Cercado v. Uniprom, Inc.
REITERATIONFacts
The Antecedents: Petitioner Lourdes A. Cercado was employed by respondent UNIPROM, Inc. from December 15, 1978, initially as a ticket seller and later promoted to cashier and clerk typist. UNIPROM instituted an Employees' Non-Contributory Retirement Plan in 1980, which was later amended in 2001 to comply with Republic Act No. 7641. The amended plan allowed UNIPROM to retire employees who had completed twenty (20) years of service, regardless of age, at the company's option. In December 2000, UNIPROM offered an early retirement package to Cercado, who had 22 years of service and was 47 years old, but she rejected it. Subsequently, UNIPROM exercised its option under the retirement plan to retire Cercado effective February 15, 2001, and provided her with retirement benefits, which she refused to accept. UNIPROM then ceased assigning her work, prompting Cercado to file a complaint for illegal dismissal. Procedural History: Cercado filed a complaint for illegal dismissal before the Labor Arbiter (LA), asserting that UNIPROM lacked a bona fide retirement plan and that she had not consented to it. UNIPROM contended that Cercado was automatically covered by the plan and that her retirement was a valid exercise of management prerogative. The LA ruled in favor of Cercado, finding her to be illegally dismissed and ordering her reinstatement with backwages. The National Labor Relations Commission (NLRC) affirmed the LA's decision, noting the lack of evidence of Cercado's consent or notification regarding the retirement plan. However, the Court of Appeals (CA) reversed these decisions, declaring UNIPROM's retirement of Cercado valid and legal, holding that the retirement plan was consistent with Article 287 of the Labor Code and that Cercado, due to her long tenure, should have been aware of it. The CA denied Cercado's motion for reconsideration. The Petition: This case is before the Supreme Court on a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure. The petitioner, Lourdes A. Cercado, raises two main issues: (1) whether UNIPROM possesses a bona fide retirement plan, and (2) whether her retirement pursuant to that plan was valid. Cercado argues that the retirement plan was unilaterally imposed and not voluntarily assented to by her or her co-employees, making her forced retirement an illegal dismissal. She contends that while an employer may have the option to retire an employee early, this prerogative must be exercised under a retirement plan that has been mutually agreed upon, not one that is unilaterally imposed, as she asserts is the case with UNIPROM's plan. The Court is asked to determine if implied knowledge of a retirement plan, due to length of service, is sufficient to constitute voluntary acceptance, or if explicit consent is required.
Issue(s)
Whether UNIPROM has a bona fide retirement plan. Whether petitioner was validly retired pursuant thereto.
Ruling
The petition is meritorious. The July 31, 2007 Decision and the May 26, 2009 Resolution of the Court of Appeals are REVERSED and SET ASIDE. The October 30, 2002 Decision of the Labor Arbiter is REINSTATED, with the modification that the award of backwages shall be computed from the time of her illegal dismissal until the actual date of her reinstatement. If reinstatement is no longer possible, UNIPROM shall pay backwages plus separation pay equivalent to one-month pay for every year of service.
Ratio Decidendi
On Issue 1: The Supreme Court held that UNIPROM's Employees' Non-Contributory Retirement Plan was not bona fide as it pertained to petitioner Cercado, primarily because it lacked her explicit consent. The Court emphasized that retirement is a bilateral act, a voluntary agreement between the employer and the employee, especially when it involves retiring an employee below the statutory retirement ages of 60 or 65. The plan, unilaterally instituted by UNIPROM, automatically covered employees and was not embodied in a collective bargaining agreement (CBA) or any employment contract assented to by Cercado. The CA's reasoning that Cercado was deemed aware of the plan due to her long service was rejected, as implied knowledge, regardless of duration, cannot be equated with the voluntary acceptance required by law for an early retirement age option. The law demands more than passive acquiescence, considering such an option involves a concession of the employee's constitutional right to security of tenure. The Court cited Jaculbe v. Silliman University to reinforce that an employer can impose a retirement age less than 65 only if it has the employees' consent, highlighting that the plan must be mutually instituted and voluntarily assented to, not unilaterally imposed. On Issue 2: The Supreme Court ruled that petitioner Cercado was illegally dismissed, as her retirement was not validly effected under UNIPROM's retirement plan due to the absence of her explicit consent. The Court distinguished the present case from precedents like Pantranco North Express, Inc. v. NLRC, Philippine Airlines, Inc. (PAL) v. Airline Pilots Association of the Philippines (APAP), and Cainta Catholic School v. Cainta Catholic School Employees Union (CCSEU), where retirement plans were upheld because they were embodied in CBAs or were accepted after negotiations with the employees' union. In those cases, the employees' consent to be retired even before the statutory age was clear and unequivocal. Here, Cercado was hired in 1978, two years before the plan's institution in 1980, meaning it was not part of her original employment contract. Furthermore, her signatures on personnel action forms for salary increases could not be construed as voluntary concurrence to the retirement plan, as that would be tantamount to compelling her agreement. Since UNIPROM terminated Cercado merely on the basis of a retirement plan provision to which she did not freely assent, it was guilty of illegal dismissal, entitling her to reinstatement without loss of seniority rights and full backwages from February 16, 2001.
Main Doctrine
A retirement plan giving an employer the option to retire employees below the statutory ages must be explicitly and voluntarily assented to by the employees. Implied knowledge, regardless of duration of employment, cannot substitute for voluntary acceptance, especially when the early retirement option infringes upon the constitutional right to security of tenure.