G.R. No. 144483; November 19, 2003
STA. CATALINA COLLEGE and SR. LORETA ORANZA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and HILARIA G. TERCERO, respondents.

FACTS

Hilaria G. Tercero was hired by Sta. Catalina College in 1955. In 1970, she was granted a one-year leave of absence without pay. After its expiration in 1971, she did not return and was subsequently employed at other schools from 1980 to 1982. In 1982, she was rehired by petitioner school. Upon her compulsory retirement in 1997 at age 65, the school computed her retirement benefits under Article 287 of the Labor Code based only on 15 years of service from 1982, excluding her 1955-1970 service, claiming she had abandoned her job. The school also deducted a prior gratuity pay of ₱12,000 and the amount of employer contributions to a private retirement plan already received.
Tercero filed a complaint, insisting her retirement pay should be based on 30 years of service, inclusive of 1955-1970, and that the gratuity pay should not be deducted. The Labor Arbiter ruled for the school. The NLRC reversed, crediting 29 years of service and disallowing the deduction of the gratuity pay. The Court of Appeals affirmed the NLRC, finding no proof of abandonment and noting the school had even awarded Tercero a plaque for 30 years of service.

ISSUE

Whether Tercero’s service from 1955 to 1970 should be included in computing her retirement benefits and whether the ₱12,000 gratuity pay should be deducted therefrom.

RULING

The Supreme Court partially granted the petition. On the first issue, the Court held that Tercero’s service from 1955 to 1970 should not be included. The employer-employee relationship was severed when she did not return after her approved leave in 1971 and subsequently worked for other institutions. This constituted abandonment, as her failure to return for over a decade, coupled with her new employment, clearly indicated she had no intention of returning. The plaque of appreciation did not constitute a waiver of the school’s right to assert abandonment or an acknowledgment of continuous unbroken service. Retirement benefits are computed based on continuous service immediately preceding retirement.
On the second issue, the Court affirmed that the ₱12,000 gratuity pay should not be deducted. A gratuity is a voluntary gift from the employer for past service, distinct from retirement benefits which are a statutory mandate. Deduction is allowed only if there is an express agreement to that effect, which was absent here. However, the employer’s contributions to the private retirement plan already received by Tercero were correctly deducted, as the law requires the employer to ensure the total retirement benefit is not less than the statutory minimum. The Court recomputed the benefits based on 15 years of service, resulting in a net balance of ₱69,602.86 due to Tercero after the lawful deduction.