G.R. No.
111651 March 15, 1996
OSMALIK S. BUSTAMANTE, PAULINO A. BANTAYAN, FERNANDO L.
BUSTAMANTE, MARIO D. SUMONOD, and SABU J. LAMARAN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION and
EVERGREEN FARMS, INC., respondents.
PADILLA, J.:p
This petition for certiorari seeks to reverse the 3 May 1993 resolution of the
National Labor Relations Commission (NLRC) which set aside its earlier
resolution dated 8 March 1993 and deleted the award of backwages in favor of
petitioners.
The focal issue therefore in this case is whether or not petitioners are entitled
to backwages after a finding by the NLRC itself that they had become regular
employees after serving for more than one (1) year of broken or non-
continuous service as probationary employees.
The facts are not in dispute. Respondent company is engaged in the business of
producing high grade bananas in its plantation in Davao del Norte. Petitioners
Paulino Bantayan, Fernando Bustamante, Mario Sumonod and Osmalik
Bustamante were employed as laborers and harvesters while petitioner Sabu
Lamaran was employed as a laborer and sprayer in respondent company's
plantation. All the petitioners signed contracts of employment for a period of
six (6) months from 2 January 1990 to 2 July 1990, but they had started
working sometime in September 1989. Previously, they were hired to do the
same work for periods lasting a month or more, from 1985 to 1989. Before the
contracts of employment expired on 2 July 1990, petitioners' employments
were terminated on 25 June 1990 on the ground of poor performance on
account of age, as not one of them was allegedly below forty (40) years old.
Petitioners filed a complaint for illegal dismissal before the Regional
Arbitration Branch, Branch XI of the NLRC in Davao City. On 26 April 1991, the
labor arbiter rendered judgment in favor of petitioners, thus —
WHEREFORE, judgment is hereby rendered:
1. Declaring the dismissal of the complainants as illegal;
2. Ordering respondent Evergreen Farms, Inc. to immediately reinstate
complainants to their former position with six (6) months backwages
computed as follows (26.17 x P79.00 per day equals P2,067.43 x 6 months
equals P12,404.58 times 5 complainants equals Sixty Two Thousand Four
Hundred Four & 58/100 (P62,404.58) PESOS. However, if reinstatement is no
longer feasible an additional one (1) month salary shall be awarded as a form of
separation pay;
3. The claims for underpayment of wages is hereby dismissed for lack of merit.
SO ORDERED.1
On 8 March 1993, public respondent dismissed the appeal of private
respondent company for lack of merit Private respondent filed a motion for
reconsideration dated 1 April 1993. Acting on said motion, public respondent
issued a second resolution on 3 May 1993 affirming its earlier resolution on
illegal dismissal but deleting the award of backwages on the ground that the
termination of petitioners' employments "was the result of the latter's (private
respondent) mistaken interpretation of the law and that the same was
therefore not necessarily attended by bad faith, nor arbitrariness, . . .".2
In their present petition, petitioners argue that the public respondent gravely
abused its discretion in rendering the second resolution which removed the
award of backwages in their favor.
We rule in favor of petitioners.
It is undisputed that petitioners were illegally dismissed from employment.
Article 280 of the Labor Code states:
Art. 280. Regular and Casual Employment. — The provisions
of written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except
where the employment has been fired for a specific project or undertaking the
completion or termination of which has been determined at the time of the
1
engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, that, any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
This provision draws a line between regular and casual employment, a
distinction however often abused by employers. The provision enumerates two
(2) kinds of employees, the regular employees and the casual employees. The
regular employees consist of the following:
1) those engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer; and
2) those who have rendered at least one year of service whether such service is
continuous or broken.
The law distinguishes between the two (2) kinds of employees to protect the
interests of labor. Thus, in the case of Baguio Country Club Corporation vs.
NLRC,3 the Court declared: "Its language evidently manifests the intent to
safeguard the tenurial interest of the worker who may be denied the rights and
benefits due a regular employee by virtue of lopsided agreements with the
economically powerful employer who can maneuver to keep an employee on a
casual status for as long as convenient . . . ".
In the case at bar, petitioners were employed at various periods from 1985 to
1989 for the same kind of work they were hired to perform in September 1989.
Both the labor arbiter and the respondent NLRC agree that petitioners were
employees engaged to perform activities necessary in the usual business of the
employer. As laborers, harvesters or sprayers in an agricultural establishment
which produces high grade bananas, petitioners' tasks are indispensable to the
year-round operations of respondent company. This belies the theory of
respondent company that the employment of petitioners was terminated due to
the expiration of their probationary period in June 1990. If at all significant, the
contract for probationary employment was utilized by respondent company as
a chicanery to deny petitioners their status as regular employees and to evade
paying them the benefits attached to such status. Some of the petitioners were
hired as far back as 1985, although the hiring was not continuous. They were
hired and re-hired in a span of from two to four years to do the same type of
2
work which conclusively shows the necessity of petitioners' service to the
respondent company's business. Petitioners have, therefore, become regular
employees after performing activities which are necessary in the usual business
of their employer. But, even assuming that the activities of petitioners in
respondent company's plantation were not necessary or desirable to its
business, we affirm the public respondent's finding that all of the complainants
(petitioners) have rendered non-continuous or broken service for more than
one (1) year and are consequently considered regular employees.4
We do not sustain public respondent's theory that private respondent should
not be made to compensate petitioners for backwages because its termination
of their employment was not made in bad faith. The act of hiring and re-hiring
the petitioners over a period of time without considering them as regular
employees evidences bad faith on the part of private respondent. The public
respondent made a finding to this effect when it stated that the subsequent
rehiring of petitioners on a probationary status "clearly appears to be a
convenient subterfuge on the part of management to prevent complainants
(petitioners) from becoming regular employees."5
Reliance by public respondent on the case of Manila Electric Company vs. NLRC6
is misplaced. In that case, the Court ordered the reinstatement of an employee,
without backwages because, although there was a valid cause for dismissal, the
penalty was too severe for an employee who had rendered service for an
uninterrupted period of twenty (20) years with two commendations for
honesty. In the case at bar, there is no valid cause for dismissal. The employees
(petitioners) have not performed any act to warrant termination of their
employment. Consequently, petitioners are entitled to their full backwages and
other benefits from the time their compensation was withheld from them up to
the time of their actual reinstatement.
WHEREFORE, the Resolution of the National Labor Relations Commission dated
3 May 1993 is modified in that its deletion of the award for backwages in favor
of petitioners, is SET ASIDE. The decision of the Labor Arbiter dated 26 April
1991 is AFFIRMED with the modification that backwages shall be paid to
petitioners from the time of their illegal dismissal on 25 June 1990 up to the
date of their reinstatement. If reinstatement is no longer feasible, a one-month
salary shall be paid the petitioners as ordered in the labor arbiter's decision; in
addition to the adjudged backwages.
SO ORDERED.
G.R. No. 156934 March 16, 2007
ALPHA C. JACULBE, Petitioner,
vs.
SILLIMAN UNIVERSITY,Respondent.
DECISION
CORONA, J.:
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 respondent’s university
medical center as a nurse.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 retirement on
November 18, 1993, at which time she would be 57 years old. This was
pursuant to respondent’s 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 petitioner’s 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 and ordered that
petitioner be reinstated and paid full backwages.10 On appeal, however, the
3
NLRC reversed the labor arbiter’s decision and dismissed the complaint for lack
of merit.11 The NLRC likewise denied petitioner’s motion for reconsideration.12
In the assailed decision and resolution, the CA affirmed the NLRC.
Hence, this petition.
The issues for our consideration are:
1) did respondent’s 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 respondent’s 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 respondent’s 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 respondent’s 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 latter’s 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 employee’s contract by the
University, or retirement from the University.15 (emphasis ours).
4
Rule IV, on contributions, stated:
The Plan is contributory. The University shall set aside an amount equivalent to
3½% 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 University’s 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 CA’s
theory that petitioner’s "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, respondent’s 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.
In this case, neither the CA nor the respondent cited any agreement, collective
or otherwise, to justify the latter’s imposition of the early retirement age in its
retirement plan, opting instead to harp on petitioner’s 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.

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 respondent’s 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 employer’s 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.nét 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 illegal dismissal on November 18, 1993 up to
her compulsory retirement age.

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.

SO ORDERED.