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Suarez, et al. v. National Steel Corporation October 17, 2008 Leonardo-de Castro, J.

: FACTS: Sometime in 1994 Respondent National Steel Corporation (Company), engaged in the business of manufacturing steel products needed for pipemaking, ship building, can-making, and production of appliances, adopted an organization streamlining program that resulted in the retrenchment of 700 employees, among whom were petitioners, in its main plant in Iligan. This was due to substantial financial losses it took due to foreign competition. At that time, Company and National Steel Labor UnionFederation of Free Workers (NASLU-FFW) were negotiating for the renewal of the CBA. July 18, 1994 Company sent individual notices to the 700 employees affected, terminating their services effective August 18, 1994. It also specified that each will receive a separation package. The employees, after being paid their separation benefits, executed and signed a release and quitclaim. October 27, 1994 Company and NASLU-FFW signed a new CBA, retroactive to July 1, 1994. Pursuant thereto, the retrenched employees were given their salary differentials, for which they executed and signed another release and quitclaim. February 1997 or about two and a half years after being separated, petitioners wrote Company demanding payment of retirement benefits under the CBA. Company rejected such claim, forcing petitioners to file a complaint for payment of retirement benefits. LA dismissed the complaint. Petitioners appealed. This appeal was consolidated with another case, which also involved retrenched employees. NLRC granted the appeal and reversed the LA. Company elevated the matter to the CA. CA reversed the NLRC and declared that petitioners were no longer entitled to retirement benefits after having received the separation pay, and were precluded from claiming such because of their quitclaims. Hence, this petition.

RATIO: Petitioners: We are entitled to retirement benefits in addition to the separation pay pursuant to Art. XIV of the existing CBA. Aquino v. NLRC, UE v. Minister of Labor, and Batanga Laguna Tayabas Bus Co. v. CA: Held that payment of separation benefits dies not exclude payment of retirement benefits in the absence of a specific prohibition in the retirement plan and the CBA. Respondent: Retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause. Moreover, petitioners executed valid quitclaims. Supreme Court: Contrary to the stance taken by petitioners, the retirement plan of the Company reveals that an employee who was terminated for cause is not entitled to retirement benefit. With the inclusion of such provision in the retirement plan, Company categorically disallows payment of retirement benefits to retrenched employees. There is no dispute that petitioners were separated from the service for cause, as it was due to a valid retrenchment undertaken by the Company. Retrenchment is recognized as one of the authorized causes for termination of employment under Art. 283 of the Labor Code. Apart from the aforementioned provision in the retirement plan, provisions of the 1994-1996 CBA between the Company and its employees further militate against petitioners contention that they are entitled to both separation pay and retirement benefits. Art. XIV, Sec. 3 of which provides that employees laid-off by the Company pursuant to a retrenchment program shall be given 2 months base pay per year of service credits. This shows the intention of the parties to exclude retrenched employees from receiving retirement benefits under the existing retirement plan. The court took the opportunity is discuss the nature and purpose of a CBA and how it should be interpreted. A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the parties. If the terms of the CBA are clear and have no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. However, if the CBA imports ambiguity, then the parties intention as shown by their conduct, words, actions and deeds -- prior to, during, and after executing the agreement, must be ascertained. That

ISSUE/HOLDING: WON petitioners who were retrenched employees that had already received their separation pay can still recover retirement benefits. NO. THEY CAN NO LONGER RECOVER RETIREMENT BENEFITS.

there is an apparent ambiguity or a failure to express the true intention of the parties, especially with regard to the retirement provisions of the 1994-1996 CBA, is evident in the opposing interpretations of the same by the Labor Arbiter and the CA on one hand and the NLRC on the other In this instance to resolve all doubts as to the proper interpretation of the relevant CBA provisions, it was imperative for the CA to determine the true intent of the parties to the agreement. The CA committed no error in considering the affidavits as contemporaneous and subsequent acts from which the intention of the parties to the CBA can be inferred. This juristic principle is supported by the following provision of law found in Art. 1371 of the New Civil Code. Thus, while the CBA, on its face, does not contain an express prohibition of payment of retirement benefits to retrenched employees, the parties may still prove it by means of contemporaneous and subsequent acts of the parties to the agreement, such as the execution of the affidavits by the NASLU-FFW officers and respondents managers. The Court likewise upholds the CAs finding that petitioners voluntarily executed and signed a release and quitclaim after receiving their separation package, acknowledging full and final payment of all benefits that they may be entitled to in relation to their employment. The validity of quitclaims executed by laborers has long been recognized in this 23 jurisdiction. In Periquet v. National Labor Relations Commission, this Court ruled that not all waivers and quitclaims are invalid as against public policy. 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. Such legitimate waivers resulting from voluntary settlements of laborers claims should be treated and upheld as the law between the parties.