G.R. No. 188659 - Heirs of Ridad vs. Gregorio Araneta University Foundation

The controversy stems from the implementation of the Reorganization, Retrenchment and Restructuring (RRR) Program by Gregorio Araneta University Foundation (GAUF) in 1984.
Cesar Mijares, then President of GAUF, sought approval for the RRR Program from the then Minister of Labor and Employment, Blas F. Ople, who approved the program with a reminder regarding the preservation of accrued employee benefits.
The RRR Program took effect on January 1, 1984, amidst serious business losses and financial reversals suffered by GAUF.

Manuel H. Ridad – External Relations Officer (Hired June 1, 1974; Retired October 16, 2000)
Apolinario G. Bactol – Head of Engineering Services (Hired August 20, 1969; Retired January 16, 2001)
Emerita C. Gulinao – Director of Physical Plant and Facilities and General Services (Hired June 11, 1973; Retired November 11, 2000)
Lydia S. Jusay – Dean of College of Education (Hired June 1967; Retired May 31, 2000)

Each petitioner’s retirement benefits were computed based on the RRR Program’s reckoning period beginning in January 1984, despite claims that they were retrenched and re-hired on that same date.

GAUF’s Manual of Policies, specifically Section 374, Article CVI, provided a schedule for computing retirement benefits based on the employee’s years of service.

The schedule grants a percentage of the monthly salary per year of service, with percentages increasing as the service tenure increases (e.g., 50% for 7-9 years, 60% for 10-12 years, etc.).

Petitioners contended that their retirement benefits should be reckoned from their original hiring date rather than the re-hiring date of January 1984.
Petitioners also argued that they did not receive separation benefits during the initial implementation of the RRR Program, and they questioned the inclusion of their monthly honorarium in the computation of their 13th month pay.

The Labor Arbiter ruled on September 30, 2002, awarding separation benefits computed from the period when petitioners were originally hired until December 31, 1983, after offsetting receivables, which included amounts for tuition fees and the value of lots sold by GAUF.
The National Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s decision, noting GAUF’s non-compliance with a compromise agreement that embodied the full settlement of all monetary claims.
Subsequently, GAUF appealed to the Court of Appeals, which in its Decision dated December 18, 2008, set aside both the NLRC and Labor Arbiter decisions. The appellate court held that petitioners had been effectively severed from their employment upon the implementation of the RRR Program and that the compromise agreement was valid in settling claims for separation pay.

GAUF contended that petitioners were fully paid for their separation/retirement benefits, noting that the amounts disbursed even exceeded the statutory requirements when computed based on the employee’s last pay as of December 31, 1983.
The offsets applied included receivables from tuition fee obligations and values from lot sales, though issues arose concerning the enforcement of the compromise agreement regarding properties whose titles were later rescinded.
The dispute principally centered on whether the computations should take into account the entire period from the original hiring date or only from the re-hiring date (January 1984).

Whether the retirement benefits should be computed from the petitioners’ original hiring dates or from the re-hiring date of January 1984 when the RRR Program was implemented.

Whether petitioners were paid their due separation benefits or if the offsets, including tuition fee receivables and lot sale values, improperly reduced the amounts due under the law.
Whether GAUF’s claim that all obligations were fully discharged under the compromise agreement holds merit despite lapses in the full fulfillment of its terms.

Which party bore the burden of proof regarding the payment of retirement benefits, given that crucial employment records and payroll documents are usually under the control of the employer.
Whether the offsetting of receivables and non-monetary settlements (e.g., the lot values) can be credited in settling claims for separation benefits.