent WU-PFSA are substantial
evidence as defined by the rules and jurisprudence that would substantiate that
Petitioner WU-P has long been in the practice of granting its employees two (2) sets of
Retirement Benefits.
b.
Arbitrators ruling that a university practice of granting its employees two (2) sets of
Retirement Benefits had already been established as defined by the law and
jurisprudence especially in light of the illegality and lack of authority of such alleged
grant.
c.
Arbitrators ruling that it is incumbent upon Petitioner WU-P to show proof that no Board
Resolution was issued granting two (2) sets of Retirement Benefits.
d.
Whether x x x the [CA] committed grave and palpable error in revoking the 16 August
2005 Memorandum of Petitioner WU-P for being contrary to extant policy.
26
Petitioners Arguments
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and
the PERAA Plan are one and the same. It maintains that there is no established
company practice or policy of giving two retirement benefits to its
employees. Assuming, without admitting, that two retirement benefits were
released, petitioner insists that these were done by mere oversight or mistake as there
is no Board Resolution authorizing their release. And since these benefits are
unauthorized and irregular, these cannot ripen into a company practice or policy. As to
the affidavits submitted by respondent, petitioner claims that these are self-serving
declarations, and thus, should not be given weight and credence.
27
28
29
30
31
32
33
In addition, petitioner claims that the Memorandum dated August 16, 2005, which
provides for the guidelines on the implementation of vacation and sick leave credits as
well as vacation leave commutation, is valid because it is in full accord with existing
policy.
34
Respondents Arguments
Respondent belies the claims of petitioner and asserts that there are two retirement
plans as the PERAA Retirement Plan, which has been implemented for more than 30
years, is different from the CBA Retirement Plan. Respondent further avers that it has
always been a practice of petitioner to give two retirement benefits and that this
practice was established by substantial evidence as found by both the Voluntary
Arbitrator and the CA.
35
36
37
As to the Memorandum dated August 16, 2005, respondent asserts that it is arbitrary
and contrary to the CBA and existing practices as it added qualifications or limitations
which were not agreed upon by the parties.
38
Our Ruling
The Petition is bereft of merit.
The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits
employers from eliminating or reducing the benefits received by their employees. This
rule, however, applies only if the benefit is based on an express policy, a written
contract, or has ripened into a practice. To be considered a practice, it must be
consistently and deliberately made by the employer over a long period of time.
39
40
41
An exception to the rule is when "the practice is due to error in the construction or
application of a doubtful or difficult question of law." The error, however, must be
corrected immediately after its discovery; otherwise, the rule on Non-Diminution of
Benefits would still apply.
42
43
The practice of giving two retirement

benefits to petitioners employees is
supported by substantial evidence.
In this case, respondent was able to present substantial evidence in the form of
affidavits to support its claim that there are two retirement plans. Based on the affidavits,
petitioner has been giving two retirement benefits as early as 1997. Petitioner, on the
other hand, failed to present any evidence to refute the veracity of these affidavits.
Petitioners contention that these affidavits are self-serving holds no water. The retired
employees of petitioner have nothing to lose or gain in this case as they have already
received their retirement benefits. Thus, they have no reason to perjure themselves.
Obviously, the only reason they executed those affidavits is to bring out the truth. As we
see it then, their affidavits, corroborated by the affidavits of incumbent employees, are
more than sufficient to show that the granting of two retirement benefits to retiring
employees had already ripened into a consistent and deliberate practice.
44
Moreover, petitioners assertion that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same is not supported by any
evidence. There is nothing in Article XVI of the CBA to indicate or even suggest that the
"Plan" referred to in the CBA is the PERAA Plan. Besides, any doubt in the
interpretation of the provisions of the CBA should be resolved in favor of respondent. In
fact, petitioners assertion is negated by the announcement it made during the LMC
Meeting on February 8, 2006 regarding its plan of implementing a "one-retirement plan."
For if it were true that petitioner was already implementing a one-retirement policy, there
would have been no need for such announcement. Equally damaging is the lettermemorandum dated May 11, 2006, entitled "Suggestions on the defenses we can
introduce to justify the abolition of double retirement policy," prepared by the petitioners
legal counsel.
45
These circumstances, taken together, bolster the finding that the two-retirement policy is
a practice. Thus, petitioner cannot, without the consent of respondent, eliminate the
two-retirement policy and implement a one-retirement policy as this would violate the
rule on non-diminution of benefits.
1wphi1
As a last ditch effort to abolish the two-retirement policy, petitioner contends that such
practice is illegal or unauthorized and that the benefits were erroneously given by the
previous administration. No evidence, however, was presented by petitioner to
substantiate its allegations.
Considering the foregoing disquisition, we agree with the findings of the Voluntary
Arbitrator, as affirmed by the CA, that there is substantial evidence to prove that there is
an existing practice of giving two retirement benefits, one under the PERAA Plan and
another under the CBA Retirement Plan.
The Memorandum dated August 16,
2005 is contrary to the existing CBA.
Neither do we find any reason to disturb the findings of the CA that the Memorandum
dated August 16, 2005 is contrary to the existing CBA.
Sections 1 and 2 of Article XII of the CBA provide that all covered employees are
entitled to 15 days sick leave and 15 days vacation leave with pay every year and that
after the second year of service, all unused vacation leave shall be converted to cash
and paid to the employee at the end of each school year, not later than August 30 of
each year.
The Memorandum dated August 16, 2005, however, states that vacation and sick leave
credits are not automatic as leave credits would be earned on a month-to-month basis.
This, in effect, limits the available leave credits of an employee at the start of the school
year. For example, for the first four months of the school year or from June to
September, an employee is only entitled to five days vacation leave and five days sick
leave. Considering that the Memorandum dated August 16, 2005 imposes a limitation
not agreed upon by the parties nor stated in the CBA, we agree with the CA that it must
be struck down.
46
In closing, it may not be amiss to mention that when the provision of the CBA is clear,
leaving no doubt on the intention of the parties, the literal meaning of the stipulation
shall govem.
47
However, if there is doubt in its interpretation, it should be resolved in favor of labor, as

this is mandated by no less than the Constitution.
48
49
WHEREFORE, the Petition is hereby DENIED. The assailed September 25, 2007
Decision and the February 5, 2008 Resolution of the Court of Appeals in CA-G.R. SP
No. 97053 are hereby AFFIRMED.
SO ORDERED.
G.R. No. 176985
April 1, 2013
RICARDO E. VERGARA, JR., Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC., Respondent.
DECISION
PERALTA, J.:
Before Us is a petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure assailing the January 9, 2007 Decision 1 and March 6, 2007 Resolution2 of the
Court of Appeals (CA) in CA .. G.R. SP No. 94622, which affirmed the January 31, 2006
Decision3 and March 8, 2006 Resolution4 of the National Labor Relations Commission
(NLRC) modifying the September 30, 2003 Decision 5 of the Labor Arbiter (LA) by
deleting the sales management incentives in the computation of petitioner's retirement
benefits.
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers
Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales
Supervisor (DSS) for Las Pias City, Metro Manila. As stipulated in respondents
existing Retirement Plan Rules and Regulations at the time, the Annual Performance
Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of
retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance
Incentive (which is the total performance incentive earned during the year immediately
preceding 12 months) No. of Years in Service. 6
Claiming his entitlement to an additional PhP474,600.00 as Sales Management
Incentives (SMI)7 and to the amount of PhP496,016.67 which respondent allegedly
deducted illegally, representing the unpaid accounts of two dealers within his
jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the
payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives,
Length of Service, Actual, Moral and Exemplary Damages, and Attorneys Fees." 8
After a series of mandatory conference, both parties partially settled with regard the
issue of merit increase and length of service.9 Subsequently, they filed their respective
Position Paper and Reply thereto dealing on the two remaining issues of SMI
entitlement and illegal deduction.
On September 30, 2003, the LA rendered a Decision 10 in favor of petitioner, directing
respondent to reimburse the amount illegally deducted from petitioners retirement
package and to integrate therein his SMI privilege. Upon appeal of respondent,
however, the NLRC modified the award and deleted the payment of SMI.
Petitioner then moved to partially execute the reimbursement of illegal deduction, which
the LA granted despite respondents opposition. 11 Later, without prejudice to the
pendency of petitioners petition for certiorari before the CA, the parties executed a
Compromise Agreement12 on October 4, 2006, whereby petitioner acknowledged full
payment by respondent of the amount of PhP496,016.67 covering the amount illegally
deducted.
The CA dismissed petitioners case on January 9, 2007 and denied his motion for
reconsideration two months thereafter. Hence, this present petition to resolve the
singular issue of whether the SMI should be included in the computation of petitioners
retirement benefits on the ground of consistent company practice. Petitioner insistently
avers that many DSSs who retired without achieving the sales and collection targets
were given the average SMI in their retirement package.
We deny.
This case does not fall within any of the recognized exceptions to the rule that only
questions of law are proper in a petition for review on certiorari under Rule 45 of the
Rules of Court. Settled is the rule that factual findings of labor officials, who are deemed
to have acquired expertise in matters within their respective jurisdiction, are generally
accorded not only respect but even finality, and bind us when supported by substantial
evidence.13Certainly, it is not Our function to assess and evaluate the evidence all over
again, particularly where the findings of both the CA and the NLRC coincide.
In any event, even if this Court would evaluate petitioner's arguments on its supposed
merits, We still find no reason to disturb the CA ruling that affirmed the NLRC. The
findings and conclusions of the CA show that the evidence and the arguments of the
parties had all been carefully considered and passed upon. There are no relevant and
compelling facts to justify a different resolution which the CA failed to consider as well
as no factual conflict between the CA and the NLRC decisions.
Generally, employees have a vested right over existing benefits voluntarily granted to
them by their employer.14Thus, any benefit and supplement being enjoyed by the
employees cannot be reduced, diminished, discontinued or eliminated by the
employer.15 The principle of non-diminution of benefits is actually founded on the
Constitutional mandate to protect the rights of workers, to promote their welfare, and to
afford them full protection.16 In turn, said mandate is the basis of Article 4 of the Labor
Code which states that "all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be rendered in favor of labor." 17
There is diminution of benefits when the following requisites are present: (1) the grant or
benefit is founded on a policy or has ripened into a practice over a long period of time;
(2) the practice is consistent and deliberate; (3) the practice is not due to error in the
construction or application of a doubtful or difficult question of law; and (4) the
diminution or discontinuance is done unilaterally by the employer.18
To be considered as a regular company practice, the employee must prove by
substantial evidence that the giving of the benefit is done over a long period of time, and
that it has been made consistently and deliberately.19Jurisprudence has not laid down
any hard-and-fast rule as to the length of time that company practice should have been
exercised in order to constitute voluntary employer practice. 20 The common denominator
in previously decided cases appears to be the regularity and deliberateness of the grant
of benefits over a significant period of time.21 It requires an indubitable showing that the
employer agreed to continue giving the benefit knowing fully well that the employees are
not covered by any provision of the law or agreement requiring payment thereof. 22 In
sum, the benefit must be characterized by regularity, voluntary and deliberate intent of
the employer to grant the benefit over a considerable period of time. 23
Upon review of the entire case records, We find no substantial evidence to prove that
the grant of SMI to all retired DSSs regardless of whether or not they qualify to the
same had ripened into company practice. Despite more than sufficient opportunity given
him while his case was pending before the NLRC, the CA, and even to this Court,
petitioner utterly failed to adduce proof to establish his allegation that SMI has been
consistently, deliberately and voluntarily granted to all retired DSSs without any
qualification or conditions whatsoever. The only two pieces of evidence that he
stubbornly presented throughout the entirety of this case are the sworn statements of
Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of
respondent who retired in 2000 and 1998, respectively. They claimed that the SMI was
included in their retirement package even if they did not meet the sales and collection
qualifiers.24 However, juxtaposing these with the evidence presented by respondent
would reveal the frailty of their statements.
The declarations of Hidalgo and Velazquez were sufficiently countered by respondent
through the affidavits executed by Norman R. Biola (Biola), Moises D. Escasura
(Escasura), and Ma. Vanessa R. Balles (Balles).25 Biola pointed out the various stop-gap
measures undertaken by respondent beginning 1999 in order to arrest the deterioration
of its accounts receivables balance, two of which relate to the policies on the grant of
SMI and to the change in the management structure of respondent upon its reacquisition by San Miguel Corporation. Escasura represented that he has personal
knowledge of the circumstances behind the retirement of Hidalgo and Velazquez. He
attested that contrary to petitioners claim, Hidalgo was in fact qualified for the SMI. As
for Velazquez, Escasura asserted that even if he (Velazquez) did not qualify for the SMI,
respondents General Manager in its Calamba plant still granted his (Velazquez)
request, along with other numerous concessions, to achieve industrial peace in the
plant which was then experiencing labor relations problems. Lastly, Balles confirmed
that petitioner failed to meet the trade receivable qualifiers of the SMI. She also cited
the cases of Ed Valencia (Valencia) and Emmanuel Gutierrez (Gutierrez), both DSSs of
respondent who retired on January 31, 2002 and December 30, 2002, respectively. She
noted that, unlike Valencia, Gutierrez also did not receive the SMI as part of his
retirement pay, since he failed to qualify under the policy guidelines. The verity of all
these statements and representations stands and holds true to Us, considering that
petitioner did not present any iota of proof to debunk the same.
1wphi1
Therefore, respondent's isolated act of including the SMI in the retirement package of
Velazquez could hardly be classified as a company practice that may be considered an
enforceable obligation. To repeat, the principle against diminution of benefits is
applicable only if the grant or benefit is founded on an express policy or has ripened into
a practice over a long period of time which is consistent and deliberate; it presupposes
that a company practice, policy and tradition favorable to the employees has been
clearly established; and that the payments made by the company pursuant to it have
ripened into benefits enjoyed by them.26 Certainly, a practice or custom is, as a general
rule, not a source of a legally demandable or enforceable right. 27 Company practice, just
like any other fact, habits, customs, usage or patterns of conduct, must be proven by
the offering party who must allege and establish specific, repetitive conduct that might
constitute evidence of habit or company practice.28
To close, We rule that petitioner could have salvaged his case had he step up to
disprove respondents contention that he miserably failed to meet the collection
qualifiers of the SMI. Respondent argues that
An examination of the Companys aged trial balance reveals that petitioner did not meet
the trade receivable qualifier. On the contrary, the said trial balance reveals that
petitioner had a large amount of uncollected overdue accounts. For the year 2001, his
percentage collection efficiency for current issuance was at an average of 13.5% a
month as against the required 70%. For the same, petitioners collection efficiency was
at an average of 60.25% per month for receivables aged 1-30 days, which is again, way
below the required 90%. For receivables aged 31-60 days during said year, petitioners
collection efficiency was at an average of 56.17% per month, which is approximately
half of the required 100%. Worse, for receivables over 60 days old, petitioners average
collection efficiency per month was a reprehensively low 14.10% as against the required
100%.29
The above data was repeatedly raised by respondent in its Rejoinder (To Complainants
Reply) before the LA,30Memorandum of Appeal31 and Opposition (To ComplainantAppellees Motion for Reconsideration)32 before the NLRC, and Comment (On the
Petition),33 Memorandum (For the Private Respondent), 34 and Comment (On the Motion
for Reconsideration)35 before the CA. Instead of frontally rebutting the data, petitioner
treated them with deafening silence; thus, reasonably and logically implying lack of
evidence to support the contrary.
WHEREFORE, the petition is DENIED. The January 9, 2007 Decision and March 6,
2007 Resolution of the Court of Appeals in CA-G.R. SP No. 94622, which affirmed the
January 31, 2006 Decision and March 8, 2006 Resolution of the NLRC deleting the LA's
inclusion of sales management incentives in the computation of petitioner's retirement

benefits, is hereby AFFIRMED.
SO ORDERED.
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.
DECISION
PEREZ, J.:
For review is the Decision1 of the Special Former Ninth Division of the Court of Appeals
dated 18 December 2008 which annulled and set aside the Decision 2 of the National
Labor Relations Commission (NLRC) of 31 August 2004, as well as the Labor Arbiter's
Decision3 dated 30 September 2002.
Three cases4 had already been brought up to this Court in a span of 3 decades all
stemming from the Reorganization, Retrenchment and Restructuring (RRR) Program
implemented by respondent Gregorio Araneta University Foundation (GAUF) way back
in 1984.
At that time, Cesar Mijares, then President of GAUF, wrote to then Minister of Labor and
Employment Blas F. Ople requesting the approval of the RRR Program of GAUF. The
latter approved the RRR Program with a reminder that the implementation thereof shall
be instituted without prejudice to whatever benefits may have accrued in favor of the
employees concerned. The RRR Program took effect on 1 January 1984.
The Court, in all its decisions in the GAUF cases, recognized the adoption of the RRR
Program on the ground of serious business losses and financial reverses suffered by
GAUF.
As just noted, the instant controversy traces its roots to the same RRR Program
adopted by GAUF in 1984.
Petitioners were former officers and employees of GAUF, as below indicated, with the
corresponding dates of hiring and retirement, basic salaries, and amount of retirement
benefits received, to wit:
Employees
Last Position
Held
Date of
Hiring
Date of
Retirement
Amount
Received
Basic
Salaries
Manuel
Ridad
External
Relations
Officer
June 1,
1974
Oct. 16, P193,359.50 P14,217.61

2000
Apolinario
Bactol
Head of
Engineering
Services
Aug. 20,
1969
Jan. 16, P268,103.49 P16,548.71

2001
Emerita
Gulinao
Director of
Physical
Plant and
Facilities and
General
Services
June 11,
1973
Nov. 11, P337,917.97 P24,846.92

2000
Lydia Jusay Dean of College June

of
1967
Education
May 31, P187,315.57

2000
(none
indicated)
It appears that petitioners were retrenched in view of the RRR Program but were rehired in January 1984. Consequently, GAUF set the reckoning period for the
computation of petitioners retirement benefits to January 1984. Section 374, Article CVI
of GAUFs Manual of Policies provided for a computation of the retirement benefits as
follows:
Section 374. In addition to the above privileges and benefits, faculty members and nonacademic personnel of the University further enjoy the following:
Gratuity or Retirement - A gratuity or retirement is likewise extended by the University to
all faculty members and employees who retire or resign from the University in
accordance with the following schedule, the payment of which, shall be subject to
availability of funds:
Length of Service Benefits
7-9 years: 50% of monthly salary per year of service
25 years and up: 100% of monthly salary per year of service 5

Petitioners signed individual quitclaims upon receipt of their retirement pay.
Claiming that the computation of their retirement benefits should be reckoned from the
date of their original hiring, petitioners filed a Complaint before the Labor Arbiter.
Petitioners alleged that they were not paid separation benefits during the
implementation of the RRR Program. They likewise sought the inclusion of their monthly
honorarium in the computation of their 13th month pay.
In its position paper, GAUF averred that pursuant to the RRR Program, petitioners were
all separated from employment in 1984 and paid their separation benefits in the form of
off-setting of their outstanding obligations to GAUF such as tuition fees and the value of
the lots in the Gonzales Estate area owned by GAUF and sold to petitioners. The said
settlement was embodied in a compromise agreement. 6 GAUF added that petitioners
were re-employed on 1 January 1984, hence this date should be the reckoning point for
the purpose of computing the separation pay.
On 30 September 2002, the Labor Arbiter ruled, thus:
WHEREFORE, judgment is rendered ordering respondent GREGORIO ARANETA
FOUNDATION to pay all Complainants the balance of their retirement/separation
benefit as follows:
Manuel H. Ridad P129,784.88
Apolinario G. Bactol P210,757.93
Emerita C. Gulinao P273,316.12
The award of complainant Lydia Jusay will be computed the moment she submits proof
of her monthly salary.
Ten percent of the total award as attorneys fees
Other claims are dismissed for lack of merit. 7
The Labor Arbiters award of retirement pay pertained to the period when petitioners
were originally hired until 31 December 1983 because he found that the records were
bereft of any proof that the petitioners were paid their retirement benefits before 1
January 1984. The Labor Arbiter merely confirmed the existence of GAUFs receivables
from petitioner consisting of tuition fees of the latters dependents and the value of the
lots sold by GAUF to respondents in the following amounts:
Name
Value of Lot
Receivables
Total
Manuel Ridad
P1,613.06
P10,788.66
P12,391.72
Apolinario Bactol
11,887.92
9,036.10
20,924.01
Emerita Gulinao
6,478.07
8,517.25
14,995.32
Lydia Jusay
8,878.30
7,883.30
16,781.608
The Labor Arbiter ruled that these receivables should be offset against the retirement
benefits due to each employee. The Labor Arbiter also held that the honoraria received
by petitioners are not considered as part of the basic salary for the computation of the
13th month pay. With respect to the retirement benefits of petitioners from 1 January
1984 until the effectivity of their retirement or separation, the Labor Arbiter approved the
amount as computed and submitted by GAUF.
Both parties filed their respective appeals. The NLRC noted that GAUF failed to comply
with the compromise agreement which embodied the settlement of all monetary claims
of GAUF employees, including the sale of parcels of land owned by GAUF. The NLRC
added that the titles of said parcels of land were rescinded by the trial court in a
separate litigation. Nevertheless, the NLRC affirmed the Decision of the Labor Arbiter.
GAUF then appealed to the Court of Appeals. In the assailed 18 December 2008
Decision, the appellate court resolved to grant the petition of GAUF:
WHEREFORE, the petition is GRANTED. Setting aside the NLRCs August 31, 2004
decision as well as the Labor Arbiters decision dated September 30, 2002, the
Complaint below is DISMISSED for being devoid of merit.9
The issue that went up to the Court of Appeals is whether or not the petitioners were
paid separation benefits for services rendered for the period ending in 1984. Notably,
the Court of Appeals pointed out that the Labor Arbiters ruling on retirement benefits of
petitioners from 1 January 1984 until the effectivity of their retirement or separation in
2000s was unassailed, thus, that aspect of the decision has already attained finality.
For the service period under question, the appellate court upheld the validity of the
compromise agreement. The appellate court emphasized that the Labor Arbiter
recognized the compromise agreement when he offset the value of lots from the
retirement benefits of petitioners.
Petitioners now seek the review of the Decision of the Court of Appeals, submitting the
following grounds for our consideration:
-ATHE COURT OF APPEALS HAS DECIDED NOT IN ACCORD WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT RULED THAT
PETITIONERS WERE DEEMED TO HAVE BEEN SEVERED FROM THEIR
EMPLOYMENT UPON THE IMPLEMENTATION OF RRR PROGRAM IN 1984[.]
-BTHE COURT OF APPEALS HAS SERIOUSLY ERRED IN COMPLETELY

DISREGARDING THE FINDINGS OF THE LABOR ARBITER AND THE
NATIONAL LABOR RELATIONS COMMISSION THAT PETITIONERS WERE
NOT PAID THEIR SEPARATION BENEFITS DURING THE EFFECTIVE DATE
OF THE RRR PROGRAM[.]
-CTHE COURT OF APPEALS HAS GROSSLY MISCONSTRUED THE DECISION
OF THE LABOR ARBITER AND MADE AN ERRONEOUS CONCLUSION THAT
THE PETITIONERS CLAIMS FOR THEIR RETIREMENT/BENEFITS IN 1984
WERE MADE SUBJECT OF A COMPROMISE AGREEMENT OR CONTRACT
TO SELL.10
There is no question about the validity of the RRR Program implemented in
1984. Petitioners however argue that they could not be considered severed from their
employment in 1984 because they were not paid separation benefits during the
implementation of the RRR program. To the contrary, GAUF insists that petitioners
received in full their retirement benefits.
1wphi1
Well-settled is the rule that once the employee has set out with particularity in his
complaint, position paper, affidavits and other documents the labor standard benefits he
is entitled to, and which he alleged that the employer failed to pay him, it becomes the
employers burden to prove that it has paid these money claims. One who pleads
payment has the burden of proving it, and even where the employees must allege nonpayment, the general rule is that the burden rests on the employer to prove payment,
rather than on the employees to prove non-payment. 11 The reason for the rule is that the
pertinent personnel files, payrolls, records, remittances, and other similar documents
which will show that overtime, differentials, service incentive leave, and other claims of
the worker have been paid are not in the possession of the worker but in the custody
and absolute control of the employer.12
In unison, the Labor Arbiter and the NLRC concluded that petitioners were not paid their
separation benefits. The Court of Appeals overturned the factual findings of these labor
tribunals and found that petitioners were duly paid their retirement benefits. In view of
these conflicting findings, we are constrained to review the facts on record.
We underscore the fact that there are supposed to be two (2) payments in the form of
retirement/separation pay made by GAUF to petitioners first, in 1984 and second, in
2000-2001. The first payment is the subject of the instant petition.
The retirement pay of petitioners in 1984 should be reckoned from the date of their
hiring and computed in accordance with Section 374, Article CVI of GAUFs Manual of
Policies. Moreover, the basic pay of petitioners should be based on the amount of their
last pay in 31 December 1983. The correct computation should be:

Retirement/Separation Pay = Basic Pay (Percentage depending on the years of service)
x Years of Service.
To illustrate:
Basic Pay
(1983)
Years of Service
Retirement /
Separation Pay
Manuel Ridad
P1,237 50%
P5556.50
Apolinario Bactol
P1,486 70%
13
P13522.60
Emerita Gulinao
P1,486 60%
10
P8,916.00
Lydia Jusay
P2,132 50%
P7,462.00
GAUF claims to have paid the following amounts to the petitioners:

1wphi1
Retirement /
Separation Pay
under the law
Manuel Ridad
Amount given by GAUF
P5,556.50
P7,422.00
Apolinario Bactol
P13,522.60
P14,562.80
Emerita Gulinao
P8,916.00
P9,807.60
Lydia Jusay
P7,462.00
P16,781.60
The actual amounts given by GAUF were clearly more than the amounts mandated by
law. As to whether these amounts were given to petitioners, GAUF insisted that they
have in fact fully settled these obligations through offsetting of receivables in
accordance with the compromise agreement. While this agreement bears the seal of
judicial approval, the enforcement of this agreement is another matter. The NLRC
uncovered that matters pertaining to settlement in kind which involved several parcels of
lands were not complied with because the titles to said lands were subject of then
ongoing litigation and was later on rescinded by the trial court. Therefore, these
amounts relating to receivables on parcel of lands cannot be given credit.
However, the receivables pertaining to tuition fees remain uncontested. Petitioners
never questioned these amounts and in fact, they argued before the Labor Arbiter that
the tuition fees of their dependents "have been applied to their money claims, such as
wage increases, but which were never paid." 13 Thus, these tuition fee receivables can
be offset to the separation pay due to the employees. They are as follow:
Receivables
Manuel Ridad
P10,788.66
Apolinario Bactol
P9,036.10
Emerita Gulinao
P8,517.25
Lydia Jusay
P7,883.3014
It is therefore evident that GAUF had granted petitioners their separation pay in
amounts more than what they are entitled to receive under the law. Thus, there was full
compliance with the RRR Program for the payment of separation pay.
The amounts adjudged by the Labor Arbiter were clearly arbitrary. He did not provide a
detailed computation as to how the monetary awards were arrived at. GAUF was
correct in surmising that the amounts were more or less computed on the basis of their
actual and latest salaries in 2000, less the amount of receivables, which is a clear error.
1wphi1
WHEREFORE, premises considered, the petition is DENIED. The assailed Decision

and Resolution of the Court of Appeals arc AFFIRMED.
SO ORDERED.
G.R. No. 187698
August 9, 2010
RODOLFO J. SERRANO, Petitioner,

vs.
SEVERINO SANTOS TRANSIT and/or SEVERINO SANTOS, Respondents.
DECISION
CARPIO MORALES, J.:
Petitioner Rodolfo J. Serrano was hired on September 28, 1992 as bus conductor by
respondent Severino Santos Transit, a bus company owned and operated by its corespondent Severino Santos.
After 14 years of service or on July 14, 2006, petitioner applied for optional retirement
from the company whose representative advised him that he must first sign the already
prepared Quitclaim before his retirement pay could be released. As petitioners request
to first go over the computation of his retirement pay was denied, he signed the
Quitclaim on which he wrote "U.P." (under protest) after his signature, indicating his
protest to the amount ofP75,277.45 which he received, computed by the company at 15
days per year of service.
Petitioner soon after filed a complaint1 before the Labor Arbiter, alleging that the
company erred in its computation since under Republic Act No. 7641, otherwise known
as the Retirement Pay Law, his retirement pay should have been computed at 22.5
days per year of service to include the cash equivalent of the 5-day service incentive
leave (SIL) and 1/12 of the 13th month pay which the company did not.
The company maintained, however, that the Quitclaim signed by petitioner barred his
claim and, in any event, its computation was correct since petitioner was not entitled to
the 5-day SIL and pro-rated 13th month pay for, as a bus conductor, he was paid on
commission basis. Respondents, noting that the retirement differential pay amounted to
only P1,431.15, explained that in the computation of petitioners retirement pay, five
months were inadvertently not included because some index cards containing his
records had been lost.
By Decision2 of February 15, 2007, Labor Arbiter Cresencio Ramos, Jr. ruled in favor of
petitioner, awarding himP116,135.45 as retirement pay differential, and 10% of the total
monetary award as attorneys fees. In arriving at such computation, the Labor Arbiter
ratiocinated:
In the same Labor Advisory on Retirement Pay Law, it was likewise decisively made
clear that "the law expanded the concept of "one-half month salary" from the usual onemonth salary divided by two", to wit:
B. COMPUTATION OF RETIREMENT PAY
A covered employee who retires pursuant to RA 7641 shall be entitled to retirement pay
equivalent to at least one-half (1/12) month salary for every year of service, a fraction of
at least six (6) months being considered as one whole year.
The law is explicit that "one-half month salary shall mean fifteen (15) days plus onetwelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days service incentive leaves" unless the parties provide for broader
inclusions. Evidently, the law expanded the concept of "one-half month salary" from the
usual one-month salary divided by two.
The retirement pay is equal to half-months pay per year of service. But "half-months
pay" is "expanded" because it means not just the salary for 15 days but also one-twelfth
of the 13th-month pay and the cash value of five-day service incentive leave. THIS IS
THE MINIMUM. The retirement pay package can be improved upon by voluntary
company policy, or particular agreement with the employee, or through a collective
bargaining agreement." (The Labor Code with Comments and Cases, C.A. Azcunea,
Vol. II, page 765, Fifth Edition 2004).
Thus, having established that 22.5 days pay per year of service is the correct formula in
arriving at the complete retirement pay of complainant and inasmuch as complainants
daily earning is based on commission earned in a day, which varies each day, the next
critical issue that needs discernment is the determination of what is a fair and rational
amount of daily earning of complainant to be used in the computation of his retirement
pay.
While complainant endeavored to substantiate his claim that he earned average daily
commission of P700.00, however, the documents he presented are not complete,
simply representative copies, therefore unreliable. On the other haNd, while
respondents question complainants use of P700.00 (daily income) as basis in
determining the latters correct retirement pay, however it does not help their defense
that they did not present a single Conductors Trip Report to contradict the claim of
complainant. Instead, respondents adduced a handwritten summary of complainants
monthly income from 1993 until June 2006. It must be noted also that complainant did
not contest the amounts stated on the summary of his monthly income as reported by
respondents. Given the above considerations, and most importantly that complainant
did not dispute the figures stated in that document, we find it logical, just and equitable
for both parties to rely on the summary of monthly income provided by respondent, thus,
we added complainants monthly income from June 2005 until June 2006 or the last
twelve months and we arrived at P189,591.30) and we divided it by twelve (12) to arrive
at complainants average monthly earning of P15,799.28. Thereafter, the average
monthly of P15,799.28 is divided by twenty-six (26) days, the factor commonly used in
determining the regular working days in a month, to arrive at his average daily income
of P607.66. Finally, P607.66 (average daily income) x 22.5 days = P13,672.35 x 14
(length of service) =P191,412.90 (COMPLETE RETIREMENT PAY). However,
inasmuch as complainant already received P75,277.45, the retirement differential pay
due him is P116,135.45 (P191,412.90 P75,277.45). (underscoring partly in the original
and partly supplied)
The National Labor Relations Commission (NLRC) to which respondents
appealed reversed the Labor Arbiters ruling and dismissed petitioners complaint by
Decision3 dated April 23, 2008. It, however, ordered respondents to pay retirement
differential in the amount of P2,365.35.
Citing R & E Transport, Inc. v. Latag,4 the NLRC held that since petitioner was paid on
purely commission basis, he was excluded from the coverage of the laws on 13th month
pay and SIL pay, hence, the 1/12 of the 13th month pay and the 5-day SIL should not be
factored in the computation of his retirement pay.
Petitioners motion for reconsideration having been denied by Resolution 5 of June 27,
2008, he appealed to the Court of Appeals.
By the assailed Decision6 of February 11, 2009, the appellate court affirmed the NLRCs
ruling, it merely holding that it was based on substantial evidence, hence, should be
respected.
Petitioners motion for reconsideration was denied, hence, the present petition for
review on certiorari.
The petition is meritorious.
Republic Act No. 7641 which was enacted on December 9, 1992 amended Article 287
of the Labor Code by providing for retirement pay to qualified private sector employees
in the absence of any retirement plan in the establishment. The pertinent provision of
said law reads:
Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines, is hereby amended to read as follows:
xxxx
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth ( 1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves.
Retail, service and agricultural establishments or operations employing not more
than (10) employees or workers are exempted from the coverage of this
provision.
x x x x (emphasis and underscoring supplied)
Further, the Implementing Rules of said law provide:

RULE II
Retirement Benefits
SECTION 1.
General Statement on Coverage. This Rule shall apply to all employees in the
private sector, regardless of their position, designation or status and irrespective
of the method by which their wages are paid, except to those specifically
exempted under Section 2 hereof. As used herein, the term "Act" shall refer to
Republic Act No. 7641 which took effect on January 7, 1993.
SECTION 2
Exemptions. This Rule shall not apply to the following employees:
2.1 Employees of the National Government and its political subdivisions, including
Government-owned and/or controlled corporations, if they are covered by the Civil
Service Law and its regulations.
2.2 Domestic helpers and persons in the personal service of another.
2.3 Employees of retail, service and agricultural establishment or operations
regularly employing not more than ten (10) employees. As used in this sub-section;
xxxx
SECTION 5
Retirement Benefits.
5.1 In the absence of an applicable agreement or retirement plan, an employee who
retires pursuant to the Act shall be entitled to retirement pay equivalent to at least onehalf () month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year.
5.2 Components of One-half () Month Salary. For the purpose of determining the
minimum retirement pay due an employee under this Rule, the term "one-half month
salary" shall include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate.
As used herein, the term "salary" includes all remunerations paid by an
employer to his employees for services rendered during normal working

days and hours, whether such payments are fixed or ascertained on a time,
task, piece of commission basis, or other method of calculating the same, and
includes the fair and reasonable value, as determined by the Secretary of Labor
and Employment, of food, lodging or other facilities customarily furnished by the
employer to his employees. The term does not include cost of living allowances,
profit-sharing payments and other monetary benefits which are not considered as
part of or integrated into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive
leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that
should be included in the computation of the employees retirement pay.
x x x x (emphasis supplied)
Admittedly, petitioner worked for 14 years for the bus company which did not adopt any
retirement scheme. Even if petitioner as bus conductor was paid on commission basis
then, he falls within the coverage of R.A. 7641 and its implementing rules. As thus
correctly ruled by the Labor Arbiter, petitioners retirement pay should include the cash
equivalent of the 5-day SIL and 1/12 of the 13th month pay.
The affirmance by the appellate court of the reliance by the NLRC on R & E Transport,
Inc. is erroneous. In said case, the Court held that a taxi driver paid according to the
"boundary system" is not entitled to the 13th month and the SIL pay, hence, his
retirement pay should be computed on the sole basis of his salary.
For purposes, however, of applying the law on SIL, as well as on retirement, the Court
notes that there is adifference between drivers paid under the "boundary system" and
conductors who are paid on commission basis.
In practice, taxi drivers do not receive fixed wages. They retain only those sums in
excess of the "boundary" or fee they pay to the owners or operators of the
vehicles.7 Conductors, on the other hand, are paid a certain percentage of the bus
earnings for the day.
It bears emphasis that under P.D. 851 or the SIL Law, the exclusion from its coverage of
workers who are paid on a purely commission basis is only with respect to field
personnel. The more recent case of Auto Bus Transport Systems, Inc., v.
Bautista8 clarifies that an employee who is paid on purely commission basis is entitled to
SIL:
A careful perusal of said provisions of law will result in the conclusion that the grant of
service incentive leave has been delimited by the Implementing Rules and Regulations
of the Labor Code to apply only to those employees not explicitly excluded by Section 1
of Rule V. According to the Implementing Rules, Service Incentive Leave shall not
apply to employees classified as "field personnel." The phrase "other employees
whose performance is unsupervised by the employer" must not be understood as a
separate classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the definition of field
personnel under the Labor Code as those "whose actual hours of work in the field
cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or
contract basis, purely commission basis." Said phrase should be related with
"field personnel," applying the rule on ejusdem generis that general and unlimited
terms are restrained and limited by the particular terms that they follow. Hence,
employees engaged on task or contract basis or paid on purely commission
basis are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel.
xxxx
According to Article 82 of the Labor Code, "field personnel" shall refer to nonagricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty. This definition is
further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial Employees Association which states that:
As a general rule, [field personnel] are those whose performance of their job/service is
not supervised by the employer or his representative, the workplace being away from
the principal office and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for rendering specific service
or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite
the fact that they are performing work away from the principal office of the
employee.
x x x x (emphasis, italics and underscoring supplied)
WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of February

11, 2009 and Resolution of April 28, 2009 are REVERSED and SET ASIDE and the
Labor Arbiters Decision dated February 15, 2007 isREINSTATED.
SO ORDERED.
G.R. No. 171587
October 13, 2009
EASTERN SHIPPING LINES, INC., Petitioner,

vs.
FERRER D. ANTONIO, Respondent.
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on Certiorari, under Rule 45 of the Rules of
Court, seeking to set aside the Decision1 dated December 1, 2005, and the
Resolution2 dated February 21, 2006 of the Court of Appeals (CA) in CA-G.R. SP. No.
75701 which affirmed with modification the Resolutions rendered by the National Labor
Relations Commission (NLRC), Second Division, dated September 19, 2002 and
January 30, 2003, respectively, in NLRC NCR CA NO. 029121-01, ordering petitioner to
pay respondent his optional retirement benefit, plus moral damages and attorney's fees.
Petitioner Eastern Shipping Lines is a domestic corporation doing business in the
Philippines. Respondent was hired by petitioner to work as a seaman on board its
various vessels. Respondent started as an Apprentice Engineer on December 12, 1981
and worked in petitioner's various vessels where he was assigned to different positions.
The last position he held was that of 3rd Engineer on board petitioner's vessel M/V
Eastern Venus, where he worked until February 22, 1996. In January 1996, respondent
took the licensure examinations for 2nd Engineer while petitioners vessel was drydocked for repairs. On February 13, 1996, while in Yokohama, Japan and in the employ
of petitioner, he suffered a fractured left transverse process of the fourth lumbar
vertebra. He consulted a doctor in Ogawa Hospital in Osaka, Japan and was advised to
rest for a month. He was later examined by the company doctor and declared fit to
resume work. However, he was not admitted back to work. Being in dire financial need
at that time to support his family, he applied for an optional retirement on January 16,
1997.3Petitioner, in a letter4 dated February 10, 1997, disapproved his application on the
ground that his shipboard employment history and track record as a seaman did not
meet the standard required in granting the optional retirement benefits. For refusing to
heed his repeated requests, respondent filed a complaint for payment of optional
retirement benefits against petitioner before the Industrial Relations Division of the
Department of Labor and Employment (DOLE). For their failure to reach an amicable
settlement, the complaint was forwarded to the National Labor Relations Commission
(NLRC) for proper proceedings.
In its defense, petitioner alleged that sometime in January 1996, respondent filed a
vacation leave to take the licensure examinations for 2nd Engineer while his vessel was
dry-docked for repairs. The following month, respondent, while waiting for the results of
his licensure examinations, filed another vacation leave for an alleged medical checkup. Having passed the licensure examinations for 2nd Engineer, he signified his
intention to petitioner that he be assigned to a vessel for the said position. In the
meantime, since there was still no vacancy in the desired position, respondent was
instructed to undergo medical examinations as a prerequisite for boarding a vessel. He
was found to be medically fit. Respondent, however, for unknown reasons, failed to
report to petitioner after undergoing the medical examinations. He did not even bother
to verify whether he had a voyage assignment for his new position as 2nd Engineer. On
January 16, 1997, respondent suddenly went to the office and decided to avail himself
of the company's retirement gratuity plan by formally applying for payment of his
optional retirement benefits due to financial reasons. Petitioner denied his application
ratiocinating that his shipboard employment history and track record as a seaman did
not meet the standard required in granting the optional retirement benefits.
The Labor Arbiter (LA), in his Decision5 dated April 18, 2001, rendered judgment in favor
of the respondent. It found that respondent was forced to file his optional retirement due
to petitioner's failure to give him any work assignment despite that he had already
recovered from his injury and was declared fit to work. The LA found that petitioner's
actuations amounted to constructive dismissal and, hence, ordered the payment of
respondent's optional retirement benefits, as well as moral and exemplary damages,
and attorney's fees. The dispositive portion of LAs Decision reads:
WHEREFORE, premises all considered, judgment is hereby rendered as follows:
Ordering respondent to pay complainant his optional retirement benefit of US$4,014.84
(55% x 608.30 x 12 yrs = 4,104.84) or its peso equivalent computed at the rate of
exchange at the time of actual payment; Ordering respondents to pay complainant
moral damages in the amount of P150,000.00 and exemplary damages in the amount
of P75,000.00; and to pay complainant ten (10%) percent of the total monetary award
by way of attorney's fees.
SO ORDERED.6
Dissatisfied with the LA's finding, petitioner appealed to the NLRC on grounds of serious
errors which would cause grave or irreparable damage or injury to petitioner and for
grave abuse of discretion. It alleged that the LA erred in ruling that respondent was
entitled to the optional retirement benefits, as well as to the payment of moral and
exemplary damages, and attorney's fees.
The NLRC, Second Division, in its Resolution 7 dated September 19, 2002, affirmed the
findings of the LA and dismissed petitioner's appeal. It held that petitioners denial of
respondent's application for optional retirement benefits was arbitrary and illegal.
Petitioner filed a motion for reconsideration,8 which the NLRC denied in a
Resolution9 dated January 30, 2003.
Undaunted, petitioner filed a petition for certiorari with the CA alleging that the NLRC
committed grave abuse of discretion amounting to lack or excess of jurisdiction in
awarding the retirement gratuity/separation pay to the respondent in the amount of
US$4,104.84, plus moral and exemplary damages, and attorney's fees.
The CA, in its Decision dated December 1, 2005, affirmed the resolutions of the NLRC,
but modified the award of moral damages in the reduced amount of PhP25,000.00 and
deleted the award of exemplary damages. The CA ruled that the affirmance by the
NLRC of the LA's ruling was supported by substantial evidence. Judicial prudence
dictates that the NLRC's exercise of discretion in affirming the LA's factual findings
should be accorded great weight and respect. The CA ruled that while it acknowledged
that the company's optional retirement benefits were in the form of a gratuity, which may
or may not be awarded at the company's discretion, such exercise of discretion must
still comply with the basic and common standard reason may require. Since respondent
had complied with the minimum requirement provided in the gratuity plan, i.e., actual
rendition of 3,650 days on board petitioner's vessel, thus, petitioner's denial of the
optional retirement benefits of the respondent was arbitrary and illegal.
Petitioner filed a motion for reconsideration,10 which the CA denied in a
Resolution11 dated February 21, 2006.
Hence, the instant petition raising this sole assignment of error:
WHETHER OR NOT THE COURT OF APPEALS ERRED IN AWARDING THE
RESPONDENT THE OPTIONAL RETIREMENT BENEFIT BEING APPLIED FOR IN US
DOLLARS UNDER THE GRATUITY PLAN OF HEREIN PETITIONER.12
The petition is meritorious.
Respondent is not entitled to optional retirement benefits. Under the Labor Code, it is
provided that:
ART. 287. Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable employment
contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits
as he may have earned under existing laws and any collective bargaining agreement
and other agreements: Provided, however, That an employees retirement benefits
under any collective bargaining and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years
or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may
retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as
one whole year.13
Clearly, the age of retirement is primarily determined by the existing agreement or
employment contract. In the absence of such agreement, the retirement age shall be
fixed by law. Under the aforecited law, the mandated compulsory retirement age is set
at 65 years, while the minimum age for optional retirement is set at 60 years.
In the case at bar, there is a retirement gratuity plan between the petitioner and the
respondent, which provides the following:
Retirement Gratuity
xxxx
B. Retirement under the Labor Code:
Any employee whether land-based office personnel or shipboard employee who shall
reach the age of sixty (60) while in active employment with this company may retire
from the service upon his written request in accordance with the provisions of Art. 277 of
the Labor Code and its Implementing Rules, Book 6, Rule 1, Sec. 13 and he shall be
paid termination pay equivalent to fifteen (15) days pay for every year of service as
stated in said Labor Code and its Implementing Rules. However, the company may at
its own volition grant him a higher benefit which shall not exceed the benefits provided
for in the Retirement Gratuity table mentioned elsewhere in this policy.
C. Optional Retirement:
It will be the exclusive prerogative and sole option of this company to retire any covered
employee who shall have rendered at least fifteen (15) years of credited service for
land-based employees and 3,650 days actually on board vessel for shipboard
personnel. x x x
Under Paragraph B of the plan, a shipboard employee, upon his written request, may
retire from service if he has reached the eligibility age of 60 years. In this case, the
option to retire lies with the employee.
Records show that respondent was only 41 years old when he applied for optional
retirement, which was 19 years short of the required eligibility age. Thus, he cannot
claim optional retirement benefits as a matter of right.
In Eastern Shipping Lines, Inc. v. Sedan,14 respondent Dioscoro Sedan, a 3rd Marine
Engineer and Oiler in one of the vessels of Eastern Shipping Lines, after several
voyages, applied for optional retirement. Eastern Shipping Lines deferred action since
his services on board ship were still needed. Despite several demands for his optional
retirement, the requests were not acted upon. Thus, Sedan filed a complaint before the
LA demanding payment of his retirement benefits. This Court ruled that the eligibility
age for optional retirement was set at 60 years. Since respondent was only 48 years old
when he applied for optional retirement, he cannot claim optional retirement benefits as
a matter of right. We further added that employees who are under the age of 60 years,
but have rendered at least 3,650 days (10 years) on board ship may also apply for
optional retirement, but the approval of their application depends upon the exclusive
prerogative and sole option of petitioner company. In that case, the retirement gratuity
plan is the same as in the case at bar.
The aforecited Paragraph B is different from Paragraph C on optional retirement. The
difference lies on who exercises the option to retire. Unlike in Paragraph B, the option to
retire in Paragraph C is exclusively lodged in the employer. Although respondent may
have rendered at least 3,650 days of service on board a vessel, which qualifies him for
optional retirement under Paragraph C, however, he cannot demand the same as a
matter of right.
If an employee upon rendering at least 3,650 days of service would automatically be
entitled to the benefits of the gratuity plan, then it would not have been termed as
optional, as the foregoing scenario would make the retirement mandatory and
compulsory.
Due to the foregoing findings of facts of the CA, although generally deemed conclusive,
may admit review by this Court if the CA failed to notice certain relevant facts which, if
properly considered, will justify a different conclusion and when the judgment of the CA
is premised on misapprehension of facts. 15
The CA erred in affirming the rulings of the LA and the NLRC, as the availment of the
optional retirement benefits is subject to the exclusive prerogative and sole option of the
petitioner.
It is also worth to note that respondent, being a seaman, is not entitled to the payment
of separation pay. In Millares v. National Labor Relations Commission, 16 we ruled that:
x x x [I]t is clear that seafarers are considered contractual employees. They cannot be
considered as regular employees under Article 280 of the Labor Code. Their
employment is governed by the contracts they sign everytime they are rehired and their
employment is terminated when the contract expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of Article 280 whose
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of engagement of the employee
or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season. We need not depart from the rulings of
the Court in the two aforementioned cases which indeed constitute stare decisis with
respect to the employment status of seafarers.
xxxx
From all the foregoing, we hereby state that petitioners are not considered regular or
permanent employees under Article 280 of the Labor Code. Petitioners employment
have automatically ceased upon the expiration of their contracts of enlistment (COE).
Since there was no dismissal to speak of, it follows that petitioners are not entitled
to reinstatement or payment of separation pay or backwages, as provided by law.17
The CA affirmed the award of moral damages due to the refusal of the petitioner to
reemploy respondent after he had recovered from his injury and was declared fit to
work, forcing him to apply instead for optional retirement benefit.
1avvphi1
We rule that the award of moral damages is not proper. Moral damages are recoverable
only if the defendant has acted fraudulently or in bad faith, or is guilty of gross
negligence amounting to bad faith, or in wanton disregard of his contractual obligations.

The breach must be wanton, reckless, malicious, or in bad faith, oppressive or
abusive.18 Further, moral damages are recoverable only where the dismissal was
attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in
a manner contrary to morals, good customs or public policy.19
In the present case, there was no contractual obligation on the part of the petitioner to
mandatorily reemploy respondent. The reason, as provided in the Millares case, is that
their employment is contractually fixed for a certain period of time and automatically
ceased upon the expiration of their contract. Records will show that respondent's last
employment with the petitioner ended on February 22, 1996. 20 Thereafter, no new
contract was executed between the parties. Thus, upon the expiration of the contract on
February 22, 1996, respondent's employ with the petitioner also ended.
In Gu-Miro v. Adorable,21 this Court said that:
Thus, even with the continued re-hiring by respondent company of petitioner to serve as
Radio Officer on board Bergesens different vessels, this should be interpreted not as a
basis for regularization but rather a series of contract renewals sanctioned under the
doctrine set down by the second Millares case. If at all, petitioner was preferred
because of practical considerations - namely, his experience and qualifications.
However, this does not alter the status of his employment from being contractual.
With respect to the claim for backwages and separation pay, it is now well settled that
the award of backwages and separation pay in lieu of reinstatement are reliefs that are
awarded to an employee who is unjustly dismissed. In the instant case, petitioner
was separated from his employment due to the termination of an impliedly
renewed contract with respondent company. Hence, there is no illegal or unjust
dismissal.22
Clearly, after the termination of the renewed contract with the petitioner, respondent
cannot force the petitioner to reemploy him as a matter of right. The employment ends
at the precise time the contract ends. Hence, there was no illegal or unjust dismissal, or
even a constructive dismissal.
Nonetheless, although respondent's entitlement to optional retirement pay is wanting
and despite petitioner's non-obligation to mandatorily rehire him, the grant of financial
assistance is in order as an equitable concession under the circumstances of the case.
In the aforecited case of Eastern,23 this Court affirmed the CA's grant of financial
assistance to the respondent therein. In that case, we said that:
But we must stress that this Court did allow, in several instances, the grant of financial
assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial
assistance may be allowed as a measure of social justice and exceptional
circumstances, and as an equitable concession. The instant case equally calls for
balancing the interests of the employer with those of the worker, if only to approximate
what Justice Laurel calls justice in its secular sense.
In this instance, our attention has been called to the following circumstances: that
private respondent joined the company when he was a young man of 25 years and
stayed on until he was 48 years old; that he had given to the company the best years of
his youth, working on board ship for almost 24 years; that in those years there was not a
single report of him transgressing any of the company rules and regulations; that he
applied for optional retirement under the companys non-contributory plan when his
daughter died and for his own health reasons; and that it would appear that he had
served the company well, since even the company said that the reason it refused his
application for optional retirement was that it still needed his services; that he denies
receiving the telegram asking him to report back to work; but that considering his age
and health, he preferred to stay home rather than risk further working in a ship at sea.
In our view, with these special circumstances, we can call upon the same "social and
compassionate justice" cited in several cases allowing financial assistance. These
circumstances indubitably merit equitable concessions, via the principle of
"compassionate justice" for the working class. x x x24
In the present case, respondent had been employed with the petitioner for almost
twelve (12) years. On February 13, 1996, he suffered from a "fractured left transverse
process of fourth lumbar vertebra," while their vessel was at the port of Yokohama,
Japan. After consulting a doctor, he was required to rest for a month. When he was
repatriated to Manila and examined by a company doctor, he was declared fit to
continue his work. When he reported for work, petitioner refused to employ him despite
the assurance of its personnel manager. Respondent patiently waited for more than one
year to embark on the vessel as 2rd Engineer, but the position was not given to him, as
it was occupied by another person known to one of the stockholders. Consequently, for
having been deprived of continued employment with petitioner's vessel, respondent
opted to apply for optional retirement. In addition, records show that respondent's
seaman's book, as duly noted and signed by the captain of the vessel was
marked "Very Good," and "recommended for hire." Moreover, respondent had no
derogatory record on file over his long years of service with the petitioner.
Considering all of the foregoing and in line with Eastern, the ends of social and
compassionate justice would be served best if respondent will be given some equitable
relief. Thus, the award of P100,000.00 to respondent as financial assistance is deemed

equitable under the circumstances.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals, dated December 1, 2005 and February 21, 2006, respectively, in CA-G.R. SP.
No. 75701, are REVERSED and SET ASIDE. Respondent is awarded financial
assistance in the amount of P100,000.00.
SO ORDERED.
G.R. No. 186560
November 17, 2010
GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,

vs.
FERNANDO P. DE LEON, Respondent.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court. Petitioner Government Service Insurance System (GSIS) seeks the nullification
of the Decision1 dated October 28, 2008 and the Resolution 2 dated February 18, 2009 of
the Court of Appeals (CA) in CA-G.R. SP No. 101811.
Respondent Fernando P. de Leon retired as Chief State Prosecutor of the Department
of Justice (DOJ) in 1992, after 44 years of service to the government. He applied for
retirement under Republic Act (R.A.) No. 910, invoking R.A. No. 3783, as amended by
R.A. No. 4140, which provides that chief state prosecutors hold the same rank as
judges. The application was approved by GSIS. Thereafter, and for more than nine
years, respondent continuously received his retirement benefits, until 2001, when he
failed to receive his monthly pension.3
Respondent learned that GSIS cancelled the payment of his pension because the
Department of Budget and Management (DBM) informed GSIS that respondent was not
qualified to retire under R.A. No. 910; that the law was meant to apply only to justices
and judges; and that having the same rank and qualification as a judge did not entitle
respondent to the retirement benefits provided thereunder. Thus, GSIS stopped the
payment of respondents monthly pension.4
Respondent wrote GSIS several letters but he received no response until November 9,
2007, when respondent received the following letter from GSIS:
Dear Atty. De Leon:

This is in response to your request for resumption of pension benefit.
It appears that you retired under Republic Act No. 910 in 1992 from your position as
Chief State Prosecutor in the Department of Justice. From 1992 to 2001, you were
receiving pension benefits under the said law. Beginning the year 2002, the Department
of Budget and Management through then Secretary Emilia T. Boncodin already refused
to release the funds for your pension benefit on the ground that Chief State Prosecutors
are not covered by R.A. 910. This conclusion was later on affirmed by Secretary
Rolando G. Andaya, Jr. in a letter dated 6 June 2006.
In view of these, you now seek to secure benefits under Republic Act No. 660 or any
other applicable GSIS law.
We regret, however, that we cannot accede to your request because you have chosen
to retire and in fact have already retired under a different law, Republic Act No. 910,
more than fifteen (15) years ago. There is nothing in the GSIS law which sanctions
double retirement unless the retiree is first re-employed and qualifies once again to
retire under GSIS law. In fact, Section 55 of Republic Act No. 8291 provides for
exclusivity of benefits which means that a retiree may choose only one retirement
scheme available to him to the exclusion of all others.
Nonetheless, we believe that the peculiarities of your case is a matter that may be
jointly addressed or threshed out by your agency, the Department of Justice, and the
Department of Budget and Management.
Very truly yours,
(signed)
CECIL L. FELEO
Senior Vice President
Social Insurance Group5
Respondent then filed a petition for mandamus before the CA, praying that petitioner be
compelled to continue paying his monthly pension and to pay his unpaid monthly
benefits from 2001. He also asked that GSIS and the DBM be ordered to pay him
damages.6
In the assailed October 28, 2008 Decision, the CA resolved to grant the petition, to wit:
WHEREFORE, the petition is GRANTED. The GSIS is hereby ordered to pay without
delay petitioner Atty. Fernando de Leon, his monthly adjusted pension in accordance
with other applicable law not under RA 910. It is also ordered to pay the back pensions
which should also be adjusted to conform to the applicable law from the time his
pension was withheld.
SO ORDERED.7
The CA found that GSIS allowed respondent to retire under R.A. No. 910, following
precedents which allowed non-judges to retire under the said law. The CA said that it
was not respondents fault that he was allowed to avail of the benefits under R.A. No.
910; and that, even if his retirement under that law was erroneous, respondent was,
nonetheless, entitled to a monthly pension under the GSIS Act. The CA held that this
was not a case of double retirement, but merely a continuation of the payment of
respondents pension benefit to which he was clearly entitled. Since the error in the
award of retirement benefits under R.A. 910 was not attributable to respondent, it was
incumbent upon GSIS to continue defraying his pension in accordance with the
appropriate law which might apply to him. It was unjust for GSIS to entirely stop the
payment of respondents monthly pension without providing any alternative sustenance
to him.8
The CA further held that, under R.A. No. 660, R.A. No. 8291, and Presidential Decree
(P.D.) No. 1146, respondent is entitled to a monthly pension for life. He cannot be
penalized for the error committed by GSIS itself. Thus, although respondent may not be
qualified to receive the retirement benefits under R.A. No. 910, he is still entitled to a
monthly pension under R.A. No. 660, P.D. No. 1146, and R.A. No. 8291. 9
Petitioner GSIS is now before this Court, assailing the Decision of the CA and the
Resolution denying its motion for reconsideration.
GSIS admits that respondent received monthly pensions from August 1997 until
December 2001. Thereafter, the DBM refused to remit the funds for respondents
pension on the ground that he was not entitled to retire under R.A. No. 910 and should
have retired under another law, without however specifying which law it was. 10 It
appears that the DBM discontinued the payment of respondents pension on the basis
of the memorandum of the Chief Presidential Legal Counsel that Chief Prosecutors of
the DOJ are not entitled to the retirement package under R.A. No. 910.
Because of the discontinuance of his pension, respondent sought to convert his
retirement under R.A. No. 910 to one under another law administered by
GSIS.11 However, this conversion was not allowed because, as GSIS avers, R.A. No.
8291 provides that conversion of ones retirement mode on whatever ground and for
whatever reason is not allowed beyond one year from the date of retirement.
GSIS assails the CAs Decision for not specifying under which law respondents
retirement benefits should be paid, thus making it legally impossible for GSIS to comply
with the directive.12 It then raises several arguments that challenge the validity of the
appellate courts decision.
GSIS argues, first, that the CA erred in issuing a writ of mandamus despite the absence
of any specific and clear right on the part of respondent, since he could not even specify
the benefits to which he is entitled and the law under which he is making the claim. 13
Second, GSIS alleges that it had refunded respondents premium payments because he
opted to retire under R.A. No. 910, which it does not administer. Thus, GSIS posits that
the nexus between itself and respondent had been severed and, therefore, the latter
cannot claim benefits from GSIS anymore.14
Third, GSIS contends that the CA erred in concluding that respondent would not be
unjustly enriched by the continuation of his monthly pension because he had already
benefited from having erroneously retired under R.A. No. 910. GSIS points out that it
had refunded respondents premium contributions. When the Chief Presidential Legal
Counsel concluded that respondent was not entitled to retire under R.A. No. 910, it was
implicit recognition that respondent was actually not entitled to the P1.2 million lump
sum payment he received, which he never refunded. 15
Fourth, GSIS points out that the CA erred in concluding that respondent was not
seeking conversion from one retirement mode to another. It reiterates that R.A. No.
8291 expressly prohibits conversion beyond one year from retirement. To compel GSIS
to release respondents retirement benefits despite the fact that he is disqualified to
receive retirement benefits violates R.A. No. 8291, and would subject its officials to
possible charges under R.A. No. 3019, the Anti-Graft and Corrupt Practices Act.
Fifth, GSIS contends that respondent is not entitled to the retirement benefits under
R.A. No. 8291 because, when he retired in 1992, the law had not yet been enacted. The
retirement laws administered by GSIS at that time were R.A. No. 660, R.A. No. 1616,
and P.D. No. 1146.
Lastly, GSIS argues that the writ of mandamus issued by the CA is not proper because
it compels petitioner to perform an act that is contrary to law.
Respondent traverses these allegations, and insists that he has a clear legal right to
receive retirement benefits under either R.A. No. 660 or P.D. No. 1146. 16 He claims that
he has met all the conditions for entitlement to the benefits under either of the two
laws.17 Respondent contends that the return of his contributions does not bar him from
pursuing his claims because GSIS can require him to refund the premium contributions,
or even deduct the amount returned to him from the retirement benefits he will
receive.18 He also argues that resumption of his monthly pension will not constitute
unjust enrichment because he is entitled to the same as a matter of right for the rest of
his natural life.19
Respondent accepts that, contrary to the pronouncement of the CA, he is not covered
by R.A. No. 8291. He, therefore, asks this Court to modify the CA Decision, such that
instead of Section 13 of R.A. No. 8291, it should be Section 12 of P.D. No. 1146 or
Section 11 of R.A. No. 660 to be used as the basis of his right to receive, and the
adjustment of, his monthly pension.
Furthermore, respondent argues that allowing him to retire under another law does not
constitute "conversion" as contemplated in the GSIS law. He avers that his application
for retirement under R.A. No. 910 was duly approved by GSIS, endorsed by the DOJ,
and implemented by the DBM for almost a decade. Thus, he should not be made to
suffer any adverse consequences owing to the change in the interpretation of the
provisions of R.A. No. 910. Moreover, he could not have applied for conversion of his
chosen retirement mode to one under a different law within one year from approval of
his retirement application, because of his firm belief that his retirement under R.A. No.
910 was proper a belief amply supported by its approval by GSIS, the favorable
endorsement of the DOJ, and its implementation by the DBM. 20
The petition is without merit.
Initially, we resolve the procedural issue.
GSIS contends that respondents petition for mandamus filed before the CA was
procedurally improper because respondent could not show a clear legal right to the
relief sought.
The Court disagrees with petitioner. The CA itself acknowledged that it would not
indulge in technicalities to resolve the case, but focus instead on the substantive issues
rather than on procedural questions. 21 Furthermore, courts have the discretion to relax
the rules of procedure in order to protect substantive rights and prevent manifest
injustice to a party.
The Court has allowed numerous meritorious cases to proceed despite inherent
procedural defects and lapses. Rules of procedure are mere tools designed to facilitate
the attainment of justice. Strict and rigid application of rules which would result in
technicalities that tend to frustrate rather than to promote substantial justice must
always be avoided.22
Besides, as will be discussed hereunder, contrary to petitioners posture, respondent
has a clear legal right to the relief prayed for. Thus, the CA acted correctly when it gave
due course to respondents petition for mandamus.
This case involves a former government official who, after honorably serving office for
44 years, was comfortably enjoying his retirement in the relative security of a regular
monthly pension, but found himself abruptly denied the benefit and left without means of
sustenance. This is a situation that obviously cries out for the proper application of
retirement laws, which are in the class of social legislation.
The inflexible rule in our jurisdiction is that social legislation must be liberally construed
in favor of the beneficiaries.23 Retirement laws, in particular, are liberally construed in
favor of the retiree24 because their objective is to provide for the retirees sustenance
and, hopefully, even comfort, when he no longer has the capability to earn a livelihood.
The liberal approach aims to achieve the humanitarian purposes of the law in order that
efficiency, security, and well-being of government employees may be
enhanced.25 Indeed, retirement laws are liberally construed and administered in favor of
the persons intended to be benefited, and all doubts are resolved in favor of the retiree
to achieve their humanitarian purpose.26
In this case, as adverted to above, respondent was able to establish that he has a clear
legal right to the reinstatement of his retirement benefits.
In stopping the payment of respondents monthly pension, GSIS relied on the
memorandum of the DBM, which, in turn, was based on the Chief Presidential Legal
Counsels opinion that respondent, not being a judge, was not entitled to retire under
R.A. No. 910. And because respondent had been mistakenly allowed to receive
retirement benefits under R.A. No. 910, GSIS erroneously concluded that respondent
was not entitled to any retirement benefits at all, not even under any other extant
retirement law. This is flawed logic.
Respondents disqualification from receiving retirement benefits under R.A. No. 910
does not mean that he is disqualified from receiving any retirement benefit under any
other existing retirement law.
The CA, however, incorrectly held that respondent was covered by R.A. No. 8291. R.A.
No. 8291 became a law after respondent retired from government service. Hence,
petitioner and even respondent agree that it does not apply to respondent, because the
law took effect after respondents retirement.
Prior to the effectivity of R.A. No. 8291, retiring government employees who were not
entitled to the benefits under R.A. No. 910 had the option to retire under either of two
laws: Commonwealth Act No. 186, as amended by R.A. No. 660, or P.D. No. 1146.
In his Comment, respondent implicitly indicated his preference to retire under P.D. No.
1146, since this law provides for higher benefits, and because the same was the latest
law at the time of his retirement in 1992.27
Under P.D. No. 1146, to be eligible for retirement benefits, one must satisfy the following
requisites:
Section 11. Conditions for Old-Age Pension.
(a) Old-age pension shall be paid to a member who:
(1) has at least fifteen years of service;
(2) is at least sixty years of age; and
(3) is separated from the service.
Respondent had complied with these requirements at the time of his retirement. GSIS
does not dispute this. Accordingly, respondent is entitled to receive the benefits
provided under Section 12 of the same law, to wit:
Section 12. Old-Age Pension.
(a) A member entitled to old-age pension shall receive the basic monthly pension for life
but in no case for a period less than five years: Provided, That, the member shall have
the option to convert the basic monthly pensions for the first five years into a lump sum
as defined in this Act: Provided, further, That, in case the pensioner dies before the
expiration of the five-year period, his primary beneficiaries shall be entitled to the
balance of the amount still due to him. In default of primary beneficiaries, the amount
shall be paid to his legal heirs.
To grant respondent these benefits does not equate to double retirement, as GSIS
mistakenly claims. Since respondent has been declared ineligible to retire under R.A.
No. 910, GSIS should simply apply the proper retirement law to respondents claim, in
substitution of R.A. No. 910. In this way, GSIS would be faithful to its mandate to
administer retirement laws in the spirit in which they have been enacted, i.e., to provide
retirees the wherewithal to live a life of relative comfort and security after years of
service to the government. Respondent will not receive --- and GSIS is under no
obligation to give him --- more than what is due him under the proper retirement law.
It must be emphasized that P.D. No. 1146 specifically mandates that a retiree is entitled
to monthly pension for life. As this Court previously held:
Considering the mandatory salary deductions from the government employee, the
government pensions do not constitute mere gratuity but form part of compensation.
In a pension plan where employee participation is mandatory, the prevailing view is that
employees have contractual or vested rights in the pension where the pension is part of
the terms of employment. The reason for providing retirement benefits is to compensate
service to the government. Retirement benefits to government employees are part of
emolument to encourage and retain qualified employees in the government service.
Retirement benefits to government employees reward them for giving the best years of
their lives in the service of their country.
Thus, where the employee retires and meets the eligibility requirements, he acquires a
vested right to benefits that is protected by the due process clause. Retirees enjoy a
protected property interest whenever they acquire a right to immediate payment under
pre-existing law. Thus, a pensioner acquires a vested right to benefits that have become
due as provided under the terms of the public employees pension statute. No law can
deprive such person of his pension rights without due process of law, that is, without
notice and opportunity to be heard.28
It must also be underscored that GSIS itself allowed respondent to retire under R.A. No.
910, following jurisprudence laid down by this Court.
One could hardly fault respondent, though a seasoned lawyer, for relying on petitioners
interpretation of the pertinent retirement laws, considering that the latter is tasked to
administer the governments retirement system. He had the right to assume that GSIS
personnel knew what they were doing.
Since the change in circumstances was through no fault of respondent, he cannot be
prejudiced by the same. His right to receive monthly pension from the government
cannot be jeopardized by a new interpretation of the law.
1avvphi1
GSIS argument that respondent has already been enormously benefited under R.A. No.
910 misses the point.
Retirement benefits are a form of reward for an employees loyalty and service to the
employer, and are intended to help the employee enjoy the remaining years of his life,
lessening the burden of having to worry about his financial support or upkeep. A pension
partakes of the nature of "retained wages" of the retiree for a dual purpose: to entice
competent people to enter the government service; and to permit them to retire from the
service with relative security, not only for those who have retained their vigor, but more
so for those who have been incapacitated by illness or accident. 29
Surely, giving respondent what is due him under the law is not unjust enrichment.
As to GSIS contention that what respondent seeks is conversion of his retirement
mode, which is prohibited under R.A. No. 8291, the Court agrees with the CA that this is
not a case of conversion within the contemplation of the law. The conversion under the
law is one that is voluntary, a choice to be made by the retiree. Here, respondent had no
choice but to look for another law under which to claim his pension benefits because the
DBM had decided not to release the funds needed to continue payment of his monthly
pension.
Respondent himself admitted that, if the DBM had not suspended the payment of his
pension, he would not have sought any other law under which to receive his benefits.
The necessity to "convert" was not a voluntary choice of respondent but a circumstance
forced upon him by the government itself.
Finally, GSIS would like this Court to believe that because it has returned respondents
premium contributions, it is now legally impossible for it to comply with the CAs
directive.
Given the fact that respondent is ineligible to retire under R.A. No. 910, the refund by
GSIS of respondents premium payments was erroneous. Hence, GSIS can demand the
return of the erroneous payment or it may opt to deduct the amount earlier received by
respondent from the benefits which he will receive in the future. Considering its
expertise on the matter, GSIS can device a scheme that will facilitate either the
reimbursement or the deduction in the most cost-efficient and beneficial manner.
The foregoing disquisition draws even greater force from subsequent developments.
While this case was pending, the Congress enacted Republic Act No. 10071, 30 the
Prosecution Service Act of 2010. On April 8, 2010, it lapsed into law without the
signature of the President,31 pursuant to Article VI, Section 27(1) of the Constitution. 32
Section 24 of R.A. No. 10071 provides:

Section 24. Retroactivity. - The benefits mentioned in Sections 14 and 16 hereof shall
be granted to all those who retired prior to the effectivity of this Act.
By virtue of this express provision, respondent is covered by R.A. No. 10071. In
addition, he is now entitled to avail of the benefits provided by Section 23, that "all
pension benefits of retired prosecutors of the National Prosecution Service shall be
automatically increased whenever there is an increase in the salary and allowance of
the same position from which he retired."
Respondent, as former Chief State Prosecutor, albeit the position has been renamed
"Prosecutor General,"33should enjoy the same retirement benefits as the Presiding
Justice of the CA, pursuant to Section 14 of R.A. No. 10071, to wit:
Section 14. Qualifications, Rank and Appointment of the Prosecutor General. - The
Prosecutor General shall have the same qualifications for appointment, rank, category,
prerogatives, salary grade and salaries, allowances, emoluments, and other privileges,
shall be subject to the same inhibitions and disqualifications, and shall enjoy the same
retirement and other benefits as those of the Presiding Justice of the Court of Appeals
and shall be appointed by the President.34
Furthermore, respondent should also benefit from the application of Section 16 of the
law, which states:
Section 16. Qualifications, Ranks, and Appointments of Prosecutors, and other
Prosecution Officers. x x x.
Any increase after the approval of this Act in the salaries, allowances or retirement
benefits or any upgrading of the grades or levels thereof of any or all of the Justices or
Judges referred to herein to whom said emoluments are assimilated shall apply to the
corresponding prosecutors.
Lastly, and most importantly, by explicit fiat of R.A. No. 10071, members of the National
Prosecution Service have been granted the retirement benefits under R.A. No. 910, to
wit:
Section 25. Applicability. - All benefits heretofore extended under Republic Act No. 910,
as amended, and all other benefits that may be extended by the way of amendment
thereto shall likewise be given to the prosecutors covered by this Act.
Hence, from the time of the effectivity of R.A. No. 10071, respondent should be entitled
to receive retirement benefits granted under R.A. No. 910.
Consequently, GSIS should compute respondents retirement benefits from the time the
same were withheld until April 7, 2010 in accordance with P.D. No. 1146; and his
retirement benefits from April 8, 2010 onwards in accordance with R.A. No. 910.
A final note. The Court is dismayed at the cavalier manner in which GSIS handled
respondents claims, keeping respondent in the dark as to the real status of his
retirement benefits for so long. That the agency tasked with administering the benefits
of retired government employees could so unreasonably treat one of its beneficiaries,
one who faithfully served our people for over 40 years, is appalling. It is well to remind
GSIS of its mandate to promote the efficiency and welfare of the employees of our
government, and to perform its tasks not only with competence and proficiency but with
genuine compassion and concern.
WHEREFORE, the foregoing premises considered, the Decision dated October 28,
2008 and the Resolution dated February 18, 2009 of the Court of Appeals in CA-G.R.
SP No. 101811 are hereby AFFIRMED WITH MODIFICATION. Government Service
Insurance System is ORDERED to (1) pay respondents retirement benefits in
accordance with P.D. No. 1146, subject to deductions, if any, computed from the time
the same were withheld until April 7, 2010; and (2) pay respondents retirement benefits
in accordance with R.A. No. 910, computed from April 8, 2010 onwards.
In order that respondent may not be further deprived of his monthly pension benefits,
this Decision is IMMEDIATELY EXECUTORY.
SO ORDERED.
G.R. No. 166570
December 18, 2009
EFREN M. HERRERA and ESTHER C. GALVEZ, for and on their behalf and on
behalf of OTHER SEPARATED, UNREHIRED and RETIRED EMPLOYEES OF THE
NATIONAL POWER CORPORATION,Petitioners,
vs.
NATIONAL POWER CORPORATION, THE DEPARTMENT OF BUDGET AND
MANAGEMENT and THE OFFICE OF THE SOLICITOR GENERAL, Respondents.
DECISION
DEL CASTILLO, J.:
The question at the heart of this case is whether petitioners, former employees of the
National Power Corporation (NPC) who were separated from service due to the
governments initiative of restructuring the electric power industry, are entitled to their
retirement benefits in addition to the separation pay granted by law.
Absent explicit statutory authority, we cannot provide our imprimatur to the grant of
separation pay and retirement benefits from one single act of involuntary separation
from the service, lest there be duplication of purpose and depletion of government
resources. Within the context of government reorganization, separation pay and
retirement benefits arising from the same cause, are in consideration of the same
services and granted for the same purpose. Whether denominated as separation pay or
retirement benefits, these financial benefits reward government service and provide
monetary assistance to employees involuntarily separated due to bona
fidereorganization.
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court on a pure
question of law against the Decision1 dated December 23, 2004 rendered by the
Regional Trial Court (RTC), Branch 101, Quezon City in SCA No. Q-03-50681 (for
Declaratory Relief) entitled National Power Corporation v. Napocor Employees and
Workers Union (NEWU), NAPOCOR Employees Consolidated Union (NECU), NPC
Executive Officers Association, Inc. (NPC-EXA), Esther Galvez and Efren Herrera, for
and on their behalf and in behalf of other separated, unrehired, and retired employees
of the National Power Corporation, the Department of Budget and Management (DBM),
the Office of the Solicitor General (OSG), the Civil Service Commission (CSC) and the
Commission on Audit (COA). Said Decision ruled that the petitioners are not entitled to
receive retirement benefits under Commonwealth Act No. 186 (CA No. 186), 2 as
amended, over and above the separation benefits they received under Republic Act
(RA) No. 9136,3 otherwise known as the Electric Power Industry Reform Act of 2001
(EPIRA).
Legal and factual background
RA No. 9136 was enacted on June 8, 2001 to provide a framework for the restructuring
of the electric power industry, including the privatization of NPCs assets and
liabilities.4 One necessary consequence of the reorganization was the displacement of
employees from the Department of Energy, the Energy Regulatory Board, the National
Electrification Administration and the NPC. To soften the blow from the severance of
employment, Congress provided in Section 63 of the EPIRA, for a separation package
superior than those provided under existing laws, as follows:
SEC. 63. Separation Benefits of Officials and Employees of Affected Agencies.

National government employees displaced or separated from the service as a result of
the restructuring of the [electric power] industry and privatization of NPC assets
pursuant to this Act, shall be entitled to either a separation pay and other benefits in
accordance with existing laws, rules or regulations or be entitled to avail of the
privileges provided under a separation plan which shall be one and one-half month
salary for every year of service in the government: Provided, however, That those who
avail of such privilege shall start their government service anew if absorbed by any
government-owned successor company. In no case shall there be any diminution of
benefits under the separation plan until the full implementation of the restructuring and
privatization. x x x (Emphasis supplied)
The implementing rules of the EPIRA, approved by the Joint Congressional Power
Commission on February 27, 2002,5 further expounded on the separation benefits, viz:
RULE 33. Separation Benefits
Section 1. General Statement on Coverage.
This Rule shall apply to all employees in the National Government service as of June
26, 2001 regardless of position, designation or status, who are displaced or separated
from the service as a result of the restructuring of the electric [power] industry and
privatization of NPC assets: Provided, however, That the coverage for casual or
contractual employees shall be limited to those whose appointments were approved or
attested [to] by the Civil Service Commission (CSC).
Section 2. Scope of Application.
This Rule shall apply to affected personnel of DOE, ERB, NEA and NPC.
Section 3. Separation and Other Benefits.
(a) The separation benefit shall consist of either a separation pay and other benefits
granted in accordance with existing laws, rules and regulations or a separation plan
equivalent to one and one half (1-12) months salary for every year of service in the
government, whichever is higher; Provided, That the separated or displaced employee
has rendered at least one (1) year of service at the time of effectivity of the Act.
xxxx
(e) For this purpose, "Salary", as a rule, refers to the basic pay including the thirteenth
(13th) month pay received by an employee pursuant to his appointment, excluding per
diems, bonuses, overtime pay, honoraria, allowances and any other emoluments
received in addition to the basic pay under existing laws.
(f) Likewise, "Separation" or "Displacement" refers to the severance of employment of
any official or employee, who is neither qualified under existing laws, rules and
regulations nor has opted to retire under existing laws, as a result of the Restructuring
of the electric power industry or Privatization of NPC assets pursuant to the Act.
(Emphasis supplied)
On February 28, 2003, all NPC employees, including the petitioners, were separated
from the service. As a result, all the employees who held permanent positions at the
NPC as of June 26, 2001 opted for and were paid the corresponding separation pay
equivalent to one and a half months salary per year of service. Nonetheless, in addition
to the separation package mandated by the EPIRA, a number of NPC employees also
claimed retirement benefits under CA No. 186,6 as amended by RA No. 6607 and RA No.
1616.8 Under these laws, government employees who have rendered at least 20 years
of service are entitled to a gratuity equivalent to one months salary for every year of
service for the first 20 years, one and a half months salary for every year of service
over 20 but below 30 years, and two months salary for every year of service in excess
of 30 years.9
The NPC, on the other hand, took the position that the grant of retirement benefits to
displaced employees in addition to separation pay was inconsistent with the
constitutional proscription on the grant of a double gratuity. Unable to amicably resolve
this matter with its former employees, the NPC filed on September 18, 2003, a Petition
for Declaratory Relief10 against several parties,11 including the petitioners, before the
RTC of Quezon City, to obtain confirmation that RA No. 9136 did not specifically
authorize NPC to grant retirement benefits in addition to separation pay.12 The case was
docketed as SCA No. Q-03-50681 and raffled to Branch 101 of said court.
After submission of the respondents respective Answers and Comments, 13 the parties
agreed that the court a quo would resolve the case based on the arguments raised in
their memoranda14 since only a question of law was involved.15 In due course, the
court a quo rendered the assailed Decision, finding that employees who received the
separation benefit under RA No. 9136 are no longer entitled to retirement benefits:
The aforementioned law speaks of two (2) options for the employee to choose from, that
is: (1) to receive separation pay and other benefits in accordance with existing laws,
rules, and regulations or (2) to avail of the privileges provided under a separation plan
(under R.A. 9136), which shall be one and one half months salary for every year of
service in the government.
Under Section 3(f) of Rule 33 of the Implementing Rules and Regulations of R.A. 9136,
"separation or displacement refers to the severance of employment of any official or
employee, who is neither qualified under existing laws, rules, and regulations nor has
opted to retire under existing laws as a result of the Restructuring of the electric power
industry or Privatization of NPC assets pursuant to the act". Thus, it is clear that the
receipt of benefits under the EPIRA law, by employees who opted to retire under such
law bars the receipt of retirement benefits under R.A. 1616.
Moreover, Section 8 of Article IX-B of the 1987 Constitution prohibits the grant of both
separation pay and retirement benefits. x x x
xxxx
In said constitutional provision, it is x x x clear that additional or indirect compensation is
barred by law and only [allowed] when so specifically authorized by law. Furthermore,
on the Private Respondents' contention that the second paragraph should be applied in
their [case], the same will not hold water. This is so because "retirement benefits" [are]
not synonymous to pension or gratuities as contemplated by law.
R.A. 9136 did not clearly and unequivocally authorize the payment of additional benefits
to Private Respondents as the benefits referred to in such law should not be interpreted
to include retirement benefits in addition to their separation pay. Separation from service
due to [the] restructuring of the [electric] power industry should not be interpreted to
mean "retirement" as both are different in every respect. The law specifically defines the
meaning of "separation" by virtue of the restructuring. x x x
xxxx
Thus, the Respondent-Employees are not entitled to receive retirement benefits under
Republic Act No. 1616 over and above the separation benefits they received under
Republic Act No. 9136.16
Petitioners sought recourse from the assailed Decision directly before this court on a
pure question of law. The Department of Budget and Management (DBM) submitted its
Comment on June 30, 2005,17 while the NPC, through the Office of the Solicitor
General, filed its Comment on August 23, 2005.18 Petitioners then filed their
Consolidated Reply by registered mail on November 18, 2005. 19 After the parties filed
their respective memoranda,20 the case was
submitted for decision.
Petitioners arguments
Before us, petitioners argue that:

1) The EPIRA does not bar the application of CA No. 186, as amended.
Petitioners are therefore entitled to their retirement pay in addition to separation
pay.
2) Petitioners have vested rights over their retirement benefits.
3) The payment of both retirement pay and separation pay does not constitute
double compensation, as the Constitution provides that "pensions or gratuities
shall not be considered as additional, double or indirect compensation".
Respondents arguments
Respondents NPC and the DBM, on the other hand, maintain that:
1) Section 63 of RA No. 9136 and Section 3, Rule 33 of its Implementing Rules
and Regulations do not authorize the grant of retirement benefits in addition to
the separation pay already received. Rather, Section 63 requires separated
employees to choose between a separation plan under existing laws or the
separation package under the EPIRA.
2) The grant of both separation pay and retirement benefit amounts to double
gratuity in direct contravention of the Constitution.
3) No law authorizes the payment of both separation pay and retirement benefits
to petitioners.
Issue
The sole issue in this case is whether or not NPC employees who were separated from
the service because of the reorganization of the electric power industry and who
received their separation pay under RA No. 9136 are still entitled to receive retirement
benefits under CA No. 186, as amended.
Our Ruling
We deny the petition and affirm the court a quos Decision dated December 23, 2004 in
SCA No. Q-03-50681.
Absent clear and unequivocal statutory authority, the grant of both separation pay and
retirement benefits violates the constitutional proscription on additional compensation.
Section 8 of Article IX(B) of the Constitution provides that "[n]o elective or appointive
public officer or employee shall receive additional, double, or indirect compensation,
unless specifically authorized by law". In prior decisions, we have ruled that there must
be a clear and unequivocal statutory provision to justify the grant of both separation pay
and retirement benefits to an employee.21 Here, absent an express provision of law, the
grant of both separation and retirement benefits would amount to double compensation
from one single act of separation from employment.
Petitioners claim that Section 9 of RA No. 6656 22 amounts to sufficient statutory basis for
the grant of both retirement benefits and separation pay. Section 9 provides:
x x x Unless also separated for cause, all officers and employees, who have been
separated pursuant to reorganization shall, if entitled thereto, be paid the appropriate
separation pay and retirement and other benefits under existing laws within ninety
(90) days from the date of the effectivity of their separation or from the date of the
receipt of the resolution of their appeals as the case may be. Provided, That application
for clearance has been filed and no action thereon has been made by the
corresponding department or agency. Those who are not entitled to said benefits shall
be paid a separation gratuity in the amount equivalent to one (1) month salary for every
year of service. Such separation pay and retirement benefits shall have priority of
payment out of the savings of the department or agency concerned. (Emphasis
supplied)
Unfortunately for the petitioners, their interpretation has little legal precedent. The CSC
has previously ruled that employees similarly situated to petitioners herein were not
entitled to both separation pay and retirement benefits; instead, the concerned
employee must either avail of the separation benefit or opt to retire if qualified under
existing laws. In CSC Resolution No. 021112, 23 the CSC interpreted the phrase
"separation pay and retirement" in RA No. 6656 as follows:
x x x While the aforequoted provision of law used the conjunctive "and" between the
words "separation pay" and "retirement", this does not mean that both benefits shall be
given to an affected employee. This interpretation is supported by the phrase "if entitled
thereto" found before the phrase "be paid the appropriate separation pay and retirement
and other benefits under existing laws". Thus, payment of both separation and
retirement benefits is not absolute.
Also, in CSC Resolution No. 00-1957,24 the CSC declared:
The aforequoted provision of law says: separation pay and retirement and other
benefits under existing laws. Be it noted that the conjunctive and is used between
separation pay and retirement, which in its elementary sense would mean that they are
to be taken jointly. (Ruperto G. Martin, Statutory Construction, sixth edition, p. 88)
Obviously, therefore, separation pay and retirement refer to only one benefit, of which
an employee affected by the reorganization, if entitled thereto, must be paid plus other
benefits under existing laws, i.e. terminal leave pay, etc.
Further, in Cajiuat v. Mathay,25 we found that in the absence of express provisions to the
contrary, gratuity laws should be construed against the grant of double compensation.
Cajiuat involved employees of the Rice and Corn Administration who exercised their
option to retire under CA No. 186 and received the appropriate retirement benefits.
Subsequently, the Rice and Corn Administration was abolished by Presidential Decree
No. 4.26 Said Decree also provided for the payment of a gratuity in Section 26,
paragraph 3:
Permanent officials and employees of the Rice and Corn Administration who cannot be
absorbed by the Administration, or who cannot transfer or to be transferred to other
agencies, or who prefer to retire, if qualified for retirement, or to be laid off, shall be
given gratuity equivalent to one month salary for every year of service but in no case
more than twenty-four months salary, in addition to all other benefits to which they are
entitled under existing laws and regulations. x x x
On the basis of this provision, the retired employees of the Rice and Corn
Administration claimed that they were entitled to the separation gratuity, over and above
the retirement benefits already received. We disagreed and held that:
x x x [t]here must be a provision, clear and unequivocal, to justify a double pension. The
general language employed in paragraph 3, Section 26 of Presidential Decree No. 4
fails to meet that test. All that it states is that permanent employees of the Rice and
Corn Administration who are retirable are entitled to gratuity equivalent to one month
salary for every year of service but in no case more than twenty four months salary in
addition to other benefits to which they are entitled under existing laws and regulations.
To grant double gratuity is unwarranted. No reliance can be placed [on] the use of the
term "other benefits" found in the paragraph relied upon. As clearly stated in the
memorandum of the Solicitor General, they refer to "those receivable by a retiree under
the general retirement laws, like the refund of contributions to the retirement fund and
the money value of the accumulated vacation and sick leaves of said official employee.
The clause "in addition to all other benefits to which they are entitled under existing laws
and regulations" was inserted to insure the payment to the retiree of the refund of the
contributions to the retirement fund and the money value of the accumulated vacation
and sick leaves of said official or employee.27
Nothing in the EPIRA justifies the grant of both the separation package and retirement
benefits.
The EPIRA, a legislative enactment dealing specifically with the privatization of the
electric power industry, provides:
SEC. 63. Separation Benefits of Officials and Employees of Affected Agencies.
National government employees displaced or separated from the service as a result of
the restructuring of the [electric power] industry and privatization of NPC assets
pursuant to this Act, shall be entitled to either a separation pay and other benefits in
accordance with existing laws, rules or regulations or be entitled to avail of the
privileges provided under a separation plan which shall be one and one-half month[s]
salary for every year of service in the government: Provided, however, That those who
avail of such privilege shall start their government service anew if absorbed by any
government-owned successor company. In no case shall there be any diminution of
benefits under the separation plan until the full implementation of the restructuring and
privatization. x x x (Emphasis supplied)
A careful reading of Section 63 of the EPIRA affirms that said law did not authorize the
grant of both separation pay and retirement benefits. Indeed, the option granted was
either to "a separation pay and other benefits in accordance with existing laws, rules
and regulations" or to "a separation plan which shall be one and one-half months salary
for every year of service in the government". The options were alternative, not
cumulative. Having chosen the separation plan, they cannot now claim additional
retirement benefits under CA No. 186.
This position finds further support in Section 3(f), Rule 33 of RA No. 9136s
Implementing Rules and Regulations, which provides:
(f) likewise, "separation" or "displacement" refers to the severance of employment of
any official or employee, who is neither qualified under existing laws, rules and
regulations nor has opted to retire under existing laws, as a result of the restructuring of
the electric power industry or privatization of NPC assets pursuant to the act.
As worded, Rule 33, Section 3(f) of the Implementing Rules and Regulations of RA No.
9136 precludes the receipt of both separation and retirement benefits. A separated or
displaced employee, as defined by the implementing rules, does not include one who is
qualified or has opted to retire under existing laws. Consequently, a separated
employee must choose between retirement under applicable laws or separation pay
under the EPIRA.
Within the context of reorganization, petitioners cannot claim a vested right over their
retirement benefits.
Petitioners claim that having religiously paid their premiums, they have vested rights to
their retirement gratuities which may not be revoked or impaired. However, petitioners
fail to consider that under the retirement laws that they themselves invoke, separation
from the service, whether voluntary or involuntary, is a distinct compensable event from
retirement.28 Nothing in said laws permits an employee to claim both separation pay and
retirement benefits in the event of separation from the service due to reorganization.
Thus, absent an express provision of law to the contrary, separation due to
reorganization gives rise to two possible scenarios: first, when the separated employee
is not yet entitled to retirement benefits, second, when the employee is qualified to
retire. In the first case, the employees separation pay shall be computed based on the
period of service rendered in the government prior to the reorganization. In the second
case, where an employee is qualified to retire, he or she may opt to claim separation or
retirement benefits.
Contradistinction with Larao v. Commission on Audit
We are, of course, aware that in Larao v. Commission on Audit 29 we held that
employees, who were separated from the service because of the reorganization of the
Metropolitan Waterworks and Sewerage System (MWSS) and Local Waterworks and
Utilities Administration (LWUA) pursuant to RA No. 8041, were entitled to both a
separation package and retirement benefits. 30
1avvphi1
In Larao, however, the Early Retirement Incentive Plan submitted to and approved by
then President Fidel V. Ramos explicitly provided for a separation package that would
be given over and above the existing retirement benefits. Therein lies the fundamental
difference. Hence, unlike in this case, there was specific authority for the grant of both
separation pay and retirement benefits.
WHEREFORE, the petition is DENIED. The Decision dated December 23, 2004 of the
Regional Trial Court of Quezon City, Branch 101 in SCA No. Q-03-50681 holding that
petitioners are not entitled to receive retirement benefits under Commonwealth Act No.
186, as amended is AFFIRMED with MODIFICATION that petitioners are entitled to a
refund of their contributions to the retirement fund, and the monetary value of any
accumulated vacation and sick leaves.
SO ORDERED.

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G.R. No.

March 12, 2014

WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner,

1. VACATION AND SICK LEAVE CREDITS

Ruling of the Voluntary Arbitrator

SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be

WHEREFORE, the following award is hereby made:

Ruling of the Court of Appeals

WHEREFORE, the instant appeal is DISMISSED for lack of merit.

The practice of giving two retirement

However, if there is doubt in its interpretation, it should be resolved in favor of labor, as

RICARDO E. VERGARA, JR., Petitioner,

inclusion of sales management incentives in the computation of petitioner's retirement

February 13, 2013

HEIRS OF MANUEL H. RIDAD, APOLINARIO G. BACTOL, EMERITA C. GULINAO

Oct. 16, P193,359.50 P14,217.61

Jan. 16, P268,103.49 P16,548.71

Nov. 11, P337,917.97 P24,846.92

Lydia Jusay Dean of College June

May 31, P187,315.57

25 years and up: 100% of monthly salary per year of service 5

-BTHE COURT OF APPEALS HAS SERIOUSLY ERRED IN COMPLETELY

last pay in 31 December 1983. The correct computation should be:

GAUF claims to have paid the following amounts to the petitioners:

Amount given by GAUF

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision

RODOLFO J. SERRANO, Petitioner,

Further, the Implementing Rules of said law provide:

employer to his employees for services rendered during normal working

WHEREFORE, the petition is GRANTED. The Court of Appeals Decision of February

October 13, 2009

EASTERN SHIPPING LINES, INC., Petitioner,

negligence amounting to bad faith, or in wanton disregard of his contractual obligations.

relief. Thus, the award of P100,000.00 to respondent as financial assistance is deemed

November 17, 2010

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,

Dear Atty. De Leon:

Section 24 of R.A. No. 10071 provides:

December 18, 2009

SEC. 63. Separation Benefits of Officials and Employees of Affected Agencies.

Before us, petitioners argue that:

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