Benson Ind. Employees Union v. Benson Ind., Inc.

G.R. No. 200746, August 06, 2014


Benson sent its employees, including herein petitioners, a notice informing them of their intended termination from employment on the ground of closure and/or cessation of business operations.

Petitioners, through Benson Industries Employees Union-ALU-TUCP (Union), filed a notice of strike, claiming that the company’s supposed closure was merely a ploy to replace the union members with lower paid workers, and, as a result, increase its profit at their expense.

The strike did not, however, push through due to the parties’ amicable settlement whereby petitioners accepted Benson’s payment of separation pay, computed at 15 days for every year of service

Petitioners proffered a claim for the payment of additional separation pay at the rate of four (4) days for every year of service. As basis, petitioners invoked Section 1, Article VIII of the existing collective bargaining agreement (CBA) executed by and between the Union and Benson which states that “[Benson] shall pay to any employee/laborer who is terminated from the service without any fault attributable to him, a ‘Separation Pay’ equivalent to not less than nineteen (19) days’ pay for every year of service based upon the latest rate of pay of the employee/laborer concerned.”

Benson opposed petitioners’ claim, averring that the separation pay already paid to them was already more than what the law requires.

the VA ruled in favor of petitioners that in computing the amount of separation benefits due to petitioners, the basis should be the provision of the existing CBA between Benson and the Union.

the CA reversed and set aside the VA’s ruling, and accordingly deleted the award of additional separation benefits since Benson cannot be compelled to do so considering its current financial status


Whether or not the CA correctly deleted the award to petitioners of additional separation benefits equivalent to four (4) days of work for every year of service.


NO.  When the obligation to pay separation benefits, however, is not sourced from law (particularly, Article 297 of the Labor Code), but from contract, such as an existing collective bar gaining agreement, the tenor of the parties’ agreement ought to be similar to the law’s tenor.

iI is fundamental that obligations arising from contracts have the force of law between the contracting parties and thus should be complied with in good faith; Hence, if the terms of a CBA are clear and there is no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall prevail

While serious business losses generally exempt the employer from paying separation benefits, it must be pointed that the exemption only pertains to the obligation of the employer under Article 297 of the Labor Code.


A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit.

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