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FIRST DIVISION
[G.R. No. 141707. May 7, 2002]
CAYO G. GAMOGAMO, petitioner, vs. PNOC SHIPPING AND TRANSPORT CORP.,
respondent.
D E C I S I O N
DAVIDE, JR., C.J.:
The pivotal issue raised in the petition in this case is whether, for the purpose of
computing an employee’s retirement pay, prior service rendered in a government agency
can be tacked in and added to the creditable service later acquired in a government-
owned and controlled corporation without original charter.
On 23 January 1963, Petitioner Cayo F. Gamogamo was first employed with the
Department of Health (DOH) as Dental Aide. On 22 February 1967, he was promoted to
the position of Dentist 1. He remained employed at the DOH for fourteen years until he
resigned on 2 November 1977.
On 9 November 1977, petitioner was hired as company dentist by Luzon Stevedoring
Corporation (LUSTEVECO), a private domestic corporation. Subsequently, respondent
PNOC Shipping and Transport Corporation (hereafter Respondent) acquired and took
over the shipping business of LUSTEVECO, and on 1 August 1979, petitioner was
among those who opted to be absorbed by the Respondent. Thus, he continued to work as
company dentist. In a letter dated 1 August 1979, Respondent assumed without
interruption petitioner’s service credits with LUSTEVECO, but it did not make reference
to nor assumed petitioner’s service credits with the DOH.
On 10 June 1993, then President Fidel V. Ramos issued a memorandum approving the
privatization of PNOC subsidiaries, including Respondent, pursuant to the provisions of
Section III(B) of the Guidelines and Regulations to implement Executive Order No. 37.
Accordingly, Respondent implemented a Manpower Reduction Program to govern
employees whose respective positions have been classified as redundant as a result of
Respondent’s decrease in operations and the downsizing of the organization due to lay-up
and sale of its vessels pursuant to its direction towards privatization. Under this program,
retrenched employees shall receive a two-month pay for every year of service.
Sometime in 1995, petitioner requested to be included in the next retrenchment schedule.
However, his request was turned down for the following reasons:
1. As a company dentist he was holding a permanent position;
2. He was already due for mandatory retirement in April 1995 under his retirement plan
(first day of the month following his 60
th
birthday which was on 7 March 1995).

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Eventually, petitioner retired after serving the Respondent and LUSTEVECO for 17
years and 4 months upon reaching his 60
th
birthday, on 1 April 1995. He received a
retirement pay of P512,524.15, which is equivalent to one month pay for every year of
service and other benefits.
On 30 August 1995, Admiral Carlito Y. Cunanan, Repondent’s president, died of Dengue
Fever and was forthwith replaced by Dr. Nemesio E. Prudente who assumed office in
December 1995. The new president implemented significant cost-saving measures. In
1996, after petitioner’s retirement, the cases of Dr. Rogelio T. Buena (company doctor)
and Mrs. Luz C. Reyes (telephone operator), who were holding permanent/non-redundant
positions but were willing to be retrenched under the program were brought to the
attention of the new president who ordered that a study on the cost-effect of the
retrenchment of these employees be conducted. After a thorough study, Respondent’s
Board of Directors recommended the approval of the retrenchment. These two
employees were retrenched and paid a 2-month separation pay for every year of service
under Respondent’s Manpower Reduction Program.
In view of the action taken by Respondent in the retrenchment of Dr. Buena and Mrs.
Reyes, petitioner filed a complaint at the National Labor Relations Commission (NLRC)
for the full payment of his retirement benefits. Petitioner argued that his service with the
DOH should have been included in the computation of his years of service. Hence, with
an accumulated service of 32 years he should have been paid a two-month pay for every
year of service per the retirement plan and thus should have received at least
P1,833,920.00.
The Labor Arbiter dismissed petitioner’s complaint. On appeal, however, the NLRC
reversed the decision of the Labor Arbiter. In its decision of 28 November 1997, the
NLRC ruled:
WHEREFORE, the Decision of the Labor Arbiter dated May 30, 1997 is hereby SET
ASIDE and another judgment is hereby rendered to wit:
(1) the government service of the complainant with the Department of Health
numbering fourteen (14) years is hereby considered creditable service for
purposes of computing his retirement benefits;
(2) crediting his fourteen (14) years service with the Department of Health,
together with his nearly eighteen (18) years of service with the respondent,
complainant therefore has almost thirty-two (32) years service upon which
his retirement benefits would be computed or based on;
(3) complainant is entitled to the full payment of his retirement benefits pursuant
to the respondent’s Retirement Law or the retrenchment program (Manpower
Reduction Program). In any case, he is entitled to two (2) months
retirement/separation pay for every year of service.

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FIRST DIVISION [G.R. No. 141707.  May 7, 2002] CAYO G. GAMOGAMO, petitioner, vs. PNOC SHIPPING AND TRANSPORT CORP., respondent. D E C I S I O N DAVIDE, JR., C.J.: The pivotal issue raised in the petition in this case is whether, for the purpose of computing an employee’s retirement pay, prior service rendered in a  government agency can be tacked in and added to the creditable service later acquired in a government-owned and controlled corporation without original charter. On 23 January 1963, Petitioner Cayo F. Gamogamo was first employed with the Department of Health (DOH) as Dental Aide.  On 22 February 1967, he was promoted to the position of Dentist 1.  He remained employed at the DOH for fourteen years until he resigned on 2 November 1977. On 9 November 1977, petitioner was hired as company dentist by Luzon Stevedoring Corporation (LUSTEVECO), a private domestic corporation. Subsequently, respondent PNOC Shipping and Transport Corporation (hereafter Respondent) acquired and took over the shipping business of LUSTEVECO, and on 1 August 1979, petitioner was among those who opted to be absorbed by the Respondent. Thus, he continued to work as company dentist.  In a letter dated 1 August 1979, Respondent assumed without interruption petitioner’s service credits with LUSTEVECO, but it did not make reference to nor assumed petitioner’s service credits with the DOH. On 10 June 1993, then President Fidel V. Ramos issued a memorandum approving the privatization of P ...
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