Defiance and Dismissal: Loss of Retirement Benefits for Striking Employees

The Supreme Court has long held that employees who defy a return-to-work order from the Secretary of Labor do so at their own peril. In Tolentino v. Philippine Airlines, Inc. (G.R. No. 218984, January 24, 2018), the Court clarified the severe consequences of such defiance: a striking employee who knowingly disobeys a return-to-work order loses his employment status, and this loss can strip him of retirement benefits he might otherwise have earned. The case serves as a stark reminder that the right to strike is not absolute, and that defiance of lawful authority carries lasting consequences.

The Facts of the Case

Armando M. Tolentino was hired by Philippine Airlines (PAL) as a flight engineer in 1971 and eventually rose to the rank of A340/A330 Captain. As a pilot, he was a member of the Airline Pilots Association of the Philippines (ALPAP), which had a collective bargaining agreement (CBA) with PAL.

On 5 June 1998, ALPAP members went on strike. Two days later, the Secretary of Labor issued an Order requiring all striking officers and members to return to work within 24 hours. While some pilots complied, Tolentino and others continued to participate in the strike. When they finally returned to work on 26 June 1998, PAL refused to readmit them.

Tolentino later reapplied for employment with PAL as a newly hired pilot, underwent a six-month probationary period, and resigned less than a year later, on 16 July 1999. Meanwhile, the Secretary of Labor declared the strike illegal for being "procedurally infirm and in open defiance of the return-to-work order." This ruling was affirmed by the Supreme Court in 2002.

When Tolentino sought his separation and retirement benefits under the CBA, PAL refused. He filed a complaint, which was dismissed by the Labor Arbiter, the NLRC, and the Court of Appeals. The Supreme Court affirmed these rulings.

The Issue

The central question was whether Tolentino, who had participated in an illegal strike and defied a return-to-work order, was entitled to retirement benefits under the CBA and the PAL Pilots' Retirement Benefit Plan.

The Ruling: Defiance Means Loss of Employment Status

The Supreme Court denied the petition, holding that an employee who knowingly defies a return-to-work order issued by the Secretary of Labor commits an illegal act that is a just cause for dismissal under Article 282 of the Labor Code. Citing its earlier ruling in PAL, Inc. v. Acting Secretary of Labor, the Court explained:

"From the moment a worker defies a return-to-work order, he is deemed to have abandoned his job. The loss of employment status results from the striking employees' own act — an act which is illegal, an act in violation of the law and in defiance of authority."

The Court also noted that it had already been settled in Rodriguez v. Philippine Airlines, Inc. that those who participated in the 5 June 1998 strike were deemed to have lost their employment status with PAL.

No Retirement Benefits for One Who Did Not Retire

The Court emphasized that retirement is a bilateral act — a voluntary agreement between employer and employee. Tolentino did not retire; he lost his employment status because of his own actions.

Even though Tolentino was rehired by PAL in July 1998 as a new hire, his reemployment did not restore his prior benefits or seniority. When he resigned in July 1999, he had completed less than one year of service. Under Article VII of the PAL-ALPAP Retirement Plan, a pilot must complete at least five years of continuous service to qualify for resignation benefits. Tolentino did not meet this requirement.

The Court rejected the argument that Tolentino's earlier 27 years of service should be "tacked" to his new employment. His first employment had been finally terminated due to just cause — participation in an illegal strike and defiance of the return-to-work order.

The Retirement Fund Equity Claim Also Fails

Tolentino's heirs also claimed the equity in the PAL Pilots' Retirement Benefit Plan. The Court found this fund was non-contributory — financed exclusively by PAL, with no deductions from pilots' salaries. Since Tolentino never retired, and since the fund's rules required retirement before receiving the full equity, he was not entitled to any amount.

The Court also upheld PAL's personnel policy providing that a dismissed employee forfeits all entitlements to company benefits and privileges.

Practical Takeaways

• Defiance of a return-to-work order is fatal. An employee who knowingly disobeys a return-to-work order from the Secretary of Labor is deemed to have abandoned his job and loses his employment status.
• Loss of employment status is not retirement. Retirement requires a voluntary bilateral agreement. An employee terminated for just cause cannot claim retirement benefits as if he had retired.
• Rehire as a "new hire" resets seniority. An employee rehired on condition of being treated as a new employee starts fresh — prior years of service cannot be tacked on for purposes of retirement benefits.
• Retirement benefits reward loyal service. Courts will not reward an employee who was terminated for just cause, as doing so would defeat the rationale of retirement benefits.
• Read the retirement plan rules carefully. Eligibility requirements, such as minimum years of continuous service, must be satisfied at the time of resignation or retirement.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.