Oxales vs. United Laboratories Inc.

GR No. 152991, July 21, 2008

Facts: UNILAB established the United Retirement Plan (URP) which is a comprehensive retirement
program aimed at providing for the retirement, resignation and death benefits of its members. The URP
mandates the compulsory retirement age of 60. An employee of UNILAB becomes a member of URP
upon regularization in the company. Oxales joined UNILAB in 1968 and compulsorily retired when he
reached his 60. In computing his benefits, UNILAB took into account only his basic monthly salary,
excluding his permanent and regular bonuses, reasonable value of food allowances, 1/12 of 13th month
pay and cash equivalent of service incentive leave. Thus, Oxales received in total 2, 173, 230 instead of
4, 260, 225. He wrote UNILAB to be paid the difference but the latter replied reminding Oxales of the
provisions of URP excluding commissions, overtime, bonuses or extra compensations in computing basic
salary of retiring employees. Disgruntled, Oxales filed a complaint with LA. LA, NLRC and CA dismissed
the complaint.

ISSUE:
1. WON the computation of retirement benefits should have factored other benefits?
2. WON RA 7641 (Retirement Pay Law) is applicable for purposes of computing retirement
benefits?
3. WON UNILAB is liable for moral and exemplary damages and attorneys fees?

RULING:
1. No. A retirement plan in a company partakes the nature of a contract, with the employer and
employee as the contracting parties. As such, the employer and employee may establish such
stipulations, clauses, terms and conditions as they may deem convenient provided it does not
contravene the law, morals, good customs, public order or public policy. In the case, the URP is
not contrary to law, morals, good customs, public order or public policy. In fact, it provides 1 ½
month salary for every year of service as basis of retirement whereas the law provides only ½
month salary, inclusive however of not more than 5 days service incentive leave and 1/12 of the
13th month pay. Mathematically speaking, UNILAB provided Oxales with retirement benefits way
above his entitlement under the law.
2. No. RA 7641 only applies when:
a. There is no collective bargaining agreement or other applicable employment contract
providing for retirement benefits for an employee; or
b. The above exists but it is below the requirements set for by law.
In the case, URP applies.
3. No, for want of basis. The Court in Audion v. Electric Co., Inc. v. National
Labor Relations Commission held that, “moral and exemplary damages are recoverable
only where the dismissal of an employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to morals,
good customs or public policy…” In the case, Oxales was not dismissed but was retired
by UNILAB by virtue of the URP and was paid his complete retirement benefits.