**Facts**:
1. **Employment and Retirement**: Rodolfo J. Serrano worked as a bus conductor for Severino Santos Transit from September 28, 1992, until he applied for optional retirement on July 14, 2006.
2. **Quitclaim Dispute**: Upon applying for retirement, Serrano was required by the company to sign a pre-prepared Quitclaim to release his retirement pay. Serrano signed it “under protest” (indicated by “U.P.”) as he disagreed with the computed amount of P75,277.45, based on 15 days per year of service.
3. **Filing a Complaint**: Serrano filed a complaint to the Labor Arbiter alleging incorrect computation of his retirement pay, arguing it should be 22.5 days per year of service in accordance with Republic Act No. 7641 (Retirement Pay Law), which includes the Service Incentive Leave (SIL) and the 1/12 of the 13th month pay.
4. **Employer’s Defense**: The company argued:
– The Quitclaim signed by Serrano barred his claims.
– Even if not barred, Serrano was not entitled to the 5-day SIL and prorated 13th month pay since he was paid on a commission basis.
– The discrepancy in the retirement pay was due to missing records, later identified as an amount of only P1,431.15.
5. **Labor Arbiter Decision**: On February 15, 2007, the Labor Arbiter ruled in favor of Serrano, awarding him a retirement pay differential of P116,135.45.
– The Arbiter determined that the retirement pay should indeed include the SIL and 13th month pay as per RA 7641, computing his daily earnings at P607.66 based on submitted records and averaging his income for the last year of service.
6. **NLRC Decision**: The National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision on April 23, 2008, dismissing Serrano’s complaint but ordering a retirement differential of P2,365.35, based on the ruling in R & E Transport, Inc. v. Latag.
7. **Court of Appeals**: Upon further appeal, the Court of Appeals affirmed the NLRC’s ruling on February 11, 2009, reasoning it was based on substantial evidence.
8. **Supreme Court**: Unsatisfied, Serrano filed a petition for review on certiorari to the Supreme Court.
**Issues**:
1. Whether Serrano, as a bus conductor paid on commission basis, was entitled to include the SIL and pro-rated 13th month pay in the computation of his retirement pay under RA 7641.
2. Validity and effect of the Quitclaim signed “under protest” by Serrano in barring his claims.
3. Correct determination of the computation of Serrano’s retirement pay.
**Court’s Decision**:
1. **Exclusion from 13th Month Pay and SIL**:
– The Supreme Court found that regardless of being paid on a commission basis, Serrano fell within the coverage of RA 7641 and its implementing rules.
– The distinction drawn in the R & E Transport case regarding taxi drivers under the “boundary system” does not strictly apply to bus conductors paid on commission. The Court acknowledged that payment systems like commissions did not automatically exempt workers from entitlement to SIL and 13th month pay unless defined as field personnel.
2. **Quitclaim’s Validity**:
– The Quitclaim signed under protest did not bar Serrano from claiming what was legally due to him. A Quitclaim cannot be used to deny statutory benefits mandated by law.
3. **Computation of Retirement Pay**:
– The Supreme Court reinstated the Labor Arbiter’s decision, including 22.5 days per year of service, considering the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay in the computation, fulfilling the statutory requirement under RA 7641.
**Doctrine**:
1. Employees covered by RA 7641, even those paid on a commission basis, are entitled to include the cash equivalent of the 5-day SIL and the 1/12 of the 13th month pay in their retirement pay computation.
2. Quitclaims that are signed under duress or without full understanding and consent of computed benefits do not preclude an employee from claiming statutory benefits.
**Class Notes**:
1. **Key Elements of RA 7641**: Retirement Pay Law ensures:
– Minimum retirement benefits: At least 1/2 month salary (15 days) per year of service.
– Components of 1/2 month salary include: 15 days salary, 5-day SIL, 1/12th of the 13th month pay.
– Coverage includes private sector employees, regardless of payment method unless specifically exempted.
2. **Statutory Provisions**:
– Section 287, Labor Code as amended by RA 7641.
– Rules II, Sections 1 & 5 of the Implementing Rules of RA 7641.
3. **Application**: Commission-based employee benefits under SIL and 13th-month must be factored unless classified as “field personnel” or explicitly excluded.
**Historical Background**:
The case is set against the backdrop of protective labor laws introduced in the Philippines aimed at ensuring equitable worker compensation and retirement benefits, regardless of specific employment terms like commission-based payment, aligning with the broader goals of workers’ rights and welfare mandated by the Labor Code.
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