Grace Christian High School v. Lavandera

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 is the Decision2 dated April 30, 2007 of the Court of Appeals (CA) in CA-G.R. SP. No. 75958 which affirmed with modification the Decision3 dated August 30, 2002 of the National Labor Relations Commission (NLRC) in NLRC CA No. 031739-02, applying the 22.5-day multiplier in computing respondent Filipinas A. Lavandera' s (Filipinas) retirement benefits differential, with legal interest reckoned from the filing date of the latter's illegal dismissal complaint. The Facts 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, 2001.4 On August 30, 2001,5 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 GCHS6 and/or its principal,7 Dr. James Tan.

She alleged that on May 11, 2001, she was informed that her serviceswere 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 toallow her to continue teaching but her services were terminated,8 contrary to the provisions of Republic Act No. (RA) 7641,9 otherwise known as the "Retirement Pay Law."

For their part, GCHS denied that they illegally dismissed Filipinas. They asserted that the latter was considered retired on May 31, 1997 after having rendered 20 years of service pursuant to GCHS' retirement plan and that she was duly advised that her retirement benefits in the amount of 136,210.00 based on her salary atthe time of retirement, i.e., 13,621.00, had been deposited to the trustee-bank in her name. Nonetheless, her services were retained on a yearly basis until May 11, 2001 when she was informed that her year-to-year contract would no longer be renewed.10 The LA Ruling In a Decision11 dated March 26, 2002, the Labor Arbiter (LA) dismissed the illegal dismissal complaint for lack of merit.

The LA found that GCHS has a retirement plan for its faculty and non-faculty members which pertinently provides: ARTICLE X RETIREMENT DATES12 Section 1. Normal Retirement Date- For qualified members of the Plans, the normal retirement date shall be the last day of the month during which he attains age sixty (60) regardless of length of service or upon completion of 20 years of service unless extended at the option of the School. Such extension is subject tothe approval of the School on a case to case and year to year basis.

The School reserves the right to require an employee before it approveshis application for an extension of service beyond the normal retirement date, to have a licensed physician appointed by the School, certify that the employee concerned has no physical and/or mental impediments which will prevent the employee from performing the duties in the School.13 (Emphasis supplied) Consequently, the LA ruled that Filipinas was not terminated from employment but was considered retired14 as of May 31, 1997 after rendering 20 years of service15 and was only allowed by GCHS to continue teaching on a year-to-year basis (until May 31, 2001)in the exercise of its option to do so under the aforementioned retirement plan until she was informed that her contract would not be renewed.16 Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be deficient vis-à-vis those provided under RA 7641,17 and, accordingly, awarded Filipinas retirement pay differentials based on her latest salaryas follows: ₱18,662.00/30 = ₱622.06/day ₱622.06 x 22.5 = ₱13,996.35 x 20 = ₱279,927.00 - ₱136,210.00