Almirante: Gratuity plan

ON MARCH 8, 1991, the Philippine Banking Corp. (Philbank) implemented a new gratuity plan where an employee involuntarily separated from the service is entitled to either 100 percent of his actual gratuity benefit or the actual benefit due him under the plan, whichever is higher.

In February 2000, Philbank merged with respondent Global Business Bank Inc. (Globalbank). Consequently, the petitioners’ positions became redundant. A Special Separation Program (SSP) was implemented and the petitioners were granted a separation package equivalent to one and a half month’s pay (or 150 percent of one month’s salary) for every year of service based on their current salary.

In a complaint for non-payment of separation pay, the petitioners asserted that they are entitled to separation pay at the rate of one month’s salary for every year of service under the Labor Code and gratuity pay at the rate of one month’s salary for every year of service whether under the Old Plan or the New Gratuity Plan.

Since what they received as separation pay was equivalent to only 150 percent of their monthly salaries for every year of service, the respondents are still liable to pay them the deficiency equivalent to one-half of their monthly salary for every year of service. Does this claim find merit?

Ruling: No.

Section 8 of the New Gratuity Plan expressly states that “the benefits under this Plan shall be deemed integrated with and in lieu of (i) statutory benefits under the New Labor Code and Social Security Laws, as now or hereafter amended” and that “[t]his Plan is not intended to duplicate or cause the double payment of similar or analogous benefits provided for under existing labor and security laws.”

Article 283 of the Labor Code provides only the required minimum amount of separation pay, which employees dismissed for any of the authorized causes are entitled to receive. Employers, therefore, have the right to create plans, providing for separation pay in an amount over and above what is imposed by Article 283. There is nothing therein that prohibits employers and employees from contracting on the terms of employment, or from entering into agreements on employee benefits, so long as they do not violate the Labor Code or any other law, and are not contrary to morals, good customs, public order, or public policy.

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Consequently, if the petitioners were allowed to receive separation pay from both the Labor Code, on the one hand, and the New Gratuity Plan and the SSP, on the other, they would receive double compensation for the same cause (i.e., separation from the service due to redundancy) even if such is contrary to the provisions of the New Gratuity Plan. The petitioners’ claim of being shortchanged is certainly unfounded.

They have recognized the validity of the SSP and the New Gratuity Plan as evidenced by the acceptance letters and quitclaims they executed; and the benefits they received under the SSP and the New Gratuity Plan are more than what is required by the Labor Code (Ma. Corina C. Jiao, et. al. vs. NLRC, et. al., G.R. No. 182331, April 18, 2012).