Pantranco v. NLRC

G.R. No. 95940 (July 24, 1996)

Facts:

Private respondent Urbano Suaiga was employed by petitioner Pantranco North Express, Inc. as a bus conductor starting in 1964. He became a member of the Pantranco Employees Association-PTGWO and continued his employment until August 12, 1989, when he was retired at the age of 52 after completing 25 years of service. His retirement was based on a provision in the collective bargaining agreement (CBA) between the petitioner and the union, which stipulated compulsory retirement after 25 years of service or upon reaching the age of 60, whichever came first. Following his retirement, he received P49,300.00 as retirement pay.

On February 15, 1990, Suaiga filed a complaint for illegal dismissal against Pantranco with the National Labor Relations Commission (NLRC), which was consolidated with similar complaints from other employees. After hearings, Labor Arbiter Ricardo N. Olairez ruled on March 26, 1990, that Suaiga and the other complainants were illegally dismissed, ordering their reinstatement and awarding back wages and other benefits.

Petitioner appealed the decision to the NLRC, which affirmed the labor arbiter's ruling. Consequently, Pantranco filed a petition for certiorari to nullify the NLRC's resolution.

Issues:

1. Did the NLRC err in holding that the labor arbiter had jurisdiction over the case?
2. Was the compulsory retirement of private respondent Suaiga, as per the CBA, a valid and enforceable provision, or did it constitute illegal dismissal?

Arguments:

Petitioner’s Arguments:

• The labor arbiter lacked jurisdiction because the dispute involved the interpretation of a CBA provision, which should fall under the jurisdiction of voluntary arbitrators as per Article 261 of the Labor Code.
• The compulsory retirement provision in the CBA was valid and enforceable, as it complied with Article 287 of the Labor Code, which allows for retirement at an age established in a CBA.

Respondent’s Arguments:

• The labor arbiter had jurisdiction because the case was fundamentally about illegal dismissal, and the interpretation of the CBA was merely incidental.
• The compulsory retirement provision was illegal as it effectively dismissed the employee without just cause, violating labor laws.

Court’s Decision and Legal Reasoning:

The Supreme Court found the petition meritorious and reversed the NLRC's resolution.

1. Jurisdiction of Labor Arbiter: The Court agreed with the labor arbiter's assertion of jurisdiction, stating that the case was primarily a termination dispute rather than a grievance over the CBA. The Court emphasized that the dispute was between the employer and an employee regarding the application of the CBA, which did not involve a grievance between the union and the employer.

2. Compulsory Retirement: The Court ruled that the CBA provision allowing for compulsory retirement after 25 years of service was legal and enforceable. It cited Article 287 of the Labor Code, which permits the establishment of a retirement age in a CBA. The Court noted that the law does not prohibit setting a retirement age below 60 years, and such provisions do not diminish employee benefits. The Court distinguished between retirement and dismissal, asserting that retirement is a mutual agreement, while dismissal is a unilateral act by the employer.

The Court also highlighted that the CBA is a product of negotiation and binds all parties, including union members like Suaiga. Since he ratified the CBA, he was bound by its terms, including the compulsory retirement provision.

Significant Legal Principles Established:

• The jurisdiction of labor arbiters extends to cases involving illegal dismissal, even when the interpretation of a CBA is involved.
• Provisions in a CBA that establish a compulsory retirement age below 60 years are valid and enforceable, provided they do not diminish employee benefits.
• Retirement is a bilateral act, distinct from dismissal, and is governed by the terms agreed upon in a CBA.