Goodyear Philippines, Inc. and Ramos vs. Angus

In the absence of an express or implied prohibition against it, collection of both retirement benefits and separation pay upon severance from employment is allowed. This rule is grounded on the social justice policy that doubts should always be resolved in favor of labor rights. An employee's right to receive separation pay in addition to retirement benefits depends upon the provisions of the company's Retirement Plan and/or Collective Bargaining Agreement.

Goodyear Philippines, Inc. is a corporation that employed Marina L. Angus as Secretary to the Manager of Quality and Technology beginning November 16, 1966. In order to maintain the viability of its operations amidst economic reversals, Goodyear implemented cost-saving measures, including the streamlining of its workforce. The company had a Collective Bargaining Agreement with Unyon ng mga Manggagawa sa Goma sa Goodyear Phils., Inc., effective for the period July 25, 2001 to July 24, 2004, which contained provisions on retirement benefits and separation pay.

Marina L. Angus was employed by Goodyear Philippines, Inc. on November 16, 1966 as Secretary to the Manager of Quality and Technology. On September 19, 2001, Angus received a letter from Remigio M. Ramos, Goodyear's Human Resources Director, informing her that her position had become redundant and was abolished effective September 18, 2001, and that her services would be terminated effective October 18, 2001. The letter stated that as company practice, termination due to redundancy or retrenchment is paid at 45 days' pay per year of service, but considering that Angus had rendered 34.92 years of service and had reached the required minimum age of 55 to qualify for early retirement, Management decided to grant her early retirement benefit at 47 days' pay per year of service, to be paid from the Pension Fund.

Angus responded through a letter of even date accepting Management's decision to avail early retirement benefit but disagreeing with the terms stated therein, suggesting she be given a premium of additional 3 days for every year of service, or a total of 50 days. Meanwhile, Goodyear filed an Establishment Termination Report with the Department of Labor and Employment in connection with Angus' retrenchment. On November 20, 2001, Angus accepted the checks covering payment of her retirement benefits computed at 47 days' pay per year of service, but annotated the acknowledgement receipt: "Received under protest - amount is not acceptable. Acceptance is on condition that I will be given a premium of additional 3 days for every year of service. Since my service was terminated due to redundancy, I now claim my separation pay as mandated by law. This is a separate claim from my early retirement benefit."

Allegedly because of the annotation and Angus' refusal to sign a Release and Quitclaim, petitioners took back the checks. Ramos wrote Angus a letter dated November 29, 2001 explaining that the company had offered her the most favorable separation benefits due to redundancy, and that based on the Retirement Plan under the CBA and the parties' Employment Contract, Angus was entitled to only one of several kinds of separation pay. Angus reiterated her claim for both termination pay and early retirement benefits and demanded a copy of the Notice of Redundancy filed with the DOLE and the specific provisions in the Retirement Plan, CBA, and Employment Contract justifying the prohibition. Ramos merely reminded Angus to claim her checks.

On January 17, 2002, Angus finally accepted a check in the amount of ₱1,958,927.89 purportedly inclusive of all termination benefits computed at 47 days' pay per year of service, and executed a Release and Quitclaim in favor of Goodyear. On February 5, 2002, Angus filed with the Labor Arbiter a complaint for illegal dismissal with claims for separation pay, damages, and attorney's fees. In her Position Paper, Angus claimed that her termination by reason of redundancy was effected in violation of the Labor Code for it was not timely reported to the DOLE and no separation pay was given to her; that the separation pay to which she is entitled by law is entirely different from the retirement benefits she received; that nothing in the company's Retirement Plan under the CBA, the CBA itself, or the Employment Contract prohibits the grant of more than one kind of separation pay; and that she was forced to sign a quitclaim after accepting her retirement benefits.

Petitioners, on the other hand, asserted that Angus was validly dismissed for an authorized cause; that she voluntarily accepted her termination benefits and freely executed the corresponding quitclaim; that her receipt of early retirement benefits equivalent to 47 days' pay for every year of service, which amount is higher than the regular separation pay, had effectively barred her from recovering separation pay due to redundancy; and that Section 1, Article XI of the last company CBA supports the grant of only one benefit, providing that "the availment of the retirement benefits herein provided for shall exclude entitlement to any separation pay, termination pay, redundancy pay, retrenchment pay or any other severance pay" and that "an employee shall be entitled to only one (1) benefit, whichever is higher." In her Rejoinder, Angus disputed the existence of the aforesaid provision and presented a copy of the latest CBA effective July 25, 2001 to July 24, 2004, pointing to Section 5, Article VIII thereof as the applicable provision, which sets out the retirement benefits for workers at normal retirement age of 60 and for workers at least 50 years old with at least 15 years of service recommended for early retirement.

• Entitlement to Only One Benefit: Petitioners argued that the CA erred in ordering them to pay Angus separation pay on top of retirement pay because it is very clear in the Collective Bargaining Agreement that respondent is entitled to only one type of benefit, either separation pay or retirement benefit, whichever is higher, and that the recovery of both is proscribed by the company's CBA.

• Validity of Quitclaim: Petitioners contended that the CA had no basis in disregarding the quitclaim since it was knowingly and voluntarily executed by Angus, and such voluntary execution, coupled with her acceptance of separation pay computed at early retirement rate, had effectively barred Angus from demanding more.

• Moral Damages and Attorney's Fees: Petitioners argued that the CA erred in ordering the payment of moral damages and attorney's fees notwithstanding that the complaint for illegal dismissal and money claims lacked merit.

• Distinct Nature of Benefits: Angus claimed that her termination by reason of redundancy was effected in violation of the Labor Code for it was not timely reported to the DOLE and no separation pay was given to her; that the separation pay to which she is entitled by law is entirely different from the retirement benefits that she received.

• Absence of Prohibition: Angus argued that nothing in the company's Retirement Plan under the CBA, the CBA itself, or the Employment Contract prohibits the grant of more than one kind of separation pay, and she disputed the existence of the provision petitioners alluded to, presenting the latest CBA to show that the provisions alluded to by petitioners do not exist.

• Vitiated Consent: Angus claimed that she was only forced to sign a quitclaim after accepting her retirement benefits.

• Entitlement to Both Benefits: Whether the Court of Appeals committed serious error of law in ordering the payment of separation pay to respondent on top of the retirement pay despite the alleged provision in the Collective Bargaining Agreement that respondent is entitled to only one type of benefit, either separation pay or retirement benefit, whichever is higher.

• Validity of Quitclaim: Whether the Court of Appeals committed serious error of law in ordering Goodyear to pay again separation pay to respondent despite the fact that respondent executed a valid and binding quitclaim, the consequences and effects of which she fully understood, and which she cannot now unilaterally revoke.

• Moral Damages and Attorney's Fees: Whether the Court of Appeals committed serious error of law in ordering the payment of moral damages and attorney's fees notwithstanding that the complaint for illegal dismissal and money claims lacked merit.

• Entitlement to Both Benefits: No. Angus is entitled to both separation pay and early retirement benefit due to the absence of a specific provision in the CBA prohibiting recovery of both. The provision petitioners submitted can hardly be considered substantial evidence because it does not appear to be an integral part of Goodyear's CBA, and even assuming it is, there is no showing if the CBA under which the said provision is found was the one in force at the time material to the case.

• Validity of Quitclaim: No. The release and quitclaim signed by Angus cannot be used by petitioners to legalize the denial of Angus' rightful claims, as the terms of the quitclaim authorize Angus to receive less than what she is legally entitled to.

• Moral Damages and Attorney's Fees: No. The award of moral damages in the amount of ₱5,000.00 and attorney's fees is affirmed, as moral damages is awarded when fraud and bad faith have been established, and Angus was forced to litigate her just claims when petitioners refused to heed her demands.

• Entitlement to Both Benefits: Citing Aquino vs. National Labor Relations Commission, which in turn cited Batangas Laguna Tayabas Bus Company vs. Court of Appeals and University of the East vs. Hon. Minister of Labor, the Court held that an employee is entitled to recover both separation pay and retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA. The Court found that the provision petitioners submitted cannot be considered substantial evidence because it does not appear to be an integral part of Goodyear's CBA, and there is no showing that the CBA under which the said provision is found was the one in force at the time material to the case. Angus presented the parties' 2001-2004 CBA, and upon examination, the Court agreed that it does not contain any restriction on the availment of benefits under the company's Retirement Plan and of separation pay. The Court also agreed with the CA that the amount Angus received represented only her retirement pay and not separation pay, as the September 18, 2001 letter explicitly granted her early retirement benefits pegged at 47 days' pay per year of service, to come from the company's Pension Fund, and the document showing a detailed account of her termination benefits was entitled "Summary of Retirement Pay and other Company Benefits." The Court further held that Angus was qualified for early retirement under the Retirement Plan of the CBA, as she was already 57 years of age and had been in the service for more than 34 years, and the exchange of correspondence between Angus and Ramos shows that the latter, as Goodyear's Human Resources Director, offered, recommended, and approved the grant of early retirement. The Court noted that retirement benefits and separation pay are not mutually exclusive: retirement benefits are a form of reward for an employee's loyalty and service, while separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment, recoverable only in instances enumerated under Articles 283 and 284 of the Labor Code. Article 283 clearly entitles Angus to separation pay apart from the retirement benefits she received.

• Validity of Quitclaim: The Court held that under prevailing jurisprudence, a quitclaim cannot bar an employee from demanding benefits to which he is legally entitled, and it is ineffective in barring claims for the full measure of the worker's rights, and the acceptance of benefits therefrom does not amount to estoppel. Release and quitclaims are often looked upon with disfavor when the waiver was not done voluntarily by employees who were pressured into signing them by unscrupulous employers seeking to evade their obligations.

• Moral Damages and Attorney's Fees: The Court found no cogent reason to overturn the CA's award of moral damages and attorney's fees. Moral damages is awarded when fraud and bad faith have been established, as in this case. Petitioners' false contention over what has been paid to Angus suggests an attempt to feign compliance with their legal obligation to grant their employee all the benefits provided for by agreement and law. Their bad faith is evident in the intent to circumvent this legal mandate. As Angus was forced to litigate her just claims when petitioners refused to heed her demands for the payment of separation pay, the award of attorney's fees equivalent to 10% of the amount of separation pay is also in order.

• Cumulation of Retirement Benefits and Separation Pay — In the absence of an express or implied prohibition against it, collection of both retirement benefits and separation pay upon severance from employment is allowed. This is grounded on the social justice policy that doubts should always be resolved in favor of labor rights. An employee's right to receive separation pay in addition to retirement benefits depends upon the provisions of the company's Retirement Plan and/or CBA. The Court applied this doctrine in finding that Angus was entitled to both benefits because the applicable 2001-2004 CBA contained no restriction on the availment of both.

• Distinction Between Retirement Benefits and Separation Pay — Retirement benefits are a form of reward for an employee's loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts, and company policies. Separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment, and is recoverable only in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. The Court applied this distinction in holding that the amount Angus received from petitioners represented only her retirement pay and not separation pay.

• Invalidity of Quitclaim — A quitclaim cannot bar an employee from demanding benefits to which he is legally entitled, and it is ineffective in barring claims for the full measure of the worker's rights; the acceptance of benefits therefrom does not amount to estoppel. Release and quitclaims are often looked upon with disfavor when the waiver was not done voluntarily by employees who were pressured into signing them by unscrupulous employers seeking to evade their obligations. The Court applied this doctrine in holding that the quitclaim signed by Angus was invalid because its terms authorized her to receive less than what she is legally entitled to.

• "In the absence of an express or implied prohibition against it, collection of both retirement benefits and separation pay upon severance from employment is allowed. This is grounded on the social justice policy that doubts should always be resolved in favor of labor rights." — This passage states the core ratio decidendi of the case, establishing the general rule on cumulation of retirement benefits and separation pay.

• "It is worthy to mention at this point that retirement benefits and separation pay are not mutually exclusive. Retirement benefits are a form of reward for an employee's loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts and company policies. On the other hand, separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment and is recoverable only in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible." — This passage defines the distinct legal natures of retirement benefits and separation pay, clarifying why they are not mutually exclusive.

• "Under prevailing jurisprudence, x x x a quitclaim cannot bar an employee from demanding benefits to which he is legally entitled." — This passage articulates the rule on the invalidity of quitclaims that deprive employees of their legal entitlements.

• Aquino vs. National Labor Relations Commission, G.R. No. 87653, February 11, 1992, 206 SCRA 118 — Controlling precedent cited for the rule that an employee is entitled to recover both separation pay and retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA.

• Batangas Laguna Tayabas Bus Company vs. Court of Appeals, 163 Phil. 494 (1976) — Cited in Aquino as authority for the rule allowing recovery of both separation pay and retirement benefits absent a specific prohibition.

• University of the East vs. Hon. Minister of Labor, 236 Phil. 724 (1987) — Cited in Aquino as authority for the same rule.

• Cruz vs. Philippine Global Communications, Inc., G.R. No. 141868, May 28, 2004, 430 SCRA 184 — Cited by the CA and the Court for the proposition that an employee's right to receive separation pay in addition to retirement benefits depends upon the provisions of the company's Retirement Plan and/or CBA.

• Suarez, Jr. vs. National Steel Corporation, 590 Phil. 352 (2008) — Cited for the same proposition on the dependency of the right to cumulate benefits on the provisions of the Retirement Plan and/or CBA.

• Santos vs. Servier Philippines, Inc., 593 Phil. 133 (2008) — Cited for the proposition that retirement benefits and separation pay are not mutually exclusive.

• Motorola Philippines, Inc. vs. Ambrosio, 601 Phil. 496 (2009) — Cited for the definition of separation pay as that amount which an employee receives at the time of his severance from employment.

• Solgus Corporation vs. Court of Appeals, 543 Phil. 483 (2007) — Cited for the rule that a quitclaim cannot bar an employee from demanding benefits to which he is legally entitled.

• Interorient Maritime Enterprises, Inc. vs. Remo, G.R. No. 181112, June 29, 2010, 622 SCRA 237 — Cited for the rule that a quitclaim is ineffective in barring claims for the full measure of the worker's rights and that acceptance of benefits therefrom does not amount to estoppel.

• Unicorn Safety Glass, Inc. vs. Basarte, 486 Phil. 493 (2004) — Cited for the rule that release and quitclaims are looked upon with disfavor when the waiver was not done voluntarily by employees pressured into signing them.

• Titong vs. Court of Appeals, 350 Phil. 544 (1998) — Cited for the rule that moral damages is awarded when fraud and bad faith have been established.

• PHILASIA Shipping Agency Corporation vs. Tomacruz, G.R. No. 181180, August 15, 2012, 678 SCRA 503 — Cited for the award of attorney's fees when an employee is forced to litigate just claims.

• Article 283, Labor Code — Provides for the termination of employment due to closure of establishment and reduction of personnel, including redundancy, and entitles the worker affected thereby to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. The Court applied this provision in holding that Angus was entitled to separation pay apart from the retirement benefits she received.

• Article 287, Labor Code — Provides that retirement benefits are earned under existing laws, CBAs, employment contracts, and company policies. The Court cited this provision in defining the nature of retirement benefits.

• Section 5, Article VIII, 2001-2004 Collective Bargaining Agreement — Provides for the Retirement Plan, entitling a worker at normal retirement age of 60 to a lump sum retirement benefit, and a worker at least 50 years old with at least 15 years of service, recommended by the President of the Union for early retirement and duly approved by the Human Resources Director, to a lump sum retirement benefit. The Court applied this provision in finding that Angus was qualified for early retirement.

• Carpio, J. (Chairperson)
• Velasco, Jr., J.
• Mendoza, J.
• Leonen, J.