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The case stemmed from a Complaint filed by Hassaram against PAL for illegal dismissal and the payment of retirement benefits, damages, and attorney's fees. He claimed that he had applied for retirement from PAL in August 2000 after rendering 24 years of service as a pilot, but that his application was denied. Instead, PAL informed him that he had lost his employment in the company as of 9 June 1998, in view of his failure to comply with the Return to Work Order issued by the Secretary of Labor against members of the Airline Pilots Association of the Philippines (ALPAP) on 7 June 1998.
Before the Labor Arbiter (LA), 6 Hassaram argued that he was not covered by the Secretary's Return to Work Order; hence, PAL had no valid ground for his dismissal. 7 He asserted that on 9 June 1998, he was already on his way to Taipei to report for work at Eva Air, pursuant to a four-year contract approved by PAL itself. 8 Petitioner further claimed that his arrangement with PAL allowed him to go on leave without pay while working for Eva Air, with the right to accrue seniority and retire from PAL during the period of his leave.
In its Position Paper, PAL contended that (a) the LA had no jurisdiction over the case, which was a mere off-shoot of ALPAP's strike, a matter over which the Secretary of Labor had already assumed jurisdiction; (b) the Complaint should be considered barred by res judicata, forum shopping, and prescription; (c) the case should be suspended while PAL was under receivership; and (d) if at all, Hassaram was entitled only to retirement benefits of P5,000 for every year of service pursuant to the Collective Bargaining Agreement (CBA) between PAL and ALPAP.
1. Whether the amount received by Hassaram under the Plan should be deemed part of his retirement pay.
2. Whether Hassaram is entitled to receive retirement benefits under Article 287 of the Labor Code.
Yes. It is clear from the provisions of the Plan that it is the company that contributes to a "retirement fund" for the account of the pilots. 44 These contributions comprise the benefits received by the latter upon retirement, separation from service, or disability. In Philippine Airlines, Inc. v. Airline Pilots Association of the Phils., the Court utilized these provisions to explain the nature of the Plan.
The PAL Pilots' Retirement Benefit Plan is a retirement fund raised from contributions exclusively from [PAL] of amounts equivalent to 20% of each pilot's gross monthly pay. Upon retirement, each pilot stands to receive the full amount of the contribution. In sum, therefore, the pilot gets an amount equivalent to 240% of his gross monthly income for every year of service he rendered to petitioner. This is in addition to the amount of not less than P100,000.00 that he shall receive under the 1967 Retirement Plan.
NO. We first examine Article 287 of the Labor Code, which provides in relevant part:
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Interpreting the language of this provision, we declared in Elegir as follows:
It can be clearly inferred from the language of the foregoing provision that it is applicable only to a situation where (1) there is no CBA or other applicable employment contract providing for retirement benefits for an employee, or (2) there is a CBA or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirement set by law. The rationale for the first situation is to prevent the absurd situation where an employee, deserving to receive retirement benefits, is denied them through the nefarious scheme of employers to deprive employees of the benefits due them under existing labor laws. On the other hand, the second situation aims to prevent private contracts from derogating from the public law.