Involuntary retirement

On June 7, 2011, respondent Rosita de Leon received a letter dated June 6, 2011 from petitioner Manila Hotel Corp. advising her of the intention of the management to exercise its management prerogative to compulsorily retire her from the service.

Petitioner relied on a provision in the collective bargain agreement (CBA) that an employees’ retirement is compulsory when he or she reaches the age of 60 or has rendered 20 years of service, whichever comes first. At that time respondent was 57 years old and held the position of assistant credit and collection manager/ acting general cashier. She had by then rendered 34 years of service to petitioner.

Petitioner explained that it was implementing a cost-cutting program to avoid heavy losses. Respondent graciously accepted the retirement offer and even personally and eagerly processed her personnel clearance.

Respondent claimed that she had been forced to retire without due process. She decried petitioner’s claim asserting she questioned her dismissal from the beginning, and her signing of the personnel clearance only indicated an intention to clear all her accountabilities. Thus, she filed against petitioner and its officers a complaint for illegal dismissal with money claims with prayer for reinstatement, backwages, damages and attorney’s fees.

Does her complaint find merit? Ruling: Yes.

Contrary to petitioner’s assertion, the exercise of management prerogative cannot justify its compulsory retirement of respondent’s services. There can be no debate that the exercise of management prerogatives cannot trounce the requirements of the law which, in this case, demand the employee’s unequivocal agreement to an early retirement. The Court has held:

It is true that an employer is given a wide latitude of discretion in managing its own affairs. The broad discretion includes the implementation of company rules and regulations and the imposition of disciplinary measures on its employees. But the exercise of a management prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the rights of the worker. In this light, the management prerogative will be upheld for as long as it is not wielded as an implement to circumvent the laws and oppress labor (Universal Robina Sugar Milling Corp. (URSUMCO) and/or Cabatt v. Caballeda, et al., 582 Phil. 118 (2008)).

All told, an employee in the private sector who did not expressly agree to an early retirement cannot be retired from the service before he reaches the age of 65 years. “Acceptance by the employee of an early retirement age option must be explicit, voluntary, free and uncompelled.” “The law demanded more than a passive acquiescence on the part of the employee, considering that his early retirement age option involved conceding the constitutional right to security of tenure.”

Thus, we held that “retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after aching a certain age, agrees to sever his or her employment with the former.”

In the instant case, respondent’s early retirement arose not from a bilateral act but a unilateral decision on the part of petitioner. Respondent’s consent was neither sought nor procured by petitioner in deciding to prematurely retire her services. For this reason, respondent’s compulsory retirement, as imposed by petitioner in its June 6, 2011 letter, constitutes illegal dismissal. As this Court recently held in Alfredo F. Laya, Jr. v. Philippine veterans Bank and Ricardo A. Balbido, Jr., G.R. No. 205813, January 10, 2018:

Although the employer could be free to impose a retirement age lower than 65 years for as long its employees consented, the retirement of the employee whose intent to retire was not clearly established, or whose retirement was involuntary is to be treated as a discharge. (Manila Hotel Corporation vs. Rosita De Leon, G.R. No. 219774, July 23, 2018).