The Supreme Court ruled that an employee who participates in an illegal strike and defies a return-to-work order loses their employment status and, consequently, the right to retirement benefits. This decision underscores the importance of adhering to labor laws and lawful orders, as defiance can result in the forfeiture of benefits that would otherwise accrue to an employee. The case clarifies that retirement benefits are intended as a reward for loyal service, not as an entitlement for those who engage in unlawful labor practices. The Court emphasized that retirement requires a voluntary agreement, which is absent when an employee is terminated for just cause.

Striking Out: Can Illegal Actions Erase Years of Service?

The case of Armando M. Tolentino (deceased), herein represented by his surviving spouse Merla F. Tolentino and children vs. Philippine Airlines, Inc., stemmed from a labor dispute involving Philippine Airlines (PAL) and its pilots. Armando M. Tolentino, a long-time pilot for PAL and a member of the Airline Pilots Association of the Philippines (ALPAP), participated in a strike that was later declared illegal by the Secretary of Labor. The central legal question was whether Tolentino, despite his years of service, was entitled to retirement benefits and other compensation from PAL, considering his participation in the illegal strike and subsequent failure to comply with a return-to-work order. The Supreme Court’s decision hinged on whether Tolentino’s actions constituted a just cause for termination, thereby forfeiting his right to claim retirement benefits.

Tolentino’s journey with PAL began on October 22, 1971, and by July 16, 1999, he had achieved the rank of A340/A330 Captain. However, his career took a turn when ALPAP members initiated a strike on June 5, 1998. The Secretary of Labor intervened, issuing an Order on June 7, 1998, mandating all striking ALPAP members to return to work within 24 hours, with PAL management required to accept them under the same terms and conditions as before the strike. Despite this Order, Tolentino, along with some other pilots, continued to participate in the strike. This act of defiance proved consequential.

When Tolentino and other striking pilots eventually sought to return to work on June 26, 1998, PAL refused to readmit them, leading to a complaint for illegal lockout filed by the pilots. Subsequently, on July 20, 1998, Tolentino reapplied for employment with PAL as a newly hired pilot, voluntarily undergoing a six-month probationary period. Less than a year later, on July 16, 1999, he resigned. In the interim, on June 1, 1999, the Secretary of Labor officially declared the strike illegal due to procedural infirmities and defiance of the return-to-work order. This declaration had far-reaching implications for the striking ALPAP members, including Tolentino, as the resolution stated that those who participated in defiance of the return-to-work order had lost their employment status. This resolution was later affirmed by the Supreme Court on April 10, 2002.

Upon returning to the Philippines after working for a foreign airline, Tolentino sought to collect his separation and/or retirement benefits under the collective bargaining agreement (CBA) with PAL. However, PAL refused to grant him these benefits, leading Tolentino to file a complaint for non-payment of holiday pay, rest day pay, separation pay, and retirement benefits, along with a claim for damages and attorney’s fees. The Labor Arbiter dismissed Tolentino’s complaint, finding that his participation in the illegal strike and defiance of the return-to-work order constituted a valid dismissal, thereby disqualifying him from separation pay and other benefits. The Labor Arbiter also denied his claim for retirement benefits, as Tolentino had resigned less than a year after being rehired by PAL. The National Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s decision, further cementing the denial of Tolentino’s claims.

The case eventually reached the Court of Appeals (CA), which affirmed the NLRC’s decision with a modification, ordering PAL to pay Tolentino his accrued vacation leave. The CA reasoned that the CBA justified the claim for vacation pay upon separation from the company, regardless of the validity of the termination. However, the Supreme Court ultimately reversed this decision, denying Tolentino’s claims for retirement benefits and other compensation. The Court emphasized that Tolentino’s participation in the illegal strike and his failure to comply with the return-to-work order constituted a just cause for dismissal under Article 282 of the Labor Code. The Court cited PAL, Inc. v. Acting Secretary of Labor, which stated that striking employees who defy a return-to-work order are deemed to have lost their employment status.

Furthermore, the Supreme Court clarified that Tolentino’s reemployment with PAL as a new hire did not restore his previous employment status for the purpose of retirement benefits. The Court stated that reemployment on the condition that the employee be treated as a new employee is a valid exercise of the employer’s prerogative, provided it is not motivated by anti-union sentiments. Since Tolentino resigned less than a year after being rehired, he did not meet the minimum service requirement for retirement benefits under the PAL-ALPAP Retirement Plan. The Court also rejected the argument that Tolentino was entitled to the equity in the retirement fund under the PAL Pilots’ Retirement Benefit Plan. It was clarified that the retirement fund was raised exclusively from PAL’s contributions, and only pilots who retired were entitled to receive the full amount of the contribution.

In essence, the Supreme Court’s decision reinforced the principle that employees who engage in illegal strikes and defy return-to-work orders face the risk of losing their employment status and the benefits associated with it. The ruling serves as a cautionary tale, highlighting the importance of adhering to labor laws and lawful orders in the workplace. The implications of this ruling are significant, particularly for union members and employees involved in labor disputes. It underscores the need to carefully consider the consequences of participating in strikes or defying lawful orders, as such actions can have long-term repercussions on their employment and retirement prospects.

FAQs

What was the key issue in this case?	The key issue was whether an employee, who participated in an illegal strike and defied a return-to-work order, was entitled to retirement benefits despite being terminated for just cause. The Supreme Court ruled against the employee, stating that such actions result in the loss of employment status and forfeiture of retirement benefits.
What is a return-to-work order?	A return-to-work order is a directive issued by the Secretary of Labor during a labor dispute, requiring striking employees to resume their duties under the same terms and conditions of employment that existed before the strike. It is intended to maintain essential services and prevent economic disruption.
What happens if an employee defies a return-to-work order?	If an employee defies a return-to-work order, they are deemed to have committed an illegal act, which is a just cause for dismissal under Article 282 of the Labor Code. This can lead to the loss of employment status and the forfeiture of certain benefits, such as retirement pay.
Can an employee be rehired after participating in an illegal strike?	Yes, an employee can be rehired after participating in an illegal strike, but the employer has the prerogative to treat the reemployment as a new hire. This means the employee’s previous employment status and seniority may not be recognized for the purpose of benefits, such as retirement.
What are the requirements for retirement benefits under the PAL-ALPAP Retirement Plan?	Under the PAL-ALPAP Retirement Plan, a member-pilot must complete at least five years of continuous service with PAL to be entitled to the resignation benefit. To be eligible for normal retirement, a pilot must have either 20 years of service or 20,000 flight hours with PAL.
What is the PAL Pilots’ Retirement Benefit Plan?	The PAL Pilots’ Retirement Benefit Plan is a retirement fund raised exclusively from contributions made by Philippine Airlines (PAL). Upon retirement, each pilot is entitled to receive the full amount of the contribution, which is separate from the benefits under the PAL-ALPAP Retirement Plan.
Can an employee claim retirement benefits if terminated for just cause?	No, an employee who is terminated for just cause is generally not entitled to retirement benefits. Retirement benefits are considered a reward for loyal service, and it would be contrary to the purpose of these benefits to grant them to an employee who was terminated for misconduct or violation of company policies.
What does the Personnel Policies and Procedures Manual say about benefits after dismissal?	The PAL Personnel Policies and Procedures Manual states that generally, a dismissed employee forfeits all entitlements to company benefits and privileges. This policy is applicable to employees who are terminated for just cause, such as participating in an illegal strike.

This case serves as a crucial reminder for both employers and employees regarding the consequences of labor disputes and the importance of adhering to legal and contractual obligations. The Supreme Court’s decision underscores that retirement benefits are not an automatic entitlement but rather a reward for fulfilling the duties and responsibilities of employment in accordance with the law.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Armando M. Tolentino (Deceased) vs. Philippine Airlines, Inc., G.R. No. 218984, January 24, 2018