G.R. No. 78524 & 78739. January 20, 1989.
PLANTERS PRODUCTS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, et al., respondents. / RENATO ABEJAR, et al., petitioners, vs. PLANTERS PRODUCTS, INC. and NATIONAL LABOR RELATIONS COMMISSION, respondents.

FACTS

The case involves the consolidated petitions of Planters Products, Inc. (PPI) and its retrenched employees concerning the validity of a Collective Bargaining Agreement (CBA) and the computation of separation benefits. Approximately 440 regular employees from PPI’s Bataan and Makati operations were retrenched in 1985. The employees, members of various unions, filed a class suit claiming entitlement to separation pay under prior CBAs and benefits from a company-established Retirement and Pension Plan (RPP). A critical fact is that the 1984-1987 CBA, which modified the prior “termination allowance” benefit to apply only to disability separation, was never formally ratified by the union membership, though benefits under it had been enjoyed. PPI also unilaterally amended the RPP after its BIR approval.

ISSUE

The primary issues were: (1) the validity and applicability of the unratified 1984-1987 CBA; (2) the proper computation base for the employees’ separation pay; and (3) the employees’ entitlement to death benefits and a share in the RPP fund assets.

RULING

The Supreme Court set aside the NLRC resolution. On the CBA’s validity, the Court ruled that while Article 231 of the Labor Code requires submission of proof of ratification, the 1984-1987 CBA could not be declared void simply because certain provisions later proved unfavorable. The employees had accepted and enjoyed benefits under it, and the two preceding CBAs were also unratified, yet the employees based claims on them. This created an estoppel; it was inequitable to receive benefits and later disclaim validity. However, the Court found PPI erred in its computation of separation pay. Following jurisprudence, the salary base must include not only basic salary but also the regular allowances the employees had been receiving. Since allowances for remaining PPI employees were integrated into their basic pay for terminal benefit computation, the retrenched employees were entitled to the same treatment. Regarding other claims, the Court held the employees were not entitled to death benefits as they were still alive, and under the RPP’s specific terms, only existing employees had a right to participate in the distribution of the plan’s assets. The Court ordered PPI to recompute terminal benefits inclusive of allowances.