G.R. No. 190809 - De La Salle Araneta University vs. Bernardo

Case Summary (G.R. No. 190809)

Facts of Employment and Separation

Bernardo began as a part‑time professional lecturer on June 1, 1974 at what is now DLS‑AU, teaching various semesters and summers until October 12, 2003. He took a leave (June 1975–October 1977) for government assignment and thereafter resumed teaching. His engagement was by semestral/summer fixed‑term contracts renewed at each term. On November 8, 2003, DLS‑AU notified him by telephone that his contract would not be renewed because the university was implementing a retirement age limit; Bernardo was then 75 years old and stopped teaching. At retirement his hourly rate was P246.50. DOLE advised (letters dated January 20, 2004 and February 3, 2004) that Bernardo was entitled to retirement benefits under RA 7641; DLS‑AU/Dr. Bautista denied entitlement, citing university policy and the collective bargaining agreement (CBA) limiting post‑employment benefits to full‑time permanent faculty with five years’ service immediately preceding termination.

Procedural History

Bernardo filed a complaint for non‑payment of retirement benefits and damages with the NLRC on February 26, 2004. The Labor Arbiter dismissed the complaint on December 13, 2004 as barred by prescription. The NLRC reversed and awarded retirement benefits on June 30, 2008. The Court of Appeals affirmed the NLRC decision on June 29, 2009 and denied reconsideration on January 4, 2010. DLS‑AU elevated the case to the Supreme Court via a Petition for Review on Certiorari under Rule 45; the Supreme Court rendered the final decision dismissing the petition and affirming the CA on February 13, 2017.

Issues Presented to the Supreme Court

Whether part‑time employees are excluded from coverage of retirement benefits under RA 7641. 2) Whether Bernardo’s claim for retirement benefits is barred by prescription under Article 291 of the Labor Code (three‑year prescriptive period for money claims).

Labor Arbiter’s Rationale and Disposition

The Labor Arbiter held that compulsory retirement age under the Labor Code is 65 and that an employee is effectively separated upon reaching that age; thus, Bernardo’s cause of action accrued when he reached 65 and his claim, filed ten years later, was prescribed under Article 291. Relying on precedent construing Article 291 to apply to retirement pay claims, the Labor Arbiter dismissed the complaint on that ground.

NLRC’s Rationale and Disposition

The NLRC reversed, finding (a) refusal to renew Bernardo’s contract on November 8, 2003 constituted his effective separation and the accrual of his cause of action then (not at age 65); (b) estoppel barred DLS‑AU from asserting prescription because the employer knowingly permitted Bernardo to continue teaching beyond 65, inducing belief of continued employment; and (c) part‑time status did not exclude coverage under RA 7641 because the law’s implementing rules explicitly apply “regardless of position, designation, or status” and do not list part‑time employees among exemptions. The NLRC ordered payment of retirement benefits equivalent to at least one‑half month of the latest salary for every year of service.

Court of Appeals’ Rationale and Disposition

The Court of Appeals affirmed the NLRC, emphasizing that RA 7641 and its Implementing Rules expressly define coverage broadly to include all private‑sector employees except specified exemptions, and that labor and social legislation must be liberally construed in favor of employees. The CA upheld reliance on the DOLE implementing rules and administrative guidelines and agreed that accrual occurred upon termination/denial and that estoppel applied given the employer’s conduct.

Supreme Court Analysis — Coverage under RA 7641 and Implementing Rules

The Supreme Court applied RA 7641 and the Implementing Rules (Book VI, Rule II) promulgated by DOLE under Article 5 of the Labor Code. The statutory and regulatory scheme defines coverage as “all employees in the private sector, regardless of their position, designation or status and irrespective of the method by which their wages are paid,” excluding only those explicitly enumerated (national government employees covered by Civil Service Law; retail, service and agricultural establishments regularly employing not more than ten employees). The Court invoked the Labor Advisory by then‑Secretary Quisumbing clarifying that part‑time employees are included. Applying the canon expressio unius est exclusio alterius, the Court reasoned that the explicit enumeration of exemptions indicates all others—such as part‑time employees—are included. Administrative implementing rules and contemporaneous administrative interpretation carry the force of law and persuasive weight and were held valid and applicable; labor provisions and implementing rules are to be resolved in favor of labor.

Supreme Court Analysis — Fixed‑Term Employment and Permanent Status

The Court reviewed the Manual of Regulations for Private Schools (Sections 92–93) and jurisprudence establishing that permanent status for private school teachers requires full‑time status and specified consecutive service periods; part‑time employees cannot attain permanent status regardless of length of service. The Court also reaffirmed settled jurisprudence that fixed‑term employment is valid when freely entered into without duress and not intended to circumvent security of tenure (citing Brent School and related precedents). Bernardo’s semestral and summer fixed‑term contracts were valid; his last contract ended October 12, 2003, and DLS‑AU did not offer renewal thereafter. Nevertheless, fixed‑term status and part‑time employment are immaterial to his statutory claim for retirement benefits under RA 7641.

Supreme Court Analysis — Accrual of Cause of Action, Prescription, and Estoppel

The Court applied the three‑element test for accrual of a cause of action (right, obligation, and violative act or omission). Although the Labor Arbiter treated accrual as occurring upon reaching compulsory retirement age (65), the Supreme Court held the cause of action accrued only when the employer manifested refusal to pay—here by the non‑renewal notice of November 8, 2003 and Dr. Bautista’s explicit denial by letter dated February 12, 2004. Bernardo filed his complaint on February 26, 2004, within three years of the accrual. Even if accrual were deemed at age 65, the Court found DLS‑AU’s conduct in repeatedly extending his employment beyond 65 estopped the university from asserting prescription. The Court explicated the requisites of equitable estoppel: representation or conduct

Case Syllabus (G.R. No. 190809)

Procedural History

Petition for Review on Certiorari under Rule 45 filed by De La Salle-Araneta University (DLS-AU) seeking annulment and reversal of the Court of Appeals Decision dated June 29, 2009 and Resolution dated January 4, 2010 in CA-G.R. SP No. 106399.
The Court of Appeals had affirmed in toto the Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 043416-05, which itself reversed and set aside the Labor Arbiter’s Decision dated December 13, 2004 in NLRC NCR Case No. 00-02-02729-04.
Labor Arbiter dismissed Bernardo’s complaint on December 13, 2004 on the ground of prescription.
NLRC reversed the Labor Arbiter in a Decision dated June 30, 2008, finding Bernardo entitled to retirement benefits under Republic Act No. 7641.
NLRC denied DLS-AU’s Motion for Reconsideration in a Resolution dated September 15, 2008.
Court of Appeals promulgated its Decision on June 29, 2009, affirming the NLRC decision; Motion for Reconsideration denied by its Resolution dated January 4, 2010.
Supreme Court, in a Decision penned by Justice Leonardo-De Castro on February 13, 2017, dismissed the petition and affirmed the Court of Appeals Decision and NLRC judgment.

Facts of the Case

Juanito C. Bernardo (Bernardo) began work as a part-time professional lecturer at DLS-AU (formerly Araneta University Foundation) on June 1, 1974 at P20.00 per hour.
Bernardo taught for two semesters and the summer in school year 1974-1975, took a leave of absence from June 1, 1975 to October 31, 1977 to work in Papua New Guinea, and resumed teaching in 1977 until October 12, 2003 (end of first semester, school year 2003-2004).
Bernardo’s teaching contracts were renewed at the start of every semester and summer; prior contracts contained identical provisions that they “automatically expire unless expressly renewed in writing.”
On November 8, 2003, DLS-AU informed Bernardo via telephone that he could no longer teach because the school was implementing a retirement age limit; Bernardo was then 75 years old and paid P246.50 per hour.
Bernardo sought DOLE advice and, after receiving adverse response from DLS-AU (Dr. Oscar Bautista) denying benefits, filed a complaint on February 26, 2004 before the NLRC for non-payment of retirement benefits and damages against DLS-AU and Dr. Bautista.

Communications, Opinions, and Documentary Evidence

DOLE, through its Public Assistance Center and Legal Service Office, issued letters dated January 20, 2004 and February 3, 2004 opining that Bernardo was entitled to benefits under Republic Act No. 7641 (New Retirement Law) and its Implementing Rules and Regulations.
Dr. Oscar Bautista, in a letter dated February 12, 2004, denied Bernardo any separation pay or retirement benefits, citing DLS-AU policy and the Collective Bargaining Agreement (CBA) that restrict post-employment benefits to full-time permanent faculty with at least five years immediately preceding termination.
Contracts (including the Contract for Part-Time Faculty Member Semestral) showed fixed-term engagements (one semester) and stated automatic expiry unless renewed in writing.

Positions and Arguments of the Parties

Bernardo:
- Claimed entitlement to retirement benefits after 27 years of service under Republic Act No. 7641 and its Implementing Rules.
- Contended continuous employment until October 12, 2003, and that cause of action for retirement pay accrued only upon such termination or refusal to pay.
- Argued part-time status did not exclude him from RA 7641 coverage and that the conditions of RA 7641 were met (age beyond compulsory retirement, at least five years service, absence of retirement plan providing equal or greater benefits).
DLS-AU and Dr. Bautista:
- Asserted Bernardo was a part-time, fixed-term employee not entitled to retirement benefits under DLS-AU policy or CBA; part-time faculty do not acquire permanent status under the Manual of Regulations for Private Schools and the Labor Code.
- Argued the compulsory retirement age is 65 (Article 302 [287]) and Bernardo’s cause of action accrued at age 65; thus, Bernardo’s claim filed at age 75 was time-barred under Article 291 (three-year prescriptive period for money claims).
- Contended the contracts were for a fixed term, valid if entered into freely, and that non-renewal is not equivalent to retirement.
- Maintained Dr. Bautista was not personally liable as he acted on behalf of DLS-AU; corporate personality is separate from those acting for it.
- Denied entitlement to actual, moral, or exemplary damages and attorney’s fees due to lack of proof of bad faith or loss.

Labor Arbiter’s Decision (December 13, 2004)

Dismissed Bernardo’s complaint on the ground of prescription.
Held that upon reaching compulsory retirement age of 65, an employee is effectively separated from service; Bernardo reached 65 years earlier.
Applied Article 291 of the Labor Code (money claims must be filed within three years from accrual) and De Guzman v. Court of Appeals to conclude claim for retirement benefits was a money claim subject to three-year prescription.
Concluded Bernardo’s claim accrued upon reaching age 65 and was filed ten years later; therefore it was forever barred.

NLRC Decision (June 30, 2008) — Reversal of Labor Arbiter

Reversed and set aside the Labor Arbiter’s decision; found Bernardo timely filed his complaint.
Held that because DLS-AU and Dr. Bautista knowingly extended Bernardo’s employment after he had reached compulsory retirement age, Bernardo’s cause of action accrued only upon his effective separation on November 8, 2003 when non-renewal was communicated.
Applied equitable doctrine of estoppel against DLS-AU and Dr. Bautista for allowing work beyond retirement age and thus preventing timely claim.
Held that Republic Act No. 7641’s coverage included part-time employees: the Implementing Rules provide coverage for “all employees in the private sector, regardless of their position, designation, or status, and irrespective of the method by which their wages are paid”; exceptions did not include part-time employees.
Cited humanitarian rule of liberal construction in favor of employees and ordered DLS-AU and Dr. Bautista to pay Bernardo retirement benefits equivalent to at least one-half month of his latest salary for every year of service; denied other claims for lack of merit.

Court of Appeals Decision (June 29, 2009)

Affirmed the NLRC decision in toto.
Ruled that RA 7641 and its Implementing Rules clearly include part-time employees within coverage; part-time employees are not among the statutory exclusions.
Emphasized remedial, liberal construction of labor and social laws.
Upheld NLRC reliance on the Implementing Rules and a