Santo v. University of Cebu
REITERATIONFacts
The Antecedents: Respondent University of Cebu hired petitioner Carissa E. Santo as a full-time instructor in May 1997. She completed sixteen (16) years of service and applied for optional retirement in April 2013, at the age of forty-two (42). The Faculty Manual defined optional retirement as "a resignation with separation pay" and entitled employees to retirement pay equivalent to fifteen (15) days for every year of service. Petitioner asserted her retirement pay should be computed based on Article 287 of the Labor Code, which provides for 22.5 days for every year of service. Respondent refused, arguing Article 287 did not apply as petitioner was below sixty (60) years old and intended to practice law. Procedural History: The Labor Arbiter ruled in favor of petitioner, ordering the University to pay retirement benefits based on Article 287 of the Labor Code. The National Labor Relations Commission (NLRC) reversed this, holding that Article 287 was not intended for employees who voluntarily resign to pursue other professions and that petitioner was bound by the Faculty Manual's provisions. The Court of Appeals affirmed the NLRC's decision, stating the Faculty Manual's optional retirement was a form of gratuity distinct from the retirement benefits under Article 287, which are meant for cessation of work to enjoy remaining years. The Petition: Petitioner sought to nullify the Court of Appeals' dispositions, maintaining that Article 287 of the Labor Code should govern the computation of her retirement pay as it is more favorable.
Issue(s)
Whether the Court of Appeals erred in upholding the computation of petitioner's retirement benefit based on the Faculty Manual rather than Article 287 of the Labor Code. Whether the Retirement Pay Law bars a retired employee from pursuing a livelihood or practicing a profession after receiving retirement benefits.
Ruling
The petition is GRANTED. The Decision dated December 20, 2016 and Resolution dated May 30, 2017 of the Court of Appeals are REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated July 28, 2014 is REINSTATED. Respondent University of Cebu is ordered to pay Petitioner Carissa E. Santo her retirement benefits of Php366,204.48 plus 10% Attorney's Fees of Php36,620.40 in the total amount of Php402,824.88, with six percent (6%) interest per annum from finality of this Decision until fully paid.
Ratio Decidendi
On the issue of computation of retirement benefits: The Court ruled that the optional retirement benefit provided under the respondent's Faculty Manual should be considered retirement pay within the ambit of Article 287 of the Labor Code. The Faculty Manual itself defines optional retirement as a form of "resignation with separation pay" and explicitly provides for "retirement pay" equivalent to fifteen (15) days for every year of service, and mandates compliance with Republic Act No. 7641 (the Retirement Pay Law). The Court found that the respondent's claim that the benefit was merely separation pay was belied by its own policy, and any ambiguity in the contract must be resolved in favor of the employee. Furthermore, the Court compared the optional retirement benefits under Article 287 of the Labor Code (22.5 days per year of service) and the Faculty Manual (15 days per year of service), concluding that Article 287 is more beneficial to the petitioner. Citing Beltran v. AMA Computer College-Biñan and Elegir v. Philippine Airlines, Inc., the Court reiterated that while employers may grant retirement benefits and impose different age or service requirements, these benefits must not be lesser than those provided in Article 287 of the Labor Code. The determining factor in choosing which retirement scheme to apply is the superiority in terms of benefits provided, ensuring employees receive a reasonable amount for their sustenance. On the issue of pursuing a livelihood after retirement: The Court disagreed with the NLRC and Court of Appeals' conclusion that Article 287 of the Labor Code was not intended for employees who intend to pursue further professions. The Court clarified that retirement benefits are intended to help employees enjoy their remaining years, but this does not preclude them from engaging in other activities. The Court cited previous rulings upholding compulsory retirement at ages below sixty (60) and noted that an employee's age (forty-two (42) in this case) and intention to practice law do not diminish their entitlement to retirement benefits, especially after rendering sixteen (16) years of service. The Court emphasized that a retirement plan enabling an employee to reap the fruits of their labor at an earlier age, when they are in better condition to enjoy them, is a reward for services rendered. The New Retirement Pay Law aims to provide minimum retirement benefits and applies to establishments with existing plans whose benefits are less than those prescribed by law, and such provisions are subject to judicial review if they run contrary to law, morals, or public policy.
Main Doctrine
When an employer's retirement plan offers benefits less than those provided under Article 287 of the Labor Code, the latter shall apply to ensure employees receive benefits not less than the statutory minimum, regardless of the employee's age or intention to pursue further employment.