Sta. Catalina College v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondent Hilaria G. Tercero (Hilaria) was hired as a teacher by petitioner Sta. Catalina College (petitioner school) in June 1955. In 1970, she took a one-year leave of absence without pay due to her mother's illness. After her leave expired in 1971, she was not heard from by the school and was subsequently employed by other schools. In 1982, Hilaria reapplied with petitioner school and was rehired. In 1997, she was awarded a Plaque of Appreciation for thirty years of service and ₱12,000.00 as gratuity pay. Upon reaching the compulsory retirement age of 65 on May 31, 1997, petitioner school computed her retirement benefits based on fifteen years of service (1982-1997), excluding her service from 1955-1970, asserting she had abandoned her employment in 1971. Deductions were made for her PERAA contributions and gratuity pay, leaving a balance of ₱18,185.26. Procedural History: Hilaria filed a complaint for non-payment of retirement benefits. The Labor Arbiter upheld the school's position, ordering payment of ₱18,185.26. The National Labor Relations Commission (NLRC) set aside the Labor Arbiter's decision, ordering payment of ₱85,287.72, ruling that the gratuity pay should not be deducted and that her service from 1955-1970 should be included. The Court of Appeals (CA) affirmed the NLRC decision, holding that abandonment was not proven and the employer-employee relationship was not severed. The Petition: Petitioners Sta. Catalina College and Sr. Loreta Oranza filed a petition for review on certiorari, arguing that Hilaria's service from 1955-1970 should not be included in the computation of her retirement benefits due to abandonment, and that the gratuity pay should be considered part of the retirement benefits.
Issue(s)
Whether Hilaria's services from 1955 to 1970 should be included in the computation of her retirement benefits. Whether the ₱12,000.00 gratuity pay should be deducted from her retirement benefits.
Ruling
The petition is GRANTED in part. The decision of the Court of Appeals is MODIFIED. Petitioners are directed to pay the balance of the retirement benefits to private respondent Hilaria G. Tercero in the amount of ₱69,602.86.
Ratio Decidendi
On the inclusion of services from 1955-1970: The Court ruled that Hilaria's services from 1955 to 1970 should NOT be credited for the computation of her retirement benefits. The Court found that Hilaria abandoned her employment in 1971 when her one-year leave of absence expired without her requesting an extension or notifying the school of her return. Her subsequent re-employment in 1982 after reapplying and without providing an explanation for her absence of over a decade demonstrated a clear intention to sever the employer-employee relationship. The Court clarified that abandonment requires two factors: failure to report for work without valid reason and a clear intention to sever the relationship, with the latter being the more determinative factor. The Court also noted that the employer was under no obligation to serve a notice of termination for abandonment, as Republic Act 1052, as amended, was the applicable law at the time, and abandonment is a just cause for termination. On the deduction of gratuity pay: The Court affirmed the ruling that the ₱12,000.00 gratuity pay should NOT be deducted from the retirement benefits. The Court distinguished gratuity pay from retirement benefits, stating that gratuity pay is given out of generosity as a reward for satisfactory service, while retirement benefits are intended to support the employee in their remaining years and are a reward for loyalty. Therefore, these are separate and distinct benefits. The Court also clarified that the PERAA plan was established in 1972, after Hilaria abandoned her work in 1971, so there were no retirement contributions to speak of at that time. The Court ultimately determined that Hilaria was entitled to retirement pay computed based on her service from 1982 to 1997, and the amount already paid under PERAA should be deducted from this legally mandated benefit.
Main Doctrine
Abandonment of work, characterized by the failure to report for work without valid reason and a clear intention to sever the employer-employee relationship, severs the continuity of service for purposes of computing retirement benefits, especially when the employee is subsequently rehired as a new employee.