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SECONDDIVISION

[G.R.No.149464.October19,2004]

NATIONAL FEDERATION OF LABOR (NFL), CENON BANGA, ROGELIO VILLACORTE, NAZARIO

HATAM, JULIO CUGAL, JUANITO GAVIOLA, BONIFACIO MANLAPAZ, TOMAS FABILLAR,
BERNARDSIASON,WILFREDOSANTOS,MARCIANONAPAL,FIDELABALOS,PEDROINANA,
SIMPLICIOQUIMSON,HERMINIGILDODELOSSANTOS,FRANCISCOMANONGONG,RODRIGO
DOMINGO, MARCELINO GUILLANO, JR., VALERIANO BRIONES, RAMON PUNTOD, SIMON
MORO, ROLANDO BANGA, PABLO NUEZ, ALBERTO LADERO, BENEDICTO SUMALINOG,
ISMAEL MOLAS, FIDEL CONSTANCIA, CASIANO PLAD, MARCELO SUMALINOG, NESTOR
GARCIA, FELICIANO LOZANO, CORNELIO TUMAMBUS, ANASTACIO RODRIGUEZ GIPUNAN
UNDING, CRESENCIO LASIT, FEDERICO BASILIO, LEONARDO BARREDO, ABELARDO
GARCIA, ESTANISLAO PUREZA, RAUL LINIANG, LEONCIO PALAR, NICASIO CABANERO,
LEONARDO PULGAR, ROMUALDO BACTONG, ABDUL BORJAL, MAGDINO ANSOG, JACARIA
ASSANUDDIN, HERCULANO DAGOY, MARIO TULABING, ROBERTO MAHUSAY, BENGAY
MAJID, ZOSIMO TUGAHAN, SALVADOR LUBIANO, ABDULMAJID ALIMUDDIN, POLICARPIO
WAHING, EFREN CRUZ, MELCHOR LOMONGGO, ASPALON CUEVAS, MARCIAL SERUNDO,
GENER MARTALLA, FRANCISCO BUHIAN, ROMULO GANGE, RICARDO CRUZ, ODITO
TARROZA, CATALINO MOLEJON, EUSTACIO MANLAPAZ, BIENVENIDO ALBURO, DIOSCORO
MOLOS, JUAN SIMAURIO, LUCIANO BASACA, ROMANTICO SAN LUIS, PERPITO REVILLA,
SERVANDO SINGSON, WILFREDO DEMCO, JIBRON GARCIA, JOSE SACRISTAN, MANUEL
SAYSON, GAUDIOSO DUMAYO, FELIX PLAZA, NESTOR GARCIA, ANDRES GAMUTAN,
VALERIANO LUBIANO, WILFREDO MAHUSAY, DIONESIO SALISIG, ANTONIO SUMALINOG,
PATRICIO RUALES, LEODEGARIO MANONGONG DONATO LADERO, WILFREDO BASILIO,
EMMANUEL EVANGELISTA, BIENVENIDO CRUZ, CELESTINO BACOR, HENRY GARCIA,
CRISTINO
ESCUDERO,
CECILIO
MANAHAN,
REYNALDO
LOPEZ,
ROGELIO
AMPATIN,ALEXANDER REMILLETE, AURELIO CACHUELA, EUTIQUIO FRONTAL, FABIAN
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DURAN, EXPEDITO BARRERA, CENISO BUENO JOVENCIO VELITA, VICENTE ELEMIA,

ROGELIO MIRONTOS, CESAR ALAJAS, ANTONIO FORASTEROS, RESTITUTO DAMILES,
WILFREDO ORTIZ, GERUNDIO TORINO, TEOFISTO CALUNOD, ROGELIO CUEVAS, CASMIRO
BASILIO, ELMO PEDLO, RAFAEL LAURENO, AGAPITO CARINO, EDUARDO TUGAHAN,
ANASTACIO TORINO, REIMBERTO ACOSTA, CESAR MALALIS, WINEFREDA SARENO,
FILADELFO RABINA, ANGEL YU, VICENCIO SACRISTAN, JR., CESAR AWYAN, QUIRINO
RAMOS, ELEUTERIO INFANTE, JOSE MAGONCIA, JESUS GAROTE, GODOFREDO UYAO,
EXEQUIEL GREGANA, SALUSTIANO FLORES, ADALAIDA PORLARES, SOFRIANO EDIM,
ALFREDO CERIALES, GODOFREDO DEMCO, CIPRIANO PIOQUINTO, ANTONIO JOSE
FORASTEROS, FILOMENO MOLAS, SOLIG TOTO, FRANCISCO SOLON, AMADO ENRIQUEZ,
AMADO BUCOY, ARTURO AJON, FORTIBILLAR NABI, JUAN BAYOCA, WILFREDO ORPIANA,
VICTORIANO IMBO and SABDURANI MABLIA, petitioners vs. THE HON. COURT OF APPEALS
(8THDIV.),NATIONALLABORRELATIONSCOMMISSION,EXECUTIVELABORARBITERRHETT
JULIUS J. PLAGATA, SIME DARBY PILIPINAS, INC., AMERICAN RUBBER COMPANY, INC.,
SEANOKELLEYand/orEXPEDITODOQUILLO,SR.,respondents
DECISION
CALLEJO,SR.,J.:
[1]

ThisisapetitionforreviewoftheDecision oftheCourtofAppealsinCAG.R.SPNo.56230,holdingthatthepetitioners
wereproperlypaidtheirseparationpayaftertheclosureoftherubberplantationofSimeDarbyPilipinas,Inc.(SDPI)inLatuan,
Isabela,Basilan.
TheAntecedents
American Rubber Company, Inc. (ARCI) is a domestic corporation existing in and incorporated under the laws of the
Philippines.Itwastheregisteredandbeneficialownerofa1,024hectarerubberplantationinLatuan,Isabela,Basila.OnJuly
21, 1986, ARCI also had another rubber plantation in Tumajubong and Itoito. ACI entered into a Farm Management
Agreement(FMA)withSDPI,anotherdomesticcorporation,involvingthe1,024hectarerubberplantationinLatuanandother
rubberplantations.SDPIwasgiventherighttomanage,administer,develop,cultivate,andimprovetherubberplantationsas
an agroindustrial development project, specifically designed for planting rubber trees, processing of and marketing of its
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[2]

productsandprovidingtechnicalexpertiseforaperiodoftwentyfiveyears,oruptotheyear2011.

National Federation of Labor (NFL) was the duly registered bargaining agent of the dailyandmonthlypaid rankandfile
[3]

employees of SDPI in the Latuan rubber plantation. SDPI and NFL executed a collective bargaining agreement (CBA) in
which they agreed that in case of permanent or temporary layoff, workers affected would be entitled to termination pay as
providedbytheLaborCode.The150petitionersweredailyandmonthlypaidemployeesofSDPIintheLatuanplantationand
were,likewise,membersofNFL.
OnJune15,1988,duringtheeffectivityoftheFMAbetweenARCIandSDPI,RepublicActNo.6657,otherwiseknownas
[4]

the Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. Section 8 thereof mandated that all lands of public
domain leased, held or possessed by multinational corporations or association or private nongovernmental corporations,
devoted to agroindustrial enterprises shall be subjected to immediate compulsory acquisition and distribution upon the
applicable lease, management, grower or service contracts in effects as of August 29, 1987 or otherwise upon its valid
termination,whichevercomessoonerbutnotlaterthanaftertenyearsfollowingtheeffectivityofRep.ActNo.6657.
PriortotheexpirationoftheJune30,1998deadline,SDPIdecidedtoterminatetheFMAwithARCIandceaseoperationof
the rubber plantation in Latuan, Isabela, Basilan, effective January 17, 1998. On December 17, 1997, SDPI served formal
[5]

notices of termination to all the employees of the plantation effective January 17, 1998. Simultaneously, a letter to the
Department of Labor of Employment (DOLE) of Region IX, Zamboanga City, respecting the terminations was sent by SDPI.
SeparationpayfortheemployeeswascomputedpursuanttotheprovisionsoftheCBAbetweenSDPIandNFL,inrelationto
theLaborCodeofthePhilippines.
Meanwhile,whenthe150dailyandmonthlypaidrankandfileemployeesreceivedtheirindividualterminationletters,the
members of the NFL met, on January 10, 1998, and approved Resolution No. 1, Series of 1998, requesting SDPI that the
separation pay benefits for its members be segregated from regular workdays, vacation leave, unused sick leave and other
[6]

benefits. Cenon S. Banga, the union president of the dailypaidrankandfile employees, wrote Emmanuel A. Tamayo, the
[7]
Senior Vice President of SDPI, requesting the segregation of separation pay benefits from the other receivables. He also
sent,onthesamedate,alettertoSDPIseekingtheclarificationonthebasisofcomputationoftheirseparationpay.Hepointed
outthatseparationpayshouldbecomputedpursuanttothecompanypolicyofthirtydaysperyearofservice.Hestressedthat
theunionmemberswouldrefusetoreceivethecomputedseparationpayiflessthanthatpreviouslygiventoemployeeswhose
[8]

employmenthadbeenterminatedbySDPIonpriordatespursuanttothecompanypolicy, morespecificallyseparationpay
equivalenttoonemonthforeveryyearofemploymentoftheemployees.
OnJanuary17,1998,eachofthepetitionersreceivedhisseparationpayequivalenttoonehalfmonthpayforeveryyearof
[9]

service,andotherbenefitswhichwerealllumpedinoneMetrobankcheck. Thepetitionerssimultaneouslyexecutedindividual
[10]

ReleasedandQuitclaim

following the explanation to them by Executive Labor Arbiter (ELA) Rhett Julius J. Plagata of the
[11]

nature and legal effects of the said quitclaims.

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The Labor Arbiter also assured that each of the petitioners executed his
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respecteddeedofquitclaimvoluntarily.
However,onApril2,1998,thepetitionersfiledacomplaintforillegaldismissal,deficiencyinseparationpay,backwages,
reinstatement, legal interest, moral damages, exemplary damages, attorneys fees, and cost of litigation before the Regional
ArbitrationBranchofZamboangaCityoftheNationalLaborRelationsCommission(NLRC),docketedasNLRCcaseNo.RAB
[12]

09040012598.

Thecomplainantsraisedthefollowingissues:

(1)whetherornotthecomplainantswereillegallydismissedand(2)whetherornottheyareentitledtotheirclaimsforseparationpay
differentials(nonpaymentoftheexactcomputationofseparationpay),legalinterest,moralandexemplarydamages,andattorneysfeesand
costsoflitigation.
Amatteralsoputistheeffectofthequitclaimandreleasesexecutedbythecomplaintsbeforetheundersignedon15and16January1998in
[13]

considerationofpaymenttothembySDPIofseparationpaycomputedatonehalf(1/2)monthpayforeveryyearsofservice.
[14]

On November 24, 1998, the ELA rendered a decision dismissing the complaints for lack of merit. He ruled the
termination of the petitioners employment was based on authorized cause, namely, the closure of SDPI, Latuan rubber
plantation, as a consequence of the implementation of CARL, which set the deadline for the compulsory distribution of
agricultural,includingagroindustriallandstenyearsaftertheeffectivityofthelaworJune30,1998.Consequently,pursuantto
the CBA between the SDPI and NFL in relation to Article 283 of the Labor Code, the dismissed employees should receive
separationpayattherateofonehalfmonthpayperyearofserviceinsteadofarateequivalenttoonemonthforeveryyearof
service. He also held that the petitioners had no right to invoke company policy of paying separation pay equivalent to one
monthpayforeveryyearofemploymentgrantedbySDPIforitsretrenchedemployeesinitsplantations.Healsoruledthatthe
petitionerswereestoppedfromdemandingforseparationpaydifferentialsbecausetheyvoluntarilyandwillinglyexecutedtheir
respectivedeedsofquitclaim.
Aggrieved,thepetitionersappealedtotheNLRC,whichissuedaResolutiononMay19,1999affirmingthedecisionofthe
[15]
ELA. TheNLRCruledthatpaymentofseparationpayincheckdidnotviolateArticle102oftheLaborCodewhichrequired
paymentofwagesinlegaltenderbecause(a)thecheckisalegaltenderand(b)thestatementallowspaymentofwagesin
checkinspecialcircumstances,asinthepresentcasewheretheindividualcomplaintswerepaidlargeamountsofmonetary
benefits.
Dissatisfied,thepetitionersfiledamotionforreconsiderationoftheresolution,contendingthattheNLRCdeniedthesaid
motionforlackofmerit.IntheabsenceofanyprovisionintheCBA,theexistingcompanypolicyorpracticeshouldhavebeen
appliedinthecomputationoftheseparationpayofthemonthlypaidemployees.Theenotedthatinseveralinstances,SDPI
had paid separation pay computed at one month per year of service. The NLRC denied the motion in a Resolution dated
[16]
August23,1999.
Distressed,thepetitionersfiledapetitionforcertiorariunderRule65ofthe1997RulesofProcedurebeforetheCourtof
Appeals(CA)docketedasCAG.R.SPNo.56230.Thepetitionersallegedthat:
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(I)

THERESPONDENTNLRCCOMMITEDGRAVEABUSEOFDISCRETIONAMOUNTINGTOLACKOREXCESSOF
JURISDICTION,MORESPECIFICALLY,INNOTRULINGTHATTHEELIMINATIONORDIMINUTIONOFEMPLOYEE
BENEFITSISPROHIBITEDUNDERARTICLE100OFTHELABORCODE,ASAMENDED.
(II)

THERESPONDENTNLRCCOMMITTEDGRAVEABUSEOFDISCRETIONAMOUNTINGTOLACKOREXCESSOF
JURISDICTION,MORESPECIFICALLY,WHENITRULEDTHATPETITIONERWORKERSWEREESTOPEDFROMCLAIMING
THEBALANCEOFTHEIRSEPARATIONPAYORBENEFITS.
(III)

THERESPONDENTNLRCCOMMITTEDGRAVEABUSEOFDISCRETIONAMOUNTINGTOLACKOREXCESSOF
[17]
JURISDICTION,MORESPECIFICALLY,WHENITRULEDTHATCHECKISLEGALTENDER.
InitsManifestationandMotion,theOfficeoftheSolicitorGeneral(OSG)agreedthatthepetitionersweredismissedbased
onauthorizedcause.However,itassertedthattheywereentitledtoseparationpayequivalenttoonemonthpayforeveryyear
[18]

of service. Citing the case of Robles v. Zambales Chromite Mining Co., the OSG opined that to hold that payment of
separation pay equivalent to onemonth pay applies only in cases of retrenchment and not when the termination is due to
cessationofbusinessoperationsnotduetoseriousbusinesslosses,wouldcreateadistinctionwhichwasnotcontemplated
underthelaw.AccordingtotheOSG,Section9,ImplementingRulesofBookVI,whichprovidesthatincaseofterminations
basedonbusinessclosures,separationpayshallbecomputedatonehalfmonthpayperyearofservice,cannotprevailover
theprovisionsofthelaw.
TheOSGfurtheredthatthepetitionerswerenotbarredfromrecoveringthebalanceoftheirseparationpaybecausethey
were compelled to sign the quitclaims prepared by the respondent SDPI. The signing was made a condition to enable the
petitionerstoreceivetheirseparationpayandothermonetarybenefitswithoutunduedelay.
OnMay7,2001,theCArenderedadecisionaffirmingthedecisionoftheNLRCanddismissingthepetition.
Applying Article 283 of the Labor Code, the CA ruled that separation pay due to business closures not due to business
lossesshallbeequivalenttoonemonthpayoratleastonehalfmonthpayforeveryyearofservice,whicheverishigher.Citing
[19]

[20]

the cases of Philippine Tobacco FlueCuring & Redrying Corporation v. NLRC and Naguiat v. NLRC, the CA held that
separation pay of employees dismissed based on business closures should be one half their respective monthly wage,
multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a
givenyear.
ThethresholdissueiswhetherornottheCAerredinholdingthatthepetitionersareentitledtoseparationpayequivalentto
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onehalfmonthpayforeveryyearofemploymentwiththeprivaterespondent.
The petitioners contend that the private respondent is bound by its policy of granting separation pay equivalent to one
monthpayforeveryyearofservicetoitsretrenchedemployeesintheTumajubongandLatuanplantationspriortotheclosure
ofLatuanrubberplantationwheretheywereemployed.Theyaverthattheseparationpayequivalenttoonehalfmonthpayfor
everyyearofservicewiththeprivaterespondentisproscribedbyArticle100oftheLaborCodeofthePhilippines,towit:
ART.100.Prohibitionagainsteliminationordiminutionofbenefits.Nothinginthisbookshallbeconstruedtoeliminateorinanyway
diminishsupplements,orotheremployeebenefitsbeingenjoyedatthetimeofpromulgationofthisCode.
ThepetitionerspositthatArticle100oftheLaborCodeofthePhilippinesshouldprevailoveranyprovisionsoftheCBA
betweentheNFLandtheprivaterespondent.Theyassertthattheybelievedingoodfaiththattheprivaterespondentwould
followandimplementitspolicywhichhadbeenineffectevenbeforetheprivaterespondentandtheNFLexecutedtheirCBA.
They contend that had the NFL and/or its members been informed, before the execution of the said CBA, that the private
respondentwouldnotfollowitspolicywhentheplantationstoppeditsoperation,forsure,NFLand/oritsmemberswouldhave
insistedintheinclusionintheCBAofaprovisiongrantingeachofthemseparationpayequivalenttoonemonthpayforevery
yearofservice.Ontheotherhand,theCAruledthat:
WeagreewithrespondentSDPIthatitspastpaymentofseparationpayatone(1)monthpayforeveryyearofservicecannotbetakenas
precedentorcompanypracticeapplicabletoindividualcomplaintshereinduetodifferentfactualsetting.Firstly,therewasnoprovisionin
theCBAbetweentherespondentSDPIandtherankandfileemployeesinTumajubongRubberPlantationfixingtherateofseparationpay
foranyworkerwhowasterminatedforauthorizedcause.Secondly,theTumajubongRubberPlantationandLatuanRubberPlantationwhere
individualcomplaintshereinwereassignedweretwoentities,separateanddistinctfromeachother.Thirdly,theworkersintheLatuan
RubberPlantationalludedtohavebeenterminatedfromemploymentonApril1,1994inpursuanceofthestaffreductionprogramwere
actuallyseparatedfromtheserviceduetoredundancy,and,assuch,theywereentitledtoseparationpayequivalenttoone(1)monthpayfor
everyyearofserviceunderArticle283oftheLaborCode.Fourthly,RustomDemocritoandothercomplainingworkersintheearlyNLRC
CaseNo.M00145793(RAB09110029790)werepaidoftheirseparationpayatone(1)monthpayperyearofservicebyvirtueofa
compromisesettlement.
Ifatall,respondentSDPI,throughMr.OrtallaandotherrepresentativesintheCBAnegotiations,haveintendedtouniformlygrant
separationpayatone(1)monthpayperyearofservicetoallworkerswhowereterminatedfromemploymentduetoauthorizedcauseas
whatcomplainantswouldwanttomakeitappear,thepartiestotheCBAcouldhaveexpresslymadeaprovisiontothateffecttoeraseany
[21]
doubttothecontrary.
WeagreewiththeNLRCandtheCA.
Article 283 of the Labor Code provides that employees who are dismissed due to closures that are not due to business
insolvency should be paid separation pay equivalent to onemonth pay or to at least onehalf month pay for every year of
service,whicheverishigher.Afractionofatleastsixmonthsshallbeconsideredonewholeyear,thus:
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ART.283.Closureofestablishmentandreductionofpersonnel.Theemployermayalsoterminatetheemploymentofanyemployeedueto
installationoflaborsavingdevices,redundancy,retrenchmenttopreventlossesortheclosingorcessationofoperationoftheestablishment
orundertakingunlesstheclosingisforthepurposeofcircumventingtheprovisionsofthisTitle,byservingawrittennoticeontheworkers
andtheMinistryofLaborandEmploymentatleastone(1)monthbeforetheintendeddatethereof.Incaseofterminationduetoinstallation
oflaborsavingdevicesorredundancy,theworkeraffectedtherebyshallbeentitledtoatleasthisone(1)monthpayortoatleast(1)month
payforeveryyearofservice,whicheverishigher.Incaseofretrenchmenttopreventlossesandincasesofclosureorcessationof
operationsofestablishmentorundertakingnotduetoseriousbusinesslossesorfinancialreverses,theseparationpayshallbeequivalentto
one(1)monthpayortoatleastonehalf(1/2)monthpayforeveryyearofservice,whicheverishigher.Afractionofatleastsix(6)months
shallbeconsideredone(1)wholeyear.
Patently,incasesofclosuresorcessationofoperationsofestablishmentorundertakingnotduetoseriousbusinesslosses
orfinancialreverses,theseparationpayofemployeesshallbeequivalenttoonemonthpayortoatleastonehalfmonthpay
[22]

for every year of service, whichever is higher. In no case will an employee get less than onemonth separation pay if the
separation from the service is due to the above stated causes, provided that he has already served for at least six months.
Thus,ifanemployeehadbeenintheserviceforatleastsixmonths,heisentitledtoafullmonthspayashisterminationpayif
hisseparationfromthejobisduetoanyofthecausesenumeratedabove.However,ifhehastohiscredittenyearsofservice,
heisentitledtofivemonthspay,thisbeinghigherthanonemonthpay.Stateddifferently,thecomputationofterminationpay
should be based on either onemonth or onehalf month pay, whichever will yield to the employees higher separation pay,
[23]
takingintoconsiderationhislengthofservice.
Inthiscase,thepetitionershadservedtherespondentSDPIforaperiodlongerthansixmonths.Hence,theirseparation
paycomputedatonehalfpayperyearofserviceismorethantheminimumonemonthpay.
Pursuanttothe1995CBAbetweentheSDPIanditsLatuandailypaidrankandfileemployees,permanentortemporary
[24]
layoff workers affected would be entitled to termination pay as by the Labor Code. The parties did not incorporate in the
CBA a specific provision providing that employees terminated from employment due to the closure of business operations
wouldbeentitledtoseparationpayequivalenttoonemonthpayforeveryyearofservice.Thepartiesoptedtobeboundbythe
provisionsoftheLaborCodeandnotbycompanypolicy.Theemployeesoftheprivaterespondentwhoweremembersofthe
NFLratifiedtheCBAwhichhadbeeninforceandeffectforthreeyearsbeforetheclosureoftheplantation,withouttheNFL
initiatingtherevisionthereof.
It bears stressing that a collective bargaining agreement refers to the negotiated contract between the legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of employment in the
[25]
bargainingunit. Duringthenegotiations,theparties,managementandunionmeetandconvenepromptlyandexpeditiously
[26]

ingoodfaithforthepurposeofnegotiatinganagreement. Hadthedailypaidrankandfileemployeesdeemedthesameto
beadiminutionoftheirbenefits,theyshouldhaverejectedtheCBA.ThepetitionersneverassailedtheCBAasprejudicialto
themorforhavingbeeninviolationofArticle100oftheLaborCode.Unlessannulled,theCBA,asacontractgoverningthe
employerandtheemployeesrespectingthetermsofemployment,shouldprevail.
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Therecordsrevealthatthereisnosubstantialevidencetosupporttheclaimthatasimilarpracticehadbeenmadeinthe
caseofmonthlypaidemployees.NeitheristhereanyevidencethataCBAexistbetweenmonthlypaidrankandfileemployees
andtheSDPI.Consequently,Article283oftheLaborCode,whichgrantsseparationpayequivalenttoonemonthpayorone
halfmonthpayforeveryyearofservice,whicheverishigher,totheemployeesretrenchedduetobusinessclosures,should
apply.
We find that the petitioners contention, that they were impelled to execute the deed of quitclaim and receive their
separationpayandmonetarybenefitsbecause,otherwise,theyandtheirfamilieswouldhavestarved,isimplausible.Weagree
withthefollowingratiocinationoftheELA:
Beforehand,however,itmustbestressedthatwhenthecomplainantswerepaidseparationbenefitsandexecutedtheirquitclaimsand
releasesbeforetheundersignedon15and16January1998,theundersignedverifiedandconfirmedthattheydidsovoluntarilyand
willingly,afterhavingbeenmadetounderstandtheconsequencesthereof.Andtheyreceivedtheirseparationbenefitsandexecutedtheir
quitclaimsandreleasesdespitethefactthattheyhadaskedforbutwerenotgrantedahigherrateofseparationpaythattheirunionofficers
werepresentatthattimethattheyweremadetounderstandtheconsequencesoftheirreceivingtheseparationbenefitsprofferedtothem
andtheirexecutionofquitclaimsandreleases.
Theirvoluntaryacceptanceofseparationbenefitsandexecutionofquitclaimsandreleases,tothemindoftheundersigned,nowbarsthe
complainantsfromaskingformore.Iftheywerenotamenabletothecomputationoramountthereof,theyshouldhaveacceptedthesame.
Butbysoacceptingtheseparationbenefits,theytherebyenteredintoacompromisethereonwithSDPI.Thisisso,eveniftheexistenceof
companypolicyorpracticeonthebasisofwhichthecomplainantsaskforseparationpaydifferentials,isassumedtobetrue.
Whileitistruethatquitclaimsarefrownedupontheinlaborclaims,thisholdstrueonlywhentheconsiderationthereforisunconscionably
low.Where,however,theconsiderationissubstantial,theefficacyandvaliditythereofhasbeenupheld,moreso,wherethequitclaimwas
voluntarilyandwillinglyexecuted,asintheinstantcase.
Theamountofseparationpaypaidtoandreceivedbythecomplainants,wasonehalfofwhattheywanted.Tothemindoftheundersigned,
thatconstitutedsubstantialconsiderationforthequitclaimsthecomplainantsvoluntarilyexecuted.Thisisparticularlyso,consideringthat
theseparationpaythecomplainantsreceived(onehalfmonthpayforeveryyearofservice)wastheminimumprescribedbylaw,as
embodiedinArticle283oftheLaborCode,asamended.
AsheldinPeriquetvs.NationalLaborRelationsCommission,186SCRA724(1990):
Notallwaiversandquitclaimsareinvalidasagainstpublicpolicy.Iftheagreementwasvoluntarilyenteredintoandrepresentsareasonable
settlement,itisbindingonthepartiesandmaynotbedisownedsimplybecauseofachangedofmind.Itisonlywherethereisaclearproof
thatthewaiverwaswangledfromanunsuspectingorgullibleperson,orthetermsofthesettlementareunconscionableonitsface,thatthe
lawwillstepintoannulthequestionabletransaction.Butwhereitisshownthatthepersonmakingthewaiverdidsovoluntarily,withfull
understandingofwhathewasdoing,andtheconsiderationforthequitclaimiscredibleandreasonable,thetransactionmustrecognizedasa
validandbindingundertaking.
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ThisrulingwassubsequentlyreiteratedandappliedinSamaniegovs.NationalLaborRelationsCommission,198SCRA(1991)andVeloso
vs.DepartmentofLaborandEmployment,200SCRA201(1991).
Accordingly,thecomplainantsarenotentitledto,andcannotanymorebegrantedseparationpaydifferentials.
Itbearsstressinganewthatthecomplainantswerepaidsubstantialamountsofseparationpayinthepresenceoftheundersigned,before
whomtheyexecutedandcorrespondingquitclaimsandreleasesandtowhomtheyaffirmedthevoluntarinessandtheirwillingnessastothe
executionthereofandreceiptofseparationbenefitsprofferedtothembySDPIatthattime,withunderstandingastothecontentsofthe
quitclaimsandreleasesandtheconsequencesoftheirsaidacts.
[27]

Inthelightoftheforegoingdiscussion,theothermoneyclaimsofthecomplainantsmustalsobesetaside.

We do not agree with the claim of the petitioners that the payment of separation pay and other benefits in check is in
violationofArticle102oftheLaborCode,whichprovides:
Art.102.FormsofPayment.Noemployersshallpaythewagesofanemployeebymeansofpromissorynotes,vouchers,coupons,tokens,
tickets,chitsoranyobjectotherthanlegaltender,evenwhenexpresslyrequestedbytheemployee.
PaymentofwagesbycheckormoneyordershallbeallowedwhensuchpaymentiscustomaryonthedateofeffectivityofthisCode,oris
necessarybecauseofspecialcircumstancesasspecifiedinappropriateregulationstobeissuedbytheSecretaryofLabororastipulationina
collectivebargainingagreement.
Paymentbycheckpaymentofwagesbybankchecks,postalchecksormoneyordersisallowedwheresuchmannerofwagepaymentis
customaryonthedateoftheeffectivityoftheCode,whereitisstipulatedinacollectivebargainingagreement,orwhereallofthefollowing
conditionsaremet:
1.Thereisabankorotherfacilityforencashmentwithinaradiusofone(1)kilometerfromtheworkplace
2. The employer, or any of his agents or representatives, does not receive any pecuniary benefit directly or indirectly from the
arrangement
3. The employee are given reasonable time during banking hours to withdraw their wages from the bank which time shall be
consideredascompensablehoursworkedifdoneduringtheworkinghoursand
4.Thepaymentbycheckiswiththewrittenconsentoftheemployeesconcernedifthereisnocollectiveagreementauthorizingthe
[28]

paymentofwagesbybankchecks.

The term wage was defined in Article 97(f) of the Labor Code as the remuneration or earnings, however, designated,
capableofbeingexpressedin termsofmoney,whetherfixedorascertainedonatime,task,piece,orcommissionbasis,or
othermethodofcalculatingtheunwrittencontractofemploymentforworkdoneortobedone,orforservicesrenderedortobe
rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other
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[29]

facilities customarily furnished by the employer to the employee. Wages shall be paid only by means of legal tender. The
onlyinstancewhenanemployerispermittedtopaywagesinformsotherthanlegaltender,thatisbychecksormoneyorder,is
whenthecircumstancesprescribedinthesecondparagraphofArticle102arepresent.
Inthepresentcase,thepetitionersseparationpay,otherbenefits,andthewagesfromJanuary1to17werepaidincheck.
Strictlyspeaking,SDPIviolatedtheLaborCodewhenitincludedwagesfromJanuary1to17,1998inthecheck.Considering,
however, the amount of other monetary benefits to be paid, payment in check was the most convenient form for both the
petitioners and the respondent. Further, as pointed out by the respondents, the petitioners are deemed estopped from
questioningthelegalityofpaymentofwagesfromJanuary1to17,1998incheckbecausethesamewasraisedforthefirst
timeonlyintheirappealbeforetheNLRC.
INLIGHTOFALLTHEFOREGOING,thepetitionisDENIED.ThedecisionandresolutionoftheCourtofAppealsinCA
G.R.SPNo.56230areAFFIRMED.
SOORDERED.
Puno,(Chairman),AustriaMartinez,andTinga,JJ.,concur.
ChicoNazario,J.,onleave.
[1]
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]

PennedbyAssociateJusticeEliezerR.delosSantos,withAssociateJusticesGodardoA.JacintoandBernardoP.Abesamis(retired),concurring.
Rollo,pp.5455.
Supra.
ComprehensiveAgrarianReformLawof1988Annotated,VenancioAgustin,1990ed.,p.145.
Rollo,p.169.
Id.at92.
Id.at91.
Id.at94.
Id.at170.

[10]
[11]

Id.at268and278.
CARollo,p.41.

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[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]

[23]
[24]
[25]
[26]
[27]
[28]
[29]

NFLvsCA:149464:October19,2004:J.CallejoSr:SecondDivision:Decision

Id.at271272.
Id.at42.
Rollo,p.65.
Id.at75.
Id.at104.
CARollop.10.
104Phil.688(1958).
300SCRA37(1998).
269SCRA564(1997).
Rollo,p.73.
MacAdams Metal Engineering Workers UnionIndependent v. Mac Adams Metal Engineering,414 SCRA 411 (2003) Tanjuan v. Philippine Postal
SavingsBank,Inc.411SCRA168(2003).
HandbookonWorkersStatutoryMonetaryBenefits.
CARollo,p.43.
Section1(pp),RuleI,BookVoftheOmnibusRulesImplementingtheLaborCode.
Article252oftheLaborCode.
Rollo,pp.6364.
Section2,RuleVIII,BookIII,OmnibusRulesImplementingtheLaborCode.
PhilippineAirlines,Inc.v.NLRC,263SCRA638(1996)

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