TL;DR

The Supreme Court affirmed that Philippine Journalists Inc. (PJI) must grant optional retirement benefits to employees De Guzman and Quirante, even though they were initially excluded from the Collective Bargaining Agreement (CBA) coverage. The Court ruled that PJI’s consistent past practice of granting optional retirement benefits to managerial employees, despite CBA limitations, had ripened into an enforceable company practice. This means employers in the Philippines cannot unilaterally withdraw benefits that have become customary, reinforcing the principle of non-diminution of benefits under the Labor Code and protecting employees’ legitimate expectations based on established company behavior.

The Unwritten Contract: When Company Kindness Becomes Company Duty

Can a company deny employees optional retirement benefits stipulated in a Collective Bargaining Agreement (CBA) by claiming these employees are not covered by the CBA, even if the company has consistently granted such benefits to similarly situated employees in the past? This was the core legal question in the case of Philippine Journalists Inc. v. De Guzman. The respondents, Erika Marie R. De Guzman and Edna Quirante, long-time employees of Philippine Journalists Inc. (PJI), sought to avail of the company’s optional retirement plan as outlined in their CBA. PJI, however, refused, arguing that De Guzman and Quirante, as managerial employees, were excluded from the CBA’s coverage and therefore not entitled to these benefits. This dispute reached the Supreme Court, requiring a definitive ruling on the enforceability of company practices in relation to employee benefits and CBA provisions.

The factual backdrop revealed that while the CBA technically limited optional retirement benefits to rank-and-file employees, PJI had, in practice, extended these benefits to managerial staff in previous instances. Respondents De Guzman and Quirante, relying on this precedent, applied for optional retirement after years of dedicated service. De Guzman served as an Ad Taker/Account Executive and also as Executive Security to the Chairman, while Quirante was the HRD Supervisor. Both were considered managerial employees and listed in Annex A of the CBA as excluded from the bargaining unit. Initially, the Labor Arbiter sided with PJI, dismissing the employees’ complaint. However, the National Labor Relations Commission (NLRC) reversed this decision, finding that PJI’s past practice of granting benefits to excluded employees established a right for De Guzman and Quirante. The Court of Appeals (CA) affirmed the NLRC’s ruling, prompting PJI to elevate the case to the Supreme Court.

The Supreme Court’s analysis hinged on the principle of company practice and the non-diminution of benefits enshrined in Article 100 of the Labor Code. The Court reiterated established jurisprudence defining company practice as benefits consistently and deliberately granted over a considerable period, creating a reasonable expectation among employees. Crucially, this practice must be shown to be voluntary and not based on a legal or contractual obligation. The Court examined evidence presented by De Guzman and Quirante, including affidavits from former managerial employees who had successfully availed of optional retirement benefits. PJI did not effectively refute these claims, failing to demonstrate that these prior grants were errors or isolated incidents. The Supreme Court emphasized that the regularity and deliberateness of granting optional retirement benefits to employees outside the CBA’s rank-and-file coverage established a clear company practice.

The Court referenced several landmark cases to solidify its position on company practice. In Philippine Appliance Corporation v. Court of Appeals, the standard for establishing company practice was articulated: the benefit must be given over a long period, consistently, and deliberately, demonstrating the employer’s agreement to continue the benefit even without legal obligation. Similarly, cases like Metropolitan Bank and Trust Company v. NLRC and Eastern Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union underscored that benefits granted regularly over years become part of company policy, regardless of formal agreements. The Supreme Court found that PJI’s actions met this threshold, as the optional retirement grants to managerial employees Hernandez and Madera in 2001 and 2003 demonstrated a consistent pattern over a significant period.

PJI argued that the optional retirement benefit was contingent on management approval and the company’s financial capacity, citing alleged business losses. However, the Court dismissed this argument, pointing to a prior case, Philippine Journalists, Inc. v. National Labor Relations Commission, which had already established that PJI was not genuinely suffering financial reverses during the relevant period. The Court noted inconsistencies in PJI’s claims, highlighting evidence of company renovations, employee merit increases, and executive bonuses, all indicators contradicting financial distress. Furthermore, PJI’s reliance on a “Memorandum of Understanding” falsely claiming Supreme Court acknowledgment of their financial woes was deemed bad faith and self-serving.

The Supreme Court concluded that PJI’s denial of optional retirement benefits to De Guzman and Quirante was discriminatory and violated the principle of non-diminution of benefits. Article 100 of the Labor Code explicitly prohibits the elimination or diminution of employee benefits being enjoyed at the time of the Code’s promulgation. By consistently granting optional retirement to managerial employees in the past, PJI had created a benefit that could not be unilaterally withdrawn, even for employees technically outside the CBA’s strict coverage. The Court underscored the unfairness of PJI’s actions, particularly in light of their attempts to reduce personnel while maintaining executive perks, portraying a disregard for employee welfare. The ruling serves as a strong affirmation of the importance of established company practices in defining employee rights, even beyond the explicit terms of CBAs or employment contracts.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Philippine Journalists Inc. v. De Guzman, G.R. No. 208027, April 01, 2019