l\epublic of tbe ~bilippineg

~upreme QCourt
:ffianila
SECOND DIVISION
ZUELLIG PHARMA CORPORATION,
Petitioner,

G.R. No.173587

-versusALICE M. SffiAL,
MA. TERESA J. BARISO,
PRESCILLANO L. GONZALES,
LAURA B. BERNARDO,
MAMERTA R. ZITA,
JOSEPHINE JUDY C. GARCIA,
MA. ASUNCION B. HERCE,
EDITHA D. CARPITANOS,
MA. LUZ B. BUENO,
DANTE C. VERASTIGUE,**
AGNES R. ALCOBER,
ARWIN Y. CRUZ,
ADONIS F. OCAMPO,
SOPHIA P. ANGELES,
JOEL B. BUSTAMANTE,
EDITHA B. COLE,
LUDIVINA C. PACIA,
ROSELLE M. DIZON,
RODOLFO A. ABCEDE,
WILFREDO RICAFRENTE,
RODOLFO R. ROBERTO,
ROSALIE R. LUNAR,
BENJAMINR. CALAYCAY,
GUILLERO YAP CADORNA,
THROVADORE TOBOSO,
CAROLINAS. UY,
MARIA LORETTO M. REGIS,
ALMAR C. CALUAG, **
VILMA R. SAPIWOSO~#{'

Present:

CARPIO, Chairperson,
DEL CASTILLO,
PEREZ,
MENDOZA,* and
PERLAS-BERNABE, JJ

Per Special Order No. 1484 dated July 9, 2013.

Also referred to as Dante C. Verastique in some parts of the records.
Also referred to as Alma C. Caluag in some parts of the records.

Decision

ANATALIAL. CALPITO,
FELIPE S. CALINAWAN,
VIVIELIZA DELMAR MANULAT,
MA. LIZA L. RAFINAN, **
AMMIE V. GATILAO,
ALEX B. SADAYAand
REGINO EDDIE PANGA,

G.R. No. 173587

Promulgated:

Respondents.
JUL 1 ~ 2013
x--------------------------------------------------------x

DECISION
DEL CASTILLO, J.:
1bis Petition for Review on Certiorari 1 assails the December 4, 2003
2
Decision of the Court of Appeals (CA) in CA-G.R. SP No. 50448 which nullified
the January 21, 1998 Decision3 of the National Labor Relations Commission
(NLRC) in NLRC NCR CA NO. 011914-96. The NLRC affirmed the August 6,
1996 Decision4 of the Labor Arbiter which, in turn, denied respondents' claim for
retirement gratuity and monetary equivalent of their unused sick leave on top of
the redundancy pay they already received.
Also assailed in this Petition is theCA's July 13,2006 Resolution5 denying
petitioner's motion to reconsider aforesaid CA Decision.
Factual Antecedents

Petitioner Zuellig Pharma Corporation (Zuellig) is a domestic corporation

engaged in the manufacture and distribution of pharmaceutical products. It also
distributes pharmaceutical products manufactured by other companies like Syntex
Pharmaceuticals (Syntex). Respondents (36 in all), on the other hand, were the
employees of Zuellig at its Syntex Division.
In 1995, Roche Philippines, Inc. (Roche) purchased Syntex and took over
from Zuellig the distribution of Syntex products. Consequently, Zuellig closed its
Syntex Division and terminated the services of respondents due to redundancy.
They were properly notified of their termination6 and were paid their respecti~t:X't'c
..

Also referred to as Ma. Liza L. Raffman in some parts of the records.

Rollo, pp. 3-26.
CA rolla, pp. 147-160; penned by Associate Justice Roberto A. Barrios and concurred in by Associate
Justices Juan Q. Enriquez, Jr. and Arsenio J. Magpale.
Records, pp. 333-343; penned by Commissioner Vicente S. E. Veloso and concurred in by Commissioner
Alberto R. Quimpo.
Id. at 234-242; penned by Labor Arbiter Eduardo J. Carpio.
CA rolla, pp. 245-248; penned by Associate Justice Roberto A. Barrios and concurred in by Associate
Justices Godardo A. Jacinto and Juan Q. Enriquez, Jr.
For a sample copy of the notice, see letter dated September 8, 1994, records, p. 104.

Decision

G.R. No. 173587

separation pay in accordance with Section 3(b), Article XIV of the March 21,
1995 Collective Bargaining Agreement (CBA)7 for which, respondents
individually signed Release and Quitclaim8 in full settlement of all claims arising
from their employment with Zuellig.
Proceedings before the Labor Arbiter and the NLRC
Controversy arose when respondents filed before the Arbitration Branch of
the NLRC separate Complaints9 (which were later consolidated) for payment of
retirement gratuity and monetary equivalent of their unused sick leave on top of
the separation pay already given them. Respondents claimed that they are still
entitled to retirement benefits and that their receipt of separation pay and execution
of Release and Quitclaim do not preclude pursuing such claim.
On August 6, 1996, Labor Arbiter Eduardo J. Carpio (Labor Arbiter
Carpio) rendered a Decision denying respondents claims. He opined that only
employees whose separation from employment was brought about by sickness,
death, compulsory or optional retirement, or resignation are entitled to gratuity
pay. However, employees whose separation from employment was by reason of
redundancy are not entitled to the monetary equivalent of their unused sick leave if
cessation from employment was caused by redundancy.
Upon respondents appeal, the NLRC rendered a Decision dated January
21, 1998 affirming the Decision of the Labor Arbiter.
Proceedings before the Court of Appeals
Twice rebuffed but still undeterred, the respondents filed a Petition for
Certiorari10 with the CA.
In a Decision dated December 4, 2003, the CA granted respondents
Petition and nullified the Decisions of both the Labor Arbiter and the NLRC.
Relying on the case of Aquino v. National Labor Relations Commission,11 the CA
ruled that since there is nothing in the CBA which expressly prohibits the grant of
both benefits, those who received separation pay are, therefore, still entitled to
retirement gratuity. The CA also took note of Section 5, Article V of Zuelligs
January 1, 1968 Retirement Gratuity Plan,12 which provides that an employee who
may be separated from the service for any cause not attributable to his or her own
fault or misconduct shall be entitled to full retirement benefits. Since the cause of
7
8
9
10
11
12

Id. at 106-123.
Id. at 148-182.
Id. at 2-24; 39-47; 52-59.
CA rollo, pp. 3-25.
G.R. No. 87653, February 11, 1992, 206 SCRA 118.
Records, pp. 183-191.

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G.R. No. 173587

respondents separation from work was redundancy, the CA ordered Zuellig to

pay respondents retirement gratuity and the monetary equivalent of their unused
sick leave on top of the redundancy pay previously granted to them. The
dispositive portion of the CA Decision reads:
WHEREFORE, the petition is GIVEN DUE COURSE and
GRANTED, and the assailed Decision of the Labor Arbiter dated August 6,
1996 and the affirming Decision of the NLRC dated January 21, 1998 are SET
ASIDE and VACATED. In its stead, judgment is rendered ORDERING
respondent Zuellig Pharma Corporation to pay the retirement gratuity and unused
sick leave pay prayed for, and to this end the respondent NLRC is directed to
compute and specify the respective amounts due them.
SO ORDERED.13

Grounds
Zuellig moved for a reconsideration,14 but to no avail.15 Hence, this
Petition anchored on the following grounds:
I
THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT
HELD THAT [UNDER THE TERMS AND CONDITIONS OF] THE CBA
AND THE RETIREMENT AND GRATUITY PLAN X X X
RESPONDENTS [COULD] AVAIL OF BOTH REDUNDANCY PAY AND
RETIREMENT BENEFITS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING
THAT RESPONDENTS ARE ENTITLED TO THE MONETARY
EQUIVALENT OF UNUSED SICK LEAVE.
III
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING
TO HOLD THAT QUITCLAIMS BAR RESPONDENTS FROM CLAIMING
FROM PETITIONER ANY MORE THAN THEY HAVE LAWFULLY
RECEIVED.16

The Parties Arguments

Zuellig concedes that, in the absence of contractual prohibition, payment of
both separation pay and retirement pay may be allowed as ruled by this Court in
Aquino. Nonetheless, it asserts that Aquino is not applicable in this case. It
13
14
15
16

CA rollo, p. 159.
See Motion for Reconsideration dated December 22, 2003, id. at 168-190.
See Resolution promulgated on July 13, 2006, id. at 245-248.
Rollo, p. 10.

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G.R. No. 173587

explains that in Aquino, the parties CBA incorporates by reference a retirement

plan agreed upon by the parties prior to the execution of the CBA. On the other
hand, Zuellig insists that in this case, Section 2, Article XIV of the parties CBA
prohibits the recovery of both retirement gratuity and severance pay. In addition,
Section 2, Article VII of the Retirement and Gratuity Plan likewise expressly
limits the benefits the employees may receive to their choice between (i) the
benefits enumerated therein and (ii) separation pay or other benefits that Zuellig
may be required by law or competent authority to pay them. In any event, Zuellig
further argues that respondents are not qualified to receive early retirement
benefits as none of them resigned from the service, have reached the retirement
age of 60 or have been in the employ of Zuellig for at least 25 years as required by
Section 1(b), Article XIV of the CBA.
Zuellig furthermore contends that the CAs award of monetary equivalent
of respondents unused sick leave lacks basis. It asserts that under Section 2(c)
and (d), Article VIII of the CBA, only employees who are due for compulsory
retirement and those availing of early retirement are entitled to the cash equivalent
of their unused sick leave. Those separated from employment by reason of
redundancy like the respondents are not.
Finally, Zuellig insists that the CA committed grave error in invalidating
the Release and Quitclaim voluntarily executed by the respondents. Said
quitclaims represent a fair reasonable settlement of all the claims respondents had
against Zuellig. In fact, the amount of redundancy pay given to respondents
is substantially higher than the retirement package received by those who
resigned.
Respondents counter that there is nothing in the CBA which categorically
prohibits the recovery of retirement benefits in addition to separation pay. They
assert that Section 2, Article XIV of the CBA alluded to by Zuellig does not
constitute as an express prohibition that would foreclose recovery of retirement
gratuity after the employees had received redundancy pay. Hence, following the
ruling of this Court in Aquino, they are entitled to said retirement gratuity.
With regard to Zuelligs contention that retirement benefits can be extended
only to those who resigned, respondents echo the observation of the CA that since
their separation from employment was due to a cause beyond their control, they
cannot be considered to have exclusively chosen separation pay and abandoned
their right to retirement gratuity. To bolster their point, respondents cite Section 5,
Article V of the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may be separated
from the service of the Company for any cause not attributable to his own fault or
misconduct shall be entitled to full benefits as provided for under Article V,

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G.R. No. 173587

Sections 1 and 2 above, provided, however, that any employee, executive or

supervisory personnel separated for cause shall not be entitled to any benefit as
provided for under said Article V, Sections 1, 2 and 3.17

Respondents likewise insist that since there is no specific provision in the

CBA prohibiting them from claiming the monetary value of their unused sick
leave, the same should be given to them.
Zuellig ripostes that nothing prevented respondents from resigning to make
them eligible to receive retirement gratuity. They had ample time to decide
whether to resign or to accept redundancy pay. But they chose redundancy pay
over early retirement benefits because they knew they would be getting more. As
to respondents reliance on Section 5, Article V, in relation to Sections 1 and 2, of
the Retirement Gratuity Plan, Zuellig posits that the same cannot prevail over
Section 2, Article XIV of the CBA.
On August 23, 2006, this Court issued a Temporary Restraining Order
enjoining the CA from implementing its now assailed Decision until further orders
from this Court.18
Our Ruling
The Petition is impressed with merit.
The CBA does not allow recovery of
both separation pay and retirement
gratuity.
In Aquino,19 the petitioner employees were retrenched after their employer
Otis Elevator Company (Otis) adopted cost-cutting measures and streamlined its
operations. They were thus given separation pay double the amount required by
the Labor Code. Subsequently, however, the employees filed a claim for
retirement benefits, alleging entitlement thereto by virtue of the Retirement Plan.
Otis denied the claim by asserting that separation pay and retirement benefits are
mutually exclusive of each other; hence, acceptance of one bars recovery of the
other. When the case reached its final review, this Court held that in the absence
of specific prohibition in the retirement plan or the CBA, retirement benefits and
separation pay are not mutually exclusive of each other and the employees whose
services were terminated without cause are entitled to both separation pay and
retirement gratuity.
17
18
19

Records, pp. 187-188.

Rollo, pp. 185-186.
Supra note 11.

Decision

G.R. No. 173587

In the present case, the CBA contains specific provisions which effectively
bar the availment of retirement benefits once the employees have chosen
separation pay or vice versa. The provisions of the CBA on Retirement Gratuity
read:
ARTICLE XIV
RETIREMENT GRATUITY
Section 1[a] Any employee who is separated from employment due to
sickness or death shall receive from the COMPANY a retirement gratuity in an
amount equivalent to one [1] months basic salary per year of service. For the
purpose of this agreement, years of service shall be deemed equivalent to the
total service credits [in] the COMPANY; a fraction of at least six [6] months
shall be considered as one [1] year, including probationary employment; basic
salary is understood to mean the monthly compensation being received by the
employee under the payroll for services rendered during the normal regular
working hours of the company, excluding but not limited to any other
emoluments for extra work, premiums, incentives, benefits and allowances of
whatever kind and nature.
[b] No person may retire under this paragraph for old age before
reaching the age of sixty [60] years provided that the COMPANY may compel
the retirement of an employee who reaches or is past 60 years of age. An
employee who resigns prior to attaining such retirement age shall be entitled to
any of the following percentage of the gratuity provided above:
Early Retirement or Separation
a] 5 to 7 years of service

60%

b] 8 to 10 years of service

70%

c] 11 to 15 years of service

90%

d] 16 years of service and above

100%

An employee who opts to retire before reaching the age of 60 is entitled

to one (1) months basic pay per year of service or Four Hundred Thirty
Thousand Pesos (P430,000.00), whichever is higher, provided however that his
service record in the COMPANY is not less than twenty-nine (29) years. Those
whose service record is from twenty-five (25) to twenty-eight (28) years will be
paid an amount equivalent to one (1) months basic pay per year of service or
Three Hundred Sixty Thousand Pesos (P360,000.00), whichever is higher.
An employee may be entitled to retirement gratuity on account of illness
under this article only upon a certification by the COMPANYs physician, that
the illness of the retiring individual will disable said individual from employment
for a protracted length of time.
A transfer of an employee from the employment of the COMPANY to
that of any other sister company shall be deemed a retirement for the purpose of
this section.

Decision

G.R. No. 173587

In case an employee retires at the age of 60, he shall receive a retirement

pay equivalent to his last monthly basic pay multiplied by his total service credits
or Two Hundred Ten Thousand Pesos (P210,000.00) whichever is higher,
provided however, that his service record in the COMPANY is from sixteen (16)
to nineteen (19) years. Those whose service record is less than sixteen (16) years
will be paid an amount equivalent to one (1) months basic pay per year of
service.
An employee who retires at the age of 60 or who is separated from
employment on account of illness or death will be entitled to one (1) months
basic pay per year of service or Two Hundred Fifty Thousand Pesos
(P250,000.00) whichever is higher, provided however, that his service record in
the COMPANY is not less than 20 years.
Section 2 Any payment under this provision shall be chargeable
against separation pay (other than the Social Security System benefits) which
may be demandable under an applicable law.
Section 3[a] The COMPANY shall grant to all employees whose
employment is terminated due to retrenchment or closure of business a
termination pay in accordance with the following schedule:
1. For employees who have rendered one [1] year to five [5] years of
continuous and satisfactory service 100% of monthly basic pay for every year
of service;
2. For employees who have rendered six [6] years to nine [9] years of
continuous and satisfactory service 130% of monthly basic pay for every year
of service;
3. For employees who have rendered ten [10] [years] to fifteen [15]
years of continuous and satisfactory service 155% of monthly basic pay for
every year of service;
4. For employees who have rendered [at least] sixteen [16] [years] x x x
of continuous and satisfactory service 160% of monthly basic pay for every
year of service.
[b] The COMPANY shall grant to all employees whose employment is
terminated due to merger, redundancy or installation of labor-saving device a
termination pay in accordance with the following schedule:
1. For employees who have rendered one [1] year to five [5] years of
continuous and satisfactory service 120% of monthly basic pay for every year
of service;
2. For employees who have rendered six [6] years to nine [9] years of
continuous and satisfactory service 150% of monthly basic pay for every year
of service;
3. For employees who have rendered ten [10] [years] to fifteen [15]
years of continuous and satisfactory service 175% of monthly basic pay for
every year of service;

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G.R. No. 173587

4. For employees who have rendered [at least] sixteen [16] [years] x x
x of continuous and satisfactory service 185% of monthly basic pay for every
year of service.20 (Emphasis and Italics supplied)

Section 2 of Article XIV explicitly states that any payment of retirement

gratuity shall be chargeable against separation pay. Clearly, respondents cannot
have both retirement gratuity and separation pay, as selecting one will preclude
recovery of the other. To illustrate the mechanics of how Section 2 of Article XIV
bars double recovery, if the employees choose to retire, whatever amount they will
receive as retirement gratuity will be charged against the separation pay they
would have received had their separation from employment been for a cause
which would entitle them to severance pay. These causes are enumerated in
Section 3, Article XIV of the CBA (i.e., retrenchment, closure of business, merger,
redundancy, or installation of labor-saving device). However, if the cause of the
termination of their employment was any of the causes enumerated in said Section
3, they could no longer claim retirement gratuity as the fund from which the same
would be taken had already been used in paying their separation pay. Put
differently, employees who were separated from the company cannot have both
retirement gratuity and separation pay as there is only one fund from which said
benefits would be taken. Inarguably, Section 2 of Article XIV effectively
disallows recovery of both separation pay and retirement gratuity. Consequently,
respondents are entitled only to one. Since they have already chosen and accepted
redundancy pay and have executed the corresponding Release and Quitclaim, they
are now barred from claiming retirement gratuity.
In Suarez, Jr. v. National Steel Corporation,21 the same issue cropped up
whether the retrenched employees are entitled to retirement gratuity even after
they have received their separation pay in accordance with the retrenchment
program of the company. In ruling in the negative, this Court observed that
Sections 1 and 3 of Article XIV on Retirement Benefits of the CBA separately
provide for retirement benefits and severance pay for retrenched employees.
Section 1 thereof states, among others, that those retiring with at least 10 years of
service credits are entitled to a retirement pay equivalent to one and one-half
months of basic pay for every year of service, while Section 3 extends two months
base pay for every year of service for laid-off employees pursuant to retrenchment
program. This Court elaborated thus:
A perusal of Article XIV of the parties 1994-1996 CBA readily shows
that retirement benefits shall be granted only to those employees who, after
rendering at least ten (10) years of continuous services, would retire upon
reaching the mandatory retirement age, or would avail of optional voluntary
retirement. Nowhere can it be deduced from the CBA that those employees
whose employment was terminated through one of the authorized causes are
entitled to retirement benefits. In fact, Section 3 of the afore-quoted Article XIV
20
21

Records, pp. 116-117.

G.R. No. 150180, October 17, 2008, 569 SCRA 331.

Decision

10

G.R. No. 173587

specifically provides that retrenched employees shall be given two (2) months
pay for every year of service. Section 3 shows the intention of the parties to
exclude retrenched employees, like herein petitioners, from receiving retirement
benefits under the existing retirement plan as set forth in Section 1.22 (Italics
supplied)

Similarly, in this case, there is also nothing in the CBA which would
indicate that those employees whose services were terminated by reason of
redundancy are entitled to retirement gratuity. As in Suarez, Sections 1 and 3 of
Article XIV of the CBA of the parties herein separately provide for the amount of
benefits to be received by retired employees on the one hand and those who were
terminated due to retrenchment, closure of business, merger, redundancy, or
installation of labor-saving device on the other. In short, Sections 1 and 3 clearly
spell out the difference in the treatment of employees who retired as provided in
Section 1 and those who were constrained to leave the company due to any of the
causes enumerated in Section 3. Such difference in the treatment, as well as in the
corresponding pay or gratuity, indicates the parties intention to exclude retired
employees from receiving separation pay and vice versa. A contrary construction
would distort the clear intent of the parties and render useless the classification
specifically spelled out in the CBA.
The same ruling was arrived at in Salomon v. Associate of International
Shipping Lines, Incorporated.23 Section 1 of the parties CBA in that case
provides for separation pay in case an employee is separated from the service for
cause, i.e., redundancy. Section 3, on the other hand, prescribes the amount of
retirement benefits for employees who have rendered at least 15 years of
continuous service in the association. This Court held that, as prescribed by the
CBA, the employees are entitled only to either separation pay, if they are
terminated for cause, or optional retirement benefits, if they rendered at least 15
years of continuous service. Since they were separated from the service for cause,
the employees are entitled to separation pay only.
The CA opined that since respondents were not at fault and had nothing to
do with their separation from the company by reason of redundancy, they are
therefore entitled to full retirement benefits. It anchored its conclusion on Section
5 of Article V of the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may be separated
from the service of the Company for any cause not attributable to his own fault or
misconduct shall be entitled to full benefits as provided for under Article V,
Sections 1 and 2 above, provided, however, that any employee, executive or
supervisory personnel separated for cause shall not be entitled to any benefit as
provided for under said Article V, Sections 1, 2 and 3.24
22
23
24

Id. at 342.
496 Phil. 721 (2005).
Records, pp. 187-188.

Decision

11

G.R. No. 173587

However, the same Retirement Gratuity Plan provides that in case Zuellig
is required by law or by lawful order to pay separation pay, its employees shall not
be entitled to both separation pay and the benefits provided therein. The
employees are entitled only either to separation pay or retirement gratuity,
depending on their own choice. But they cannot have both. Section 2, Article VII
of the Retirement Gratuity Plan on Effect of Social Legislation is clear on the
matter. Thus:
Section 2 Other Laws and/or Government Awards, Rules and
Regulations
Except only as provided in the next preceding Section hereof, in the
event that the Company is required under the laws or by lawful order of
competent authority to give to its employees any separation pay, or other benefits
or emoluments similar or analogous to those herein already provided, the
employees concerned shall not be entitled to both what the law or the lawful
order of competent authority requires the company to give and the benefits herein
provided, but shall be entitled only to [the] benefit of his choice.25 (Italics
supplied)

Having chosen and accepted redundancy pay, respondents are thus

precluded from seeking payment of retirement pay. Moreover, as correctly
pointed out by Zuellig, Section 5, Article V of the 1968 Retirement Gratuity Plan
was already superseded by Section 2, Article XIV of the 1995 CBA, a much later
contract which reiterates the express prohibition against double recovery. In
addition, unlike in Aquino where the employees have served the company for at
least ten years making them eligible for retirement,26 none of the respondents
herein appear to be qualified for optional retirement. Under Section 1[a] and [b],
Article XIV of the CBA earlier quoted, to be entitled to retirement gratuity, the
employee must have reached 60 years of age, resigned, suffered illness, or opted to
retire even before reaching the age of 60 but has been in the employ of Zuellig for
at least 25 years. None of the respondents who initiated the complaints appear to
have met the above requirements. They never even bothered to controvert
Zuelligs contention that they are not qualified for retirement.
Respondents are not entitled to the
monetary equivalent of their unused
sick leave credits.
The pertinent provisions of Article VIII of the CBA on unused sick leave
provide:
Section 2[a] Sick leave Every regular employee who has rendered:
25
26

Id. at 189.
Supra note 11 at 122.

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12

G.R. No. 173587

1. One [1] year to fifteen [15] years of continuous and satisfactory service shall
be entitled to fifteen [15] working days sick leave with pay for every year;
2. Sixteen [16] years and above of continuous and satisfactory service shall be
entitled to twenty [20] working days sick leave with pay for every year;
provided that the illness is certified by the COMPANY physician or in
exceptional cases, by any other duly licensed physician.
[b] Unspent sick leave shall accrue to a period not exceeding one
hundred twenty [120] working days.
[c] An employee who is sixty [60] years old and due for compulsory
retirement shall be entitled to encashment of unused sick leave based on his/
her service record in the company in accordance with the following schedule:
1. 16 years and above of continuous service 100% encashment up to a
maximum of four [4] months basic salary
2. 11 years to 15 years of continuous service 50% encashment up to a
maximum of two [2] months basic salary
3. 10 years and below of continuous service 50 % encashment up to [a]
maximum of one [1] month basic salary
[d] An employee who retires before reaching the age of sixty [60] shall
be entitled to encashment of unused sick leave based on his/her service
record in the COMPANY in accordance with the following schedule:
1. 25 years and above of continuous service 100% encashment up to a
maximum of one and one-half [1 ] months basic salary
2. 11 years to 24 years of continuous service 50% encashment up to a
maximum of one [1] month basic salary provided the retirement is due to
illness or disability as certified by the company physician.27

According to the CA, since [t]he above enumerations fall short of

providing in the instances of the other causes of separation from service such as
redundancy as in the case of the petitioners, death, merger, installation of labor
cost-saving device, retrenchment or closure of business, all of which are causes
not attributable and beyond the control of the employees[,]28 the respondents
should be given the monetary equivalent of their unused sick leave.
This Court cannot agree.
The CAs ruling in effect put something into the CBA that is not written in
it, contrary to the old and familiar Latin maxim of expressio unius est exclusio
alterius. The express mention of one person, thing, act, or consequence excludes
all others. Put differently, where the terms are expressly limited to certain
matters, it may not, by interpretation or construction, be extended to other matters.
In this case, Article VIII of the CBA covers only (1) an employee who is 60 years
27
28

Records, p. 111.
CA rollo, p. 158.

Decision

13

G.R. No. 173587

old and due for compulsory retirement; (2) an employee who retires prior to
attaining the compulsory retirement age but has served at least 25 years; and, (3)
an employee who retires before attaining compulsory retirement age due to illness
or disability. Necessarily, the enumeration cannot be extended to include those
who will be leaving the company due to redundancy, death, merger, installation of
labor cost-saving device, retrenchment, or closure of business as mistakenly ruled
by the CA.
As the law between the parties, the CBA
must be strictly complied with.
It is a familiar and fundamental doctrine in labor law that the CBA is the
law between the parties and they are obliged to comply with its provisions. In
Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda29 this Court
elucidated as follows:
A collective bargaining agreement [or CBA] refers to the negotiated
contract between a legitimate labor organization and the employer concerning
wages, hours of work and all other terms and conditions of employment in a
bargaining unit. As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient
provided these are not contrary to law, morals, good customs, public order or
public policy. Thus, where the CBA is clear and unambiguous, it becomes the
law between the parties and compliance therewith is mandated by the express
policy of the law.30

Here, and as discussed above, the parties CBA provides in no uncertain

terms that whatever amount of money the employees will receive as retirement
gratuity shall be chargeable against separation pay. It is the unequivocal
manifestation of their agreement that acceptance of retirement gratuity forecloses
receipt of separation pay and vice versa. The CBA likewise exclusively
enumerates departing employees who are entitled to the monetary equivalent of
their unused sick leave. These agreements must prevail and be given full effect.
The Release and Quitclaim executed by
each of the respondents remains valid.
It is true that quitclaims executed by employees are often frowned upon as
contrary to public policy. But that is not to say that all waivers and quitclaims are
invalid as against public policy.31 Quitclaims will be upheld as valid if the
following requisites are present: (1) the employee executes a deed of quitclaim
voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the
29
30
31

499 Phil. 174 (2005).

Id. at 179-180.
Suarez, Jr. v. National Steel Corporation, supra note 21 at 346.

Decision

14

G.R. No. 173587

consideration of the quitclaim is credible and reasonable; and, (4) the contract is
not contrary to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law.32
In this case, there is no showing that Zuellig coerced or forced respondents
to sign the Release and Quitclaim. In fact, there is no allegation that Zuellig
employed fraud or deceit in making respondents sign the Release and Quitclaim.
On the other hand, respondents declared that they had received the separation pay
in full settlement of all claims arising from their employment with Zuellig. For
which reason, they have remised, released and discharged Zuellig.
Notably, the Release and Quitclaim represents a reasonable and fair
settlement of respondents claims. Under Article 283 of the Labor Code, the
employers are required to pay employees separated from employment by reason
of redundancy at least one (1) month pay or at least one (1) month pay for every
year of service, whichever is higher.33 Here, respondents received 100% of their
one (1) month basic pay for every year of service, plus a premium ranging from
20% to 85% of such basic pay for every year of service (depending on the number
of years in service), as separation pay. In Goodrich Manufacturing Corporation,
v. Ativo,34 this Court declared that
It is only where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are unconscionable on
its face, that the law will step in to annul the questionable transaction. But where
it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as a valid and
binding undertaking.

WHEREFORE, the instant Petition is hereby GRANTED. The

December 4, 2003 Decision and the July 13, 2006 Resolution of the Court of
Appeals in CA-G.R. SP No. 50448 are ANNULLED and SET ASIDE and the
January 21, 1998 Decision of the National Labor Relations Commission in NLRC
NCR CA NO. 011914-96 is REINSTATED and AFFIRMED.
32
33

34

Jiao v. National Labor Relations Commission, G.R. No. 182331, April 18, 2012, 670 SCRA 184, 202.
ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL.
The employer may also terminate the employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and the Department of Labor and Employment at least one
(1) month before the intended date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least
his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
G.R. No. 188002, February 1, 2010, 611 SCRA 261, 266 citing Periquet v. National Labor Relations
Commission, 264 Phil. 1115, 1122 (1990).

15

Decision

G.R. No. 173587

The Temporary Restraining Order issued by this Court on August 23,2006

is made PERMANENT.
SO ORDERED.

~Pi~-~>
MARIANO C. DEL CASTILLO
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSEC

ESTELAM~~RNABE
Associate Justice

NDOZA

Decision

16

G.R. No. 173587

ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was ,assigned to the writer of the opinion of the
Court's Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson

CERTIFICATION
Pursuant to Section 13, Article Vlll of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice