FIRST DIVISION
ALPHA C. JACULBE, G.R. No. 156934
Petitioner,
Present:
PUNO,
C.J., Chairperson,
SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and
GARCIA, JJ.
SILLIMAN UNIVERSITY,
Respondent. Promulgated:
March 16, 2007
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D E C I S I O N
CORONA, J.:
Petitioner comes to us
via this petition for review on certiorari[1] to
challenge a decision[2] of the
Court of Appeals (CA) and the resolution[3]
affirming it.
Sometime in 1958,
petitioner began working for respondent’s university medical center as a nurse.[4]
In a letter dated
December 3, 1992,[5]
respondent, through its Human Resources Development Office, informed petitioner
that she was approaching her 35th year of service with the
university and was due for automatic retirement on November 18, 1993, at which
time she would be 57 years old. This was pursuant to respondent’s retirement
plan for its employees which provided that its members could be automatically
retired “upon reaching the age of 65 or after 35 years of uninterrupted service
to the university.”[6] Respondent required certain documents in
connection with petitioner’s impending retirement.
A brief exchange of
letters[7] between
petitioner and respondent followed. Petitioner
emphatically insisted that the compulsory retirement under the plan was
tantamount to a dismissal and pleaded with respondent to be allowed to work
until the age of 60 because this was the minimum age at which she could qualify
for SSS[8] pension.
But respondent stood pat on its decision to retire her, citing “company
policy.”
On November 15, 1993,
petitioner filed a complaint in the National Labor Relations Commission (NLRC)
for “termination of service with preliminary injunction and/or restraining
order.”[9] On
November 18, 1993, respondent compulsorily retired petitioner.
After the parties
submitted their position papers, the labor arbiter rendered a decision finding
respondent guilty of illegal dismissal and ordered that petitioner be
reinstated and paid full backwages.[10] On
appeal, however, the NLRC reversed the labor arbiter’s decision and dismissed
the complaint for lack of merit.[11] The
NLRC likewise denied petitioner’s motion for reconsideration.[12] In the
assailed decision and resolution, the CA affirmed the NLRC.
Hence, this petition.
The issues for our consideration
are:
1)
did
respondent’s retirement plan imposing automatic retirement after 35 years of
service contravene the security of tenure clause in the 1987 Constitution and
the Labor Code?
2)
did
respondent commit illegal dismissal by retiring petitioner solely by reason of such
provision in its retirement plan?
Retirement plans allowing
employers to retire employees who are less than the compulsory retirement age
of 65 are not per se repugnant to the constitutional guaranty of
security of tenure. Article 287 of the Labor Code provides:
ART.
287. Retirement - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable
employment contract. xxx
By its express language, the Labor
Code permits employers and employees to fix the applicable retirement age at
below 60 years.[13]
However, after reviewing
the assailed decision together with the rules and regulations of respondent’s
retirement plan, we find that the plan runs afoul of the constitutional
guaranty of security of tenure contained in Article XIII, also known as the provision
on Social Justice and Human Rights.
The CA, in ruling against
petitioner, premised its decision to uphold the retirement plan on her
voluntary participation therein:
The
petitioner in this case may, however, argue that the Pantranco
case is not applicable in the case at bar as the controversy in the said case
involves a compulsory retirement on the basis of the length of service rendered
by the employee as agreed in an existing CBA, whereas in the present case, the
private respondent compulsorily retired the petitioner not based on a CBA but
on the retirement scheme provided for in the private respondent’s retirement
plan. Nonetheless, this argument must fail.
The contract fixing for retirement age as allowed under Article 287 of the
Labor Code does not exclusively refer to CBA which provides for an agreed
retirement age. The said provision explicitly allows, as well, other applicable
employment contract to fix retirement age.
The
records disclose that the private respondent’s Retirement Plan has been in
effect for more than 30 years. The said plan is deemed integrated into the
employment contract between private respondent and its employees as
evidenced by the latter’s voluntary contribution through monthly salary
deductions. Previous retirees have already enjoyed the benefits of the
retirement plan, and ever since the said plan was effected, no questions or
disagreement have been raised, until the same was made to apply to the
petitioner. xxx[14]
(emphasis ours)
The problem with this
line of reasoning is that a perusal of the rules and regulations of the plan
shows that participation therein was not voluntary at all.
Rule III of the plan, on
membership, stated:
SECTION 1 – MEMBERSHIP
All full-time Filipino employees of
the University will automatically become members of the Plan, provided,
however, that those who have retired from the University, even if rehired, are
no longer eligible for membership in the Plan. A member who continues to
serve the University cannot withdraw from the Plan.
xxx xxx xxx
SECTION 2 – EFFECTIVITY OF MEMBERSHIP
Membership in the Plan starts on the
day a person is hired on a full-time basis by the University.
SECTION 3 –
TERMINATION OF MEMBERSHIP
Termination of membership in
the Plan shall be upon the death of the member, resignation or termination
of employee’s contract by the University, or retirement from the
University.[15]
(emphasis ours).
Rule IV, on contributions, stated:
The
Plan is contributory. The University shall set aside an amount equivalent to 3½%
of the basic salaries of the faculty and staff. To this shall be added a 5%
deduction from the basic salaries of the faculty and staff.
A
member on leave with the University approval shall continue paying, based on
his pay while on leave, his leave without pay should pay his contributions to
the Plan. However, a member, who has been on leave without pay should pay his
contributions based on his salary plus the University’s contributions while on
leave or the full amount within one month immediately after the date of his
reinstatement. Provided[,] further that if a member has no sufficient source of
income while on leave may pay within six months after his reinstatement.[16]
From the language of the foregoing
retirement plan rules, the compulsory nature of both membership in and
contribution to the plan debunked the CA’s theory that petitioner’s “voluntary
contributions” were evidence of her willing participation therein. It was
through no voluntary act of her own that petitioner became a member of the plan.
In fact, the only way she could have ceased to be a member thereof was if she
stopped working for respondent altogether. Furthermore, in the rule on
contributions, the repeated use of the word “shall” ineluctably pointed to the
conclusion that employees had no choice but to contribute to the plan (even
when they were on leave).
According to the assailed
decision, respondent’s retirement plan “ha(d) been in effect for more than 30
years.”[17] What
was not pointed out, however, was that the retirement plan came into being in
1970[18] or 12
years after petitioner started working for respondent. In short, it was not
part of the terms of employment to which petitioner agreed when she started
working for respondent. Neither did it
become part of those terms shortly thereafter, as the CA would have us
believe.
Retirement is the result
of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain age agrees to
sever his or her employment with the former.[19] In Pantranco North Express, Inc. v. NLRC,[20] to
which both the CA and respondent refer, the imposition of a retirement age
below the compulsory age of 65 was deemed acceptable because this was part of the
CBA between the employer and the employees. The consent of the employees, as
represented by their bargaining unit, to be retired even before the statutory
retirement age of 65 was laid out clearly in black and white and was therefore
in accord with Article 287.
In this case, neither the
CA nor the respondent cited any agreement, collective or otherwise, to justify
the latter’s imposition of the early retirement age in its retirement plan,
opting instead to harp on petitioner’s alleged “voluntary” contributions to the
plan, which was simply untrue. The truth was that petitioner had no choice but
to participate in the plan, given that the only way she could refrain from
doing so was to resign or lose her job. It is axiomatic that employer and
employee do not stand on equal footing,[21] a
situation which often causes an employee to act out of need instead of any
genuine acquiescence to the employer. This was clearly just such an
instance.
Not only was petitioner still
a good eight years away from the compulsory retirement age but she was also
still fully capable of discharging her duties as shown by the fact that
respondent’s board of trustees seriously considered rehiring her after the effectivity of her “compulsory retirement.”[22]
As already stated, an
employer is free to impose a retirement age less than 65 for as long as it has
the employees’ consent. Stated conversely, employees are free to accept the
employer’s offer to lower the retirement age if they feel they can get a better
deal with the retirement plan presented by the employer. Thus, having
terminated petitioner solely on the basis of a provision of a retirement plan
which was not freely assented to by her, respondent was guilty of illegal
dismissal.
At
this point, reinstatement is out of the question. Petitioner is now 71 years
old and therefore well over the statutory compulsory retirement age. For this
reason, we grant her separation pay in lieu of reinstatement. It is also for
this reason that we modify the award of backwages in
her favor, to be computed from the time of her illegal dismissal on November
18, 1993 up to her compulsory retirement age.
WHEREFORE, the petition is hereby GRANTED.
The decision of the Court of Appeals in CA-G.R. SP No. 50445 is REVERSED
and SET ASIDE. The October 25, 1994 decision of the labor arbiter
finding respondent guilty of illegal dismissal is REINSTATED, with
the MODIFICATION that, in lieu of reinstatement, petitioner is awarded
separation pay, the award of backwages to be computed
from the time of her illegal dismissal up to her compulsory retirement age.
SO ORDERED.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson
ANGELINA
SANDOVAL-GUTIERREZ ADOLFO S.
AZCUNA
Associate Justice
Pursuant to Section 13, Article VIII of the
Constitution, I certify that the conclusions in the above decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
Chief Justice
[1] Under Rule 45 of the Rules of Court.
[2] Dated July 11, 2002 in CA-G.R. SP No. 50445, penned by Associate Justice Amelita G. Tolentino and concurred in by Associate Justices Ruben T. Reyes (now Presiding Justice) and Renato C. Dacudao of the Eighth Division of the Court of Appeals; rollo, pp. 149-158.
[3] Dated January 20, 2003 in CA-G.R. SP No. 50445, penned by Associate Justice Amelita G. Tolentino and concurred in by Associate Justices Ruben T. Reyes (now Presiding Justice) and Renato C. Dacudao of the Eighth Division of the Court of Appeals; id., p. 197.
[4] Id., p. 15.
[5] Id., pp. 60-61.
[6] Id., p. 135.
[7] Id., pp. 62-70.
[8] Social Security System.
[9] Rollo, pp. 55-59.
[10] Id., pp. 88-97.
[11] Id., pp. 116-120.
[12] Id., pp. 129-132.
[13] Pantranco North Express, Inc. v. NLRC, 328 Phil. 470 (1996).
[14] Supra note 2, at 155-156.
[15] Rollo, p. 134.
[16] Id., p. 135.
[17] Supra note 2, at 156.
[18] Rollo,
p. 133.
[19] Soberano v. Clave, G.R. Nos. L-43753-56 & L-50991, 29 August 1980, 99 SCRA 549.
[20] Id.
[21] Mercury Drug Co., Inc. v. CIR, 155 Phil. 636 (1974).
[22] Id., pp. 79-80.