PRESCRIPTION TO FILE RETIREMENT CLAIM DOES NOT RUN IF EMPLOYEE IS ENGAGED EVEN AFTER REACHING COMPULSORY RETIREMENT AGE

De La Salle Araneta University vs. Juanito C. Bernardo
G.R. No. 190809, February 13, 2017

Facts:

Juanito Bernardo filed a complaint against DLS-AU for the payment of retirement benefits. Bernardo alleged that he started working as a part-time professional lecturer at DLS-AU (formerly known as the Araneta University Foundation) on June 1, 1974.

Bernardo’s teaching contract was renewed at the start of every semester and summer. However, on November 8, 2003, DLS-AU informed Bernardo through a telephone call that he could not teach at the school anymore as the school was implementing the retirement age limit for its faculty members. As he was already 75 years old, Bernardo had no choice but to retire.

Bernardo immediately sought advice from the Department of Labor and Employment (DOLE) regarding his entitlement to retirement benefits after 27 years of employment. In its letters, the DOLE opined that Bernardo was entitled to receive benefits under Republic Act No. 7641, otherwise known as the “New Retirement Law,” and its Implementing Rules and Regulations.

Yet, Dr. Bautista, in a letter stated that Bernardo was not entitled to any kind of separation pay or benefits. Dr. Bautista explained to Bernardo that as mandated by the DLS-AU’s policy and Collective Bargaining Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five years immediately preceding the termination of their employment could avail themselves of the post-employment benefits. As part-time faculty member, Bernardo did not acquire permanent employment under the Manual of Regulations for Private Schools, in relation to the Labor Code, regardless of his length of service. Aggrieved by the repeated denials of his claim for retirement benefits, Bernardo filed before the NLRC, National Capital Region, a complaint for non-payment of retirement benefits and damages against DLS-AU and Dr. Bautista. DLS-AU.

DLS-AU and Dr. Bautista maintained that Bernardo, as a part-time employee, was not entitled to retirement benefits. The contract between DLS-AU and Bernardo was for a fixed term, i.e., one semester. Contracts of employment for a fixed term are not proscribed by law, provided that they had been entered into by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent. That DLS-AU no longer renewed Bernardo’s contract did not necessarily mean that Bernardo should be deemed retired from service.

LA Ruling:

The LA rendered its Decision dismissing the complaint on the ground of prescription holding that if Bernardo were indeed entitled to receive his retirement pay/benefits, he should have claimed the same ten (10) years ago upon reaching the age of sixty-five (65).

Bernardo appealed to the NLRC.

NLRC Ruling:

The NLRC reversed the Labor Arbiter’s ruling and found that Bernardo timely filed his complaint for retirement benefits. The NLRC pointed out that DLS-AU and Dr. Bautista, knowing fully well that Bernardo already reached the compulsory age of retirement of 65 years old, still extended Bernardo’s employment.

Thus, Bernardo’s cause of action for payment of his retirement benefits accrued only on November 8, 2003, when he was informed by DLS-AU that his contract would no longer be renewed and he was deemed separated from employment. The principle of estoppel was also applicable against DLS-AU and Dr. Bautista who could not validly claim prescription when they were the ones who permitted Bernardo to work beyond retirement age.

As to retirement benefits, the NLRC held that a perusal of the retirement law does not exclude a part time employee from enjoying retirement benefits. On this score, Republic Act No. 7641 explicitly provides as within its coverage “all employees in the private sector, regardless of their position, designation, or status, and irrespective of the method by which their wages are paid”

DLS-AU filed and MR. It was denied. Thus, it filed a Petition for Certiorari and Prohibition before the CA.

CA Ruling:

The Court of Appeals promulgated its Decision on June 29, 2009, affirming in toto the NLRC judgment.

Issue/s:

1. Whether or not a part time employee is entitled to retirement benefit
2. Whether or not the cause of action for retirement accrues upon reaching the age of 65 despite the school’s continued employment; applicability of principle of estoppel
3. Whether or not the cause of action for retirement accrues only upon separation from service

SC Ruling:

Republic Act 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 Jess than those prescribed in said law.

Through a Labor Advisory dated October 24, 1996, then Secretary of Labor, and later Supreme Court Justice, Leonardo A. Quisumbing (Secretary Quisumbing), provided Guidelines for the Effective Implementation of Republic Act No. 7641, The Retirement Pay Law, addressed to all employers in the private sector. In said Guidelines, they shall include part-time employees, employees of service and other job contractors and domestic helpers or persons in the personal service of another.

Bernardo -being 75 years old at the time of his retirement, having served DLS-AU for a total of 27 years, and not being covered by the grant of retirement benefits in the CBA -is unquestionably qualified to avail himself of retirement benefits under said statutory provision, i.e., equivalent to one-half month salary for every year of service, a fraction of at least six months being considered as one whole year.

Bernardo’s right to retirement benefits and the obligation of DLS-AU to pay such benefits are already established under Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641.

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However, there was a violation of Bernardo’s right only after DLS-AU informed him on November 8, 2003 that the university no longer intended to offer him another contract of employment, and already accepting his separation from service, Bernardo sought his retirement benefits, but was denied by DLS-AU. Therefore, the cause of action for Bernardo’s retirement benefits only accrued after the refusal of DLS-AU to pay him the same, clearly expressed in Dr. Bautista’s letter dated February 12, 2004. Hence, Bernardo’s complaint, filed with the NLRC on February 26, 2004, was filed within the three-year prescriptive period provided under Article 291 of the Labor Code.

Even granting arguendo that Bernardo’s cause of action already accrued when he reached 65 years old, we cannot simply overlook the fact that DLS-AU had repeatedly extended Bernardo’s employment even when he already reached 65 years old. DLS-AU still knowingly offered Bernardo, and Bernardo willingly accepted, contracts of employment to teach for semesters and summers in the succeeding 10 years. Since DLS-AU was still continuously engaging his services even beyond his retirement age, Bernardo deemed himself still employed and deferred his claim for retirement benefits, under the impression that he could avail himself of the same upon the actual termination of his employment. The equitable doctrine of estoppel is thus applicable against DLS-AU.

DLS-AU, in this case, not only kept its silence that Bernardo had already reached the compulsory retirement age of 65 years old, but even continuously offered him contracts of employment for the next 10 years. It should not be allowed to escape its obligation to pay Bernardo’s retirement benefits by putting entirely the blame for the deferred claim on Bernardo’s shoulders.