Case Digest: Heirs of Ridad v. GAUF

G.R. No. 188659 : February 13, 2013




In 1984, the Reorganization, Retrenchment and Restructuring (RRR) Program was adopted by respondent Gregorio Araneta University Foundation (GAUF). It was approved by then Minister of Labor and Employment Blas F. Ople with a reminder that the implementation thereof shall be instituted without prejudice to whatever benefits may have accrued in favor of the employees concerned.

The Court, in all its decisions in the GAUF cases, recognized the adoption of the RRR Program on the ground of serious business losses and financial reverses suffered by GAUF.

Petitioners were former officers and employees of GAUF who were retrenched in view of the RRR Program but were re-hired in January 1984. Consequently, GAUF set the reckoning period for the computation of petitioners retirement benefits to January 1984. Section 374, Article CVI of GAUFs Manual of Policies provided for a computation of the retirement benefits as follows:

Section 374. In addition to the above privileges and benefits, faculty members and non-academic personnel of the University further enjoy the following:

Gratuity or Retirement - A gratuity or retirement is likewise extended by the University to all faculty members and employees who retire or resign from the University in accordance with the following schedule, the payment of which, shall be subject to availability of funds:
Length of Service Benefits 
7-9 years: 50% of monthly salary per year of service
10-12 years: 60% of monthly salary per year of service
13-15 years: 70% of monthly salary per year of service
16-18 years: 80% of monthly salary per year of service
19-21 years: 90% of monthly salary per year of service
22-24 years: 95% of monthly salary per year of service
25 years and up: 100% of monthly salary per year of service5
Petitioners signed individual quitclaims upon receipt of their retirement pay.

Claiming that the computation of their retirement benefits should be reckoned from the date of their original hiring, petitioners filed a Complaint before the Labor Arbiter. Petitioners alleged that they were not paid separation benefits during the implementation of the RRR Program. They likewise sought the inclusion of their monthly honorarium in the computation of their 13th month pay.

In its position paper, GAUF averred that pursuant to the RRR Program, petitioners were all separated from employment in 1984 and paid their separation benefits in the form of off-setting of their outstanding obligations to GAUF such as tuition fees and the value of the lots in the Gonzales Estate area owned by GAUF and sold to petitioners. The said settlement was embodied in a compromise agreement. GAUF added that petitioners were re-employed on 1 January 1984, hence this date should be the reckoning point for the purpose of computing the separation pay.

The LA rendered judgment respondent GAUF to pay all complainants the balance of their retirement/separation benefit.

The Labor Arbiters award of retirement pay pertained to the period when petitioners were originally hired until 31 December 1983 because he found that the records were bereft of any proof that the petitioners were paid their retirement benefits before 1 January 1984. The Labor Arbiter merely confirmed the existence of GAUFs receivables from petitioner consisting of tuition fees of the latters dependents and the value of the lots sold by GAUF to respondents and ruled that the receivables should be offset against the retirement benefits due to each employee. The Labor Arbiter also held that the honoraria received by petitioners are not considered as part of the basic salary for the computation of the 13th month pay. With respect to the retirement benefits of petitioners from 1 January 1984 until the effectivity of their retirement or separation, the Labor Arbiter approved the amount as computed and submitted by GAUF.

Both parties filed their respective appeals. The NLRC ruled that GAUF failed to comply with the compromise agreement which embodied the settlement of all monetary claims of GAUF employees, including the sale of parcels of land owned by GAUF. Nevertheless, the NLRC affirmed the Decision of the LA.

On GAUFs appeal, the CA granted the petition.

Hence, this petition for review.


Whether or not the petitioners were paid separation benefits during the implementation of the RRR Program?


The petition is denied.


Well-settled is the rule that once the employee has set out with particularity in his complaint, position paper, affidavits and other documents the labor standard benefits he is entitled to, and which he alleged that the employer failed to pay him, it becomes the employers burden to prove that it has paid these money claims. One who pleads payment has the burden of proving it, and even where the employees must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employees to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances, and other similar documents which will show that overtime, differentials, service incentive leave, and other claims of the worker have been paid are not in the possession of the worker but in the custody and absolute control of the employer.

The actual amounts given by GAUF were clearly more than the amounts mandated by law. As to whether these amounts were given to petitioners, GAUF insisted that they have in fact fully settled these obligations through offsetting of receivables in accordance with the compromise agreement.

However, the receivables pertaining to tuition fees remain uncontested. Petitioners never questioned these amounts and in fact, they argued before the Labor Arbiter that the tuition fees of their dependents have been applied to their money claims, such as wage increases, but which were never paid. Thus, these tuition fee receivables can be offset to the separation pay due to the employees.

It is therefore evident that GAUF had granted petitioners their separation pay in amounts more than what they are entitled to receive under the law. Thus, there was full compliance with the RRR Program for the payment of separation pay.


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