G.R. No.

156934

March 16, 2007

ALPHA C. JACULBE, Petitioner,

vs.
SILLIMAN UNIVERSITY,Respondent.
DECISION
CORONA, J.:

and ordered that petitioner be reinstated and paid full

backwages.10 On appeal, however, the NLRC reversed the labor
arbiters decision and dismissed the complaint for lack of merit.11
The NLRC likewise denied petitioners motion for
reconsideration.12 In the assailed decision and resolution, the CA
affirmed the NLRC.
Hence, this petition.
The issues for our consideration are:

Petitioner comes to us via this petition for review on certiorari1 to

challenge a decision2 of the Court of Appeals (CA) and the
resolution3 affirming it.
Sometime in 1958, petitioner began working for respondents
university medical center as a nurse.4
5

In a letter dated December 3, 1992, 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
respondents 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 petitioners impending retirement.
A brief exchange of letters7 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
SSS8 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

1) did respondents 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 respondents 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
respondents 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 respondents 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 latters
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. xxx14 (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 employees
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 3% 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 Universitys 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 CAs theory that petitioners "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, respondents 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 197018 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.

computed from the time of her illegal dismissal on November 18,

1993 up to her compulsory retirement age.

In this case, neither the CA nor the respondent cited any

agreement, collective or otherwise, to justify the latters imposition
of the early retirement age in its retirement plan, opting instead to
harp on petitioners 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.

SO ORDERED.

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 respondents
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 employers 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.1awphi1.nt
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

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.

CASE DIGEST:
Jaculbe vs. Silliman University
Facts: Jaculbe began working in 1958 for Sillimans medical
center as a nurse. In 1992, Silliman informed her that she was
approaching her 35thyear of service with the university and was
due for automatic retirement on November 18, 1993. Sillimans
retirement plan provided that members could be automatically
retired upon reaching the age of 65 or after 35 years of
uninterrupted service to the university.
On November 18, 1993, respondent compulsorily retired
petitioner. She sued for illegal dismissal.
Issues:
1) Did respondents 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?

Held:
A perusal of the rules and regulations of the retirement plan
showed that participation of Jaculbe in said plan was not
voluntary.
Rule III of the plan states that all full
-time Filipino employees of the University will automatically
become members of the plan and that a member who continues
to serve the university cannot withdraw from the plan. The

compulsory nature of the plan debunked the theory that

petitioners voluntary contributions were evidence of her willing
participation in the said plan.
The retirement plan only came into being in 1970, 12 years after
the she starting working for Silliman University. This means that it
was not part of the terms of employment to which Jaculbe agreed
when she started working.
Jaculbe was still a good eight years away from the compulsory
retirement age and that she was also still fully capable of
discharging her duties as a nurse when she was dismissed. An
employer is only free to impose a retirement age less than 65
when it has the employees consent. However she cannot be
reinstated anymore at this time when she is already 71 years of
age.