Retirement should be pleaded in the complaint. If not, it cannot be included in the execution of Decision that already became final and executory.

The Supreme Court held in the following case:

Concepcion A. Villena vs. Batangas II Electric Cooperative, Inc. and George A. Din
G.R. No. 205735, February 4, 2015


Villena was hired by respondent Batangas II Electric Cooperative, Inc. (BATELEC II) as bookkeeper in 1978. She rose from the ranks and was promoted as Finance Manager. In 1994, she was demoted to the position of Auditor, which caused her to file a complaint for constructive dismissal before the Labor Arbiter (LA).

Learn the relevant labor laws for HR practitioners by getting the HR Bundle books

In a Decision dated July 22, 1998, the LA dismissed Villena’s complaint, prompting her to seek recourse before the National Labor Relations Commission (NLRC). The ruling of the LA was reversed whereby the NLRC declared Villena to have been illegally dismissed, and thus, ordered BATELEC II to reinstate her to her former position as Finance Manager, or its equivalent, and to pay her salary differentials. However, the NLRC’s judgment was silent on the payment of allowances, benefits, and attorney’s fees.

Hence, Villena moved for reconsideration, but was denied. At odds with the verdict, she elevated the matter to the CA via petition for certiorari. The CA modified the NLRC Resolution and declared Villena to be “entitled to the difference between the salary of the Finance Manager and that of the auditor, plus allowances and any other benefits pertaining to the position of Finance Manager at the time she was removed therefrom up to the date of her actual reinstatement.” It also granted her attorney’s fees in the amount of 10% of the total monetary award.

The case was then remanded to the NLRC for the computation of the total amount due to Villena. In the course thereof, the LA declared that Villena was entitled only to “salary differentials, 13th month pay, unused sick leave, leave of absence”, excluding from the computation claims for bonus, representation allowance, transportation benefits, and attorney’s fees.   Moreover, her claim for separation pay in lieu of reinstatement was denied.

While Villena received the amount of ­1,078,890.14, she appealed to the NLRC the exclusion of her other benefits as well as her claim for separation pay. Meanwhile, on September 20, 2003, BATELEC II issued Policy No. 03-003,16 which provided for retirement benefits to its regular employees.

In a Resolution dated March 22, 2007, the NLRC granted the appeal of Villena, holding that since reinstatement was no longer possible, separation pay in lieu of reinstatement was justified. It then directed BATELEC II “to pay [Villena] her claim for separation pay in lieu of reinstatement equivalent to one (1) month pay for every year of service from the date of her hiring up to the date of the finality of the judgment, salary differentials and other benefits from the date of her dismissal up to the date of the payment of her separation pay, and [attorney’s] fees equivalent to ten percent (10%) of the totality of her award.” BATELEC II moved for reconsideration, but the same was denied.

With no further action having been taken by BATELEC II, the March 22, 2007 NLRC Resolution attained finality. Thus, Villena moved for its execution.

LA Ruling:

The Executive Labor Arbiter issued an Order dated November 24, 2009 (November 24, 2009 LA Order), finding Villena to be entitled to the following benefits: (a) salary differentials; (b) 13th month pay; (c) 14th month pay; (d) bonus cash gift; (e) unused sick leave; (f) leave of absence; (g) uniform allowance; (h) separation pay; (i) representation allowance; (j) transportation allowance; (k) cellular phone allowance; (l) retirement pay; and (m) attorney’s fees, in the total amount of ­6,294,290.99 net of the amount earlier partially satisfied.

Insisting that Villena was not entitled to salary differentials, allowances and benefits of a Finance Manager, separation pay, and allowances for representation, transportation, and cellular phone usage, BATELEC II appealed to the NLRC.

NLRC Ruling:

The NLRC partly granted the appeal and excluded from the computation of monetary awards the sums for representation, transportation, and cellular phone usage allowances, as well as retirement pay. It found that Villena was not able to prove that she was qualified to receive representation allowance or that she was authorized to travel. The NLRC likewise found no basis for the award of cellular phone allowance to Villena.

Villena moved for partial reconsideration, which the NLRC partly granted in a Resolution dated May 17, 2011 (May 17, 2011 Resolution), deleting the award for separation pay and in lieu thereof, ordering the payment of retirement pay in the interest of justice and fairness and in order to be consistent with the spirit of the law on retirement to grant the more beneficial retirement gratuity to the worker, including 15th month pay.

Dissatisfied, Villena filed a petition for certiorari before the CA.

CA Ruling:

The CA reversed and set aside the ruling of the NLRC, pointing out that the earlier August 31, 2001 CA Decision finding Villena to have been illegally dismissed and the March 22, 2007 NLRC Resolution ordering the payment of separation pay in lieu of reinstatement had both become final and executory and, thus, immutable and unalterable.

As the NLRC, in its May 17, 2011 Resolution, awarded retirement pay instead of separation pay, the CA found that the NLRC acted beyond its authority in modifying the aforesaid final and executory judgments.

The CA, however, affirmed the February 28, 2011 NLRC Resolution disallowing the inclusion of allowances for representation, transportation, and cellular phone usage as Villena did not perform her duties as Finance Manager not being a certified public accountant which is a required qualification for such position. Contesting the exclusions, Villena filed the present petition.


Whether or not the employee who filed a labor case is entitled to retirement pay based on the retirement plan created by the employer at the time the case was pending in accordance with the CA Decision and NLRC Resolution indicating entitlement to “other benefits”

Whether or not the employee is entitled to representation, transportation, and cellular phone usage allowances

SC Ruling:

The SC found the case partly meritorious.

The “other benefits” mentioned in these rulings cannot be construed to include retirement pay for the primary reason that they adjudged awards relative to Villena’s illegal dismissal complaint, which remains barren of a specific cause of action for retirement pay. In order for her retirement pay claim to be considered, Villena’s complaint should have contained substantial allegations which would show that she (a) had applied for the same, and (b) her application squares with the requirements of entitlement under the terms of the company’s retirement plan.

However, based on the records, what she sought for in her illegal dismissal complaint were the reliefs of reinstatement, payment of salary differentials, all benefits and allowances that she may have received as Finance Manager, attorney’s fees, and damages. Thus, as the matter left for determination is whether or not the aforesaid rulings, when executed, should include retirement pay and representation, transportation, and cellular phone usage allowances, the Court will harken back only to the context of the illegal dismissal complaint from which such awards of “other benefits” stemmed from.

The Court is not unaware of its rulings wherein it pronounced that retirement pay and separation pay are not mutually exclusive (unless there is a specific prohibition in the collective bargaining agreement or retirement plan against the payment of both benefits); however, with Villena’s entitlement to retirement pay not included as an issue in an illegal dismissal case which had already been finally decided, it is quite absurd for Villena to submit a “contemporaneous” claim for retirement pay on the execution phase of these proceedings. In fine, the plea to include retirement pay in the execution of the final and executory August 31, 2001 CA Decision and March 22, 2007 NLRC Resolution, under the phrase “other benefits,” cannot be granted.

It is clear from BATELEC II’s pleadings and submissions that representation allowance, transportation allowance, and cellular phone usage allowance are given to the Finance Manager/Department Manager as part of their benefits, unlike the separate entitlement to retirement pay which may be recovered only upon a meritorious subsequent application when the employee decides to retire. Consequently, these allowances ought to be included in the “other benefits pertaining to the position of Finance Manager” to which Villena is entitled to and which were awarded to her under the final and executory CA Decision and NLRC Resolution.

With the award of the “other benefits pertaining to the position of Finance Manager” made by the CA in its August 31, 2001 Decision lapsing into finality, the same had already become immutable and unalterable; this means that they may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law.

error: Content is protected !!