G.R. No. 232522 - Santo vs. University of Cebu

Carissa E. Santo was hired by the University of Cebu in May 1997 as a full-time instructor.
During her tenure, she pursued legal studies and passed the 2009 Bar Examinations.
She accumulated sixteen (16) years of service by April 2013, though she was only forty-two (42) years old at that time.

Under the University’s Faculty Manual, optional retirement was available to permanent employees who reached either their fifty-fifth (55th) birthday or had rendered at least fifteen (15) years of service.
The Faculty Manual provided that the retirement benefit would be computed as fifteen (15) days of salary for every year of service.
Petitioner applied for optional retirement in April 2013 and accepted the Faculty Manual’s computation.

Petitioner claimed that her retirement pay should instead be computed under Article 287 (now Article 302) of the Labor Code, which mandates retirement pay equivalent to 22.5 days per year of service (15 days plus additional components reflecting one-twelfth of the 13th month pay and service incentive leave benefits).
The University (respondent) contended that the Faculty Manual’s scheme – labeled as “resignation with separation pay” – was a voluntary retirement benefit and not subject to the computation prescribed by the Labor Code.

The Labor Arbiter initially ruled in favor of petitioner, awarding retirement benefits computed at 22.5 days per year of service, along with attorney’s fees.
On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision, holding that petitioner was not entitled to the more generous computation under Article 287, as she was voluntarily opting for retirement to engage in the legal profession.
The Court of Appeals affirmed the NLRC’s ruling by upholding the computation based on the Faculty Manual and subsequently denied petitioner’s motion for reconsideration.

Petitioner sought to nullify the Court of Appeals’ decisions, arguing that Article 287 of the Labor Code (providing for a higher retirement pay computation) should apply instead of the Faculty Manual’s provisions.
The petition raised the issue of whether the faculty manual’s retirement scheme should be considered replete with “resignation with separation pay” or as a bona fide retirement benefit that must meet the minimum benefits prescribed by law.

Whether the Court of Appeals erred in affirming the computation of petitioner’s retirement benefits based on the Faculty Manual instead of applying Article 287 (now Article 302) of the Labor Code.

Is the retirement benefit provided under the Faculty Manual—a scheme described both as a resignation with separation pay and as a form of retirement pay—sufficient under the law?
Does the petitioner's voluntary retirement preclude her from availing the more favorable computation mandated by Article 287 of the Labor Code?