SECOND DIVISION

[G.R. No. 232522. August 28, 2019.]

CARISSA E. SANTO , petitioner, vs. UNIVERSITY OF CEBU , respondent.

DECISION

LAZARO-JAVIER , J : p

The Case
This petition seeks to nullify the following dispositions of the Court of Appeals in
CA-G.R. SP No. 09693:
1. Decision 1 dated December 20, 2016 which a rmed the ruling of the
National Labor Relations Commission (NLRC) nding that the computation
of petitioner's optional retirement package under respondent's Faculty
Manual is not subject to the computation prescribed under Article 287 2 of
the Labor Code, as amended by Republic Act No. 7641 (RA 7641)
otherwise known as the "New Retirement Pay Law"; 3 and
2. Resolution 4 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 quali ed
for optional retirement under respondent's Faculty Manual, viz.:
Optional Retirement
A permanent employee may, upon reaching his fty- fth (55th)
birthday or after having completed at least fteen (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), and shall be entitled to the retirement
pay equivalent to a total of fteen (15) days for every year of service based on
the average monthly salary to the employee computed for the past three years. 5
(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 fteen
(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 in
accordance with Article 287 6 of the Labor Code. Respondent refused to accept her
computation. Thus, she initiated the complaint 7 below for payment of retirement
bene ts under Article 287 8 of the Labor Code, damages and attorney's fees against
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 respondent. HESIcT

For its part, respondent argued that petitioner was not covered by the Retirement
Pay Law being less than sixty (60) years old at the time of her retirement. 9
Labor Arbiter's Ruling
By Decision 1 0 dated July 28, 2014, Labor Arbiter Vitto A. Kintanar found that
respondent's retirement package was less than what Article 287 1 1 of the Labor Code
prescribed, i.e., 22.5 days for every year of service 1 2 viz.:
WHEREFORE, premises considered, judgment is hereby rendered in favor
of complaint against respondent UC ordering the latter to pay complainant her
retirement bene ts 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 are dismissed for lack of merit.
SO ORDERED. 1 3
The NLRC's Ruling
On appeal, the NLRC reversed. 1 4 It ruled that Article 287 1 5 was not intended to
bene t 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. 1 6 Thus, petitioner was bound
to accept whatever optional retirement bene ts were provided under respondent's
Faculty Manual. Nothing more. The NLRC ruled:
WHEREFORE, PREMISES CONSIDERED, respondents' appeal is given due
course. The Decision of the Labor Arbiter is hereby REVERSED, SET ASIDE
and VACATED and a new one entered ordering respondent University of Cebu
to pay complainant the sum of P192,401.97 representing her optional retirement
bene ts plus whatever additional nancial assistance it has offered the
complainant. x x x. 1 7
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 as basis in the
computation of her retirement package. 1 8 Respondent, on the other hand, insisted that
the provision is not applicable to her. 1 9
The Court of Appeals' Ruling
By Decision 2 0 dated December 20, 2016, the Court of Appeals a rmed. 2 1 It
found that respondent's Faculty Manual referred to the optional retirement bene t as
"resignation 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 fty- ve (55) or after rendering at least fteen (15) years of service. 2 2 As such, the
Court of Appeals ruled that it was different from the retirement bene ts granted under
Article 287 2 3 of the Labor Code which were intended to help the employee enjoy the
remaining years of his or her life after he or she had completely stopped working. 2 4
Petitioner moved for a reconsideration but the Court of Appeals denied the same
through its Resolution dated May 30, 2017. 2 5
The Present Petition
Petitioner now seeks a rmative relief from the Court. She maintains that Article
287 2 6 of the Labor Code should be applied in the computation of her retirement pay
since the provision is more favorable to her than that provided under respondent's
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 Faculty Manual. 2 7
In its Comment, 2 8 respondent ripostes that the optional retirement bene t
granted under its Faculty Manual is a form of resignation with separation pay and not
the kind of retirement pay contemplated under Article 287 2 9 of the Labor Code. It is a
mere gratuity to its employees who voluntarily terminate their services upon reaching
the age of fifty-five (55) or after rendering at least fifteen (15) years of service. 3 0
Issue
Did the Court of Appeals err in upholding the computation of petitioner's
retirement bene t based on the Faculty Manual rather than Article 287 3 1 of the Labor
Code?
Ruling
The Faculty Manual provides for
payment of optional retirement
benefits

Retirement bene ts 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. 3 2 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. 3 3 caITAC

The optional retirement bene ts 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 rst, provided that depending on the exigency of
the service, the University has the option to 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 fty- fth (55th) birthday or after
having completed at least fteen (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 fteen (15) days for every year of service
based on the average monthly salary of the employee computed for the past
three years. 3 4
Retirement Plan
The University has insured the retirement pay of its employees with the PERAA
Retirement Plan and continued with the PAG-IBIG law (RA7742). For purposes of
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 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 RA7641, 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 de ciency or difference as required by
DOLE's 1996 Guidelines for the Effective Implementation of the
Retirement Pay Law (RA 7641). This policy applies likewise to the
computation of the early retirement pay . 3 5 (emphasis supplied)
Clearly, the Faculty Manual intends to grant retirement bene ts to quali ed
employees. It entitles an employee to retire after fteen (15) years of service or upon
reaching the age of fty- ve (55) and accordingly collect retirement bene ts. It even
mandates compliance with RA 7641 3 6 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 bene t is actually a form of
separation pay to quali ed employees who wish to resign is belied by its own company
policy. This bene t clearly falls within the category of "Retirement Pay," speci cally
under "Optional Retirement." For sure, respondent is precluded from claiming
otherwise.
In another vein, the con ict between respondent's own categorization of the
bene t 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. 3 7
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 bene ts under the law to give maximum aid and
protection to labor. 3 8
The optional retirement under respondent's Faculty Manual, therefore, should not
be taken as anything else but a retirement bene t within the ambit of Article 287 3 9 of
the Labor Code. ICHDca

Petitioner's retirement pay should be

computed based on Article 287 of the
Lab or Co de

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- ve (65). The law does not
make a distinction as to the retirement bene ts granted in either case. In both cases,
the retirement bene t is equivalent to 1/2 month salary for every year of service, the
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 1/2 month being computed at 22.5 days 4 0 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 be entitled to receive
such retirement bene ts as he may have earned under existing laws
and any collective bargaining agreement and other agreements:
provided, however, that an employee's retirement bene ts 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 bene ts of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty- ve (65) years
which is hereby declared as the compulsory retirement age, who has served at
least ve (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 fteen (15) days plus one-twelfth (1/12) of the 13th
month pay and the cash equivalent of not more than ve (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 bene ts, an employee must have rendered service for at least fteen (15)
years or must have reached fty- ve (55) years of age. To be entitled to compulsory
retirement bene ts, an employee must have rendered at least twenty (20) years of
service or must have reached sixty (60) years of age, whichever comes rst. The
Faculty Manual further provides that the compulsory retirement bene t 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 bene t however, it
shall be equivalent to fifteen (15) days per year of service." 4 1
Now, comparing the optional retirement bene ts under the two (2) retirement
schemes, it is apparent that fteen (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 bene cial for petitioner if Article 287's retirement plan will be applied in the
computation of her retirement benefits.
I n Beltran v. AMA Computer College-Biñan , 4 2 the Court ruled that while the
employer is free to grant retirement bene ts and impose different age or service
requirements, the bene ts should not be lesser than those provided in Article 287 of
the Labor Code.
Too, in Elegir v. Philippine Airlines, Inc. , 4 3 the Court decreed that the determining
factor in choosing which retirement scheme to apply is superiority in terms of bene ts
provided. Thus, We ruled that even if the employer has an existing retirement scheme
but the same does not provide for retirement bene ts equal or superior to that which is
provided under Article 287 of the Labor Code, the latter will apply. In this manner, the
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 employee can be assured of a reasonable amount of retirement pay for his or her
sustenance.
The retirement bene ts 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. TCAScE

So must it be.
The Retir ement Pay L aw does not bar
a retired employee 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 bene ts under Article 287 of the Labor Code, as amended, is
not applicable to petitioner's case. For it was supposedly not intended to bene t
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 bene ts 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 nancial support. 4 4 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). 4 5 In one case, 4 6 the Court even upheld the compulsory
retirement of two (2) employees at the ages of forty- ve (45) and thirty-eight (38) for
being consistent with Article 287 of the Labor Code.
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 bene ts under the law. Sixteen (16) years is
more than an ideal length of service an employee can render to his or her employer. 4 7 A
retirement plan entitling an employee to retire after fteen (15) years of service and
accordingly collect retirement bene ts is "reward for services rendered since it enables
an employee to reap the fruits of her labor — particularly retirement bene ts, 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." 4 8
All told, the New Retirement Pay Law intends to give the minimum retirement
bene ts 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 bene ts
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 public policy, such provisions may be reviewed and even
voided. 4 9 Neither will the Court sustain a retirement clause that entitles the retiring
employee to benefits less than what is guaranteed under the law. 5 0
ACCORDINGLY , the petition is GRANTED . The Decision dated December 20,
2016 and Resolution dated May 30, 2017 of the Court of Appeals in CA-G.R. SP No.
09693 are REVERSED and SET ASIDE . The Decision of the Labor Arbiter dated July
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 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 bene ts of Php366,204.48 plus 10% Attorney's Fees of Php36,620.40 in the
total amount of Php402,824.88.
This amount shall earn six percent (6%) interest per annum from nality of this
Decision until fully paid.
SO ORDERED.
Carpio, Caguioa, J.C. Reyes, Jr. and Zalameda, JJ., concur.

Footnotes
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."

4. Rollo, pp. 51-53.

5. Id. at 44-45.
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.
10. Id. at 112-119.
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 11. Should be Article 302, as per LABOR CODE (Amended and Renumbered), dated July 21,
2015.
12. Rollo, p. 116.
13. Id. at 119.

14. Id. at 250-256.

15. Should be Article 302, as per LABOR CODE (Amended and Renumbered), dated July 21,
2015.

16. Rollo, p. 254.

17. Id. at 255.
18. Petition for Certiorari; Rollo, pp. 266-286.
19. Comment; Rollo, pp. 287-303.

20. Penned by Associate Justice Marilyn B. Lagura-Yap with Associate Justices Gabriel T.
Ingles and Germano Francisco D. Legaspi concurring, Rollo, pp. 39-50.
21. Rollo, pp. 39-50.

22. Id. at 45.

23. Should be Article 302, as per LABOR CODE (Amended and Renumbered), dated July 21,
2015.
24. Rollo, p. 46.
25. Id. at 51-53.
26. Should be Article 302, as per LABOR CODE (Amended and Renumbered), dated July 21,
2015.
27. Rollo, p. 26.
28. Id. at 340-351.

29. Should be Article 302, as per LABOR CODE (Amended and Renumbered), dated July 21,
2015.

30. Rollo, p. 45.

31. Should be Article 302, as per LABOR CODE (Amended and Renumbered), dated July 21,
2015.
32. Abanto v. Board of Directors of the Development Bank of the Philippines, G.R. Nos. 207281
& 210922, March 5, 2019.

33. Banco De Oro Unibank, Inc. v. Sagaysay , 769 Phil. 897, 906 (2015).
34. Rollo, p. 142.
35. Rollo, pp. 29 and 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
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 Establishment."
37. Fortune Medicare, Inc. v. Amorin, 729 Phil. 484, 494 (2014).
38. C.F. Sharp Crew Management, Inc. v. Legal Heirs of Repiso, 780 Phil. 645, 668 (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 (2012).
41. Rollo, p. 142.

42. G.R. No. 223795, April 3, 2019.

43. Supra note 40.
44. See Sta. Catalina College and Sr. Loreta Oranza v. NLRC, 461 Phil. 720, 734 (2003).
45. See Cainta Catholic School v. Cainta Catholic School Employees Union, 523 Phil. 134, 150
(2006); Pantranco North Express, Inc. v. NLRC, 328 Phil. 470, 482-483 (1996);
Progressive Development Corporation v. NLRC, 398 Phil. 433, 437 (2000); and Philippine
Airlines, Inc. v. Airline Pilots Association of the Phils., 424 Phil. 356, 363 (2002).
46. Progressive Development Corporation v. NLRC, 398 Phil. 433, 437 (2000).
47. Pantranco North Express, Inc. v. NLRC, 328 Phil. 470, 482-483 (1996).
48. Cainta Catholic School v. Cainta Catholic School Employees Union, 523 Phil. 134, 152
(2006).
49. Id. at 151-152.
50. Id.

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