GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN, Petitioner,
FILIPINAS A. LAVANDERA, Respondent.
G.R. No. 177845 August 20, 2014
TOPIC: Retirement pay benefits
Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher since June1977, with a monthly salary of 18,662.00 as of May 31, 2001.
On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of service incentive leave (SIL) pay, separation pay, service allowance, damages, and attorney’s fees against GCHS and/or its principal, Dr. James Tan. She alleged that on May 11, 2001, she was informed that her services were to be terminated effective May 31, 2001, pursuant to GCHS’ retirement plan which gives the school the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half (½) month for every year of service. At that time, Filipinas was only 58 years old and still physically fit to work. She pleaded with GCHS to allow her to continue teaching but her services were terminated, contrary to the provisions of Republic Act No. (RA) 7641, otherwise known as the “Retirement Pay Law.”
LA dismissed the illegal dismissal case but found the retirement benefits payable under GCHS plan to be deficient. NLRC reversed LA’s award and held that retirement pay should be computed based on her monthly salary at the time of her retirement. CA modified NLRC’s decision and ruled that the computation of “one-half month salary” by equating it to”22.5 days”.
Whether or not the multiplier “22.5 days” is to be used in computing the retirement pay differentials of Filipinas.
YES. RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing for the rules on retirement pay to qualified private sector employees in the absence of any retirement plan in the establishment. The said law states that “an employee’s retirement benefits under any collective bargaining agreement (CBA)]and other agreements shall not be less than those provided” under the same – that is, at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year – and that “unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.”
Applicability of the 1/2 month salary provision
- There is no CBA or other applicable agreement providing for retirement benefits to employees, or
- There is a CBA or other applicable agreement providing for retirement benefits but it is below the requirement set by law.
Verily, the determining factor in choosing which retirement scheme to apply is still superiority in terms of benefits provided.
In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half (1/2) month for every year of service. Considering, however, that GCHS computed Filipinas’ retirement pay without including one-twelfth (1/12) of her 13th month pay and the cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas’ retirement benefits should be computed in accordance with Article 287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement scheme. They differ, however, in the resulting benefit differentials due to divergent interpretations of the term “one-half (1/2) month salary” as used under the law.
Elegir v. Philippine Airlines, Inc.: “one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for SIL.”
The Court sees no reason to depart from this interpretation. GCHS’ argument therefore that the 5 days SIL should be likewise pro-rated to their 1/12 equivalent must fail.
Moreover, the Court held that the award of legal interest at the rate of 6% per annum on the amount of P68,150.00 representing the retirement pay differentials due Filipinas should be reckoned from the rendition of the LA’s Decision on March 26, 2002 and not from the filing of the illegal dismissal complaint.