Published 14 July 2023, The Daily Tribune
Last week, I wrote an article discussing basic pointers on retirement law. For this second part, I would like to expound on a couple of interesting Supreme Court cases relevant to retirement.
Goodyear Philippines Inc. v. Marina Angus (G.R. No. 185449, 12 November 2014)
Goodyear employed Marina in 1966 as a secretary to the manager of Quality and Technology.
Later, Goodyear implemented cost-saving measures which included the streamlining of its workforce.
Thus, in September 2001, Marina received a letter informing her that her position as a secretary was considered redundant and was going to be abolished, and she would be terminated effective 18 October 2021.
She was also informed that as per company practice, termination due to redundancy or retrenchment was paid at 45 days’ pay per year of service, and since Marina had rendered 34.92 years of service, management decided to grant her an early retirement benefit at 47 days’ pay per year of service.
While Marina accepted the early retirement benefit, she did not agree to its terms but claimed a premium of an additional 3 days for every year of service, or a total of 50 days. Marina accepted “under protest” the checks covering her retirement benefit computed at 47 days per year of service and other company benefits. Also, she separately claimed separation pay since her service was terminated due to redundancy.
Was Marina entitled to early retirement benefits and separation pay?
Yes. Marina was entitled to both early retirement benefits and separation pay due to the absence of a specific provision in the Collective Bargaining Agreement prohibiting the receipt of both.
According to the SC, retirement benefits and separation pay are not mutually exclusive. Retirement benefits are “a form of reward for an employee’s loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts and company policies.”
Separation pay is the “amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment…”
Carissa Santo v. University of Cebu (G.R. No. 232522, 28 August 2019)
In May 1997, the University of Cebu hired Carissa as a full-time instructor. During her employment, Carissa studied law and passed the 2009 bar examinations.
Under the university’s Faculty Manual, “a permanent employee may, upon reaching his fifty-fifth (55th) birthday or after having completed at least fifteen (15) years of service, opt for an early retirement… and shall be entitled to the retirement pay equivalent to a total of fifteen (15) days for every year of service…”
In April 2013, she applied for optional retirement. The university approved her application and computed her optional retirement pay at 15 days per year of service under the faculty manual.
Carissa asserted that her retirement pay should have been computed at 22.5 days per year of service under Article 287 of the Labor Code. The university refused to accept her computation. Thus, she initiated a complaint for payment of retirement benefits under the law, damages, and attorney’s fees.
Which retirement scheme applied to Carissa?
The SC ruled that Carissa’s retirement pay should have been computed at 22.5 days per year of service (based on Article 287 of the Labor Code) which was more beneficial and advantageous to Carissa than the retirement benefits under the faculty manual (15 days per year of service). It reiterated that “while the employer is free to grant retirement benefits and impose different age or service requirements, the benefits should not be less than that provided in Article 287 of the Labor Code.”
The SC disagreed with the Court of Appeal’s ruling that Article 287 of the Labor Code on retirement benefits was not applicable since it was supposedly not intended to benefit Carissa who voluntarily resigned not to rest in the twilight years of her life but to actively engage in the practice of the legal profession.
The SC clarified that Carissa’s intention to practice law after retiring as a college instructor did not affect or diminish her entitlement to retirement benefits under the law.