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Phil Airlines v.

Airline Pilots
GR No. 143686 15 Jan 2002 J. Ynares-Santiago

FACTS
PAL unilaterally retired Captain Albion Collantes. The Airline Pilots Association of the Philippines
(ALPAP) contended that the retirement constituted illegal dismissal and union busting and filed a
notice of strike with the DOLE.
The DOLE Sec assumed jurisdiction over the dispute and issued an order:
o Upholding PAL's action of unilaterally retiring Cpt. Collantes as valid exercise of its option
under Sec. 2 Art. VII of the PAL-ALPAP Retirement Pan.1
o That the basis for computation of retirement benefits should be Art. 287 of the LC and not
the Retirement Plan.*
o That in the exercise of its option to retire pilots, PAL should first consult the pilot concerned
before implementing his retirement.
MR was denied. PAL filed for certiorari in the CA which was also denied. Petition for review on
certiorari to the SC.

ISSUES
W/N PAL's action of unilaterally retiring Captain Collantes is valid. YES
Whether the basis of retirement benefits should be the Labor Code or the Retirement Plan.
(Retirement Plan)
W/N PAL should first consult the pilot concerned before implementing his retirement? No need to
consult.

HELD
The retirement is valid. The pertinent provisions of the Retirement Plan are a special scheme of
retirement that could not have been contemplated by the Labor Code, specifically Art. 287.
The basis for benefits should be the Retirement Plan. The PAL Pilot's Retirement Benefit Plan is a
retirement fund from contributions exclusively from PAL equivalent to 20% of each pilot's gross
monthly pay. Upon retirement, each pilot stands to receive the full amount of the contribution.
Thus upon retirement each pilot gets 240% of his gross monthly income for every year of service,

1
SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a pilot
for PAL or has flown 20,000 hours for PAL shall be eligible for normal retirement. The normal retirement
date is the date on which he completes twenty (20) years of service, or on which he logs his 20,000
hours as a pilot for PAL. The member who retires on his normal retirement shall be entitled to either (a)
a lump sum payment of P100,000.00 or (b) to such termination pay benefits to which he may be entitled
to under existing laws, whichever is the greater amount.

SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal
retirement date may retire either at his option or at the option of the Company and when so retired he
shall be entitled either (a) to a lump sum payment of P5,000.00 for each completed year of service
rendered as a pilot, or (b) to such termination pay benefits to which he may be entitled under existing
laws, whichever is the
greater amount
on top of the P100,000 he receives under the 1967 Retirement Plan. Thus, he would get much
more than under the provisions of Art. 287 of the Labor Code (1/2 month salary for every year of
service)
Citing Bulletin Publishing v. Sanchez, the Court said that "the retirement of an employee may be
done upon initiative and option of management. And when there are cases of voluntary
retirement, the same is effective only upon the approval of management." The requirement to
consult the pilots prior to their retirement defeats the exercise by management of its option to
retire said employees. It gives the pilot concerned an undue prerogative to assail the decision of
management. Due process only requires that notice be given to the pilot of PAL's decision to
retire him.
When the SOLE imposed the added requirement that PAL should consult its pilots prior to its
retirement, he resolved a question which was outside of the issues raised, depriving PAL an
opportunity to be heard on this point.