G.R. No. 120802




Manila THIRD DIVISION G.R. No. 120802 June 17, 1997 JOSE T. CAPILI, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, and UNIVERSITY OF MINDANAO, respondents. DAVIDE, JR., J.: The pivotal issue in this petition is whether an instructor of a private educational institution may be compelled to retire at the age of sixty years. A corollary issue is whether his subsequent acceptance of retirement benefits would estop him from pursuing his complaint questioning the validity of his forced retirement. Petitioner Jose T. Capili, Jr., was employed by private respondent University of Mindanao (hereafter, UM) as a college instructor in November 1982. On 2 July 1993, the private respondent informed the petitioner that under the law and UM's retirement program he would be eligible for retirement when he would reach the age of 60 years on 18 August 1993. In his answer of 5 August 1993, the petitioner informed UM that pursuant to Section 4, Rule II, Book VI of the Rules Implementing the Labor Code, the that he was not opting to retire but would continue to serve until he reaches the compulsory retirement age of 65. In its reply of 10 August 1993 to the petitioner, UM reiterated its position that under the university's retirement plan, it could retire him. It argued that under Section 4 cited by the petitioner, the employee has the option only in the absence of a retirement plan. Perceiving the school's insistence as constructive dismissal, and recalling at least four other faculty members who were allowed to teach beyond their sixtieth birth anniversary, the petitioner filed a complaint1 for illegal dismissal before the Regional Arbitration Branch No. XI of the NLRC in Davao City. He sought his reinstatement to his former position without loss of seniority rights with full back wages, wage differential, 13th month differential, moral and exemplary damages, and attorney's fees.2 In its position paper,3 UM invoked Article 287 of the Labor Code which provides that any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. It contended that it has a retirement plan, known as the University of Mindanao & Associated Enterprises Retirement Plan, under which it could retire the petitioner upon his reaching the age of 60. UM also cited Policy Instruction No. 25 issued by the Secretary of Labor, which provides that in the absence of a retirement plan any teacher or other employee in a private educational institution may retire or be retired from the service upon reaching the age of 60 years. In his position paper4 the petitioner maintained that private respondent's retirement plan applies only to members thereof, pursuant to Articles II and III of its Rules and Regulations,5 and that since he is not a member of the Plan, he is not covered by it. He further contended that Policy Instruction No. 25, issued on 1 June 1977, was abrogated by Republic Act No. 7641, which took effect on 7 January 1993; and that pursuant to the new Rule II, Book VI of the Omnibus Rules Implementing the Labor Code,6 which also took effect on 7 January 1993, he has the option whether or not to retire upon attaining the age of 60 years. On 18 April 1994,7 Labor Arbiter Newton Sancho held for UM and dismissed the complaint. He ruled: There is no question that UM [University of Mindanao] has an existing retirement plan which fixed 60 years as an age for "normal retirement." It applies to all its employees and that of its associated enterprises, including the non-members thereof as a matter of school policy. As such, the option to retire complainant lies on the administration of UM. Complainant's reliance on R.A. No. 7641 is evidently misplaced. It only provides for retirement pay to qualified private sector employees in the absence of any retirement plan of the establishment. Given UM's retirement plan or school policy of retiring its teachers upon reaching the age of 60, said law does not clearly operate in his favor. That at least four (4) teachers had been allowed to work beyond their 60th birthday does not make them an exception to UM's policy on the matter. They did so on a case-to-case and semestral basis to which UM consented in the exercise of its management prerogative. The charge that he was discriminated against through "forced" retirement because of his propensity to question certain school policies or regulations cannot be given credence. For want of corroborative evidence, it is simply self-serving! Ditto his money claims. UM has proofs that he had been fully paid thereof. The petitioner appealed8 from the decision to the respondent Commission on 10 May 1994, or thirteen days after he received the Labor Arbiter's decision. He argued that the Labor Arbiter erred in ruling that private respondent's retirement plan applies to all its employees and that he had been fully paid his monetary claims. The private respondent moved to dismiss the appeals9 for having been filed out of time, as the same should have been filed within ten days from petitioner's receipt of the Arbiter's decision, or, at the latest, on 7 May 1994. On 21 November 1994, the private respondent filed a Manifestation with Motion 10 alleging that on 6 October 1994, the petitioner "received his retirement pay and other accrued benefits" due from the private respondent, thus making the appeal moot and academic. The petitioner filed a Counter-Manifestation 11 wherein he alleged that his "partial acceptance" of retirement benefits did not render the case moot and academic, and that having "long and unjustly been denied of his retirement benefits since August 18, 1993 [he could not] be expected to remain idle." On 19 January 1995, the respondent NLRC dismissed the appeal for having been filed out of time, it appearing that since the petitioner received a copy of the assailed decision on 27 April 1994, he had only until 7 May 1994 to file his appeal; however, considering that 7 May 1994 was a Saturday, he had until 9 May 1994, the next working day, to file the appeal. He filed the appeal only on 10 May 1994. 12 The petitioner moved for the reconsideration 13 of the order, alleging that he could not have filed his appeal on 9 May 1994 which was a non-working holiday, as the barangay elections were held on the said date. In its resolution of 31 March 1995, 14 the NLRC reconsidered the order of 19 January 1995 and decided the case on its merits. In disposing of the appeal, it made the following observations and conclusions: After a careful review of the respective arguments of the parties, We find no serious inconsistency between the company retirement plan of the university and the provision of Article 287 of the Labor Code, as amended by R.A. 7641. Both speak of fixing the normal retirement age at 60 in the absence of a retirement plan or agreement. The retirement plan of the university allows retirement at a later or beyond 60 by mutual assent and on a case-to-case basis. Whereas, R.A. 7641, has fixed 65 as the compulsory retirement date. Except therefore for the fixing of a maximum retirement age of 65 or the compulsory retirement date, Section 14, Rule I, Book VI of the Implementing Rules of Article 287 prior to its amendment by R.A. 7641, has equally fixed the retirement benefit to at least one-half (1/2) month for every year of service. The contention of complainant that respondent's retirement plan is inapplicable for being a non-member is beside the point. Respondent has expressly assented to the extension of the retirement plan to complainant thereby serving as the "consensual basis" for the applicability of the retirement plan to complainant. (See Llora Motors, Inc. vs. Drilon, 179 SCRA 176, November 7, 1989, citing Allied Investigation Bureau, Inc. vs. Ople, 91 SCRA 265). The ultimate question, however, is that will complainant be forced by the respondent to retire at age 60 or on his 60th birthday if he refuses to accept the same. It is Our well discerned view that respondent may not force complainant to retire at age 60, unless there are other justifiable reason to compel complainant to accept the same. This is so because the law (R.A. 7641) has fixed age 65 as the compulsory age of retirement. It, however, appears that this particular issue has become moot and academic. During the pendency of the case, complainant has accepted and received from respondent university his retirement benefits (Annex "1" to Respondent's Manifestation). Complainant's counter-manifestation that this was only "partial acceptance" of his retirement benefits is belied by the computation of his retirement benefits based on his length of service in the sum of P67,344.42, plus other fringe benefits or in the total sum of P75,338.10. Deducting therefrom the sum of P60,015.45 which was partially released to him, he received the balance of his retirement benefits in the sum of P15,322.65 as shown by his signature appearing on the Journal Voucher dated October 4, 1994 (Annex "2", ibid). Except for the notation on the exclusion of incremental proceeds of his benefits which is still subject of conciliation, there is nothing on Annex "1" indicating that complainant only received partial payment of his retirement benefits or a reservation that receipt of the balance of his retirement was without prejudice to his claims in the instant case. Complainant therefore by his own act of accepting the proceeds of his retirement benefits as originally offered to him by respondent is now estopped from further pursuing his claims in the instant case. Besides, the main cause of action of complainant in suing respondent is the charge of illegal or constructive dismissal. There being no concrete and convincing proof that complainant was illegally dismissed, the present action must equally fail. Thus, the issue as to whether or not complainant was forced to prematurely retire by respondent is now moot and academic in view of the subsequent acceptance by complainant of his retirement benefits from respondent. It then dismissed the appeal for lack of merit and affirmed the Labor Arbiter's decision, subject to the foregoing modification. Petitioner's motion for reconsideration 15 of the above resolution having been denied in the resolution 16 of 31 May 1995, the petitioner filed this petition. He alleges that the respondent Commission committed grave abuse of discretion amounting to excess or lack of jurisdiction. (i) . . . WHEN IT RENDERED ITS RESOLUTIONS IN A MANNER VIOLATIVE OF SUBSTANTIAL DUE PROCESS. (ii) . . . WHEN IT RENDERED THE QUESTIONED RESOLUTION. . . DISMISSING THE APPEAL IN CONTRAVENTION TO THE RULING OF THE SUPREME COURT IN THE CASE OF ZURBANO, SR. VS. NLRC (229 SCRA 563) AND OTHERS. (iii) . . . IN HOLDING THAT THE PETITIONER BY ACCEPTING THE PROCEEDS OF HIS RETIREMENT BENEFITS IS ESTOPPED FROM PURSUING HIS CLAIMS. The first assigned error consists of the last two errors, which boil down to the issue of whether the petitioner, by his acceptance of retirement benefits, is estopped from pursuing his claim of illegal dismissal arising from his forced retirement before the age of 65. In its comment, the Office of the Solicitor General agrees with the petitioner that the latter's acceptance of retirement benefits does not amount to estoppel or render the appeal moot and academic, and hence, the NLRC committed reversible error and grave abuse of discretion in perfunctorily dismissing petitioner's appeal solely on the ground of estoppel. It nevertheless disagreed with the NLRC's conclusion that the petitioner could not be forced to retire at age 60. It is of the view that petitioner's forced retirement at the age of 60 is valid and that petitioner's not being a member of the retirement plan is of no moment, since all employees of UM are covered by it. These notwithstanding, the OSG concurred in the dispositive portion of the NLRC's resolution. On the other hand, the private respondent submits that the NLRC was correct in holding that petitioner's voluntarily acceptance of his retirement benefits amounted to a waiver of his claims, and that his retirement was in accordance with UM's retirement policy. We resolved to give due course to the petition and required the parties to submit their respective memoranda. Only the petitioner and private respondent submitted their memoranda. The OSG manifested that it be excused from filing a memorandum and that its comment be treated as its memorandum. The applicable law on the matter is Article 287 of the Labor Code of the Philippines, as amended by R.A. No. 7641, which took effect on 7 January 1993. 17 As amended, the Article reads as follows: Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining agreement and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee. It may be noted that before the effectivity of R.A. No. 7641, Article 287 of the Labor Code did not specifically provide for the retirable age of employees in the private sector, thus: Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and other collective bargaining or other agreement. Section 13, Rule I, book VI of the Omnibus Rules Implementing the Labor Code provided: Sec. 13. In the absence of any collective bargaining agreement or other applicable agreement concerning terms and conditions of employment which provides for retirement at an older age, an employee may retire upon reaching the age of sixty (60) years. Notably, the option to retire at 60 years was the employee's prerogative. However, the Department of Labor and Employment had provided a separate rule for employees of private educational institutions. Policy Instruction No. 25 promulgated on 1 June 1977 by the Secretary of Labor provided as follows: For purposes of applying the retirement provisions of the Labor Code in private educational institutions, and in consideration of the unique characteristics and peculiar problems and work situations of such institutions, the following rules are hereby issued for the information and guidance of all concerned: I — If there is a retirement plan under a collective agreement or employer policy in private educational institutions, any teacher and/or employee who retires or is retired from the service pursuant to the same shall be entitled to all the retirement benefits provided therein. II — In the absence of any such company policy or collective agreement providing for a retirement plan for teachers and other employees in private educational institutions, any teacher and/or employee may retire or be retired from the service upon reaching the age of sixty (60) years and shall be paid the equivalent of at least one month salary or one-half month salary for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year. It is clear therefrom that in the absence of a collective bargaining agreement or company policy providing for a retirement plan, the option to retire at age 60 could be exercised by either the employee or the employer. This power of the employer no longer exists under R.A. No. 7641, which unequivocally provides that the option to retire upon reaching the age of 60 years or more but not beyond 65 is the exclusive prerogative of the employee if there is no provision on retirement in a collective bargaining agreement or any other agreement or if the employer has no retirement plan. The foregoing brings us to the next point of inquiry, viz., whether private respondent UM has a retirement plan or collective bargaining agreement or other agreement vesting upon UM the prerogative to retire an employee who reaches 60 years. UM insists that it has a retirement plan under the title University of Mindanao & Associated Enterprises Retirement Plan, 18 which became effective on 1 July 1968, and that the petitioner is covered by it. On the other hand, the petitioner contends that the Plan covers only those who opted to become members thereof. We agree with the petitioner. Indeed, under UM's Retirement Plan only members are covered by it. It defines Member as an employee, as herein defined, who chooses to contribute to the Fund as provided for in Article IV, Section 1 hereof. Only Members shall be entitled to any of the benefits provided for under this Plan and to any of the Company's contributions as provided for in Articles IV and V hereof. 19 As to eligibility for membership therein of employees hired after the effectivity of the Plan, it explicitly provides as follows: [A]ny employee hired after the effective date may become a Member of the Plan on the date he becomes a permanent full-time employee if he chooses to contribute to the Fund in accordance with Article IV, Section I, hereof. 20 Nothing could be clearer from the above provisions of the Plan than that it is not applicable to all employees of UM and its associated enterprises. It applies only to those who opted to become members thereof. Contracts take effect only between the parties thereto. 21 Since the Plan was prepared and approved only by the responsible officials of UM and its associated enterprises, namely, the Presidents of UM, Mt. Apo Science Foundation, and Davao Savings and Loan Association, 22 the Plan may thus be described as a contract of adhesion. Hence, the above provisions on requirements of membership and eligibility must be strictly construed against UM and its associated enterprises.ℒαwρhi৷ 23 UM cannot now be heard to claim that the plan applies to all its employees or to those who did not even opt to become members thereof. The validity then of UM's "retirement" of the petitioner upon the latter's 60th birth anniversary on 18 August 1993 could only be based on proof that the petitioner became a member of its Retirement Plan at any time after his employment in 1982 but before 18 August 1993. The burden to prove such a fact was on UM, but the record fails to show that UM has discharged that burden. UM's belated attempt to prove that it is a school policy to retire employees who reach the age of 60, pursuant to UM's Retirement Policies dated 16 December 1990 24 and Updated Retirement Policy dated 3 August 1993, 25 cannot sway this Court in UM's favor. These documents are mere scraps of paper, they being only xerox copies. They have not been certified to be true copies or offered in evidence before the Labor Arbiter and the NLRC. Neither have they even been referred to in UM's comment in this case. The foregoing notwithstanding, a supervening event worked against the petitioner. On 30 April 1994, after receiving the Labor Arbiter's decision but before filing his appeal from that decision, the petitioner received partial payment of his retirement pay and other accrued benefits from respondent UM. 26 During the pendency of his appeal with the NLRC, specifically, on 6 October 1994, he received full payment of his retirement benefits. In his Counter-Manifestation 27 he declared: COMPLAINANT-APPELLANT. . . most respectfully maintains that the partial acceptance of the retirement benefits does not render the instant case moot and academic. The complainant-appellant who had long and unjustly been denied of his retirement benefits since August 18, 1993 cannot be expected to remain idle. By his acceptance of retirement benefits the petitioner is deemed to have opted to retire under the third paragraph of Article 287 of the Labor Code, as amended by R.A. No. 7641. Thereunder he could choose to retire upon reaching the age of 60 years, provided it is before reaching 65 years, which is the compulsory age of retirement. Also worth noting is his statement that he "had long and unjustly been denied of his retirement benefits since August 18, 1993." Elsewise stated, he was entitled to retirement benefits as early as 18 August 1993 but was denied thereof without justifiable reason. This could only mean that he has already acceded to his retirement, effective on such date — when he reached the age of 60 years. WHEREFORE, the 31 March 1995 and 31 May 1995 Resolutions of the National Labor Relations Commission in NLRC CA No. M-002096-94 are AFFIRMED subject to the modification that the petitioner is hereby declared to be not covered by respondent University of Mindanao's Retirement Plan but is, nevertheless, deemed to have opted to retire when he reached the age of sixty years, pursuant to Article 287 of the Labor Code, as amended by R.A. No. 7641. No pronouncement as to costs. SO ORDERED. Narvasa, C.J., Melo and Panganiban, JJ., concur. Francisco, J., is on leave. Footnotes 1 Original Record (OR), vol. 2, 1. 2 Position Paper, 7; OR, vol. 2, 53. 3 OR vol. 2, 16-20. 4 Id., 47-54. 5 Pertinent portions thereof read as follows: ARTICLE II x x x x x x x x x (e) "Member" shall mean any employee, as herein defined, who chooses to contribute to the Fund as provided for in Article IV, Section 1, hereof. Only members shall be entitled to any of the benefits provided for under this Plan and to any of the Company's contributions as provided for in Article IV and V hereof. x x x x x x x x x ARTICLE III Section 1 — Eligibility at Effective Date Any employee as of the effective date of the Plan may become a member of the Plan on the effective date if he chooses to contribute to the Fund in accordance with Article IV, Section I hereof. Section 2 — Eligibility After Effective Date Any employee of the Company not covered by the Plan as of the effective date and any employee hired after the effective date may become a Member of the Plan on the date he became a permanent full-time employee if he chooses to contribute to the Fund in accordance with Article IV, Section 1 hereof. 6 Section 4 thereof reads as follows: Sec. 4. Optional; Compulsory Retirement 4.1 Optional Retirement. — In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment, an employee may retire upon reaching the age of sixty (60) years or more if he has served for at least five (5) years in said establishment. 4.2 Compulsory retirement. — Where there is no such plan or agreement referred to in the immediate preceding sub-section, an employee shall be retired upon reaching the age of sixty-five (65) years. 4.3 Upon retirement of an employee, whether optional or compulsory, his services may be continued or extended on a case to case basis upon agreement of the employer and employee. 4.4 Service Requirement. — The minimum length of service in an establishment or with an employer of at least five (5) years required for entitlement to retirement pay shall include authorized absences and vacations, regular holidays and mandatory fulfillment of a military or civic duty. 7 Decision, NLRC Case No. RAB-11-08-00712-93; OR, vol. 2, 63-68. 8 OR, vol. 1, 1-7. 9 Motion to Dismiss Appeal, OR, vol. 1, 54-55. 10 OR, vol. 1, 62-64. 11 Id., 72. 12 Id., 76-77. Per Presiding Commissioner Musib M. Buat, with Commissioners Oscar N. Abella and Leon G. Gonzaga, Jr., concurring. 13 Id., 85-87. 14 Id., 105-113; Rollo, 23-31. 15 OR, vol. 1, 139-145. 16 Id., 231-233; Rollo, 33-35. 17 CJC Trading, Inc. v. NLRC, 246 SCRA 724, 731 [1995]. 18 Annex "4" of UM's Position Paper, OR, vol. 2, 32-41. 19 Subparagraph (e), first paragraph, Article II; see note 7, supra. 20 Section 2, Article III; see note 7, supra. 21 Article 1311, Civil Code. 22 Page 10 of Plan, OR, vol. 2, 41. 23 See BPI Credit Corp. v. Court of Appeals, 204 SCRA 601 [1991]. 24 Annex "5" of Private Respondent's Supplemental Memorandum, Rollo, 233. 25 Annex "4" of Private Respondent's Memorandum. 26 OR, vol. 1, 62. 27 Id., 72. The Lawphil Project - Arellano Law Foundation