Cercado vs . Uniprom, October 13, 2010

Facts:
Lourdes A. Cercado (Cercado) started working for UNIPROM, Inc. (UNIPROM) as a ticket seller assigned at Fiesta Carnival in Quezon City and was subsequently promoted as cashier and then as clerk typist.
Them, UNIPROM instituted an Employees Non-Contributory Retirement Plan which provides that any participant with twenty (20) years of service, regardless of age, may be retired at his option or at the option of the company.
 
Then, the UNIPROM amended the retirement plan in compliance with Republic Act (R.A.) No. 7641 whereas, reserved the option to retire employees who were qualified to retire under the program.
 
In December 2000, UNIPROM implemented a company-wide early retirement program for its 41 employees, including herein Cercado, who, at that time, was 47 years old, with 22 years of continuous service to the company. She was offered an early retirement package amounting to P171,982.90, but she rejected the same.
 
However, the UNIPROM exercised its option under the retirement plan, and decided to retire Cercado effective at the end of business hours on February 15, 2001. Then, a check of even date in the amount of P100,811.70, representing her retirement benefits under the regular retirement package, was issued to her. Cercado refused to accept the check.
 
UNIPROM nonetheless pursued its decision and Cercado was no longer given any work assignment after February 15, 2001 which prompted her to file a complaint for illegal dismissal before the Labor Arbiter (LA) which alleged that UNIPROM did not have a bona fide retirement plan, and that even if there was, she did not consent thereto.
 
For its part, UNIPROM averred that Cercado was automatically covered by the retirement plan when she agreed to the company’s rules and regulations, and that her retirement from service was a valid exercise of a management prerogative.
 
The LA rendered a decision finding petitioner to be illegally dismissed. Respondent company was ordered to reinstate her with payment of full backwages. The National Labor Relations Commission (NLRC) affirmed the LAs decision, adding that there was no evidence that Cercado consented to the alleged retirement plan of UNIPROM or that she was notified thereof.
 
The CA set aside the decisions of the LA and the NLRC. Cercado moved for reconsideration, but the same was denied. Hence, the instant recourse.

Issues:
Whether UNIPROM has a bona fide retirement plan.
 
Whether petitioner was validly retired pursuant thereto.
 
​Held:
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.
Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for compulsory retirement at 65 years, while the minimum age for optional retirement is set at 60 years. An employer is, however, free to impose a retirement age earlier than the foregoing mandates. This has been upheld in numerous cases as a valid exercise of management prerogative.
 
In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for 22 years, pursuant to Uniprom’s Employees Non-Contributory Retirement Plan, which provides that employees who have rendered at least 20 years of service may be retired at the option of the company. At first blush, respondent’s retirement plan can be expediently stamped with validity and justified under the all-encompassing phrase management prerogative, which is what the CA did. But the attendant circumstances in this case, vis-vis the factual milieu of the string of jurisprudence on this matter, impel us to take a deeper look.
 
In Pantranco North Express, Inc. v. NLRC, the Court upheld the retirement of private respondent pursuant to a Collective Bargaining Agreement (CBA) allowing Pantranco to compulsorily retire employees upon completing 25 years of service to the company. Interpreting Article 287, the Court ruled that the Labor Code permits employers and employees to fix the applicable retirement age lower than 60 years of age. The Court also held that there was no illegal dismissal involved, since it was the CBA itself that incorporated the agreement between the employer and the bargaining agent with respect to the terms and conditions of employment. Hence, when the private respondent ratified the CBA, he concurrently agreed to conform to and abide by its provisions.
 
Thus, the Court stressed, "providing in a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be governed by such CBA."