Grace Christian High School vs. Lavandera

Grace Christian High School vs. Lavandera, GR No.
177845, August 20, 2014
Concept: 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].
Facts
Filipinas was employed by (GCHS) as high school teacher since June 1977, with a monthly salary of P18,662.00 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 (1/2) 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."
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 P136,210.00 based on her salary at the time of retirement, i.e., P13,621.00, 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.
Labor Arbiter (LA) dismissed the illegal dismissal complaint for lack of merit. The LA found that GCHS has a retirement plan.
Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be deficient vis-à-vis those provided
under RA 7641, and, accordingly, awarded Filipinas retirement pay differentials based on her latest salary as follows:
P18,662.00/30 = P622.06/day P622.06 x 22.5 = P13,996.35 x 20 = P279,927.00 - Amount deposited in trust P136,210.00 =
Retirement benefits differential P143,717.00
The LA, however, denied Filipinas' claims for service allowance, salary increase, and damages for lack of sufficient bases, but
awarded her attorney's fees equivalent to five percent (5%) of the total award, or the amount of P7,185.85.
NLRC set aside the LA's award, and ruled that Filipinas' retirement pay should be computed based on her monthly salary at the
time of her retirement on May 31, 1997, i.e., P13,621.00. Moreover, it held that under Article 287 of the Labor Code,as amended by
RA 7641, the retirement package consists of 15 days salary, plus 13th month pay and SIL pay pro-rated to their one-twelfth
(1/12) equivalent. NLRC awarded Filipinas retirement pay differentials in the amount of P27,057.20.
CA affirmed with modification the NLRC's Decision. It held that "one-half month salary" equates it to "22.5 days" which is "arrived
at after adding 15 days plus 2.5 days representing one-twelfth of the 13th month pay, plus 5 days of [SIL]. Accordingly, it computed
Filipinas' retirement benefits differential as follows: Monthly salary P13,624.00 ÷ 30 days = 454.13 x 22.5 days = P10,218.00 x 20
years = P204,360.00 - Amount deposited in trust 136,210.00 = Retirement benefits differential P68,150.00
Issue
Whether or not the CA committed reversible error in using the multiplier "22.5. days" in computing the retirement pay differentials of
Filipinas.
Ruling
NO. RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, 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 "[u]nless 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."
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.
The Court, in the case of Elegir v. Philippine Airlines, Inc has recently affirmed that "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.
Section 5.2, Rule II of the Implementing Rules of Book VI of the Labor Code,as amended, promulgated to implement RA 7641,
further clarifies what comprises the "1/2 month salary" due a retiring employee.
5.2 Components of One-half (1/2) Month Salary. — For the purpose of determining the minimum retirement pay due an
employee under this Rule, the term "one-half month salary" shall include all the following:…
…(b) The cash equivalent of not more than five (5) days of service incentive leave
The rules are, thus, clear that the whole 5 days of SIL are included in the computation of a retiring employees' pay.

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Grace Christian High School vs. Lavandera, GR No.

177845, August 20, 2014

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