A Long-Standing Practice

Quintin was hired in June 1990 by AMA Education System (AMA) as a Mathematics and CAD Instructor. Eight years later, he was promoted as its School Registrar and was able to work as such until April 1999. While serving as School Registrar, he was promoted to the position of School Administrator/Chief Operations Officer of AMA’s College in Biñan, Laguna in January 1999.

Quintin alleged that sometime in 2008, he applied for retirement relying on a long-standing policy of AMA Education System in granting early retirement benefits to its employees. While the said application for early retirement was being processed, Quintin was requested to continue his employment until after the enrollment period. Later, he was informed of the approval of his application, and the processing of the payment of his benefits.

On June 3, 2008 Quintin was compelled to leave immediately for the USA to avoid the cancellation of his visa as a permanent resident.

On September 3, 2010, while on vacation in the Philippines, Quintin filed a complaint for payment of retirement benefits/separation pay against AMA.

AMA contended that Quintin’s request in 2008 for early retirement was disapproved. Before the denial could be communicated to him, Quintin had already left the country without submitting a resignation letter and following the standard company policy on proper turn over of work and accomplishment of clearance. AMA added that it was willing and ready to release to Quintin his last salary and 13th month pay in the total amount of PhP28,046.34, less an unliquidated amount for the 2008 graduation.

Quintin retorted that he underwent an exit interview, clearance procedures, and turn over of work accountabilities. Quintin then claimed that his basic monthly salary was PhP51,310.00 and not PhP25,000.00. He also denied that he received the unliquidated budget for the 2008 graduation. Lastly, Quintin argued that while it had no written retirement plan, AMA had a long-standing practice of granting early retirement, separation pay, or cash gift or benefit to those who have not reached the compulsory retirement age or mandatory twenty-year service requirement.

Was Quintin entitled to retirement benefits?

The Supreme Court ruled that Quintin was entitled to retirement benefits from AMA.

The Court stated that Article 302¹formerly Article 287 of the Labor Code of the Philippines provides for the voluntary retirement age of 60 years old and mandatory retirement age of 65 years old. In addition to the age requirements, the employee must have served at least five years in the company. The statutory retirement benefit is pegged at one-half month salary for every year of service or a fraction thereof. The employer however, is free to grant other retirement benefits and impose different age or service requirements, provided that the benefits shall not be lesser than those provided in Article 302.

The Court then discussed Article 100²ARTICLE 100. Prohibition against Elimination or Diminution of Benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. of the Labor Code of the Philippines. According to the Court, the said Article expressly prohibits the elimination or reduction of benefits received by employees. However, the basis for the grant of said benefit must be shown through an express policy, written contract, or an unwritten policy that has ripened into a company practice. To be considered a practice, it must be consistently and deliberately made by the employer over a significant period of time.³Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, 639 Phil. 633, 641 (2010). The Court added that it has not defined what constitutes a “significant period of time.” Jurisprudence⁴Metropolitan Bank and Trust Co. v. National Labor Relations Commission, 607 Phil. 359 (2009). explains that the matter is decided according to the peculiar facts and circumstances of each case, the common denominator of which is the regularity and deliberateness of the grant of benefits over a significant period of time.

In the present case, the Court found that Quintin was able to prove through substantial evidence the existence of an established company practice of granting early retirement to its employees who have rendered at least ten years of service, regardless of age. Specifically, the Court admitted the affidavits of Salvacion and Elsa, two former AMA employees, who both attested in their separate affidavits that they were former employees of AMA who were granted retirement benefits. The Court noted that although they did not personally confirm the award of their early retirement, the affidavits showed that they occupied managerial positions and were privy to the policies of the school and to the movements or retirement of their subordinate personnel. Nonetheless, the Court found that the affidavits revealed the following:

• Salvacion was AMA’s School Director in Quezon City, while Elsa was its Registrar of the Basic Education Department, also in Quezon City;
• Salvacion worked for AMA for 11 years and Elsa was with AMA for 18 years;
• AMA granted an early retirement program to its employees who had rendered at least 10 years of service;
• Both received early retirement benefits of one-month salary for every year of service pursuant to the early retirement program of AMA; and
• Eight other employees were able to avail of the early retirement program.

On the other hand, the Court also found that AMA merely denied that it had any existing early retirement policy and the grant of Salvacion and Elsa’s requests were isolated cases. However, the Court stressed that AMA did not submit controverting evidence to refute Salvacion and Elsa’s statements in their affidavits as to the grant of early retirement benefits to its other employees. Notably, AMA did not explain why Salvacion and Elsa’s requests for early retirement were granted but Quintin’s request was denied.

The Court held that Quintin substantially proved that AMA had a consistent company practice of granting early retirement to its employees who have rendered at least 10 years of service. For the Court, Quintin is entitled to retirement benefits.

Further reading:

• Beltran v. AMA Computer College-Biñan, G.R. No. 223795, April 3, 2019.