Korean Air Co., Ltd. vs. Yuson

G.R. No. 170369. June 16, 2010.

MAIN TOPIC – Contracts – Essential Requisites of Contract


In July 1975, Korean Air Co., Ltd. hired Adelina A.S. Yuson (Yuson) as reservations agent and  was promoted as passenger sales manager in 1999. Korean Air had an International Passenger  Manual (IPM) which contained, among others, travel benefit to its employees. In 2000, Korean  Air suffered a net loss. In 2001, in order to cut costs offered its employees an early retirement  

program (ERP). Yuson accepted the offer for early retirement, however she was excluded from  the ERP because she was retiring on 8 January 2002. Yuson claimed that Korean Air was bound  by the perfected contract and accused the company of harassment and discrimination. Korean  Air answered that ERP was not an absolute offer but rather an invitation to possible qualified  employees subject to the approval and acceptance by the Company. 

Yuson filed a complaint with NLRC for payment of benefit under the ERP, moral damages,  exemplary damages, and attorney’s fees. NLRC ordered Korean Air to pay Yuson her benefit  under the ERP and to give her 10 Korean Air economy tickets. Korean Air filed a motion for  reconsideration, the NLRC set aside its decision. 

On 8 January 2002, her 60th birthday, Yuson availed of the optional retirement under Article  287 of the Labor Code, as amended. 

The Court of Appeals held that Yuson may claim benefit under the ERP because “the offer was  certain and the acceptance is absolute; hence, there is a valid contract pursuant to the last  paragraph of Article 1315 of the New Civil Code.” 


Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are  bound not only to the fulfillment of what has been expressly stipulated but also to all the  consequences which, according to their nature, may be in keeping with good faith, usage  and law. 

Article 1318. There is no contract unless the following requisites concur: 

(1) Consent of the contracting parties; 

(2) Object certain which is the subject matter of the contract; 

(3) Cause of the obligation which is established. (1261) 

Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the  thing and the cause which are to constitute the contract. The offer must be certain and the  acceptance absolute. x x x”



(1) Whether or not Korean Air’s offer for early retirement and Yuson’s acceptance of the offer  constituted a perfected contract under Article 1315 of the Civil Code; 

(2) Whether or not Yuson may claim benefit under the ERP; 



(1) No. In the present case, the offer is not certain. Approval of applications for the ERP is  within Korean Air’s management prerogatives. The exercise of management prerogative is  valid as long as it is not done in a malicious, harsh, oppressive, vindictive, or wanton manner.  In the present case, the Court sees no bad faith on Korean Air’s part. The 21 August 2001  memorandum clearly states that Korean Air, on its discretion, was offering ERP to its  employees. The memorandum also states that the reason for the ERP was to prevent further  losses. Korean Air did not abuse its discretion when it excluded Yuson in the ERP. To allow  Yuson to avail of the ERP would have been contrary to the purpose of the ERP. 

(2) No. Yuson’s claim for benefit under the ERP became moot when she availed of the optional  retirement under Article 287 and accepted the benefit. By her acceptance of the benefit, Yuson is  deemed to have opted to retire under Article 287. 


WHEREFORE, we GRANT the petition. We SET ASIDE the 28 June 2005 Decision and 3  November 2005 Resolution.


An offer is a unilateral proposition made by one party to another for the celebration of a  contract. For an offer to be certain, a contract must come into existence by the mere acceptance  of the offeree without any further act on the offeror’s part. The offer must be definite, complete  and intentional.