Santo Vs University of Cebu 2019

8/10/24, 7:39 PM SUPREME COURT REPORTS ANNOTATED VOLUME 916
*
G.R. No. 232522. August 28, 2019.
CARISSA E. SANTO, petitioner, vs. UNIVERSITY OF

CEBU, respondent.
Labor Law; Retirement Benefits; Words and Phrases;

Retirement benefits are a form of reward for an employee’s loyalty
and service to an employer and are earned under existing laws,
Collective Bargaining Agreements (CBA), employment contracts
and company policies.—Retirement benefits are a form of reward
for an employee’s loyalty and service to an employer and are
earned under existing laws, Collective Bargaining Agreements
(CBA), employment contracts and company policies. It is the
result of a bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the latter, after
reaching a certain age or length of service, agrees to sever his or
her employment with the former.
Same; Labor Disputes; In controversies between a laborer and
his master, doubts reasonably arising from the interpretation of
agreements and writing should be resolved in the former’s favor.—
Clearly, the Faculty Manual intends to grant retirement benefits
to qualified employees. It entitles an employee to retire after
fifteen (15) years of service or upon reaching the age of fifty-five
(55) and accordingly collect retirement benefits. It even mandates
compliance with RA 7641 such that when the computation of its
retirement plan is found to be lower than what the law requires,
respondent is bound to pay the deficiency. Respondent’s claim —
that its optional retire-
_______________
* SECOND DIVISION.
258
258 SUPREME COURT REPORTS ANNOTATED

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Santo vs. University of Cebu
ment benefit is actually a form of separation pay to qualified

employees who wish to resign is belied by its own company policy.
This benefit clearly falls within the category of “Retirement Pay,”
specifically under “Optional Retirement.” For sure, respondent is
precluded from claiming otherwise. In another vein, the conflict
between respondent’s own categorization of the benefit as
“retirement pay,” on the one hand, and its description of it as “a
resignation with separation pay,” on the other, could only be taken
against respondent. For settled is the rule that ambiguities in a
contract are interpreted against the party that caused the
ambiguity. Too, in controversies between a laborer and his
master, doubts reasonably arising from the interpretation of
agreements and writing should be resolved in the former’s favor.
The State policy is to extend the doctrine to a greater number of
employees who can avail of the benefits under the law to give
maximum aid and protection to labor. The optional retirement
under respondent’s Faculty Manual, therefore, should not be
taken as anything else but a retirement benefit within the ambit
of Article 287 of the Labor Code.
Same; Retirement Benefits; Comparing the optional retirement
benefits under the two (2) retirement schemes, it is apparent that
fifteen (15) days’ worth of salary for every year of service provided
under respondent’s Faculty Manual is much less than twenty-two
and a half (22.5) days’ worth of salary for every year of service
provided under Article 287 of the Labor Code. Obviously, it is more
beneficial for petitioner if Article 287’s retirement plan will be ap
plied in the computation of her retirement benefits.—We are
confronted with two (2) retirement schemes here: 1) Article 287 of
the Labor Code; and 2) Respondent’s Faculty Manual. The
riveting question is “which retirement scheme applies to
petitioner?” Article 287 of the Labor Code. As amended by RA
7641, the provision bears two (2) types of retirements: 1) optional
at age sixty (60); and 2) compulsory at age sixty-five (65). The law
does not make a distinction as to the retirement benefits granted
in either case. In both cases, the retirement benefit is equivalent
to 1/2 month salary for every year of service, the 1/2 month being
computed at 22.5 days provided the employee has worked with his
or her employer for at least five (5) years prior to retirement,
thus: Art. 287. Retirement.—Any employee may be retired
upon reaching the retirement age established in the
collective bargaining agreement or other applicable
employment contract. In case of retirement, the employee
shall
259
VOL. 916, AUGUST 28, 2019 259

be entitled to receive such retirement benefits as he

may have earned under existing laws and any collective
bargaining agreement and other agreements: Provided,
however, That an employee’s retirement benefits under
any collective bargaining and other agreements shall not
be less than those provided herein. In the absence of a
retirement plan or agreement plan providing for retirement
benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty-
five (65) years which is hereby declared as the compulsory
retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay
equivalent to 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. 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. x x x x x x Similarly, respondent’s Faculty Manual
provides for two (2) types of retirements: 1) Optional Retirement;
and 2) Compulsory Retirement. To be entitled to optional
retirement benefits, an employee must have rendered service for
at least fifteen (15) years or must have reached fifty-five (55)
years of age. To be entitled to compulsory retirement benefits, an
employee must have rendered at least twenty (20) years of service
or must have reached sixty (60) years of age, whichever comes
first. The Faculty Manual further provides that the compulsory
retirement benefit shall be in an amount equal to that which is
required by law or that granted by the Pag-IBIG and the PERAA
Retirement Plan, whichever is higher. For optional retirement
benefit however, it shall be equivalent to fifteen (15) days per year
of service. Now, comparing the optional retirement benefits under
the two (2) retirement schemes, it is apparent that fifteen (15)
days’ worth of salary for every year of service provided under re-
spondent’s Faculty Manual is much less than 22.5 days’ worth of
salary for every year of service provided under Article 287 of the
Labor Code. Obviously, it is more beneficial for petitioner if
Article 287’s retirement plan will be applied in the computation of
her retirement benefits.
Same; Same; Retirement benefits are intended to help the
employee enjoy the remaining years of his or her life, releasing the
retiree from the burden of worrying for his or her financial support
.—In
260

reversing the labor arbiter’s ruling, both the NLRC and the
Court of Appeals ruled that the retirement benefits under Article
287 of the Labor Code, as amended, is not applicable to
petitioner’s case. For it was supposedly not intended to benefit
petitioner who voluntarily resigned not to rest in the twilight
years of her life but to actively engage in the practice of the legal
profession. We disagree. Indeed, retirement benefits are intended
to help the employee enjoy the remaining years of his or her life,
releasing the retiree from the burden of worrying for his or her
financial support. Petitioner’s situation, however, is not unusual.
The Court has long recognized retirement plans which set the
minimum retirement age of employees below sixty (60). In one
case, the Court even upheld the compulsory retirement of two (2)
employees at the ages of forty-five (45) and thirty-eight (38) for
being consistent with Article 287 of the Labor Code.
Same; Same; Petitioner’s age at forty-two (42) years coupled
with her admission that she intends to practice law after retiring a
s a college instructor, do not affect, nay, diminish her entitlement
to retirement benefits under the law.—Clearly then, petitioner’s
age at forty-two (42) years coupled with her admission that she
intends to practice law after retiring as a college instructor, do not
affect, nay, diminish her entitlement to retirement benefits under
the law. Sixteen (16) years is more than an ideal length of service
an employee can render to his or her employer. A retirement plan
entitling an employee to retire after fifteen (15) years of service
and accordingly collect retirement benefits is “reward for services
rendered since it enables an employee to reap the fruits of her
labor — particularly retirement benefits, whether lump sum or
otherwise, at an earlier age, when said employee, in presumably
better physical and mental condition, can enjoy them better and
longer.” All told, the New Retirement Pay Law intends to give the
minimum retirement benefits to employees not otherwise entitled
thereto under the collective bargaining and other agreements. Its
coverage also applies to establishments with existing collective
bargaining or other agreements or voluntary retirement plans
whose benefits are less than those prescribed by the law, as in
this case. Thus, retirement plans under any employment contract

or agreement are not absolutely beyond the ambit of judicial
review. A retirement plan, as a labor contract, is not merely
contractual in nature but impressed with public interest. If the
retirement provisions of the company run contrary to law, public
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VOL. 916, AUGUST 28, 2019 261

morals, or public policy, such provisions may be reviewed and

even voided. Neither will the Court sustain a retirement clause
that entitles the retiring employee to benefits less than what is
guaranteed under the law.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Manuel Elijah J. Sarausad, Virgil B. Vallecera and Ba
ldomero Estenzo for respondent University of Cebu.
LAZARO-JAVIER, J.:
The Case
This petition seeks to nullify the following dispositions
of the Court of Appeals
1
in C.A.-G.R. S.P. No. 09693:
1. Decision dated December 20, 2016 which
affirmed the ruling of the National Labor Relations
Commission (NLRC) finding that the computation of
petitioner’s optional retirement package under
respondent’s Faculty Manual is not subject2 to the
computation prescribed under Article 287 of the
Labor Code, as amended by Republic Act No. 7641
(RA 7641)3 otherwise known as the “New Retirement
Pay Law”; and
_______________
1 Penned by Associate Justice Marilyn B. Lagura-Yap, with Associate

Justices Gabriel T. Ingles and Germano Francisco D. Legaspi, concurring,
Rollo, pp. 39-50.
2 Pursuant to Department of Labor and Employment (DOLE) Advisory
No. 1, Series of 2015, Renumbering of the Labor Code of the Philippines,
as Amended, Art. 287 has been renumbered to Art. 302.
3 Entitled “AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL
DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE
LABOR CODE OF THE PHILIPPINES, BY PROVIDING FOR
RETIREMENT PAY TO QUALIFIED PRIVATE SECTOR EMPLOYEES
IN THE ABSENCE OF ANY RETIREMENT PLAN IN THE
ESTABLISHMENT.”
262

4
2. Resolution dated May 30, 2017, denying
petitioner’s motion for reconsideration.
Antecedents
The facts are undisputed.

In May 1997, respondent University of Cebu hired
petitioner Carissa E. Santo as a full-time instructor.
During her employment, as such, she studied law and
passed the 2009 Bar Examinations. She continued working
for respondent until she got qualified for optional
retirement under respondent’s Faculty Manual, viz.:
Optional Retirement
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 retire
ment (which is a resignation with separation pay)
considering that separation before reaching 15 years of full-
time service does not entitle an employee to any separation
pay, except that which is contributed by the University to
Pag-IBIG, and shall be entitled to the retirement pay
equivalent to a total of fifteen (15) days for every year of
service based on the average monthly salary 5
to the
employee computed for the past three years. (emphasis
supplied)
In April 2013, she applied for optional retirement; she

was then only forty-two (42) years old but had already
completed sixteen (16) years of service with respondent.
The latter approved her application and computed her
optional retirement pay at fifteen (15) days for every year
of service per provisions of the Faculty Manual. She

asserted, though, that her retirement pay should be
equivalent to 22.5 days per year of service
_______________
4 Rollo, pp. 51-53.

5 Id., at pp. 44-45.
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VOL. 916, AUGUST 28, 2019 263

6
in accordance with Article 287 of the Labor Code.
Respondent refused to accept
7
her computation. Thus, she
initiated the complaint below
8
for payment of retirement
benefits under Article 287 of the Labor Code, damages and
attorney’s fees against respondent.
For its part, respondent argued that petitioner was not
covered by the Retirement Pay Law being9 less than sixty
(60) years old at the time of her retirement.
_______________
6 Art. 302. [287] Retirement.—Any employee may be retired upon

reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any
collective bargaining agreement and other agreements: Provided, however,
That an employee’s retirement benefits under any collective bargaining
and other agreements shall not be less than those provided therein.
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching
the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared the compulsory retirement age, who has served
at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to 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. 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.
7 Rollo, pp. 54-55.
8 Now Article 302 of the LABOR CODE, as renumbered.
9 Rollo, p. 155.
264

Labor Arbiter’s Ruling

10
By Decision dated July 28, 2014, Labor Arbiter Vitto A.
Kintanar found that respondent’s
11
retirement package was
less than what Article 287 of the Labor 12
Code prescribed,
i.e., 22.5 days for every year of service, viz.:
WHEREFORE, premises considered, judgment is hereby

rendered in favor of complaint against respondent UC
ordering the latter to pay complainant her retirement
benefits plus 10% thereof as Attorney’s fees, in the total
amount of P402,824.43 (P366,204.48 Retirement benefit +
36,620.40 Attorney’s fees).
All others claims
13
are dismissed for lack of merit.
SO ORDERED.
The NLRC’s Ruling

14
On
15
appeal, the NLRC reversed. It ruled that Article
287 was not intended to benefit petitioner who voluntarily
resigned not to rest in the twilight years of her life but to
16
actively engage in the practice of the legal profession.
Thus, petitioner was bound to accept whatever optional
retirement benefits were provided under respondent’s
Faculty Manual. Nothing more. The NLRC ruled:
WHEREFORE, PREMISES CONSIDERED,

respondents’ appeal is given due course. The Decision of
_______________
10 Id., at pp. 112-119.

11 Should be Article 302, as per LABOR CODE (Amended and
Renumbered), dated July 21, 2015.
12 Rollo, p. 116.
13 Id., at p. 119.
14 Id., at pp. 250-256.
16 Rollo, p. 254.
265
VOL. 916, AUGUST 28, 2019 265

the Labor Arbiter is hereby REVERSED, SET ASIDE

and VACATED and a new one entered ordering respon-
dent University of Cebu to pay complainant the sum of
P192,401.97 representing her optional retirement benefits
plus whatever additional17
financial assistance it has offered
the complainant. x x x.
The Proceedings Before the Court of Appeals
Aggrieved, petitioner went up to the Court of Appeals

via Rule 65 of the Rules of Court. She maintained her
reliance on Article 287 of the Labor Code 18
as basis in the
computation of her retirement package. Respondent, on
the other
19
hand, insisted that the provision is not applicable
to her.
The Court of Appeals’ Ruling

20
By Decision dated 21
December 20, 2016, the Court of
Appeals affirmed. It found that respondent’s Faculty
Manual referred to the optional retirement benefit as “resig
nation with separation pay.” It was a form of gratuity
which respondent granted to its employees who wished to
voluntarily terminate their services upon reaching the age
of fifty-five22 (55) or after rendering at least fifteen (15) years
of service. As such, the Court of Appeals ruled that it was
different from 23
the retirement benefits granted under
Article 287 of the Labor Code which were intended to help
the employee enjoy the
_______________
17 Id., at p. 255.
18 Petition for Certiorari; id., at pp. 266-286.
19 Comment; id., at pp. 287-303.
20 Penned by Associate Justice Marilyn B. Lagura-Yap, with Associate
Justices Gabriel T. Ingles and Germano Francisco D. Legaspi,
concurring, id., at pp. 39-50.
21 Id.
22 Id., at p. 45.
266

remaining years of his or 24her life after he or she had

completely stopped working.
Petitioner moved for a reconsideration but the Court of
Appeals denied
25
the same through its Resolution dated May
30, 2017.
The Present Petition
Petitioner now seeks affirmative 26

relief from the Court.
She maintains that Article 287 of the Labor Code should
be applied in the computation of her retirement pay since
the provision is more favorable to her 27
than that provided
under respondent’s 28Faculty Manual.
In its Comment, respondent ripostes that the optional
retirement benefit granted under its Faculty Manual is a
form of resignation with separation pay and not the 29
kind of
retirement pay contemplated under Article 287 of the
Labor Code. It is a mere gratuity to its employees who
voluntarily terminate their services upon reaching the age
of fifty-five30 (55) or after rendering at least fifteen (15) years
of service.
_______________
24 Rollo, p. 46.
25 Id., at pp. 51-53.
27 Rollo, p. 26.
28 Id., at pp. 240-351.
30 Rollo, p. 45.
267
VOL. 916, AUGUST 28, 2019 267

Issue
Did the Court of Appeals err in upholding the

computation of petitioner’s retirement benefit
31
based on the
Faculty Manual rather than Article 287 of the Labor
Code?
Ruling The Faculty Manual pro-

vides for payment of op-
tional retirement benefits
Retirement benefits are a form of reward for an

employee’s loyalty and service to an employer and are
earned under existing laws, Collective Bargaining
Agreements
32
(CBA), employment contracts and company
policies. It is the result of a bilateral act of the parties, a
voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age
or length of service,
33
agrees to sever his or her employment
with the former.
The optional retirement benefits granted under
respondent’s Faculty Manual squarely fits the definition,
viz.:
Retirement Pay
Compulsory Retirement
Retirement from the service of the University shall be
compulsory upon the regular employee’s attainment of his
sixtieth (60) birthday or twenty (20) years of service,
whichever comes first, Provided, That depending on the
exigency of the service, the University has the option to
_______________

32 Abanto v. Board of Directors of the Development Bank of the
Philippines, G.R. Nos. 207281 & 210922, March 5, 2019, 895 SCRA 1.
33 Banco de Oro Unibank, Inc. v. Sagaysay, 769 Phil. 897, 906; 771
SCRA 68, 77-78 (2015).
268

extend the service of the employee concerned beyond the

retirement period on a year-to-year basis.
Upon retirement, an employee shall be entitled to the
retirement pay in an amount equal to that which is
required by law or that granted by the Pag-IBIG and the
PERAA Retirement Plan, whichever is higher. x x x.
Optional Retirement
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 (which is a
resignation with separation pay), considering that
separation before reaching 15 years of full-time service does
not entitle an employee to any separation pay, except that
which is contributed by the University to PAG- IBIG) (sic),
and shall be entitled to the retirement pay equivalent
to a total of fifteen (15) days for every year of service
based on the average monthly salary of the employee
34
computed for the past three years.
Retirement Plan
The University has insured the retirement pay of its
employees with the PERAA Retirement Plan and continued
with the Pag-IBIG law (RA 7742). For purposes of
computing the retirement pay, only the University’s PERAA
and Pag-IBIG contribution and its increments shall be
considered, as mandated by DOLE’s 1996 Guidelines for the
Effective Implementation of RA 7641, the retirement pay
law. In case the PERAA and Pag-IBIG retirement pay is
higher than the computed retirement pay the institution
grants herein, the employee gets the total amount granted
by the retirement plan under PERAA and/or Pag-IBIG.
However, in case the retirement pay from PERAA
and/or Pag-IBIG is lower than the institutional
computation as mentioned above, the University
shall provide the deficiency or difference as required
by DOLE’s 1996 Guidelines for the
_______________
34 Rollo, p. 142.
269
VOL. 916, AUGUST 28, 2019 269

Effective Implementation of the Retirement Pay Law

(RA 7641). This policy applies likewise to the
35
computation of the early retirement pay. (emphasis
supplied)
Clearly, the Faculty Manual intends to grant retirement

benefits to qualified employees. It entitles an employee to
retire after fifteen (15) years of service or upon reaching
the age of fifty-five (55) and accordingly collect retirement
36
benefits. It even mandates compliance with RA 7641 such
that when the computation of its retirement plan is found
to be lower than what the law requires, respondent is
bound to pay the deficiency.
Respondent’s claim — that its optional retirement
benefit is actually a form of separation pay to qualified
employees who wish to resign is belied by its own company
policy. This benefit clearly falls within the category of
“Retirement Pay,” specifically under “Optional
Retirement.” For sure, respondent is precluded from
claiming otherwise.
In another vein, the conflict between respondent’s own
categorization of the benefit as “retirement pay,” on the one
hand, and its description of it as “a resignation with
separation pay,” on the other, could only be taken against
respondent. For settled is the rule that ambiguities in a
contract are37
interpreted against the party that caused the
ambiguity.
Too, in controversies between a laborer and his master,
doubts reasonably arising from the interpretation of
agreements and writing should be resolved in the former’s
favor.
_______________
35 Id., at pp. 29, 142.

36 Entitled “AN ACT AMENDING ARTICLE 287 OF
PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE
KNOWN AS THE LABOR CODE OF THE PHILIPPINES, BY

PROVIDING FOR RETIREMENT PAY TO QUALIFIED PRIVATE
SECTOR EMPLOYEES IN THE ABSENCE OF ANY RETIREMENT
PLAN IN THE ESTABLISHMENT.”
37 Fortune Medicare, Inc., v. Amorin, 729 Phil. 484, 494; 719 SCRA
133, 145 (2014).
270

The State policy is to extend the doctrine to a greater

number of employees who can avail of the benefits 38under
the law to give maximum aid and protection to labor.
The optional retirement under respondent’s Faculty
Manual, therefore, should not be taken as anything else 39
but a retirement benefit within the ambit of Article 287 of
the Labor Code.
Petitioner’s retirement pay

should be computed based
on Article 287 of the Labor
Code
We are confronted with two (2) retirement schemes here:

1) Article 287 of the Labor Code; and 2) Respondent’s
Faculty Manual. The riveting question is “which retirement
scheme applies to petitioner?”
Article 287 of the Labor Code.
As amended by RA 7641, the provision bears two (2)
types of retirements: 1) optional at age sixty (60); and 2)
compulsory at age sixty-five (65). The law does not make a
distinction as to the retirement benefits granted in either
case. In both cases, the retirement benefit is equivalent to
1/2 month salary for every year40
of service, the 1/2 month
being computed at 22.5 days provided the employee has
worked with his or her employer for at least five (5) years
prior to retirement, thus:
Art. 287. Retirement.—Any employee may be

retired upon reaching the retirement age estab-
_______________
38 C.F. Sharp Crew Management, Inc. v. Legal Heirs of the Late
Godofredo Repiso, 780 Phil. 645, 668; 783 SCRA 516, 541 (2016).
39 Now Article 302, as renumbered.
40 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 service incentive leave; see Elegir v. Philippine Airlines, Inc., 691
Phil. 58, 73; 676 SCRA 463, 478 (2012).
271
VOL. 916, AUGUST 28, 2019 271

lished in the collective bargaining agreement or

other applicable employment contract.
In case of retirement, the employee shall be
entitled to receive such retirement benefits as he
may have earned under existing laws and any
collective bargaining agreement and other agree-
ments: Provided, however, That an employee’s
retirement benefits under any collective bargaining
and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement plan
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years
which is hereby declared as the compulsory retirement age,
who has served at least five (5) years in the said
establishment, may retire and shall be entitled to
retirement pay equivalent to 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.
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. x x x (emphasis supplied)
Similarly, respondent’s Faculty Manual provides for two

(2) types of retirements: 1) Optional Retirement; and 2)
Compulsory Retirement. To be entitled to optional
retirement benefits, an employee must have rendered
service for at least fifteen (15) years or must have reached
fifty-five (55) years of age. To be entitled to compulsory

retirement benefits, an employee must have rendered at
least twenty (20) years of service or must have reached
sixty (60) years of age, whichever comes first. The Faculty
Manual further provides that the compulsory retirement
benefit shall be in an amount equal to that which is
required by law or that granted by the Pag-IBIG and the
PERAA Retirement Plan, whichever is
272

higher. For optional retirement benefit however, 41it shall be

equivalent to fifteen (15) days per year of service.
Now, comparing the optional retirement benefits under
the two (2) retirement schemes, it is apparent that fifteen
(15) days’ worth of salary for every year of service provided
under respondent’s Faculty Manual is much less than 22.5
days’ worth of salary for every year of service provided
under Article 287 of the Labor Code. Obviously, it is more
beneficial for petitioner if Article 287’s retirement plan will
be applied in the computation of her retirement 42benefits.
In Beltran v. AMA Computer College-Biñan, the Court
ruled that while the employer is free to grant retirement
benefits and impose different age or service requirements,
the benefits should not be lesser than those provided in
Article 287 of the Labor Code. 43
Too, in Elegir v. Philippine Airlines, Inc., the Court de-
creed that the determining factor in choosing which
retirement scheme to apply is superiority in terms of
benefits provided. Thus, We ruled that even if the employer
has an existing retirement scheme but the same does not
provide for retirement benefits equal or superior to that
which is provided under Article 287 of the Labor Code, the
latter will apply. In this manner, the employee can be
assured of a reasonable amount of retirement pay for his or
her sustenance.
The retirement benefits under Article 287 of the Labor
Code, therefore, should be applied in the computation of
petitioner’s retirement pay. It is more advantageous to
petitioner and it is what the law commands.
So must it be.
_______________
41 Rollo, p. 142.
42 G.R. No. 223795, April 3, 2019, 900 SCRA 85.
43 Supra note 40.
273
VOL. 916, AUGUST 28, 2019 273

The Retirement Pay Law

does not bar a retired em-
ployee from pursuing a
livelihood or practicing a
profession after receiving
retirement benefits
In reversing the labor arbiter’s ruling, both the NLRC

and the Court of Appeals ruled that the retirement benefits
under Article 287 of the Labor Code, as amended, is not
applicable to petitioner’s case. For it was supposedly not
intended to benefit petitioner who voluntarily resigned not
to rest in the twilight years of her life but to actively
engage in the practice of the legal profession.
We disagree.
Indeed, retirement benefits are intended to help the
employee enjoy the remaining years of his or her life,
releasing the retiree from
44
the burden of worrying for his or
her financial support. Petitioner’s situation, however, is
not unusual. The Court has long recognized retirement
plans which set the
45
minimum 46retirement age of employees
below sixty (60). In one case, the Court even upheld the
compulsory retirement of two (2) employees at the ages of
forty-five (45) and thirty-eight (38) for being consistent
with Article 287 of the Labor Code.
_______________
44 See Sta. Catalina College v. National Labor Relations Commission,

461 Phil. 720, 734; 416 SCRA 233, 243 (2003).
45 See Cainta Catholic School v. Cainta Catholic School Employees Uni
on (CCSEU), 523 Phil. 134, 150; 489 SCRA 468, 483 (2006); Pantranco
North Express, Inc. v. NLRC, 328 Phil. 470, 482-483; 259 SCRA 161, 171
(1996); Progressive Development Corporation v. NLRC, 398 Phil. 433, 437;
344 SCRA 512, 518 (2000); and Philippine Airlines, Inc. v. Airline Pilots
Association of the Phils., 424 Phil. 356, 363; 373 SCRA 302, 308 (2002).
46 Progressive Development Corporation v. NLRC, id., at p. 437; p. 514.
274

Clearly then, petitioner’s age at forty-two (42) years

coupled with her admission that she intends to practice law
after retiring as a college instructor, do not affect, nay,
diminish her entitlement to retirement benefits under the
law. Sixteen (16) years is more than an ideal length47 of
service an employee can render to his or her employer. A
retirement plan entitling an employee to retire after fifteen
(15) years of service and accordingly collect retirement
benefits is “reward for services rendered since it enables an
employee to reap the fruits of her labor — particularly
retirement benefits, whether lump sum or otherwise, at an
earlier age, when said employee, in presumably better
physical48 and mental condition, can enjoy them better and
longer.”
All told, the New Retirement Pay Law intends to give
the minimum retirement benefits to employees not
otherwise entitled thereto under the collective bargaining
and other agreements. Its coverage also applies to
establishments with existing collective bargaining or other
agreements or voluntary retirement plans whose benefits
are less than those prescribed by the law, as in this case.
Thus, retirement plans under any employment contract or
agreement are not absolutely beyond the ambit of judicial
review. A retirement plan, as a labor contract, is not
merely contractual in nature but impressed with public
interest. If the retirement provisions of the company run
contrary to law, public morals, or public49 policy, such
provisions may be reviewed and even voided. Neither will
the Court sustain a retirement clause that entitles the
retiring employee
50
to benefits less than what is guaranteed
under the law.
_______________
47 Pantranco North Express, Inc. v. NLRC, supra note 45 at pp. 482-

483; p. 173.
48 Cainta Catholic School v. Cainta Catholic School Employees Union
(CCSEU), supra note 45 at p. 152; p. 485.
49 Id., at pp. 151-152; p. 485.
50 Id.
275
VOL. 916, AUGUST 28, 2019 275

ACCORDINGLY, the petition is GRANTED. The

Decision dated December 20, 2016 and Resolution dated
May 30, 2017 of the Court of Appeals in C.A.-G.R. S.P. No.
09693 are REVERSED and SET ASIDE. The Decision of
the Labor Arbiter dated July 28, 2014 in NLRC RAB VII
No. 01-0236-14 is REINSTATED.
Respondent University of Cebu is ordered to PAY
Petitioner Carissa E. Santo her retirement benefits of
P366,204.48 plus 10% Attorney’s Fees of P36,620.40 in the
total amount of P402,824.88.
This amount shall earn six percent (6%) interest per
annum from finality of this Decision until fully paid.
SO ORDERED.
Carpio (Chairperson, Senior Associate Justice),

Caguioa, J. Reyes, Jr. and Zalameda, JJ., concur.
Petition granted, judgment and resolution reversed and

set aside. That of Labor Arbiter reinstated.
Notes.—Republic Act (RA) No. 7641 is a curative social

legislation. It precisely intends to give the minimum
retirement benefits to employees not entitled to the same
under collective bargaining and other agreements. It also
applies to establishments with existing collective
bargaining or other agreements or voluntary retirement
plans whose benefits are less than those prescribed in said
law. (De La Salle-Araneta University vs. Bernardo, 817
SCRA 317 [2017])
Retirement plans allowing employers to retire
employees who have not yet reached the compulsory
retirement age of sixty-five (65) years are not per se
repugnant to the constitutional guaranty of security of
tenure, provided that the retirement benefits are not lower
than those prescribed by law. (Laya, Jr. vs. Philippine
Veterans Bank, 850 SCRA 315 [2018])
——o0o——
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8/10/24, 7:39 PM SUPREME COURT REPORTS ANNOTATED VOLUME 916

CARISSA E. SANTO, petitioner, vs. UNIVERSITY OF

Labor Law; Retirement Benefits; Words and Phrases;

258 SUPREME COURT REPORTS ANNOTATED

Santo vs. University of Cebu

ment benefit is actually a form of separation pay to qualified

VOL. 916, AUGUST 28, 2019 259

be entitled to receive such retirement benefits as he

260 SUPREME COURT REPORTS ANNOTATED

this case. Thus, retirement plans under any employment contract

VOL. 916, AUGUST 28, 2019 261

morals, or public policy, such provisions may be reviewed and

PETITION for review on certiorari of the decision and

1 Penned by Associate Justice Marilyn B. Lagura-Yap, with Associate

262 SUPREME COURT REPORTS ANNOTATED

The facts are undisputed.

A permanent employee may, upon reaching his fifty-

In April 2013, she applied for optional retirement; she

of service per provisions of the Faculty Manual. She

4 Rollo, pp. 51-53.

VOL. 916, AUGUST 28, 2019 263

6 Art. 302. [287] Retirement.—Any employee may be retired upon

264 SUPREME COURT REPORTS ANNOTATED

Labor Arbiter’s Ruling

WHEREFORE, premises considered, judgment is hereby

The NLRC’s Ruling

WHEREFORE, PREMISES CONSIDERED,

10 Id., at pp. 112-119.

VOL. 916, AUGUST 28, 2019 265

the Labor Arbiter is hereby REVERSED, SET ASIDE

The Proceedings Before the Court of Appeals

Aggrieved, petitioner went up to the Court of Appeals

The Court of Appeals’ Ruling

266 SUPREME COURT REPORTS ANNOTATED

remaining years of his or 24her life after he or she had

The Present Petition

Petitioner now seeks affirmative 26

VOL. 916, AUGUST 28, 2019 267

Did the Court of Appeals err in upholding the

Ruling The Faculty Manual pro-

Retirement benefits are a form of reward for an

31 Should be Article 302, as per LABOR CODE (Amended and

268 SUPREME COURT REPORTS ANNOTATED

extend the service of the employee concerned beyond the

VOL. 916, AUGUST 28, 2019 269

Effective Implementation of the Retirement Pay Law

Clearly, the Faculty Manual intends to grant retirement

35 Id., at pp. 29, 142.

KNOWN AS THE LABOR CODE OF THE PHILIPPINES, BY

270 SUPREME COURT REPORTS ANNOTATED

The State policy is to extend the doctrine to a greater

Petitioner’s retirement pay

We are confronted with two (2) retirement schemes here:

Art. 287. Retirement.—Any employee may be

VOL. 916, AUGUST 28, 2019 271

lished in the collective bargaining agreement or

Similarly, respondent’s Faculty Manual provides for two

fifty-five (55) years of age. To be entitled to compulsory

272 SUPREME COURT REPORTS ANNOTATED