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RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION
G.R.No.156934March16,2007
ALPHAC.JACULBE,Petitioner,
vs.
SILLIMANUNIVERSITY,Respondent.
DECISION
CORONA,J.:
Petitionercomestousviathispetitionforreviewoncertiorari1tochallengeadecision2 of the Court of Appeals
(CA)andtheresolution3affirmingit.
Sometimein1958,petitionerbeganworkingforrespondentsuniversitymedicalcenterasanurse.4
In a letter dated December 3, 1992,5 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
retirementonNovember18,1993,atwhichtimeshewouldbe57yearsold.Thiswaspursuanttorespondents
retirementplanforitsemployeeswhichprovidedthatitsmemberscouldbeautomaticallyretired"uponreaching
the age of 65 or after 35 years of uninterrupted service to the university."6 Respondent required certain
documentsinconnectionwithpetitionersimpendingretirement.
Abriefexchangeofletters7betweenpetitionerandrespondentfollowed.Petitioneremphaticallyinsistedthatthe
compulsoryretirementundertheplanwastantamounttoadismissalandpleadedwithrespondenttobeallowed
toworkuntiltheageof60becausethiswastheminimumageatwhichshecouldqualifyforSSS8pension.But
respondentstoodpatonitsdecisiontoretireher,citing"companypolicy."
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for
"terminationofservicewithpreliminaryinjunctionand/orrestrainingorder."9OnNovember18,1993,respondent
compulsorilyretiredpetitioner.
Afterthepartiessubmittedtheirpositionpapers,thelaborarbiterrenderedadecisionfindingrespondentguiltyof
illegal dismissal 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,thispetition.
Theissuesforourconsiderationare:
1)didrespondentsretirementplanimposingautomaticretirementafter35yearsofservicecontravenethe
securityoftenureclauseinthe1987ConstitutionandtheLaborCode?
2) did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its
retirementplan?
Retirementplansallowingemployerstoretireemployeeswhoarelessthanthecompulsoryretirementageof65
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

collectivebargainingagreementorotherapplicableemploymentcontract.xxx
Byitsexpresslanguage,theLaborCodepermitsemployersandemployeestofixtheapplicableretirementageat
below60years.13
However,afterreviewingtheassaileddecisiontogetherwiththerulesandregulationsofrespondentsretirement
plan,wefindthattheplanrunsafouloftheconstitutionalguarantyofsecurityoftenurecontainedinArticleXIII,
alsoknownastheprovisiononSocialJusticeandHumanRights.
The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntary
participationtherein:
Thepetitionerinthiscasemay,however,arguethatthePantrancocaseisnotapplicableinthecaseatbarasthe
controversyinthesaidcaseinvolvesacompulsoryretirementonthebasisofthelengthofservicerenderedby
the employee as agreed in an existing CBA, whereas in the present case, the private respondent compulsorily
retiredthepetitionernotbasedonaCBAbutontheretirementschemeprovidedforintheprivaterespondents
retirement plan. Nonetheless, this argument must fail. The contract fixing for retirement age as allowed under
Article287oftheLaborCodedoesnotexclusivelyrefertoCBAwhichprovidesforanagreedretirementage.The
saidprovisionexplicitlyallows,aswell,otherapplicableemploymentcontracttofixretirementage.
The records disclose that the private respondents Retirement Plan has been in effect for more than 30 years.
Thesaidplanisdeemedintegratedintotheemploymentcontractbetweenprivaterespondentanditsemployees
asevidencedbythelattersvoluntarycontributionthroughmonthlysalarydeductions.Previousretirees
havealreadyenjoyedthebenefitsoftheretirementplan,andeversincethesaidplanwaseffected,noquestions
ordisagreementhavebeenraised,untilthesamewasmadetoapplytothepetitioner.xxx14(emphasisours)
The problem with this line of reasoning is that a perusal of the rules and regulations of the plan shows that
participationthereinwasnotvoluntaryatall.
RuleIIIoftheplan,onmembership,stated:
SECTION1MEMBERSHIP
All fulltime Filipino employees of the University will automatically become members of the Plan, provided,
however,thatthosewhohaveretiredfromtheUniversity,evenifrehired,arenolongereligibleformembershipin
thePlan.AmemberwhocontinuestoservetheUniversitycannotwithdrawfromthePlan.
xxxxxxxxx
SECTION2EFFECTIVITYOFMEMBERSHIP
MembershipinthePlanstartsonthedayapersonishiredonafulltimebasisbytheUniversity.
SECTION3TERMINATIONOFMEMBERSHIP
TerminationofmembershipinthePlanshallbeuponthedeathofthemember,resignationortermination
ofemployeescontractbytheUniversity,orretirementfromtheUniversity.15(emphasisours).
RuleIV,oncontributions,stated:
ThePlaniscontributory.TheUniversityshallsetasideanamountequivalentto3%ofthebasicsalariesofthe
facultyandstaff.Tothisshallbeaddeda5%deductionfromthebasicsalariesofthefacultyandstaff.
AmemberonleavewiththeUniversityapprovalshallcontinuepaying,basedonhispaywhileonleave,hisleave
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
amountwithinonemonthimmediatelyafterthedateofhisreinstatement.Provided[,]furtherthatifamemberhas
nosufficientsourceofincomewhileonleavemaypaywithinsixmonthsafterhisreinstatement.16
From the language of the foregoing retirement plan rules, the compulsory nature of both membership in and
contributiontotheplandebunkedtheCAstheorythatpetitioners"voluntarycontributions"wereevidenceofher
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
respondentaltogether.Furthermore,intheruleoncontributions,therepeateduseoftheword"shall"ineluctably
pointed to the conclusion that employees had no choice but to contribute to the plan (even when they were on
leave).

Accordingtotheassaileddecision,respondentsretirementplan"ha(d)beenineffectformorethan30years."17
What was not pointed out, however, was that the retirement plan came into being in 197018 or 12 years after
petitionerstartedworkingforrespondent.Inshort,itwasnotpartofthetermsofemploymenttowhichpetitioner
agreedwhenshestartedworkingforrespondent.Neitherdiditbecomepartofthosetermsshortlythereafter,as
theCAwouldhaveusbelieve.
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.19InPantrancoNorthExpress,Inc.v.NLRC,20towhichboththeCAandrespondentrefer,theimposition
ofaretirementagebelowthecompulsoryageof65wasdeemedacceptablebecausethiswaspartoftheCBA
between the employer and the employees. The consent of the employees, as represented by their bargaining
unit,toberetiredevenbeforethestatutoryretirementageof65waslaidoutclearlyinblackandwhiteandwas
thereforeinaccordwithArticle287.
Inthiscase,neithertheCAnortherespondentcitedanyagreement,collectiveorotherwise,tojustifythelatters
imposition of the early retirement age in its retirement plan, opting instead to harp on petitioners alleged
"voluntary"contributionstotheplan,whichwassimplyuntrue.Thetruthwasthatpetitionerhadnochoicebutto
participateintheplan,giventhattheonlywayshecouldrefrainfromdoingsowastoresignorloseherjob.Itis
axiomatic that employer and employee do not stand on equal footing,21 a situation which often causes an
employeetoactoutofneedinsteadofanygenuineacquiescencetotheemployer.Thiswasclearlyjustsuchan
instance.
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
consideredrehiringheraftertheeffectivityofher"compulsoryretirement."22
As already stated, an employer is free to impose a retirement age less than 65 for as long as it has the
employeesconsent.Statedconversely,employeesarefreetoaccepttheemployersoffertolowertheretirement
age if they feel they can get a better deal with the retirement plan presented by the employer. Thus, having
terminatedpetitionersolelyonthebasisofaprovisionofaretirementplanwhichwasnotfreelyassentedtoby
her,respondentwasguiltyofillegaldismissal.
At this point, reinstatement is out of the question. 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 computed from the time of her
illegaldismissalonNovember18,1993uptohercompulsoryretirementage.
1 a w p h i1 .n t

WHEREFORE,thepetitionisherebyGRANTED.ThedecisionoftheCourtofAppealsinCAG.R.SPNo.50445is
REVERSEDandSETASIDE.TheOctober25,1994decisionofthelaborarbiterfindingrespondentguiltyofillegal
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
compulsoryretirementage.
SOORDERED.
RENATOC.CORONA
AssociateJustice
WECONCUR:
REYNATOS.PUNO
ChiefJustice
Chairperson
ANGELINASANDOVALGUTIERREZ
AssociateJustice

ADOLFOS.AZCUNA
AsscociateJustice

CANCIOC.GARCIA
AssociateJustice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had
beenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.
REYNATOS.PUNO

ChiefJustice

Foonotes
1UnderRule45oftheRulesofCourt.
2 Dated July 11, 2002 in CAG.R. SP No. 50445, penned by Associate Justice Amelita G. Tolentino and

concurredinbyAssociateJusticesRubenT.Reyes(nowPresidingJustice)andRenatoC.Dacudaoofthe
EighthDivisionoftheCourtofAppealsrollo,pp.149158.
3DatedJanuary20,2003inCAG.R.SPNo.50445,pennedbyAssociateJusticeAmelitaG.Tolentinoand

concurredinbyAssociateJusticesRubenT.Reyes(nowPresidingJustice)andRenatoC.Dacudaoofthe
EighthDivisionoftheCourtofAppealsid.,p.197.
4Id.,p.15.
5Id.,pp.6061.
6Id.,p.135.
7Id.,pp.6270.
8SocialSecuritySystem.
9Rollo,pp.5559.
10Id.,pp.8897.
11Id.,pp.116120.
12Id.,pp.129132.
13PantrancoNorthExpress,Inc.v.NLRC,328Phil.470(1996).
14Supranote2,at155156.
15Rollo,p.134.
16Id.,p.135.
17Supranote2,at156.
18Rollo,p.133.
19Soberanov.Clave,G.R.Nos.L4375356&L50991,29August1980,99SCRA549.
20Id.
21MercuryDrugCo.,Inc.v.CIR,155Phil.636(1974).
22Id.,pp.7980.
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