Retirement Pay: International School Manila vs. Ireland Carreon Cabrido (G.R. No. 275832, July 29, 2025)

Thursday, December 18, 2025

Retirement Pay: International School Manila vs. Ireland Carreon Cabrido (G.R. No. 275832, July 29, 2025)

Facts

Ireland Carreon Cabrido was employed by International School Manila (ISM) as an Afternoon Activity Coach (AFAC) and Athletic Activity Coach (ATAC) from 14 August 1995 to 29 May 2020, working part-time on fixed-term contracts renewed semester-by-semester. During the COVID-19 pandemic lockdown, Cabrido received pay from March through May 2020 despite suspension of activities. In July 2020, ISM proffered an early retirement package to employees aged 50 or older with at least five years’ service as of 31 January 2021.

Cabrido expressed his intent to avail of the offer. When he received the computation, retirement pay was set at ₱298,196, which he contested as underpayment and demanded what he calculated as ₱680,112 based on 25 years’ service. ISM refused. Cabrido filed a labor complaint for underpayment of retirement benefits.

The Labor Arbiter dismissed the complaint, holding that (1) Cabrido was a part-time, fixed-term employee who could not acquire regular status; and (2) under Republic Act No. 7641 (the Retirement Pay Law), he could not avail retirement pay because he was only 50 when the retirement option was offered, below the statutory 60-year threshold for optional retirement under the Labor Code. The NLRC affirmed.

The Court of Appeals reversed: it held that (1) fixed-term status does not bar entitlement to retirement pay; (2) Cabrido met the ISM retirement plan’s own qualifications (Option A: age ≥ 50 and ≥10 years’ service); (3) the offer made by ISM was not mere financial assistance; and (4) the quitclaim was void as against public policy.

ISM elevated the case to the Supreme Court.

Issues

• Whether Ireland Carreon Cabrido is entitled to retirement pay under ISM’s retirement plan.

• Whether Cabrido’s fixed-term, part-time employment status precludes entitlement to retirement benefits.

• Whether the Labor Code’s retirement age requirement (60 years) applies to the retirement package offered.

• Whether the quitclaim signed by Cabrido precludes his claim.

Ruling

The Supreme Court denied the petition and affirmed the Court of Appeals. The Court held:

• Cabrido is entitled to retirement pay pursuant to Option A of ISM’s Retirement Plan and thus should be awarded retirement benefits, with computation remanded to the Labor Arbiter.

• Fixed-term or part-time status does not preclude retirement pay under the Labor Code as amended by RA 7641, which applies to all private sector employees regardless of status unless expressly exempted.

• The offer and acceptance of a retirement package created contractual obligations; ISM cannot evade those obligations by recharacterizing the offer as mere “financial aid.”

• The quitclaim was not recognized as valid; enforcement would be contrary to public policy where the entitlement is a statutory right.

The Court reaffirmed that retirement benefit is a right — not a privilege nor a dole-out.

Ratio Decidendi

The decision rests on three core legal principles:

• Statutory Right to Retirement Pay:

Article 302 of the Labor Code (formerly Art. 287) as amended by RA 7641 affirms that any employee may retire upon reaching the retirement age established in existing agreements or contracts and is entitled to retirement benefits earned under existing laws and agreements. The statute’s plain language does not limit coverage to regular, full-time employees.

• Coverage of RA 7641 Extends to All Private Sector Employees:

The Supreme Court in prior cases, notably De La Salle Araneta University v. Bernardo and others, held that RA 7641’s implementing rules and Department of Labor advisories clarify that all employees in the private sector are covered, including part-time workers, contractors, domestic workers, and others unless specifically exempted.

• Contractual Election of Retirement Terms Supersedes Default Norms:

Where the employer has offered a retirement plan or option with specific terms (e.g., age 50), acceptance by the employee binds both parties to those terms in lieu of the default statutory minimums. This is consistent with jurisprudence recognizing that the retirement age is “primarily determined by the existing agreement or employment contract.”

Labor Law Significance and Implications

1. Expansion of Coverage Beyond Traditional Categories

This ruling emphatically rejects the notion that only regular or full-time employees are entitled to retirement benefits. The Court’s interpretation aligns with the statutory text and implementing labor advisory, emphasizing coverage of all private employees unless exempted. This has far-reaching implications for fixed-term, part-time, and nontraditional work arrangements common in educational and service industries.

2. Reinforcement of Worker Rights as Human Dignity

By grounding the right to retirement in broader human-rights and constitutional protections for dignity and labor welfare, the Court underscores retirement benefits as part of core labor protections, not gratuities. This frames statutory benefits within a human dignity paradigm, likely to influence future interpretative approaches.

3. Contractual Autonomy within Statutory Bounds

The decision clarifies that employers and employees can agree on retirement terms (including retirement age and benefit computation) provided contractual terms do not fall below statutory minima. Acceptance of such offers can bind parties notwithstanding default age thresholds under RA 7641.

Jurisprudential Context

Prior Supreme Court cases have consistently held that:

• Article 302 (formerly Art. 287) governs retirement pay and sets minimum standards for retirement benefits.

• The statutory scheme envisages retirement as a contractual act triggered by conditions agreed upon in a plan or contract, not solely by reaching default ages.

• Retirement pay is due even in the absence of a company plan if statutory requisites are met, reflecting the law’s policy to protect workers’ economic security.

Notable decisions include De La Salle Araneta University v. Bernardo and Aquino v. NLRC, which recognized retirement pay rights of part-time/fixed-term employees and emphasized statutory coverage without status discrimination.

Verified Sources

• Supreme Court Decision: International School Manila vs. Ireland Carreon Cabrido, G.R. No. 275832, July 29, 2025 (Supreme Court E-Library).

Link: https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/70007

• Article 302 (formerly Art. 287), Labor Code: Governing retirement pay and conditions.

• Jurisprudence: DOLE Advisory interpretations and prior case law establishing coverage and computation standards.