Suarez vs. National Steel Corporation

Retrenched employees who have received separation pay cannot also recover retirement benefits where the retirement plan bars benefits for terminations for cause and the CBA provides a separate, exclusive retrenchment package. Because retrenchment is an authorized cause under Article 283 of the Labor Code and the parties intended the increased two-month separation package to replace retirement benefits, the claim for additional retirement pay was denied and the quitclaims were upheld.

National Steel Corporation manufactured steel products for pipe making, ship building, can-making and appliance production, with its main plant in Iligan City. Its rank-and-file employees were represented by the certified bargaining agent National Steel Labor Union-Federation of Free Workers (NASLU-FFW), with which it negotiated successive CBAs, including a 1991-1994 CBA and a 1994-1996 CBA retroactive to July 1, 1994. The company maintained an existing retirement plan granting normal and optional early retirement benefits, alongside CBA provisions governing retirement and retrenchment compensation.

Respondent suffered substantial financial losses sometime in 1994 due to increased volume of steel products manufactured by foreign countries. To address the losses, it adopted an organizational streamlining program resulting in the retrenchment of seven hundred employees in its Iligan City main plant, at a time when it and NASLU-FFW were negotiating renewal of the CBA that expired June 30, 1994.

On July 18, 1994, respondent sent individual notices to the affected employees, including petitioners, terminating services effective August 18, 1994 with a separation package consisting of separation pay equivalent to two months salary for every year of service, leave balance credits, 13th month pay, and uniform plus rice subsidy differential. After payment, each employee executed and signed a release and quitclaim written in English with a Visayan translation in the same document, acknowledged before a notary public. On October 27, 1994, respondent and NASLU-FFW signed a new CBA retroactive to July 1, 1994 until June 30, 1996, pursuant to which the retrenched employees were given salary differentials for which they executed and signed another release and quitclaim.

Nothing was heard from the retrenched employees until February 1997, about two and a half years after separation, when petitioners demanded retirement benefits under the CBA, claiming qualification for optional retirement after at least ten years of service when retrenched on August 18, 1994. Respondent rejected the claim, prompting the complaint for payment of retirement benefits docketed as NLRC CA No. M-003642-97. The Labor Arbiter found the complaint without merit, while the NLRC on consolidated appeal with the Abella case reversed and granted the claims, a ruling the Court of Appeals later set aside.

• Entitlement to Both Benefits: Petitioner argued that they are entitled to retirement benefits in addition to separation pay pursuant to Article XIV of the CBA, invoking Aquino vs. NLRC, University of the East vs. Minister of Labor, and Batangas Laguna Tayabas Bus Co. vs. Court of Appeals for the rule that separation pay does not exclude retirement benefits absent specific prohibition in the retirement plan and CBA.
• Conflicting CA Decisions: Petitioner maintained that the consolidated NLRC decision was affirmed by the CA Twelfth Division in CA-G.R. SP No. 55034 while set aside by the CA Fifteenth Division, and that the Fifteenth Division decided in a way probably not in accord with law or applicable Supreme Court decisions.
• Parol Evidence and Affidavits: Petitioner argued that reliance on affidavits of NASLU-FFW officers to deny retirement benefits violated the retirement pay law and the parol evidence rule under Section 9, Rule 130 of the Rules of Court, as well as the waiver clause of the 1994-1996 CBA.
• Departure from Judicial Proceedings: Petitioner contended that the Fifteenth Division so far departed from the accepted and usual course of judicial proceedings as to call for exercise of supervision by the Supreme Court.

• Express Prohibition in Retirement Plan: Respondent maintained that its retirement plan expressly prohibits payment of retirement benefits to employees terminated for cause, so retrenched employees granted their separation package are precluded from receiving retirement benefits.
• Validity of Quitclaims: Respondent countered that petitioners executed valid quitclaims after receiving separation benefits, barring further claims.
• Due Process and Non-Party Decision: Respondent argued in effect that the CA Twelfth Division decision in a case where it was not impleaded cannot bind it without violating due process, and that its own appeal deserved evaluation on its own merits.
• Forum Shopping: Respondent defended its certification against forum shopping, the charge thereof lacking merit where the other CA case was filed by a different party and it did not resort to multiple remedies.

• Dual Recovery of Benefits: Whether retrenched employees who already received separation pay can still recover retirement benefits.
• Meaning of Terminations for Cause: Whether the phrase terminations for cause in Article X(E) of the retirement plan covers retrenchment as an authorized cause or only just-cause terminations under Article 282 of the Labor Code.
• CBA Interpretation and Parol Evidence: Whether affidavits of management and union negotiators may be considered to prove the parties' intent to make separation pay and retirement benefits mutually exclusive despite the parol evidence rule and CBA waiver clause.
• Validity of Quitclaims: Whether the releases and quitclaims executed by petitioners bar their claim for retirement benefits.
• Effect of Separate CA Decision: Whether the CA Twelfth Division affirmance of the NLRC in a case to which respondent was not a party binds respondent or should have been adopted by the CA Fifteenth Division.
• Forum Shopping and Intervention: Whether respondent committed forum shopping and whether intervenors whose own petition was denied with finality may intervene to benefit from a favorable judgment.

• Dual Recovery of Benefits: No. Both separation pay and retirement benefits cannot be recovered, payment of both being proscribed by Article X of the retirement plan and Article XIV of the 1994-1996 CBA.
• Meaning of Terminations for Cause: Terminations for cause includes retrenchment. The plan does not distinguish between just and authorized causes, and retrenchment under Article 283 is a lawful termination for cause.
• CBA Interpretation and Parol Evidence: Yes. The affidavits were properly considered as contemporaneous and subsequent acts showing intent, an admitted exception to the parol evidence rule where the CBA is ambiguous.
• Validity of Quitclaims: Yes. The quitclaims are valid, having been voluntarily executed with full understanding and representing a reasonable settlement, and bar further claims.
• Effect of Separate CA Decision: No. One who is not a party is not bound, and applying the Twelfth Division decision against respondent would violate due process.
• Forum Shopping and Intervention: No forum shopping was committed, and the motions for intervention were denied for lack of merit after intervenors' own petition was denied with finality.

• Dual Recovery of Benefits: Petitioners' reliance on Aquino vs. NLRC and companion cases was misplaced because entitlement depends on the retirement plan and CBA provisions. Unlike those cases where no prohibition existed, respondent's plan and the 1994-1996 CBA contained provisions excluding retrenched employees: Section 3, Article XIV granted retrenched employees two months base pay per year, while Section 1 limited retirement benefits to normal and optional voluntary retirement, and the 1991-1994 CBA provision giving retrenched employees the same retirement benefits was deleted and replaced.
• Meaning of Terminations for Cause: Article X(E) provides no retirement benefits are payable for resignations or terminations for cause, with only a narrow exception for voluntary resignation after qualifying for optional early retirement. Petitioners' restrictive reading limiting cause to Article 282 was rejected because Articles 282 to 284 are all lawful terminations by the employer, past jurisprudence used dismissal for cause for just and/or authorized causes, and nothing in the plan limits the term to Article 282.
• CBA Interpretation and Parol Evidence: A CBA is more than a contract, but where its retirement provisions import ambiguity — evidenced by opposing interpretations of the Labor Arbiter and CA versus the NLRC — intent must be ascertained from conduct, words, actions and deeds prior to, during and after execution. Under Section 9, Rule 130 exceptions and Article 1371 of the Civil Code, contemporaneous and subsequent acts are principally considered; the affidavits merely confirmed existing intent and did not amend the CBA or violate its waiver clause.
• Validity of Quitclaims: Not all waivers and quitclaims are invalid; voluntarily entered agreements representing reasonable settlement are binding under Periquet vs. National Labor Relations Commission. No force, deceit, coercion or intimidation was shown; petitioners signed two sets of quitclaims in English and Visayan, acknowledged before a notary, declaring full payment and voluntary release, covering a fair package of two months salary per year plus leave credits, 13th month pay, subsidies, salary differential and signing bonus, with nothing unconscionable on its face.
• Effect of Separate CA Decision: Respondent was never impleaded nor intervened in CA-G.R. SP No. 55034 before the Twelfth Division. A person not impleaded cannot be bound without being deprived of due process, as no man shall be affected by a proceeding to which he is a stranger; respondent was entitled to have its own appeal evaluated on its own merits.
• Forum Shopping and Intervention: Forum shopping requires seeking a favorable opinion in another forum after adverse judgment by appeal or certiorari, and separate actions by different parties on essentially the same subject matter without resort to multiple remedies by the same party do not constitute it; non-disclosure of the union's separate petition was not fatal. Intervention was properly denied because intervenors' own review of the same CA decision had been denied with finality and cannot be reopened, and their interest depended on a favorable judgment that was not rendered.

• Separation pay vs. retirement benefits exclusivity — In the absence of prohibition, an employee may recover both separation pay and retirement benefits; if the employer intends them to be mutually exclusive, it must include the corresponding provision in the retirement plan and CBA to remove ambiguity. Applied here, the express bar in Article X(E) of the retirement plan and the distinct retrenchment package in Section 3, Article XIV of the 1994-1996 CBA displaced the Aquino vs. NLRC rule and precluded dual recovery.
• Authorized cause as termination for cause — Terminations under Articles 282 to 284 of the Labor Code are all terminations by the employer for lawful cause, and dismissal for cause has been used to refer to just and/or authorized causes. Applied here, retrenchment to prevent losses under Article 283 was a termination for cause within Article X(E), barring retirement benefits and limiting petitioners to separation pay.
• CBA interpretation; ambiguity and contemporaneous acts — If CBA terms are clear, literal meaning prevails; if ambiguous, the parties' intention as shown by conduct, words, actions and deeds prior to, during and after execution must be ascertained, and under Article 1371 of the Civil Code contemporaneous and subsequent acts are principally considered. Applied here, opposing readings of Article XIV justified resort to negotiators' affidavits to confirm intent to make the two-month retrenchment package exclusive.
• Parol evidence rule exceptions — When terms are reduced to writing, no evidence of other terms is generally admissible, but a party may present evidence to modify, explain or add to terms where intrinsic ambiguity, failure to express true intent, validity, or subsequent agreed terms is put in issue. Applied here, intrinsic ambiguity and failure to express true intent allowed the affidavits of union and management panel members.
• Validity of quitclaims in labor cases — Not all waivers and quitclaims are invalid as against public policy; if voluntarily entered into and representing a reasonable settlement, the waiver is binding and may not be disowned upon change of mind. Applied here, two notarized bilingual quitclaims for a substantial package, without proof of coercion or unconscionability, barred the retirement claim.
• Res inter alios acta; due process for non-parties — One who is not a party to a case is not bound by its decision, otherwise deprivation of due process results. Applied here, the CA Twelfth Division decision in the union's appeal where the company was not impleaded could not bind respondent nor compel adoption by the Fifteenth Division.
• Forum shopping — Forum shopping is the act of a party against whom adverse judgment was rendered of seeking another possibly favorable opinion in another forum by appeal or special civil action for certiorari. Applied here, no forum shopping attended respondent's separate CA petition where the other case was filed by a different party and no multiple remedies were resorted to by respondent.

• "No retirement benefits are payable in instances of resignations or terminations for cause;" — States the controlling bar in Article X(E) of the retirement plan applied to deny retirement benefits to employees separated by valid retrenchment.
• "If the agreement was voluntarily entered into and represents a reasonable settlement of the claims of the employee, it is binding on the parties and may not later be disowned simply because of a change of mind." — Recites the Periquet vs. National Labor Relations Commission test for validity of quitclaims used to uphold petitioners' two releases.
• "Article 1371. In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered." — Supplies the civil-law basis for admitting negotiators' affidavits to resolve ambiguity in Article XIV of the CBA.
• "Employees laid-off by the Company pursuant to a retrenchment program shall be given two (2) months base pay per year of service credits." — Quotes Section 3, Article XIV of the 1994-1996 CBA construed as the exclusive, increased retrenchment compensation in lieu of retirement benefits.

• Aquino vs. NLRC, G.R. No. 87653, February 11, 1992, 206 SCRA 118 — Invoked by petitioners for dual recovery absent prohibition; held inapplicable because respondent's plan and CBA expressly prohibited it.
• University of the East vs. Minister of Labor, G.R. No. L-74007 — Invoked by petitioners on same dual-recovery rule; held misplaced for same reason.
• Batangas Laguna Tayabas Bus Co. vs. Court of Appeals, G.R. No. L-38482, June 18, 1976, 71 SCRA 470 — Invoked by petitioners on same point; held misplaced.
• Periquet vs. National Labor Relations Commission, G.R. No. 91298, June 22, 1990, 186 SCRA 724 — Controlling precedent upholding voluntary, reasonable quitclaims; followed to validate petitioners' releases.
• Ruben Serrano vs. National Labor Relations Commission, G.R. No. 117040, May 4, 2000, 331 SCRA 331; Jenny M. Agabon vs. National Labor Relations Commission, G.R. No. 158693, November 17, 2004, 442 SCRA 573 — Cited for prior use of dismissal for cause encompassing just and/or authorized causes.
• United Kimberly-Clark Employees Union-Philippine Transport General Workers' Organization vs. Kimberly-Clark Phils., Inc., G.R. No. 162957, March 6, 2006, 484 SCRA 187 — Cited for nature of CBA as generalized code governing the whole employment relationship.
• Siguan vs. Lim, G.R. No. 134685, November 19, 1999, 318 SCRA 725 — Cited to justify Rule 45 review of facts where NLRC and CA findings are at variance.
• Aron vs. Realon, G.R. No. 159156, January 31, 2005, 450 SCRA 372; Heirs of Antonio Pael vs. Court of Appeals, G.R. No. 133547, February 10, 2000, 325 SCRA 341 — Cited for rule that non-parties are not bound by a decision.
• Development Bank of the Philippines vs. Court of Appeals — Cited for definition of forum shopping to reject the charge against respondent.

• Article 283, Labor Code of the Philippines — Authorizes termination due to retrenchment to prevent losses upon one-month notice, with separation pay of at least one month or one-half month per year of service; applied to characterize petitioners' separation as for authorized cause entitled only to separation pay.
• Article 282, Labor Code of the Philippines — Provides just causes for termination; invoked in petitioners' narrow reading of terminations for cause, which was rejected as the retirement plan drew no such distinction.
• Section 9, Rule 130, Rules of Court — Parol evidence rule barring extrinsic evidence of written agreement terms except for intrinsic ambiguity, failure to express true intent, validity, or subsequent terms; applied to admit affidavits due to ambiguity in CBA retirement provisions.
• Article 1371, New Civil Code — Directs that contemporaneous and subsequent acts principally determine contracting parties' intention; applied to justify reliance on negotiators' affidavits.
• Article XIV, 1994-1996 CBA; Article X(E), Retirement Plan — Govern retirement benefits and retrenchment compensation; construed together to make the two-month retrenchment package exclusive of retirement benefits and to bar claims by those terminated for cause.

Reynato S. Puno, Chief Justice, Antonio T. Carpio, Associate Justice, Renato C. Corona, Associate Justice, Adolfo S. Azcuna, Associate Justice