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RepublicofthePhilippinesSUPREMECOURT

Manila

FIRSTDIVISION

G.R.No.156934March16,2007

ALPHAC.JACULBE,Petitioner,vs.SILLIMANUNIVERSITY,Respondent.

DECISION

CORONA,J.:

Petitionercomestousviathispetitionforreviewoncertiorari1tochallengeadecision2of theCourtofAppeals(CA)andtheresolution3affirmingit.

Sometimein1958,petitionerbeganworkingforrespondentsuniversitymedicalcenterasanurse.4

Ina letterdatedDecember3,1992,5 respondent, through itsHumanResourcesDevelopmentOffice, informedpetitioner that she was approaching her 35th year of service with the university and was due for automaticretirementonNovember18,1993,atwhichtimeshewouldbe57yearsold.Thiswaspursuanttorespondentsretirementplanforitsemployeeswhichprovidedthatitsmemberscouldbeautomaticallyretired"uponreachingthe age of 65 or after 35 years of uninterrupted service to the university."6 Respondent required certaindocumentsinconnectionwithpetitionersimpendingretirement.

Abriefexchangeofletters7betweenpetitionerandrespondentfollowed.Petitioneremphaticallyinsistedthatthecompulsoryretirementundertheplanwastantamounttoadismissalandpleadedwithrespondenttobeallowedtoworkuntiltheageof60becausethiswastheminimumageatwhichshecouldqualifyforSSS8pension.Butrespondentstoodpatonitsdecisiontoretireher,citing"companypolicy."

On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for"terminationofservicewithpreliminaryinjunctionand/orrestrainingorder."9OnNovember18,1993,respondentcompulsorilyretiredpetitioner.

Afterthepartiessubmittedtheirpositionpapers,thelaborarbiterrenderedadecisionfindingrespondentguiltyofillegal dismissal andordered that petitioner be reinstatedandpaid full backwages.10On appeal, however, theNLRCreversed the laborarbitersdecisionanddismissed thecomplaint for lackofmerit.11TheNLRC likewisedenied petitioners motion for reconsideration.12 In the assailed decision and resolution, the CA affirmed theNLRC.

Hence,thispetition.

Theissuesforourconsiderationare:

1)didrespondentsretirementplanimposingautomaticretirementafter35yearsofservicecontravenethesecurityoftenureclauseinthe1987ConstitutionandtheLaborCode?

2) did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in itsretirementplan?

Retirementplansallowingemployerstoretireemployeeswhoarelessthanthecompulsoryretirementageof65are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor Codeprovides:

ART. 287. Retirement Any employee may be retired upon reaching the retirement age established in the

collectivebargainingagreementorotherapplicableemploymentcontract.xxx

Byitsexpresslanguage,theLaborCodepermitsemployersandemployeestofixtheapplicableretirementageatbelow60years.13

However,afterreviewingtheassaileddecisiontogetherwiththerulesandregulationsofrespondentsretirementplan,wefindthattheplanrunsafouloftheconstitutionalguarantyofsecurityoftenurecontainedinArticleXIII,alsoknownastheprovisiononSocialJusticeandHumanRights.

The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntaryparticipationtherein:

Thepetitionerinthiscasemay,however,arguethatthePantrancocaseisnotapplicableinthecaseatbarasthecontroversyinthesaidcaseinvolvesacompulsoryretirementonthebasisofthelengthofservicerenderedbytheemployeeasagreed inanexistingCBA,whereas in thepresentcase, theprivate respondentcompulsorilyretiredthepetitionernotbasedonaCBAbutontheretirementschemeprovidedforintheprivaterespondentsretirement plan.Nonetheless, this argumentmust fail. The contract fixing for retirement age as allowed underArticle287oftheLaborCodedoesnotexclusivelyrefertoCBAwhichprovidesforanagreedretirementage.Thesaidprovisionexplicitlyallows,aswell,otherapplicableemploymentcontracttofixretirementage.

The recordsdisclose that theprivate respondentsRetirementPlanhasbeen ineffect formore than30years.Thesaidplanisdeemedintegratedintotheemploymentcontractbetweenprivaterespondentanditsemployeesasevidencedbythelattersvoluntarycontributionthroughmonthlysalarydeductions.Previousretireeshavealreadyenjoyedthebenefitsoftheretirementplan,andeversincethesaidplanwaseffected,noquestionsordisagreementhavebeenraised,untilthesamewasmadetoapplytothepetitioner.xxx14(emphasisours)

The problem with this line of reasoning is that a perusal of the rules and regulations of the plan shows thatparticipationthereinwasnotvoluntaryatall.

RuleIIIoftheplan,onmembership,stated:

SECTION1MEMBERSHIP

All fulltime Filipino employees of the University will automatically becomemembers of the Plan, provided,however,thatthosewhohaveretiredfromtheUniversity,evenifrehired,arenolongereligibleformembershipinthePlan.AmemberwhocontinuestoservetheUniversitycannotwithdrawfromthePlan.

xxxxxxxxx

SECTION2EFFECTIVITYOFMEMBERSHIP

MembershipinthePlanstartsonthedayapersonishiredonafulltimebasisbytheUniversity.

SECTION3TERMINATIONOFMEMBERSHIP

Terminationofmembership inthePlanshallbeuponthedeathofthemember,resignationorterminationofemployeescontractbytheUniversity,orretirementfromtheUniversity.15(emphasisours).

RuleIV,oncontributions,stated:

ThePlaniscontributory.TheUniversityshallsetasideanamountequivalentto3%ofthebasicsalariesofthefacultyandstaff.Tothisshallbeaddeda5%deductionfromthebasicsalariesofthefacultyandstaff.

AmemberonleavewiththeUniversityapprovalshallcontinuepaying,basedonhispaywhileonleave,hisleavewithoutpayshouldpayhiscontributions to thePlan.However,amember,whohasbeenon leavewithoutpayshould pay his contributions based on his salary plus the Universitys contributions while on leave or the fullamountwithinonemonthimmediatelyafterthedateofhisreinstatement.Provided[,]furtherthatifamemberhasnosufficientsourceofincomewhileonleavemaypaywithinsixmonthsafterhisreinstatement.16

From the language of the foregoing retirement plan rules, the compulsory nature of bothmembership in andcontributiontotheplandebunkedtheCAstheorythatpetitioners"voluntarycontributions"wereevidenceofherwillingparticipation therein. Itwas throughnovoluntaryactofherownthatpetitionerbecameamemberof theplan. In fact, the only way she could have ceased to be a member thereof was if she stopped working forrespondentaltogether.Furthermore,intheruleoncontributions,therepeateduseoftheword"shall"ineluctablypointed to theconclusion thatemployeeshadnochoicebut tocontribute to theplan(evenwhen theywereonleave).

Accordingtotheassaileddecision,respondentsretirementplan"ha(d)beenineffectformorethan30years."17Whatwasnotpointedout, however,was that the retirementplancame intobeing in197018 or 12yearsafterpetitionerstartedworkingforrespondent.Inshort,itwasnotpartofthetermsofemploymenttowhichpetitioneragreedwhenshestartedworkingforrespondent.Neitherdiditbecomepartofthosetermsshortlythereafter,astheCAwouldhaveusbelieve.

Retirement is the result of a bilateral act of theparties, a voluntary agreement between theemployer and theemployee whereby the latter, after reaching a certain age agrees to sever his or her employment with theformer.19InPantrancoNorthExpress,Inc.v.NLRC,20towhichboththeCAandrespondentrefer,theimpositionofaretirementagebelowthecompulsoryageof65wasdeemedacceptablebecausethiswaspartoftheCBAbetween theemployer and theemployees.The consent of the employees, as representedby their bargainingunit,toberetiredevenbeforethestatutoryretirementageof65waslaidoutclearlyinblackandwhiteandwasthereforeinaccordwithArticle287.

Inthiscase,neithertheCAnortherespondentcitedanyagreement,collectiveorotherwise,tojustifythelattersimposition of the early retirement age in its retirement plan, opting instead to harp on petitioners alleged"voluntary"contributionstotheplan,whichwassimplyuntrue.Thetruthwasthatpetitionerhadnochoicebuttoparticipateintheplan,giventhattheonlywayshecouldrefrainfromdoingsowastoresignorloseherjob.Itisaxiomatic that employer and employee do not stand on equal footing,21 a situation which often causes anemployeetoactoutofneedinsteadofanygenuineacquiescencetotheemployer.Thiswasclearlyjustsuchaninstance.

Notonlywaspetitionerstillagoodeightyearsaway from thecompulsory retirementagebutshewasalsostillfully capable of discharging her duties as shown by the fact that respondents board of trustees seriouslyconsideredrehiringheraftertheeffectivityofher"compulsoryretirement."22

As already stated, an employer is free to impose a retirement age less than 65 for as long as it has theemployeesconsent.Statedconversely,employeesarefreetoaccepttheemployersoffertolowertheretirementage if they feel they can get a better deal with the retirement plan presented by the employer. Thus, havingterminatedpetitionersolelyonthebasisofaprovisionofaretirementplanwhichwasnotfreelyassentedtobyher,respondentwasguiltyofillegaldismissal.

At this point, reinstatement is out of the question.1 a w p h i1 .n t Petitioner is now 71 years old and thereforewell over thestatutorycompulsoryretirementage.For this reason,wegrantherseparationpay in lieuof reinstatement. It isalso for this reason thatwemodify theawardofbackwages inher favor, tobecomputed from the timeofherillegaldismissalonNovember18,1993uptohercompulsoryretirementage.

WHEREFORE,thepetitionisherebyGRANTED.ThedecisionoftheCourtofAppealsinCAG.R.SPNo.50445isREVERSEDandSETASIDE.TheOctober25,1994decisionofthelaborarbiterfindingrespondentguiltyofillegaldismissal is REINSTATED, with the MODIFICATION that, in lieu of reinstatement, petitioner is awardedseparation pay, the award of backwages to be computed from the time of her illegal dismissal up to hercompulsoryretirementage.

SOORDERED.

RENATOC.CORONAAssociateJustice

WECONCUR:

REYNATOS.PUNOChiefJusticeChairperson

ANGELINASANDOVALGUTIERREZAssociateJustice

ADOLFOS.AZCUNAAsscociateJustice

CANCIOC.GARCIAAssociateJustice

CERTIFICATION

Pursuant toSection 13,ArticleVIII of theConstitution, I certify that the conclusions in the above decision hadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNO

ChiefJustice

Foonotes

1UnderRule45oftheRulesofCourt.

2DatedJuly11,2002 inCAG.R.SPNo.50445,pennedbyAssociateJusticeAmelitaG.TolentinoandconcurredinbyAssociateJusticesRubenT.Reyes(nowPresidingJustice)andRenatoC.DacudaooftheEighthDivisionoftheCourtofAppealsrollo,pp.149158.

3DatedJanuary20,2003inCAG.R.SPNo.50445,pennedbyAssociateJusticeAmelitaG.TolentinoandconcurredinbyAssociateJusticesRubenT.Reyes(nowPresidingJustice)andRenatoC.DacudaooftheEighthDivisionoftheCourtofAppealsid.,p.197.

4Id.,p.15.

5Id.,pp.6061.

6Id.,p.135.

7Id.,pp.6270.

8SocialSecuritySystem.

9Rollo,pp.5559.

10Id.,pp.8897.

11Id.,pp.116120.

12Id.,pp.129132.

13PantrancoNorthExpress,Inc.v.NLRC,328Phil.470(1996).

14Supranote2,at155156.

15Rollo,p.134.

16Id.,p.135.

17Supranote2,at156.

18Rollo,p.133.

19Soberanov.Clave,G.R.Nos.L4375356&L50991,29August1980,99SCRA549.

20Id.

21MercuryDrugCo.,Inc.v.CIR,155Phil.636(1974).

22Id.,pp.7980.

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