An employee who qualifies for optional retirement but dies before formally retiring is still entitled to those benefits, which can be claimed by their beneficiaries. This ruling ensures that an employee’s years of service and entitlement to retirement benefits are not nullified by unforeseen circumstances like death, upholding the constitutional mandate to protect labor rights and provide social justice.

Beyond the Grave: Can Retirement Benefits Be Claimed After an Employee’s Death?

This case revolves around Cesario Bernadas, an employee of United Doctors Medical Center (UDMC) who passed away before he could formally apply for optional retirement. At the heart of the matter is whether Cesario’s beneficiaries, represented by his wife Leonila, could claim his optional retirement benefits despite his death. UDMC argued that since Cesario did not apply for retirement during his lifetime, his beneficiaries were not entitled to these benefits. The National Labor Relations Commission (NLRC) and the Court of Appeals (CA) both ruled in favor of the beneficiaries, emphasizing the constitutional protection afforded to labor and resolving doubts in favor of the employee. The Supreme Court was tasked to resolve whether the respondent, as her husband’s representative, may claim his optional retirement benefits.

The Supreme Court, in affirming the CA’s decision, clarified the nature of retirement benefits and their importance in protecting employees’ rights. The court distinguished between retirement benefits and insurance proceeds, noting that insurance is an indemnity against loss from an unknown event, whereas retirement plans serve to secure employee loyalty and ensure financial security upon reaching an age where earning ability diminishes. Therefore, receiving insurance benefits does not preclude entitlement to retirement benefits. The court further elaborated on the types of retirement plans in the Philippines, outlining the compulsory plans under Republic Act No. 8282 (Social Security Law) and Republic Act No. 8291 (Government Service Insurance System Act), as well as voluntary plans established through collective bargaining agreements (CBAs) or employer policies.

The court cited **Article 302 [287] of the Labor Code**, emphasizing that retirement benefits earned under existing laws and CBAs should be provided to employees. In this case, the CBA between UDMC and its employees stipulated an optional retirement policy, granting benefits to employees with at least 20 years of service. Cesario had worked for UDMC for 23 years, making him eligible for optional retirement at the time of his death. The petitioner argued that the respondent, Cesario’s wife, did not have the capacity to apply for optional retirement benefits on behalf of her deceased husband, as he never applied during his lifetime.

However, the Supreme Court underscored that retirement laws should be liberally construed in favor of the intended beneficiaries. The court acknowledged that while optional retirement typically requires the exercise of an option by the employee, death should be considered as an unforeseen event that prevents the employee from exercising that option. To deny Cesario’s beneficiaries the retirement benefits he had earned would be highly inequitable, especially since the CBA did not explicitly require an application prior to vesting the right to these benefits. The court emphasized that retirement benefits are the property interests of the retiree and their beneficiaries. Therefore, the absence of a specific prohibition in the CBA against beneficiaries claiming retirement benefits in the event of the employee’s death further supports the ruling in favor of Leonila Bernadas.

“Retirement benefits are the property interests of the retiree and his or her beneficiaries. The CBA does not prohibit the employee’s beneficiaries from claiming retirement benefits if the retiree dies before the proceeds could be released. Even compulsory retirement plans provide mechanisms for a retiree’s beneficiaries to claim any pension due to the retiree.”

Thus, even though Cesario passed away before he could formally apply for optional retirement, his years of service and eligibility for benefits were not forfeited. This decision underscores the importance of CBAs in protecting employees’ rights and the court’s commitment to interpreting labor laws in a way that promotes social justice and protects the interests of workers and their families.

This ruling provides clarity on the rights of employees and their beneficiaries regarding optional retirement benefits. It reinforces the principle that labor laws should be interpreted to protect the interests of workers, ensuring that their years of service and contributions are duly recognized and rewarded, even in unforeseen circumstances. This case serves as a reminder to employers to clearly define the terms and conditions of their retirement plans to avoid ambiguity and potential disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: UNITED DOCTORS MEDICAL CENTER vs. BERNADAS, G.R. No. 209468, December 13, 2017