18/12/2025
"The issue of the grant of retirement benefit is not an issue of generosity and greed... Employers should be reminded to take the issue of retirement with careful consideration. Retirement is a right and not a privilege; neither is it considered a 'dole out,'" the Supreme Court said.
"RETIREMENT BENEFIT IS A RIGHT AND NOT A PRIVILEGE OR A DOLE OUT"โ SUPREME COURT
The Supreme Court (SC) has affirmed the Court of Appeals (CA) decision granting retirement pay worth about P680,112 to a part-time employee with fixed-term employment, emphasizing that all employees in the private sector, regardless of their status, are entitled to retirement pay.
In a 13-page ruling authored by Associate Justice Ramon Paul Hernando, the SC's First Division denied the appeal of International School Manila (ISM) questioning the grant of retirement pay to its former employee Ireland Carreon Cabrido.
ISM employed Cabrido as an Afternoon Activity (AFAC) and Athletic Activity (ATAC) coach from August 14, 1995, to May 29, 2020. During the pandemic lockdown, Cabrido still received a salary from March 2020 to May 2020.
In July 2020, ISM offered an early retirement package for those who (1) were at least 50 years old and (2) had worked for at least 5 years as of January 31, 2021. Cabrido expressed his intent to avail of the offer.
When Cabrido received ISM's computation, he questioned why his retirement pay was fixed at PHP 298,196. He asserted that based on his 25 years of service, the computation should have been PHP 680,112. ISM denied Cabrido's request, paving the way for him to file a labor complaint before the labor arbiter.
The labor arbiter dismissed his complaints, noting that he is a part-time employee who has a fixed-term employment status. It added that at the time Cabrido availed early retirement, he was only 50 years old, way below the 60-year-old requirement to avail retirement pay under Republic Act No. 7641.
The said decision was affirmed by the National Labor Relations Commission (NLRC), prompting him to elevate the case before the Court of Appeals (CA).
In reversing the said ruling, the CA ruled that Cabrido is entitled to Option A of ISM's Retirement Plan because he falls under said category. It noted that Cabrido is at least 50 years of age and has completed 10 years of service, which perfectly suits the said retirement option.
The Supreme Court agreed with the Court of Appeals, citing the United Nations Human Rights Office of the High Commissioner's statement that the right to social security is of central importance in guaranteeing human dignity for all persons when they are faced with circumstances that deprive them of their capacity to fully realize their human rights.
It emphasized that ISM cannot renege on its obligation and refuse to grant Cabrido his retirement pay under the pretense that it was doling out financial aid. Its claim that Cabrido, being only 50 years old, is not entitled to retirement pay under the Labor Code, which requires that the employee be at least 60 years old, is nothing but misleading and fraudulent representation.
The highest bench underscored that the grant of retirement benefits is not an issue of generosity or greed of the employer.
"The issue of the grant of retirement benefit is not an issue of generosity and greed... Employers should be reminded to take the issue of retirement with careful consideration. Retirement is a right and not a privilege; neither is it considered a 'dole out,'" the Supreme Court said.