The Supreme Court in Quintin V. Beltran v. AMA Computer College ruled that a company’s consistent practice of granting early retirement benefits to employees, even without a formal written policy, constitutes an enforceable company policy. This decision protects employees’ rights to benefits that have become an established part of their compensation, preventing employers from unilaterally withdrawing such benefits. The Court emphasized the importance of substantial evidence in proving such practices and reinforced the principle of non-diminution of benefits under the Labor Code. This case confirms that long-standing, consistently applied benefits can create a legally binding obligation for employers, safeguarding employee welfare and stability.

When Consistent Benevolence Becomes a Binding Obligation

The case of Quintin V. Beltran v. AMA Computer College centers on whether AMA Computer College had an established company practice of granting early retirement benefits to its employees, even in the absence of a written retirement plan. Quintin Beltran, the petitioner, sought early retirement benefits after serving AMA for 18 years. His request was denied, leading him to file a complaint for retirement benefits and other monetary claims. The Labor Arbiter (LA) dismissed the complaint, a decision partly reversed by the National Labor Relations Commission (NLRC). The Court of Appeals (CA) affirmed the NLRC’s findings. The primary issue before the Supreme Court was whether the CA erred in affirming the NLRC’s decision, specifically regarding the existence of a company policy on early retirement.

The Supreme Court approached the case by first emphasizing the importance of procedural rules in labor cases. The Court noted that the NLRC has more leeway in applying its rules to ensure just and expeditious resolution of labor disputes. Therefore, the submission of affidavits from two former AMA employees, Catolico and Creencia, who attested to having received early retirement benefits, was deemed admissible even though they were submitted late. The Court cited Loon v. Power Master, Inc., emphasizing that while technical rules of procedure are relaxed, there are two qualifications: a party must adequately explain any delay in submitting evidence, and the party must sufficiently prove the allegations sought to be proven.

In this case, the Court found that Beltran adequately explained the delay, attributing it to the difficulties in contacting former employees while residing abroad. Additionally, the affidavits sufficiently proved that AMA had a practice of granting early retirement benefits. Building on this procedural foundation, the Court turned to the core substantive issue: whether AMA had a consistent company practice that entitled Beltran to early retirement benefits. The Court referred to Article 302 of the Labor Code, which stipulates the conditions for retirement, setting the voluntary retirement age at 60 years old and the mandatory retirement age at 65 years old, with a minimum of five years of service to be eligible for retirement benefits.

However, the Court clarified that employers are free to grant other retirement benefits and impose different requirements, provided these are not less than those provided in Article 302. Article 100 of the Labor Code, the **non-diminution of benefits rule**, prohibits the elimination or reduction of benefits received by employees, provided that the basis for the benefit is shown through an express policy, written contract, or an unwritten policy that has become a company practice. The central question then became whether AMA had an unwritten policy of granting early retirement that had ripened into a company practice. This determination hinges on whether such a practice was consistently and deliberately made by the employer over a significant period.

The Court referenced Metropolitan Bank and Trust Co. v. National Labor Relations Commission, which underscores that there is no hard and fast rule regarding the length of time a company practice must be exercised to constitute a voluntary employer practice that cannot be unilaterally withdrawn. The decision emphasized that the key factor is the regularity and deliberateness of granting the benefits over a significant period. With these principles in mind, the Court scrutinized the evidence presented by Beltran. The affidavits of Catolico and Creencia attested to AMA’s practice of granting early retirement benefits to employees who had rendered at least 10 years of service, irrespective of age. These employees had both availed themselves of this program, receiving one month’s salary for every year of service.

Furthermore, Catolico and Creencia identified eight other employees who had also received early retirement benefits. The Court found their testimonies credible, considering their managerial positions and length of service at AMA. As Director and Registrar, Catolico and Creencia would have been privy to the school’s policies and personnel movements. Adding weight to Beltran’s case was the fact that he held a similar position to Catolico and had served the school for 18 years, similar to Creencia. The fact that his request for early retirement was denied, without explanation, while others were granted, underscored the inconsistency in AMA’s actions. In contrast, AMA merely denied the existence of any early retirement policy, claiming that the grants to Catolico and Creencia were isolated acts of generosity.

The Court found this defense unpersuasive, noting that AMA failed to present any evidence to refute the specific claims made in Catolico and Creencia’s affidavits regarding the early retirement benefits granted to other employees. AMA’s reliance on management prerogative and generosity, when it had previously denied the existence of a retirement plan, further weakened its position. The Court contrasted AMA’s lack of explanation for denying Beltran’s request with the detailed evidence presented by Beltran, including his request for early retirement, clearance forms, and exit interview form, all of which supported his claim that he had complied with the necessary procedures. Therefore, the Court concluded that the evidence presented by Beltran substantially outweighed AMA’s bare denials.

Citing Wesleyan University – Phils, v. Wesleyan University – Faculty and Staff Association, the Court reiterated the importance of substantial evidence in the form of affidavits to support claims of retirement benefits, especially when the employer fails to refute the veracity of these affidavits. Ultimately, the Supreme Court reversed the decisions of the CA and NLRC, holding that Beltran had sufficiently proven that AMA had a consistent company practice of granting early retirement benefits. Therefore, he was entitled to receive the same benefits. However, the Court noted that Beltran was unable to prove the exact amount of his last salary, thus upholding the CA and NLRC’s finding of P25,000.00. His claims for sick leave conversion and a Hong Kong trip incentive were also denied for lack of evidence.

Acknowledging the distress caused to Beltran, the Court awarded him moral and exemplary damages. The Court reasoned that AMA had acted in bad faith by refusing to grant Beltran’s request for early retirement and by accusing him of abandoning his position without proper procedure. This caused considerable distress to Beltran, who had dedicated 18 years of service to the institution. The Court also awarded attorney’s fees, citing Article 2208 of the Civil Code, which allows such fees when exemplary damages are awarded and when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just, and demandable claim. The Court clarified, however, that the liability for the monetary award was imposed only on AMA, not on its directors, officers, or employees, as there was no evidence of their personal participation, bad faith, or malice in the denial of Beltran’s application for early retirement.

FAQs

What was the key issue in this case?	The key issue was whether AMA Computer College had an established company practice of granting early retirement benefits to its employees, even without a written policy, and whether Quintin Beltran was entitled to those benefits.
What is the non-diminution of benefits rule?	The non-diminution of benefits rule, under Article 100 of the Labor Code, prohibits employers from eliminating or reducing benefits that employees are already receiving at the time of the Code’s promulgation, provided the benefit is based on an express policy, written contract, or an established company practice.
What constitutes a company practice?	A company practice is a consistent and deliberate action made by the employer over a significant period of time. It must be shown that the employer regularly and intentionally provided the benefit, indicating that it has become an established condition of employment.
What evidence did the petitioner present to prove the company practice?	The petitioner presented affidavits from two former employees who attested that AMA had a practice of granting early retirement benefits to employees with at least 10 years of service. These affidavits also named other employees who had received similar benefits.
Why were the affidavits of the former employees considered credible?	The affidavits were considered credible because the former employees held managerial positions and had long tenures at AMA, making them knowledgeable about the school’s policies and personnel matters.
Did AMA present any evidence to counter the petitioner’s claims?	No, AMA merely denied the existence of an early retirement policy and claimed that the grants to the former employees were isolated acts of generosity. They did not provide any evidence to refute the specific claims made in the affidavits.
Why was the petitioner awarded moral and exemplary damages?	The petitioner was awarded moral and exemplary damages because the Court found that AMA acted in bad faith by refusing to grant his request for early retirement and by falsely accusing him of abandoning his position without proper procedure.
Who is liable for the monetary award in this case?	Only AMA Education System is liable for the monetary award. The directors, officers, and employees were not held personally liable because there was no evidence of their personal participation, bad faith, or malice in the denial of the petitioner’s application for early retirement.

In conclusion, the Supreme Court’s decision in Quintin V. Beltran v. AMA Computer College underscores the importance of protecting employees’ rights to benefits that have become established company practices. Employers must recognize that consistent and deliberate benevolence can create legally binding obligations. This case serves as a reminder that substantial evidence is key in proving such practices, and that the principle of non-diminution of benefits must be upheld to ensure fair treatment of employees.

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: Quintin V. Beltran v. AMA Computer College, G.R. No. 223795, April 03, 2019