Manila Hotel Corp. v.
De Leon
G.R. No. 219724 – July 23, 2018
J. Tijam
Topic: The Collective Bargaining Agreement; CBA does not apply to Managerial Employees
Doctrine: In the absence of an agreement to the contrary, managerial employees cannot be allowed to
share in the concessions obtained by the labor union through collective negotiation. Otherwise, they
would be exposed to the temptation of colluding with the union during the negotiations to the
detriment of the employer.
.
Petitioner: Manila Hotel Corporation
Respondents: Rosita De Leon
Case Summary: After rendering almost 34 years of service, the respondent received a Notice informing
her of the management’s decision to terminate her. She filed for an illegal dismissal case against her
employer. In this case, it was uncontested that she was a managerial employee. The issue is whether the
CBA with regard to retirement is applicable to her. The Court said that petitioner’s CBA with its rank-
and-file employees does not apply to her. In the absence of an agreement to the contrary, managerial
employees cannot be allowed to share in the concessions obtained by the labor union through
collective negotiation. Otherwise, they would be exposed to the temptation of colluding with the union
during the negotiations to the detriment of the employer.
Facts:
Respondent began working for petitioner on September 1, 1976 as a Restaurant and Bar Cashier.
She was promoted to Front Office Cashier in October 1977, as Front Office Cashier’s Shift
Leader in August 1986, and as Head Cashier in January 1988.
In March, 1989, she assumed the post of Income Auditor.
Seven years later, she accepted the position of Assistant Credit and Collection Manager. In March
2000, petitioner turned over to her the functions of the General Cashier who had resigned.
On June 7, 2011, respondent received petitioner’s June 6, 2011 letter, captioned as a Notice of
Compulsory Retirement. The letter contained a statement that the Management would like to
exercise its management prerogative to compulsorily retire the respondent having been rendered
35 years of service in service from the Hotel.
At the time the respondent (57 years old) received the Notice, respondent was an Assistant Credit
and Collection Manager/ Acting General Cashier. She had by then rendered 34 years of service.
Respondent filed a complaint for illegal dismissal, underpayment of salaries and 13 th month pay,
nonpayment of service charges, transportation allowance and other related benefits, and
illegal deductions, with prayer for reinstatement without loss of seniority rights, backwages,
actual, moral and exemplary damages and attorney’s fees.
Petitioner argued that there was no illegal dismissal because respondent voluntarily accepted its
offer to avail the compulsory retirement program under the CBA between petitioner and its rank-
and-file employees.
o Under the CBA, an employee’s retirement is compulsory when he or she reaches the age
of 60 or has rendered 20 years if service, whichever comes first.
Petitioner averred that when respondent received the Notice, she went directly to the Human
Resources Director to inquire about her retirement pay, and upon learning that the same
would amount to P1.5 Million, she graciously accepted the retirement offer and even
personally and eagerly processed her Personnel Clearance.
o However, when notified that the release of her retirement pay at P1,510,757.92 had
been approved, respondent refused to get her check and instead maliciously sued
petitioner for illegal dismissal.
Moreover, petitioner pointed out that respondent already rendered 14 years in excess of the 20
year cutoff period for compulsory retirement, thus, it allegedly had all the right to terminate her
services.
In any case, petitioner argued, respondent could be compulsorily retired under the CBA,
being a rank-and-file employee.
o It averred that respondent’s work, the most crucial aspect of which was merely to
count and keep petitioner’s money, was routinary and did not involve the exercise
of any discretion.
Respondent, on the other hand, argued that that petitioner’s CBA with the rank-and -file
employees did not apply to her because she held a managerial or supervisory position as
shown no less by her job title.
Ruling of the LA: the LA held that respondent was a managerial employee, as evinced by the
Personnel Status Form and Appraisal Sheets she submitted and based on her responsibilities
and duties and the benefits and privileges that came with her post. The LA also concluded
that the CBA did not apply to the respondent and therefore her compulsory retirement constituted
constructive dismissal.
Ruling of the NLRC: the NLRC reversed the LA while managerial employees are ordinarily
outside the scope of CBA, nothing prevents employers from granting them benefits equal to
or higher than those given to union members. It held that in extending the retirement
benefits under the CBA to respondent, petitioner was merely exercising a management
prerogative, and by immediately processing her retirement requirements, including the
Personnel Clearance, respondent accepted petitioner’s offer of retirement.
o The NLRC thus concluded that petitioner’s offer of retirement and respondent’s
acceptance thereof constituted a bilateral agreement. It also ruled that having assented
to her compulsory retirement, respondent was already estopped from contesting the
same.
Ruling of the CA: reversed the NLRC
Issue + Held: WON the CBA applies to the respondent. No.
The CA held that respondent is a managerial employee, as found by the LA and the NLRC – a
finding which petitioner never bothered to contest.
Because respondent is a managerial employee, petitioner’s CBA with its rank-and-file employees
does not apply to her.
Citing the case of United Pepsi-Cola Supervisory Union v. Laguesma, the Court held that by the
very nature of their functions, they assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial functions in the field of
labor relations. As such, the rationale behind the ineligibility of managerial employees to
form, assist or join a labor union equally applies to them.
Citing the case of Bulletin Publishing Co. v. Sanchez, the Court held that the rationale for this
inhibition has been stated to be, because if these managerial employees would belong to or be
affiliated with a Union, the latter might not be assured of their loyalty to the Union in view of
evident conflict of interests. The Union can also become company- dominated with the
presence of managerial employees in Union membership.
Thus, in the absence of an agreement to the contrary, managerial employees cannot be
allowed to share in the concessions obtained by the labor union through collective negotiation.
Otherwise, they would be exposed to the temptation of colluding with the union during the
negotiations to the detriment of the employer.
o Accordingly, the fact that respondent had rendered more than 20 years of service to
petitioner will not justify the latter’s act of compulsorily retiring her at age 57,
absent proof that she agreed to be covered by the CBA’s retirement clause.
Under Art. 287 of the Labor Code, the retirement age is primarily determined by the existing
agreement of employment contract.
The Court did not agree with the argument of the Petitioner in saying that it had an implied
agreement with the respondent for the latter’s compulsory retirement, which constitutes a
retirement contract under the labor code. The petitioner maintained that the agreement was
perfected when respondent verbally accepted its retirement offer and when she personally and
voluntarily processed her Personnel Clearance. However, the Court said that the letter was a
Notice which indicates that it merely served to notify respondent of a decision to retire her
services.
Furthermore, the CA correctly observed that respondent’s refusal to accept her retirement pay
and her objections to being retired early, as well as the filing of her complaint for illegal
dismissal, confirm that she did not consent to her compulsory retirement.
All told, an employee in the private sector who did not expressly agree to an early retirement
cannot be retired from the service before he reaches the age of 65 years.
“Acceptance by the employee of an early retirement age option must be explicit, voluntary,
free and uncompelled.”
“The law demanded more than a passive acquiescence on the part of the employee,
considering that his early retirement age option involved conceding the constitutional right to
security of tenure.”
The Court reiterated that “[r]etirement is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employee whereby the latter, after reaching a
certain age, agrees to sever his or her employment with the former.
Ruling:
The Petition is DENIED.
