International School Manila vs. Ireland Carreon Cabrido

An employee who accepts an employer's early retirement offer is entitled to retirement benefits under the employer's retirement plan, notwithstanding the employee's fixed-term or part-time status, because Republic Act No. 7641 applies to all private sector employees regardless of position, designation, or status, and the employer is estopped from denying the nature of its offer as retirement pay.

International School Manila (ISM) employed Ireland Carreon Cabrido as an Afternoon Activity (AFAC) and Athletic Activity (ATAC) coach from August 14, 1995 to May 29, 2020. His duties included teaching techniques and lessons to students, assisting in the AFAC and ATAC office, and performing other duties that his coordinator may assign. Face-to-face classes were disallowed starting March 2020 due to government-imposed lockdowns in response to the COVID-19 pandemic, though Cabrido continued to receive his salary from March 2020 to May 2020.

International School Manila (ISM) employed Ireland Carreon Cabrido as an Afternoon Activity (AFAC) and Athletic Activity (ATAC) coach from August 14, 1995 to May 29, 2020. His duties included teaching techniques and lessons to students, assisting in the AFAC and ATAC office, and performing other duties that his coordinator may assign. Face-to-face classes were disallowed starting March 2020 due to several lockdowns imposed by the government in response to the COVID-19 pandemic, although Cabrido received his salary from March 2020 to May 2020.

On July 23, 2020, ISM offered an early retirement package to employees 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 on August 24, 2020, of his retirement pay of PHP 298,196.18, he requested a recomputation, asserting that based on his 25 years of service, the computation should have been PHP 680,112.57 or equivalent to 70% of PHP 971,598.38. ISM denied Cabrido's request.

Cabrido filed a complaint against ISM for underpayment of retirement pay and damages, arguing that he was a regular employee having rendered 25 years of service. ISM claimed that Cabrido was employed on a fixed-term basis, with his employment contracts indicating the period within which he was employed. The Labor Arbiter dismissed the complaint, finding that Cabrido's employment status was fixed-term, that his repeated rehiring did not make him a regular employee, that at 50 years old he did not meet the 60-year age requirement under RA 7641, and that the Waiver, Release, and Quitclaim he signed should be given weight. The NLRC affirmed.

The Court of Appeals partly granted Cabrido's petition, holding that although Cabrido was a part-time fixed-term employee who could not attain regular status, he was entitled to Option A of ISM's Retirement Plan because he was at least 50 years of age and had completed 10 years of service. The CA also held that under RA 7641, part-time employees with fixed-term employment are entitled to retirement benefits, that ISM could not renege on its obligation under the pretense of financial aid, and that the quitclaim was against public policy.

• Retirement Plan Coverage: ISM argued that the CA overlooked that its Retirement Plan covers only full-time regular employees, and that the definition of "Member" under the plan expressly refers to a locally hired national faculty or support staff or teaching assistant in the regular and permanent employ of the employer.
• Nature of the Offer: ISM maintained that Cabrido was only entitled to the financial assistance offered by way of accommodation, which he had already received, and that the CA effectively rewrote the school's retirement plan.
• Age Requirement: ISM argued that Cabrido, being only 50 years old, is not entitled to retirement pay under the Labor Code, which requires the employee to be at least 60 years old.
• Validity of Quitclaim: ISM contended that the quitclaim executed by Cabrido in its favor is valid, thus precluding him from pursuing his claims.
• Lack of Qualifications: ISM pointed out that Cabrido does not possess the requirements to qualify as a regular full-time faculty member, as he has a degree in Advertising and Public Relations, completed only 14 units of Certificate Course in Physical Education, and did not take the Licensure Examination for Teachers.

• Regular Employment: Cabrido argued that he was a regular employee of ISM as he rendered 25 years of service.
• Entitlement to Retirement Pay: Cabrido asserted that based on his 25 years of service, the computation of his retirement pay should have been PHP 680,112.57 or equivalent to 70% of PHP 971,598.38, which was the correct amount.

• Entitlement to Retirement Pay: Whether Cabrido is entitled to retirement pay under ISM's Retirement Plan despite being a fixed-term part-time employee.

• Entitlement to Retirement Pay: Yes. Cabrido is entitled to retirement pay pursuant to Option A, Section 3, Article V of ISM's Retirement Plan. The fixed-term nature of his employment is immaterial because Republic Act No. 7641 applies to all employees in the private sector regardless of their position, designation, or status, and ISM is estopped from denying the nature of its offer as retirement pay.

• Entitlement to Retirement Pay: The Court first addressed the procedural question, noting that when the CA's findings and conclusions differ from those of the labor tribunals, a Rule 45 review can consider questions of fact. The Court then discussed the definition of retirement, citing Santo vs. University of Cebu, which defined retirement as "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." The Court derived the elements of retirement: (1) it is a form of reward for an employee's loyalty and service; (2) it is earned under existing laws, CBAs, employment contracts, and company policies; (3) it is a result of a bilateral act of the parties; and (4) it is an agreement whereby, after reaching a certain age or length of service, the employee severs their employment.

The Court further explained that retirement is not merely a reward or privilege but a right indispensable for one's dignity, citing Articles 22 and 25 of the Universal Declaration of Human Rights and the state policies under Article II of the Constitution. Addressing ISM's contention that its Retirement Plan covers only full-time regular employees, the Court cited De La Salle Araneta University vs. Bernardo, which held that RA 7641 applies to "all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid," including part-time employees. Thus, the fact that Cabrido's contract was for a fixed term was immaterial.

The Court also rejected ISM's imputation of greed on Cabrido, noting that ISM itself initiated the offer and used the words "retirement option" and "retirement package." When Cabrido conveyed his acceptance of the offer, it became a new "agreement" that would be the basis for the grant of retirement pay, superseding any other previously agreed retirement plans. The Court applied the doctrine of estoppel, citing Riingen vs. Western Union Financial Services, holding that ISM's conduct and representations led Cabrido to believe he was qualified to avail of the offer, and that the benefit he would receive was retirement pay computed according to applicable laws.

Finally, the Court held that the quitclaim should not stop Cabrido from pursuing his claim for retirement pay. Quitclaims are looked upon with disfavor and are commonly frowned upon as contrary to public policy and ineffective to bar claims, because the employer and employee do not stand on the same footing. ISM left Cabrido with no choice but to accept the terms of its offer, and the pandemic caused a negative impact on an individual's income. The Court emphasized that the premise of the quitclaim was the offer and acceptance of ISM's computed retirement benefit, and ISM cannot call it retirement pay to release itself from further responsibility while simultaneously denying its nature as retirement pay when the computation is challenged.

• Definition of Retirement — Retirement is "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. 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." The elements are: (1) it is a form of reward for loyalty and service; (2) it is earned under existing laws, CBAs, employment contracts, and company policies; (3) it is a result of a bilateral act of the parties; and (4) it is an agreement whereby, after reaching a certain age or length of service, the employee severs their employment.

• Retirement as a Human Right — Retirement is no longer merely a reward or privilege but a right indispensable for one's dignity, encompassing the right to social security and protection from unemployment, old age, and other lack of livelihood. This is grounded in Articles 22 and 25 of the Universal Declaration of Human Rights and the state policies under Article II of the Constitution.

• Coverage of Republic Act No. 7641 — RA 7641 applies to "all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid," including part-time employees, employees of service and other job contractors, and domestic helpers. The fixed-term nature of an employee's contract is immaterial to entitlement to retirement benefits.

• Estoppel in Pais — Under estoppel in pais, a person is considered in estoppel if his conduct, representations, admissions, or silence when he ought to speak out, whether intentionally or through culpable negligence, causes another to believe certain facts to exist and such other rightfully relies and acts on such belief, as a consequence of which he would be prejudiced if the former is permitted to deny the existence of such facts. ISM's conduct and representations led Cabrido to believe he was qualified to avail of the retirement offer.

• Quitclaims — Quitclaims are looked upon with disfavor and are commonly frowned upon as contrary to public policy and ineffective to bar claims, because the employer and the employee do not stand on the same footing, such that quitclaims usually take the form of contracts of adherence, not of choice.

• "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. 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." — This passage from Santo v. University of Cebu defines retirement and establishes the elements the Court applied in determining Cabrido's entitlement.

• "Republic Act No. 7641 states that 'any employee may be retired upon reaching the retirement age [. . .];' and '[i]n 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.' The Implementing Rules provide that Republic Act No. 7641 applies to 'all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid, except to those specifically exempted [. . .]'" — This passage from De La Salle Araneta University v. Bernardo establishes that RA 7641 covers all private sector employees regardless of status, which was central to the Court's ruling that Cabrido's fixed-term status was immaterial.

• "According to Article 1431 of the Civil Code, 'through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.'" — This passage from Riingen v. Western Union Financial Services articulates the estoppel doctrine the Court applied to bind ISM to its representations that the offer was a retirement package.

• Santo vs. University of Cebu, 860 Phil. 979 (2019) — Cited as the source of the definition of retirement and its elements, which the Court applied to determine Cabrido's entitlement.
• De La Salle Araneta University vs. Bernardo, 805 Phil. 580 (2017) — Controlling precedent establishing that RA 7641 applies to all private sector employees regardless of status, including part-time employees, and that the fixed-term nature of employment is immaterial.
• Riingen vs. Western Union Financial Services, 897 Phil. 1028 (2021) — Followed in applying the doctrine of estoppel in pais to bind ISM to its representations that the offer was a retirement package.
• Al-Masiya Overseas Placement Agency, Inc. vs. Viernes, 869 Phil. 123 (2020) — Cited for the rule that quitclaims are looked upon with disfavor and are contrary to public policy because employer and employee do not stand on the same footing.

• Article 302 [287], Labor Code, as amended by Republic Act No. 7641 — Provides that any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract, and that 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. The Court applied this provision to hold that ISM's offer and Cabrido's acceptance constituted a new agreement for retirement benefits.
• Republic Act No. 7641 — An Act Amending Article 287 of the Labor Code, providing for retirement pay to qualified private sector employees in the absence of any retirement plan. The Court held that this law applies to all private sector employees regardless of status, including part-time and fixed-term employees.
• Article 1431, Civil Code — Provides that through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. The Court applied this to estop ISM from denying the nature of its offer as retirement pay.
• Articles 22 and 25, Universal Declaration of Human Rights — Recognize the right to social security and the right to security in the event of unemployment, sickness, disability, widowhood, old age, or other lack of livelihood. The Court cited these provisions to establish that retirement is a right indispensable for human dignity.
• Article II, Sections 11 and 18, Constitution — Provides that the State values the dignity of every human person and guarantees full respect for human rights, and affirms labor as a primary social economic force. The Court cited these provisions as the constitutional backdrop for the right to retirement benefits.

Gesmundo, C.J. (Chairperson), Zalameda, Rosario, and Marquez, JJ., concurred.