EMPLOYEE MUST PROVE CLAIM OF COMPANY PRACTICE OF HIGHER RETIREMENT BENEFIT

Galang vs. BOIE Takeda Chemicals, Inc., G.R. No. 183934. July 20, 2016

Facts:

Respondent Boie Takeda Chemicals, Inc. (BTCI) hired petitioners Ernesto Galang and Ma. Olga Jasmin Chan in August 28, 1975 and July 20, 1983, respectively. Through the years, petitioners rose from the ranks and were promoted to Regional Sales Managers in 2000. Petitioners held these positions until their separation from BTCI on May I, 2004.

Within the organizational hierarchy, Regional Sales Managers reported to the National Sales Director. In 2002, when the National Sales Director position became vacant, petitioners assumed and shared (with the general manager) the functions and responsibilities of this higher position, and reported directly to the General Manager.

In February 2003, the new General Manager, Kazuhiko Nomura (Nomura), asked petitioners to apply for the position of National Sales Director. Simultaneously, Nomura also asked Edwin Villanueva (Villanueva) and Mimi Escarte, both Group Product Managers in the marketing department, to apply for the position of Marketing Director. All four employees submitted themselves to interviews with the management. In the end, Nomura hired an outsider from Novartis Company as Marketing Director, while the position of National Sales Director remained vacant. Later, however, petitioners were informed that BTCI promoted Villanueva as National Sales Director.

The promotion of Villanueva as the National Sales Director caused ill-feelings on petitioners’ part. They believed that Villanueva did not apply for the position; has only three years of experience in sales; and was reportedly responsible for losses in the marketing depmiment. Petitioners further resented Villanueva’s appointment because they heard that the appointment was made only because he threatened to leave the office along with the company’s top cardio-medical doctors.

After Villanueva’s promotion, petitioners claimed that Nomura threatened to dismiss them from office if they failed to perform well under the newly appointed National Sales Director. This prompted petitioners to inquire if they could avail of early retirement package due to health reasons. Specifically, they requested Nomura if they could avail of the early retirement package of 150% plus 120% of monthly salary for every year of service tax free, and full ownership of service vehicle tax free. They claimed that this is the same retirement package given to previous retirees namely, former Regional Sales Director Jose Sarmiento, Jr. (Sarmiento), and former National Sales Director Melchor Barretto. Nomura, however, insisted that such retirement package does not exist and Sarmiento’s case was exceptional since he was just a few years shy from the normal retirement.

Subsequently, petitioners intimated their intention to retire in a joint written letter of resignation. Thereafter, petitioners received their retirement package and other monetary pay from BTCI. Upon petitioners’ retirement, the positions of Regional Sales Manager were abolished, and a new position of Operations Manager was created. On October 20, 2004, petitioners filed the complaint for constructive dismissal and money claims before the NLRC Regional Arbitration Branch.

LA Ruling:

Labor Arbiter ruled that petitioners were constructively dismissed. The Labor Arbiter explained that petitioners were forced to retire because Villanueva’s appointment constituted an abuse of exercise of management prerogative; and that subsequent events, such as the abolition of the positions of Regional Sales Managers and the creation of the position of the Operations Manager show that petitioners’ easing out from service were orchestrated. It also found that petitioners were discriminated as to their retirement package.

BTCI appealed the LA Decision with the NLRC.

NLRC Ruling:

Petitioners allegedly received a Notice of Decision dated March 10, 2006 from the NLRC. The notice informed petitioners that a decision was promulgated by the NLRC on February 7, 2006. The attached decision in the notice, however, was dated March 7, 2006. The decision dated March 7, 2006 (March Decision) reversed and set aside the LA Decision, and dismissed the complaint. In said decision, the NLRC ruled that petitioners failed to prove that they were constructively dismissed. Petitioners filed a motion to declare the March Decision null and void by way of motion for reconsideration dated March 22, 2006. Petitioners alleged that prior to the Notice of Decision, they personally received a decision allegedly promulgated on February 7, 2006 (February Decision) which affirmed the LA Decision, but with modification as to the amount of moral and exemplary damages.

The NLRC issued a Resolution which denied petitioners’ motion for reconsideration, and therefore upheld the NLRC’s March Decision. The NLRC clarified that the official decision is the March Decision, and that the February Decision cannot be considered as the official decision because it was merely a draft decision.

CA Ruling:

Petitioners filed a petition for certiorari under Rule 65.

The CA said that the “NLRC having thus chosen to uphold its Decision dated March 7, 2006 as the authentic one, this Court must therefore, consider the same as the version herein submitted for review.” The CA also found that the March Decision was more in tune with law and jurisprudence. It reviewed and reassessed the facts and evidence on record and made a finding that the NLRC did not commit grave abuse of discretion.

Thus, petitioners filed before this Court a petition for review on certiorari under Rule 45 of the Revised Rules of Court. They allege that the CA erred in sustaining the decision of the NLRC.

Issues:

1. Whether petitioners were constructively dismissed from service; and
2. Whether petitioners are entitled to a higher retirement package.

SC Ruling:

The SC denied the petition.

Constructive dismissal has often been defined as a “dismissal in disguise” or “an act amounting to dismissal but made to appear as if it were not.” It exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. In some cases, while no demotion in rank or diminution in pay may be attendant, constructive dismissal may still exist when continued employment has become so unbearable because of acts of clear discrimination, insensibility or disdain by the employer, that the employee has no choice but to resign. Under these two definitions, what is essentially lacking is the voluntariness in the employee’s separation from employment.

Petitioners were neither demoted nor did they receive a diminution in pay and benefits. Petitioners also failed to show that employment is rendered impossible, unreasonable or unlikely.

Our labor laws respect the employer’s inherent right to control and manage effectively its enterprise and do not normally allow interference with the employer’s judgment in the conduct of his business. Management has exclusive prerogatives to determine the qualifications and fitness of workers for hiring and firing, promotion or reassignment. It is only in instances of unlawful discrimination, limitations imposed by law and collective bargaining agreement can this prerogative of management be reviewed.

Thus, the SC repeatedly reminded that the Labor Arbiters, the different Divisions of the NLRC, and even courts, are not vested with managerial authority. The employer’s exercise of management prerogatives, with or without reason, does not per se constitute unjust discrimination, unless there is a showing of bad faith or grave abuse of discretion. In this case, there is none.

Petitioners did not present any evidence showing BTCI’s adopted rules and policies laying out the standards of promotion of an employee to National Sales Director. They did not present the qualification standards (which BTCl did not allegedly follow) needed for the position. Petitioners merely assumed that one of them was better for the job compared to Villanueva. Mere allegations without proof cannot sustain petitioners’ claim. In any case, a perusal of Villanueva’s resume shows that he has combined experiences in both sales and marketing. The NLRC also found that an independent consulting agency, K Search Asia Consulting, was engaged by BTCI to determine who to appoint as National Sales Director. The consulting agency recommended Villanueva to the position. In the absence of any qualification standards that BTCI allegedly gravely abused to refuse to follow, we cannot substitute our own judgment on the qualifications of Villanueva.

It is true that in constructive dismissal cases, the employer is charged with the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. However, it is likewise true that in constructive dismissal cases, the employee has the burden to prove first the fact of dismissal by substantial evidence. Only then when the dismissal is established that the burden shifts to the employer to prove that the dismissal was for just and/or authorized cause. The logic is simple-if there is no dismissal, there can be no question as to its legality or illegality.

Here, records show that petitioners failed to establish the fact of their dismissal when they failed to prove that their decision to retire is involuntary. Consequently, no constructive dismissal can be found.

The entitlement of employees to retirement benefits must specifically be granted under existing laws, a collective bargaining agreement or employment contract, or an established employer policy. Based on both parties’ evidence, petitioners arc not covered by any agreement. There is also no dispute that petitioners received more than what is mandated by Article 287 of the Labor Code. Petitioners, however, claim that they should have received a larger pay because BTCI has given more than what they received to previous retirees. In essence, they claim that they were discriminated against because BTCI did not give them the package of 150% of monthly salary for every year of service on top of the normal retirement package.

In Vergara vS. Coca-Cola Bottlers Philippines. Inc., we explained that the burden of proof that the benefit has ripened into company practice, i.e., giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately, rests with the employee: 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. 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. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees arc not covered by any provision of the law or agreement requiring payment thereof.

The SC agreed with the CA when it ruled that “[t]his concession given to such an employee was not proved (sic) to be company practice or policy such that petitioners can demand of it over and above what has been specified in the collective bargaining agreement.” To prove that their claim on the additional grant of 150% of salary, petitioners presented evidence showing that Anita Ducay, Rolando Arada, Marcielo Rafael, and Sarmiento, received significantly larger retirement benefits. However, the cases of Ducay, Arada, and Rafael cannot be used as precedents to prove this specific company practice because these employees were not shown to be similarly situated in terms of rank, nor are the applicable retirement packages corresponding to their ranks alike. Also, these employees, including Sarmiento, all retired in the same year of 2001, or only within a one-year period. Definitely, a year cannot be considered long enough to constitute the grant of retirement benefits to these employees as company practice.