Case Digest: MWSS v. Advincula, et al.

G.R. No. 179217: February 2, 2011

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, Petitioner, v. GABRIEL ADVINCULA, et al.,Respondents.

CARPIO, J.:

FACTS:

Sometime in 1996, petitioner Metropolitan Waterworks and Sewerage System (MWSS) was reorganized pursuant to the National Water Crisis Act of 1995. Because of the reorganization, MWSS offered separation benefits to its affected official and employees through the Revised Early Retirement Incentive Package (ERIP I) which was availed of by around 2,000 MWSS employees.

The MWSS pay separation benefits to its affected permanent officials and employees who have served at least one year:

Subsequently MWSS entered into concession agreements with Maynilad Water Services, Inc. and Manila Water Company, Inc. for the privatization of its waterworks and sewerage systems. MWSS again offered a retirement plan called Early Retirement Incentive Package II (ERIP II) to around 5,000 of its employees who are not absorbed.

Under ERIP II, MWSS paid separation and other benefits in this manner: (1) all employees, regardless of the length of service, were given one month pay for every year of service; (2) those who served for 15 to 20 years received one month pay for every year of service, cash payment from the Government Service Insurance System (GSIS) equivalent to 18 months salary plus monthly pension upon reaching the age of 60; and (3) those who served for more than 20 years received a return of their premium from GSIS.

On 21 January 2004, respondents, who are all past and present employees of MWSS and who were all qualified to retire at the time ERIP I and ERIP II were issued, filed a petition for mandamus against MWSS for the alleged non-payment of their separation pay.

The RTC granted the issuance of the writ of mandamus. MWSS filed an appeal with the CA.

The CA AFFIRMED WITH THE MODIFICATION that the Writ of Mandamus issued against appellant Metropolitan Waterworks and Sewerage System (MWSS) commands it to release the payment of the balance of the ERIP separation pay in the amount equivalent to 0.5 per year times BMP (basic monthly pay) only to the following employees who retired in 1997 under ERIP II, to wit: (1) employees who have rendered less than fifteen (15) years of service provided they were not excluded by paragraph 1, MC No. 26-96(c), and provided further, that they were not absorbed by the private concessionaires during the reorganizations; and (2) those who have served for more than thirty (30) years.

Both parties filed their respective motions for reconsideration which the CA denied for lack of merit. Respondents filed a petition for review on certiorari with the Supreme Court which was denied. Through an Entry of Judgment issued by this Court, the case became final and executory. Then, petitioner filed this petition for review on certiorari.

ISSUE:

Whether the Court of Appeals erred in allowing the writ of mandamus against petitioner commanding it to pay the balance of 0.5 month salary for every year of service of unpaid separation benefits to those employees who have served for more than 30 years and retired in 1997 under ERIP II.

HELD: The CA's decision was sustained.

LABOR LAW

It is undisputed that respondents were all qualified to retire under RA 1616 at the time of the reorganization and privatization of MWSS in 1996 and 1997, respectively.

Section 1 of RA 1616 provides:

Section 1. Section twelve of Commonwealth Act Numbered One hundred eighty-six, as amended, is hereby further amended by adding two new paragraphs after paragraph (a) which reads as follows:

(c) Retirement is likewise allowed to a member, regardless of age, who has rendered at least twenty years of service. The benefit shall, in addition to the return of his personal contributions plus interest, be only a gratuity equivalent to one month salary for every year of service, based on the highest rate received, but not to exceed twenty-four months. This gratuity is payable by the employer or office concerned which is hereby authorized to provide the necessary appropriation or pay the same from savings in its appropriations.

It is clear from the provision that an employee who has rendered at least 20 years of service may retire under RA 1616 and receive a retirement gratuity of 1 month salary for every year of service.

On the other hand those who are not qualified to retire, for as long as they served for more than a year, may avail of the gratuity corresponding to their length of service. As for those employees who are qualified to retire, they may only receive a separation pay equivalent to the difference between the incentive package and the retirement benefit under any existing retirement law. For this purpose, basic monthly pay shall be based on the full implementation of the Salary Standardization Law II salary rates at the designated salary step as of December 31, 1995. The number of service years for qualified retirees under GSIS existing retirement laws shall be certified by the GSIS.

The ERIP to be paid by MWSS to officials or employees qualified to retire shall be the difference between the incentive package and the retirement benefit under any existing retirement law (RA 1616, 1146 or 660). Hence, those who have rendered at least 20 but less than 30 years of service should receive 1 month salary for every year of service; and those who have rendered more than 30 years should receive 1.5 month salary for every year of service.

In the present case, MWSS already gave the affected employees under ERIP II, regardless of the length of service, a separation benefit equivalent to 1 month salary for every year of service. Thus, those employees who have rendered at least 20 but less than 30 years of service already received the payment due them. However, MWSS is still obligated to pay those affected employees who have rendered more than 30 years for the balance of 0.5 month salary for every year of service.

The reasoning forwarded by petitioner that the remaining balance of 0.5 is not mandatory but is still dependent on whether the employee had been absorbed by the private concessionaire or actually resigned from the service only applies to those employees who have served less than 15 years.

Those belonging to the second category, on the other hand, shall receive the difference between the incentive package and the retirement benefit under any existing retirement law while those in the third category or the casual employees shall receive one (1) month basic salary for every year of service.

As can be gleaned from the foregoing, employees who have rendered at least fifteen years of service but less than twenty (20) years are already categorized as retirables under PD 1146.

It is evident that appellant has fully paid the non-retirables, or those who had rendered less than fifteen (15) years of service, their ERIP separation benefit of 1.5 per year times BMP. What is not immediately evident is whether or not appellant has fully paid the retirables their ERIP separation benefit. Appellant claims that it has in fact paid the retirables more than what they were entitled to. Appellees claim otherwise.

Under Republic Act No. 1616 (RA 1616), the retirees, or those who have served at least twenty (20) years, are entitled to a gratuity equivalent to one (1) month for every year of service, in addition to the return of his personal contribution plus interest. x x x [I]t thus appears that the amount equivalent to 1.5 per year times BMP that appellant paid its employees, specifically the retirables, reasonably covers their ERIP separation pay, which is only equivalent to the difference between the incentive package and the retirement benefit provided by the applicable law.

In the case of those who were separated in 1997 under ERIP II, it is undisputed that all the employees were given one (1) month salary for every year of service. In addition, those who served for 15-20 years received the benefits under Republic Act No. 8291 and an amount equivalent to their eighteen (18) months salary from GSIS while those who served for 20 years or more received from the GSIS the return of their premiums.

It is readily apparent that those employees who have rendered less than fifteen (15) years of service have been underpaid by 0.5 per year times BMP of their separation pay. However, this is not applicable to employees who were offered appointments in the new organizations for positions they applied for who refused such offer of appointments; or to employees who were absorbed by the private concessionaires. The reason for the latter is that these employees were never separated from the service by virtue of the reorganizations of appellant pursuant to RA No. 8041.

Those who served twenty (20) years or more apparently were separated from the service under RA 1616 which provides as retirement benefit a gratuity equivalent to one (1) month salary for every year of service, in addition to the return of the employee's personal contributions. Under the ERIP, those who have served for 20-30 years are entitled to 2.0 per year times BMP minus the retirement benefit. Thus, these employees were entitled to a separation pay of 1.0 per year times BMP which was already given by appellant.

On the other hand, those who have rendered more than thirty (30) years of service are entitled to 2.5 per year times BMP minus the retirement benefit of one (1) month salary for every year of service. Appellant should pay them 1.5 per year times BMP instead of the one month salary for every year of service actually given them as separation pay. Thus, appellant owes these appellees 0.5 per year times BMP.

As for those who have served from 15-20 years, the 1.0 per year times BMP ERIP benefit that they received is more than enough payment of their separation pay on top of their retirement benefits.

In fine, We find that the following appellees who were separated from appellant in 1997 under ERIP II have a clear legal right to the payment of the balance of their separation pay in the amount equivalent to 0.5 per year times BMP pursuant to MC No. 26-96 and the accompanying circulars issued pursuant to E.O. 286, viz: (1) employees who have rendered less than fifteen (15) years of service provided they were not excluded by paragraph 1, MC No. 26-96(c), and provided further, that they were not absorbed by the private concessionaires during the reorganizations; and (2) those who have served for more than thirty (30) years.

In sum, we see no reason to disturb the findings of the appellate court. MWSS must properly compensate those employees who have served for more than 30 years and have separated from the MWSS in 1997 under ERIP II for an additional separation benefit of 0.5 month salary per year of service.

DENIED.

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