2018 Labor Law, Q1

Narciso filed a complaint against Norte University for the payment of retirement benefits after having been a part-time professional lecturer in the same school since 1974. Narciso taught for two semesters and a summer term for the school year 1974-1975, took a leave of absence from 1975 to 1977, and resumed teaching until 2003. Since then, his contract has been renewed at the start of every semester and summer, until November 2005 when he was told that he could no longer teach because he was already 75 years old. Norte University also denied Narciso’s claim for retirement benefits stating that only full-time permanent faculty, who have served for at least five years immediately preceding the termination of their employment, can avail themselves of post-employment benefits. As part-time faculty member, Narciso did not acquire permanent employment status under the Manual of Regulations for Private Schools, in relation to the Labor Code, regardless of his length of service.
(a) Is Narciso entitled to retirement benefits? (2.5%)
(b) If he is entitled to retirement benefits, how should retirement pay be computed in the absence of any contract between him and Norte University providing for such benefits? (2.5%)

Quick check

Does a part-time faculty member qualify for statutory retirement benefits under Article 302 of the Labor Code?

Under DLSAU v. Bernardo, what impact does the lack of permanent employment status under school regulations have on an employee's statutory retirement entitlement?

In the absence of a contractual retirement plan, how many days' salary per year of service is an eligible retiree entitled to under Article 302?

Which of the following items is NOT included in the statutory 22.5 days' retirement pay computation?

How is a fraction of a year treated when computing an employee's total years of service for retirement benefits under Article 302?

Learn more about these topics

1. Part-Time Faculty Coverage
Under Article 302 of the Labor Code, as amended by Republic Act No. 7641 (The Retirement Pay Law), statutory retirement benefits apply to all employees in the private sector regardless of their position, designation, or status, provided they have rendered at least five years of service. In the landmark case of De La Salle Araneta University v. Bernardo, the Supreme Court clarified that part-time faculty members are not excluded from statutory coverage. Non-acquisition of permanent tenure under private school regulations does not forfeit an employee's entitlement to retirement compensation upon reaching retirement age.

2. Statutory Computation Components
In the absence of an applicable Collective Bargaining Agreement or private retirement plan, the statutory retirement pay under Article 302 of the Labor Code is pegged at one-half month salary for every year of service. Statutory jurisprudence establishes that the phrase 'one-half month salary' means twenty-two and a half days' pay per year of service. This component is composed of fifteen days basic salary, five days corresponding to service incentive leave pay, and two and a half days representing one-twelfth of the thirteenth month pay.

3. Service Length Calculation
For purposes of calculating statutory retirement benefits under Article 302 of the Labor Code, a fraction of at least six months is considered as one whole year of service. For part-time faculty members who teach per semester or hourly rates, total service includes all cumulative years rendered with the educational institution. An employer cannot evade retirement pay obligations by asserting that a part-time employee's employment contract was periodically renewed per academic term, provided the worker accumulated at least five years of service in the establishment.

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The questions reproduced here are the official texts of the Philippine Bar Examinations, published by the Supreme Court. They are reproduced for study purposes.The suggested answers are the author’s own.

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