Erika and Edna were both employees of Philippine Journalists, Inc. Erika started with the company on 11 May 1994 and left the company on 15 November 2008. She was an Ad Taker/Account Executive. Edna was employed since 05 September 1989 and was the Human Resources Department Supervisor when she ended her employment on 15 March 2009.
Erika and Edna wrote separate letters on 28 October 2008 and 23 January 2009, respectively, informing Philippine Journalists, Inc. of their desire to avail of its optional retirement plan as embodied in the Collective Bargaining Agreement. They tendered their resignation from employment.
Since Philippine Journalists, Inc. refused to give their optional retirement benefits, Erika and Edna filed a complaint for unfair labor practice and money claims, nonpayment of optional retirement benefits and service incentive leave against Philippine Journalists, Inc. before the Office of the Labor Arbiter.
Philippine Journalists, Inc. countered that at the time Erika and Edna applied for optional retirement, it was suffering losses and had implemented a retrenchment program owing to these losses. It also averred that there was no express company policy on optional retirement when Erika and Edna applied for the same.
Philippine Journalists, Inc. further asserted that there were employees who were granted optional retirement benefits in the past, but they were covered by an existing and approved optional retirement program. Two former employees attested to this assertion.
The Office of the Labor Arbiter dismissed the complaint for lack of merit. It found that the Collective Bargaining Agreement categorized certain positions within Philippine Journalists, Inc. as managerial and are therefore excluded from the bargaining unit. According to the Office of the Labor Arbiter, since Erika and Edna were managerial employees, they were not entitled to optional retirement benefits.
The National Labor Relations Commission, however, set aside the Decision of the Office of the Labor Arbiter and ruled that Erika and Edna were entitled to optional retirement benefits under the Collective Bargaining Agreement. According to the Commission, even if managerial employees were excluded from the coverage of the Collective Bargaining Agreement, there was a showing that there were certain managerial employees who were able to avail of, and were granted, optional retirement benefits.
The Court of Appeals affirmed the ruling of the Commission on the ground that Philippine Journalists Inc.’s grant of optional retirement benefits to two of its managerial employees had ripened into a company practice that may be considered an enforceable obligation. Specifically, one managerial employee availed of the optional retirement benefits in 2003 while another retired optionally in 2001. For the Court of Appeals, Philippine Journalists, Inc. consistently granted optional retirement benefits in a considerable length of two years.
Thus, the grant of optional retirement benefits by Philippine Journalists, Inc., even if it was not obliged under the Collective Bargaining Agreement, already constituted voluntary employer practice which cannot be unilaterally withdrawn or diminished by the employer without violating the Labor Code of the Philippines.1Article 100 of the Labor Code of the Philippines states: “ART. 100. Prohibition against elimination or diminution of benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.”
Ruling:
In agreeing with the Court of Appeals, the Supreme Court ruled:
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. Jurisprudence 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. 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. 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. 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.
In the present case, the Supreme Court found that the grant of optional retirement benefits to two managerial employees in the past was voluntary, deliberate, and done with sufficient regularity as would indicate that this had become a company practice within Philippine Journalists, Inc.
The Supreme Court further found that Philippine Journalists, Inc. was not incurring losses, and was in fact exhibiting conduct inconsistent with the claim.
1)
Philippine Journalists, Inc. appeared to have discriminated against its core employees, such as Erika and Edna, while it favored those in the upper tier of its management. It had been found guilty of illegal dismissal based on an illegal retrenchment scheme, while upper management continued to enjoy its perks and privileges and refused to tighten its belt in this respect.
2)
Philippine Journalists, Inc. pursued a scheme to reduce its personnel by any means necessary, which the Supreme Court viewed as unfair and prejudicial to the interests of labor. The Court took note of the situation of Erika and Edna, who resigned under the honest belief that they could avail of an optional retirement scheme similar to other employees in the past. According to the Court, if Philippine Journalists, Inc. believed that Erika and Edna were not entitled to avail of the optional retirement scheme, then it should have at least put their respective resignations on hold to clarify any issues. Instead, Philippine Journalists, Inc. was found to have taken a hostile stance, and had quickly grabbed the opportunity to declare Erika and Edna separated from their employment by voluntary resignation. It failed to take time to explain that the optional retirement program was no longer in effect and afford Erika and Edna the opportunity to reconsider their actions. The Court stated that Philippine Journalists, Inc. exhibited bad faith.
3)
Finally, the Court stressed that Philippine Journalists, Inc.’s bad faith was further evident when it falsely declared that it had suffered financial reverses since 1997. The Court found that Philippine Journalists, Inc. deceived their employees and used this false claim to deprive the latter of a fair appraisal of the facts and circumstances during negotiations leading to such agreement.
For the Supreme Court, Philippine Journalists, Inc. engaged in unfair labor activities and took an anti-labor stance at the expense of its employees, which included Erika and Edna. The Court did not countenance the same.
Further reading:
- Philippine Journalists, Inc. v. De Guzman, G.R. No. 208027, April 1, 2019.
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