Padillo v. Rural Bank (G.R. No. 199338; January 21, 2013)


FACTS: Petitioner, the late Eleazar Padillo (Padillo), was an employee of respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems in 2003, the Bank took out retirement/insurance plans with Philippine American Life and General Insurance Company (Philam Life) for all its employees in anticipation of its possible closure and the concomitant severance of its personnel. Respondent Mark Oropeza is the president and major stockholder of the bank.

Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to effectively pursue his work. He wrote a letter addressed to Oropeza expressing his intention to avail of an early retirement package. Despite several follow-ups, his request remained unheeded. Not having received his claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery of unpaid retirement benefits.

The Labor Arbiter dismissed Padillos complaint on the ground that the latter did not qualify to receive any benefits under Article 300 of the Labor Code as he was only fifty-five (55) years old when he resigned, while the law specifically provides for an optional retirement age of sixty (60) and compulsory retirement age of sixty-five (65).

Padillo elevated the matter to the NLRC. The NLRC reversed the Labor Arbiters ruling. Aggrieved, Oropeza and the Bank filed a petition for certiorari with the CA. The CA reversed the NLRCs ruling but with modification. It directed the respondents to pay Padillo the amount of P50,000.00 as financial assistance exclusive of the P100,000.00 Philam Life Plan benefit.

Displeased with the CAs ruling, Padillo (now substituted by his legal heirs due to his death) filed the instant petition before the Supreme Court.

ISSUE: Is Padillo entitled to claim for separation and retirement benefits under the Labor Code?

At the outset, it must be maintained that the Labor Code provision on termination on the ground of disease under Article 297 does not apply in this case, considering that it was Padillo and not the Bank who severed the employment relations. A plain reading of the Article 297 of the Labor Code clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties.What remains applicable, however, is the Labor Code provision on retirement. In the absence of any applicable agreement, an employee must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year. Notably, these age and tenure requirements are cumulative and non- compliance with one negates the employees entitlement to the retirement benefits under Article 300 of the Labor Code altogether.

In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equivalent contract between the parties which set out the terms and condition for the retirement of employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the Bank.

Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served for twenty-nine (29) years he, however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan, petitioners claim for retirement benefits must be denied.

Nevertheless, the Court concurs with the CA that financial assistance should be awarded but at an increased amount. With a veritable understanding that the award of financial assistance is usually the final refuge of the laborer, considering as well the supervening length of time which had sadly overtaken the point of Padillos death an employee who had devoted twenty-nine (29) years of dedicated service to the Bank the Court, in light of the dictates of social justice, holds that the CAs financial assistance award should be increased from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 benefit receivable by the petitioners under the Philam Life Plan which remains undisputed.

Finally, the Court finds no bad faith on the part of the Bank and Oropeza as they were within their right, absent any proof of its abuse, to ignore Padillos misplaced claim for retirement benefits. Oropezas and the Banks obstinate refusal to accede to Padillos request is precisely justified by the fact that here lies no basis under any applicable agreement or law which accords the latter the right to demand any retirement benefits from the Bank. While the Court mindfully notes that damages may be recoverable due to an abuse of right under Article 21 in conjunction with Article 19 of the Civil Code the following elements must, however, obtain: ( 1) there is a legal right or duty; (2) exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another. Records reveal that none of these elements exists in the case at bar and thus, no damages on account of abuse of right may he recovered. PARTLY GRANTED.