Philippine Journalists Inc. vs. De Guzman

A benefit voluntarily, deliberately, and consistently granted by an employer to employees over a significant period of time—even in the absence of any legal or contractual obligation—ripens into a company practice that cannot be unilaterally withdrawn or diminished without violating Article 100 of the Labor Code. Jurisprudence has not laid down any hard-and-fast rule as to the minimum length of time required; the determinative factors are the regularity, deliberateness, and voluntary intent of the employer in conferring the benefit.

Respondents Erika Marie R. De Guzman and Edna Quirante were both employees of petitioner Philippine Journalists, Inc. (PJI). De Guzman was hired on 11 May 1994 as an Ad Taker/Account Executive but also served as Executive Security to the Chairman, while Quirante was employed since 05 September 1989 and held the position of HRD Supervisor at the time of her cessation of employment. Both occupied positions listed in Annex A of the Collective Bargaining Agreement (CBA) between PJI and its rank-and-file employees, which excluded managerial, probationary, and contractual employees from the bargaining unit. The CBA contained an optional retirement provision under Article XIV, Section 3, allowing a regular employee who had continuously rendered five years of service to optionally retire and receive optional retirement pay computed on the basis of the approved Retirement Plan. PJI had previously granted optional retirement benefits to managerial employees Nepthalie E. Hernandez (in 2003) and Atty. Julie Interior-Madeja (in 2001), neither of whom belonged to the rank-and-file bargaining unit.

Respondents Erika Marie R. De Guzman and Edna Quirante were long-time employees of Philippine Journalists, Inc. (PJI). De Guzman started with the company on 11 May 1994 and left on 15 November 2008; she held the position of Ad Taker/Account Executive with a salary of ₱23,000.00 plus commission, but also served as Executive Security to the Chairman of PJI. Quirante had been employed since 05 September 1989 and was the HRD Supervisor at the time her employment ceased on 15 March 2009, with a salary of ₱25,522.20. Both respondents occupied positions enumerated in Annex A of the Collective Bargaining Agreement (CBA) between PJI and its rank-and-file employees, which excluded managerial, probationary, and contractual employees from the bargaining unit.

On 28 October 2008 and 23 January 2009, respectively, respondents separately wrote to PJI informing the company of their desire to avail of the optional retirement plan embodied in the CBA. Their sole reason for tendering their resignations was to avail of the optional retirement package, operating under the honest belief that they could do so because PJI had allowed other employees—not all of whom were rank-and-file—to avail of the same benefit in the past. PJI refused to process the payment of the optional retirement benefits, prompting respondents to file a complaint for unfair labor practice and money claims, nonpayment of optional retirement benefits, and service incentive leave against PJI and its corporate officers.

The Labor Arbiter dismissed the complaint on 29 April 2010, finding that respondents were not rank-and-file employees and therefore not entitled to optional retirement benefits under the CBA. On appeal, the NLRC reversed the Labor Arbiter on 29 December 2011, sustaining respondents' contention that an approved optional retirement plan was no longer required because the CBA itself provided the basis for computation, and that PJI's past practice of granting optional retirement benefits to managerial employees—specifically Nepthalie E. Hernandez (2003) and Atty. Julie Interior-Madeja (2001)—constituted voluntary company practice that could not be unilaterally withdrawn. The Court of Appeals affirmed the NLRC on 7 November 2012, holding that the grant of optional retirement benefits had ripened into company practice under Article 100 of the Labor Code. PJI's motion for reconsideration was denied on 4 July 2013.

Petitioners claimed that PJI was suffering business losses at the time respondents applied for optional retirement and had implemented a retrenchment program, but the record did not support this claim. In a prior case, Philippine Journalists, Inc. vs. National Labor Relations Commission, it had been established that PJI was not suffering business reverses, as evidenced by office renovations, merit increases for employees, a Christmas party at a plush hotel, and PJI executives' refusal to forego their quarterly bonuses. PJI had in fact been found guilty of illegal dismissal based on an illegal retrenchment scheme and was compelled to reinstate retrenched employees.

• Distinction Between Compulsory and Optional Retirement: Petitioners argued that a distinction must be made between compulsory retirement benefit and optional retirement benefit: while the former may be demanded as a matter of right under Article 287 of the Labor Code, the latter may not be demanded as a right but requires management approval.
• Management Approval as Condition Precedent: Petitioners contended that under the CBA, an employee who had continuously rendered five years of service may optionally retire only if there is an approved retirement plan, and that management consent and approval is the most important condition for the grant of optional retirement benefits, as the employer must be financially ready to assume the obligation.
• Claim of Business Losses: Petitioners alleged that PJI was suffering losses at the time respondents applied for optional retirement and had in fact implemented a retrenchment program owing to these losses.
• Absence of Express Company Policy: Petitioners averred that there was no express company policy on optional retirement at the time respondents applied, and that the benefits previously granted to other employees were covered by an existing approved optional retirement program, as attested to by Atty. Madera and two other longtime PJI employees, Carolina Mendoza and Ernesto San Agustin.

• Compulsory vs. Optional Retirement: Whether a distinction exists between compulsory retirement benefit and optional retirement benefit such that the latter cannot be demanded as a matter of right.
• Company Practice: Whether the optional retirement benefit can be demanded as a mandatory benefit by an employee who voluntarily resigns, even without an approved optional retirement program by management, on the ground that it has ripened into company practice.

• Compulsory vs. Optional Retirement: No. While optional retirement is not demandable as a matter of right in the same manner as compulsory retirement, the voluntary and deliberate grant of optional retirement benefits by an employer over a significant period of time ripens into company practice that becomes enforceable as a matter of right under Article 100 of the Labor Code.
• Company Practice: Yes. PJI's grant of optional retirement benefits to managerial employees in 2001 and 2003, done voluntarily and deliberately with full knowledge that these employees were not covered by the CBA, constituted voluntary employer practice that could not be unilaterally withdrawn or diminished.

• Compulsory vs. Optional Retirement: Petitioners' argument that optional retirement benefits require management approval and cannot be demanded as of right was addressed in the context of company practice. While the CBA's optional retirement provision on its face applies only to regular employees within the bargaining unit, the dispositive question was not whether respondents were entitled under the CBA itself, but whether PJI's past conduct of granting the same benefit to employees outside the bargaining unit had created an enforceable obligation. The Court found that PJI had voluntarily and deliberately granted optional retirement benefits to managerial employees Nepthalie E. Hernandez in 2003 and Atty. Julie Interior-Madeja in 2001, with full knowledge that they were not entitled under the CBA. This conduct satisfied the requirements for voluntary employer practice: regularity, deliberateness, and voluntary intent over a significant period. Jurisprudence has not laid down any hard-and-fast rule as to the minimum length of time; the common denominator is the regularity and deliberateness of the grant over a significant period. The benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time. Once these elements are present, the benefit becomes demandable as a matter of right and cannot be unilaterally withdrawn under Article 100 of the Labor Code.

• Company Practice: The Court found that PJI's grant of optional retirement benefits to two management employees in the past was voluntary, deliberate, and done with sufficient regularity to constitute company practice within PJI. Petitioners' refusal to apply this practice to respondents, on the pretext that the company was losing money, was unsupported by the record. The claim of business losses was contradicted by the prior finding in Philippine Journalists, Inc. vs. National Labor Relations Commission that PJI was not suffering financial reverses, as evidenced by office renovations, merit increases, a Christmas party at a plush hotel, and executives' refusal to forego quarterly bonuses. PJI's 2005 "Memorandum of Understanding" falsely declaring that it "suffered financial reverses x x x since 1997, as declared by the Supreme Court" was untrue and made in bad faith to secure concessions from employees. Furthermore, PJI's conduct of immediately accepting respondents' resignations without clarifying whether the optional retirement program was available—when respondents had tendered resignations solely on the ground of availing optional retirement—constituted bad faith. Petitioners should have placed the resignations on hold pending clarification rather than hastily treating them as voluntary resignations with concomitant non-payment of benefits. The Court also noted that PJI had been found guilty of illegal dismissal based on an illegal retrenchment scheme, while upper management continued to enjoy perks and privileges, demonstrating an anti-labor stance that could not be countenanced.

• Voluntary Company Practice (Non-Diminution Rule) — A benefit voluntarily, deliberately, and consistently granted by an employer over a significant period of time, even in the absence of any legal or contractual obligation, ripens into company practice that cannot be unilaterally withdrawn or diminished without violating Article 100 of the Labor Code. To constitute regular company practice, the employee must prove by substantial evidence that: (a) the giving of the benefit was done over a long period of time; (b) it was made consistently and deliberately; and (c) the employer agreed to continue giving the benefit knowing fully well that the employees were not covered by any law or agreement requiring payment thereof. Jurisprudence has not laid down any hard-and-fast rule as to the minimum length of time; the common denominator is the regularity and deliberateness of the grant over a significant period. In this case, PJI's grant of optional retirement benefits to managerial employees in 2001 and 2003 satisfied these requisites.

• Bad Faith in Employer Conduct — An employer's bad faith is evident when it deliberately misrepresents its financial condition to secure concessions from employees, hastily accepts resignations tendered in reliance on an available benefit without clarification, and maintains an anti-labor stance while preserving management perks and privileges. Such conduct reinforces the finding that the denial of benefits was unjustified and discriminatory.

• "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." — This passage articulates the controlling test for when an employer's voluntary grant of benefits ripens into an enforceable company practice, defining the elements that employees must establish by substantial evidence.

• "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." — This formulation clarifies that no fixed minimum duration is required; the focus is on the quality of the employer's conduct—its regularity and deliberateness—rather than on a specific number of years.

• "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." — This states the knowledge requirement: the employer must have acted with awareness that the benefit was not legally or contractually owed, thereby demonstrating voluntary intent.

• "PJI appears to discriminate against its core employees, while it favors those in the upper tier; 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." — This passage contextualizes the Court's finding of bad faith and anti-labor conduct, underscoring the inequity that reinforced the denial of the petition.

• Philippine Journalists, Inc. vs. National Labor Relations Commission, 532 Phil. 531 (2006) — Controlling precedent on the factual issue of PJI's financial condition; established that PJI was not suffering business losses, as evidenced by office renovations, merit increases, a Christmas party at a plush hotel, and executives' refusal to forego quarterly bonuses. PJI accepted this finding with finality when it reinstated its illegally retrenched employees.

• Philippine Appliance Corporation vs. Court of Appeals — Cited for the principle that to be considered a "regular practice," the giving of the benefit should have been done over a long period of time and must be shown to have been consistent and deliberate, requiring an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees were not covered by the law requiring payment thereof.

• Metropolitan Bank and Trust Company vs. NLRC — Cited for the proposition that jurisprudence has not laid down any hard-and-fast rule as to the length of time company practice should have been exercised to constitute voluntary employer practice, and for surveying cases where periods ranging from two to six years were held sufficient.

• Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union — Cited alongside Philippine Appliance Corporation and Metropolitan Bank for the instructive pronouncement on what constitutes regular company practice.

• Pag-asa Steel Works vs. CA — Cited for the principle that to ripen into a company practice demandable as a matter of right, the giving of the benefit should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer.

• Vergara, Jr. vs. Coca-Cola Bottlers Philippines, Inc., 707 Phil. 255 (2013) — Cited for the formulation that the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.

• Davao Fruits Corporation vs. Associated Labor Unions — Cited as illustrative of company practice lasting six years that ripened into an enforceable obligation.

• Tiangco vs. Leogardo, Jr. — Cited as illustrative of company practice lasting three years and four months that ripened into an enforceable obligation.

• Sevilla Trading vs. Semana — Cited as illustrative of company practice lasting at least two years that ripened into an enforceable obligation.

• Article 100, Labor Code (Prohibition against elimination or diminution of benefits) — Provides that nothing in the Labor Code shall be construed to eliminate or in any way diminish supplements or other employee benefits being enjoyed at the time of promulgation of the Code. Applied as the statutory basis for holding that PJI's voluntary grant of optional retirement benefits, having ripened into company practice, could not be unilaterally withdrawn or diminished.

• Article 287 (now Article 302 as re-numbered), Labor Code (Retirement) — Governs compulsory and optional retirement, providing that any employee may be retired upon reaching the retirement age established in the CBA or other applicable employment contract, and shall be entitled to retirement benefits as earned under existing laws and any CBA and other agreements. Petitioners invoked this provision to distinguish compulsory retirement (demandable as of right) from optional retirement (requiring management approval), but the Court found the distinction irrelevant once company practice was established.

• Article XIV, Section 3, CBA (Optional Retirement) — Provides that a regular employee who has continuously rendered five years of service may optionally retire and shall receive optional retirement pay computed on the basis of the approved Retirement Plan. The Court found this provision clear on its face but noted it applied only to employees within the bargaining unit; respondents' entitlement arose not from this provision directly but from PJI's voluntary company practice of extending the benefit to excluded employees.

• Article I, Section 1, CBA (Appropriate Bargaining Unit) — Defines the bargaining unit as consisting of regular rank-and-file employees, excluding managerial, probationary, and contractual positions enumerated in Annex A. Both respondents were found to belong to the excluded categories, which is why their entitlement to optional retirement benefits was grounded on company practice rather than the CBA itself.

Bersamin, C.J., Gesmundo, J., and Carandang, J. concurred. Jardeleza, J. was on official leave.