Retirement plan

Due process only requires that notice of the employer’s decision to retire an employee be given to the employee.

Respondent Lourdes School of Quezon City (LSQC) has a retirement plan provding for retirement at 60 years old, or separation pay depending on the number of years of service.

On Nov. 25, 2003, LSQC issued an addendum to its retirement policy, which provided that an employee may apply for retirement or be retired when he reaches the age of 60 years or when he completes 30 years of service, whichever comes first.

In a letter dated March 23, 2004, petitioner Editha M. Catotocan and seven other co-employees wrote to LSQC and appealed for the deferment of the implementation of the addendum, particularly the provision that normal retirement will commence after completing 30 years of service. They requested that they be allowed to retire when they reached 60 years of age.

In a letter dated Jan. 27, 2005, LSQC Rector Fr. Cesar Acuin notified petitioner that she will be retired by the end of the school year for having served at least 30 years. At that time, petitioner was 56 years old. Full retirement benefits were given to and received by her.

In response to her “letter of intent”, petitioner was appointed as grade school guidance counselor for the school years 2006-2007, 2007-2008, and 20082009. For the next school year however, petitioner’s application was no longer considered by LSQC.

Petitioner filed a complaint for illegal dismissal and monetary claims.

Does her complaint prosper?

Ruling: No.

Jurisprudence is replete with cases discussing the employer’s prerogative to lower the compulsory retirement age subject to the consent of its employees.

In Pantranco North Express, Inc. v. NLRC, 328 Phil. 470 (1996), the Court upheld the retirement of the private respondent therein pursuant to a CBA allowing the employer to compulsorily retire employees upon completing 25 years of service to the company.

Interpreting Article 287, the Court held that the Labor Code permits employers and employees to fix the applicable retirement age lower than 60 years of age.

Thus, retirement plans, as in LSQC’s retirement plan, allowing employers to retire employees who have not yet reached the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at 60 years or below, provided that the employ- ees’ retirement benefits under any CBA and other agreements are not less than those provided.

Indeed, acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled.

While an employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan. In other words, only the implementation and execution of the option may be unilateral, but not the adoption and institution of the retirement plan containing such option.

However, we already had the occasion to strike down the added requirement that an employer must first consult its employee prior to retiring him, as this requirement unduly constricts the exercise by management of its option to retire the said employee. Due process only requires that notice of the employer’s decision to retire an employee be given to the employee.

Here, the CA and the NLRC did not gravely abuse its discretion in finding that LSQC did not illegally dismiss Catotocan from service.

While it may be true that Catotocan was initially opposed to the idea of her retirement at an age below 60 years, it must be stressed that Catotocan’s subsequent actions after her “retirement” are actually tantamount to her consent to the addendum to the LSQC’s retirement policy of retiring her from service upon serving the school for at least 30 continuous years, to wit: after being notified that she was being retired from service by LSQC, she opened a savings account with BDO, the trustee bank; she accepted all the proceeds of her retirement package: the lump sum and all the monthly payments credited to her account until June 2009; upon acceptance of the retirement benefits, there was no notation that she is accepting the retirement benefits under protest or without prejudice to the filing of an illegal dismissal case.

We also did not find an iota of evidence showing that LSQC exerted undue influence against Catotocan to acquire her consent on the school’s retirement policy. Suffice it to say that from the foregoing, Catotocan performed all the acts to ratify her retirement in accordance with LSQC’s retirement policy. (Peralta, J., SC 2nd Division, Editha M. Catotocan vs. Lourdes School of Quezon City, Inc./ Lourdes School, Inc. and Rev. Fr. Cesar F. ACuin, OFM Cap, Rector, G.R. No. 213486, April 26, 2017).