Title
Universal Robina Sugar Milling Corp. vs. Caballeda
Case
G.R. No. 156644
Decision Date
Jul 28, 2008
Employees forced into retirement at 60 by URSUMCO's unilateral policy; SC ruled illegal dismissal, retroactive application of RA 7641, and entitlement to full benefits.
retirement benefits
backwages
compulsory retirement
A

Case Summary (G.R. No. 156644)

Factual Background

URSUMCO employed Agripino Caballeda as a welder from March 1989 until June 23, 1997, earning P124.00 per day. Alejandro Cadalin worked as a crane operator from 1976 until June 15, 1997, earning P209.30 per day. On April 24, 1991, URSUMCO’s president issued a Memorandum establishing a company policy on “Compulsory Retirement.” Under the Memorandum, employees corporate-wide who attained sixty years of age on or before April 30, 1991 would be considered retired on May 31, 1991. Thereafter, each employee would be deemed retired thirty days after attaining age sixty, with personnel department retirement notices prepared and served on employees at least thirty days before the designated retirement date. Employees were to continue reporting for work during the first half of the thirty-day period, and unused vacation and sick leave credits were to be converted into cash and included in final retirement benefits. The Memorandum further required that engaging a retiree after retirement must be cleared with the President or relevant senior vice-president, and retirees could only be re-engaged under limited retainer or consultancy arrangements.

After RA 7641’s enactment, and on April 29, 1993, URSUMCO and the National Federation of Labor (NFL) entered into a Collective Bargaining Agreement (CBA). The CBA’s Article XV provided that members’ retirement benefits would be in accordance with law.

The Alleged Compulsory Retirement and Subsequent Complaints

Respondents alleged that, upon reaching age sixty, they were forced to retire in violation of RA 7641. Agripino asserted that URSUMCO illegally dismissed him on June 24, 1997 when he was forced to retire upon reaching sixty. He claimed he accepted separation pay, applied for retirement benefits with the Social Security System (SSS), and contested that retirement as a disguised termination. Alejandro turned sixty on April 15, 1997, filed an application for retirement with URSUMCO on May 28, 1997, and attached birth and baptismal certificates. He accepted retirement benefits and executed a quitclaim on July 23, 1997.

Agripino filed a complaint on August 6, 1997 before the LA of Dumaguete City for illegal dismissal, damages, and attorney’s fees, alleging that compulsory retirement violated RA 7641 and amounted to illegal dismissal. Alejandro filed a complaint on August 26, 1997 for illegal dismissal, underpayment of retirement benefits, damages, and attorney’s fees. He alleged he received only fifteen (15) days per year of service as retirement benefits and further claimed discrimination because other workers over sixty were allegedly allowed to continue reporting for work.

Labor Arbiter’s Ruling

On September 30, 1998, the LA declared URSUMCO guilty of illegal dismissal and ordered it to pay both respondents backwages from their respective termination dates: June 23, 1997 for Agripino and June 15, 1997 for Alejandro, up to the promulgation of the decision. The LA also ordered reinstatement to their former or equivalent positions without loss of seniority rights and privileges, and it adjudicated computed awards, including a ten percent (10%) attorney’s fee on the aggregate award. The LA dismissed all other claims for lack of merit.

NLRC’s Ruling on Appeal

Both petitioners appealed to the NLRC. On January 27, 2000, the NLRC ruled that Alejandro voluntarily retired, pointing to his retirement application, documentary submissions, clearance processing, acceptance of retirement benefits, and receipt of P33,476.77. However, the NLRC held that Alejandro’s retirement benefits were computed based only on fifteen days salary per year of service and therefore needed recomputation to conform with Art. 287 of the Labor Code, as amended by RA 7641.

For Agripino, the NLRC rejected URSUMCO’s attempt to characterize him as a casual employee, reasoning that the casual employment theory appeared designed to evade his retirement benefits. Consequently, the NLRC set aside the LA ruling that had found illegal dismissal and dismissed the complaints for illegal dismissal. It instead ordered URSUMCO to pay retirement benefits, with separate computations for Alejandro and Agripino that used fifteen (15) days as the factor representing one-half month salary, plus pro-rated components, and then credited or netted retirement differentials.

After URSUMCO’s motion for reconsideration was denied on May 22, 2000, respondents elevated the dispute to the CA via petition for certiorari.

Court of Appeals’ Ruling

On September 11, 2002, the CA held that URSUMCO illegally dismissed respondents. The CA found that URSUMCO violated respondents’ rights because the Memorandum unilaterally imposed compulsory retirement at age sixty. The CA reasoned that there was no existing CBA or employment contract providing for early compulsory retirement, and it treated involuntary retirement as discharge. The CA thus concluded that the forced retirement amounted to illegal dismissal.

The CA, however, sustained the NLRC’s computation of retirement benefits, amending the NLRC decision solely in the aspect of backwages. It ordered payment of retirement benefits using the NLRC’s recomputed figures and further ordered respondents to receive backwages from June 1997 up to 2002.

Issues Raised Before the Supreme Court

Petitioners assigned several errors, which the Supreme Court distilled into three principal questions. First, whether RA 7641 could be given retroactive effect without violating the non-impairment clause embodied in the Bill of Rights. Second, whether Agripino was a seasonal or project worker rather than a casual worker. Third, whether respondents were illegally terminated on account of compulsory retirement or instead voluntarily retired.

Petitioners argued that respondents voluntarily retired, especially pointing to Alejandro’s retirement application, documentary compliance, acceptance of benefits, and execution of a quitclaim. They further contended that RA 7641 could not apply retroactively because an existing CBA governed retirement benefits. Petitioners also maintained that the Memorandum was no longer implemented because RA 7641 and the CBA were already in effect at the time of retirement, and that if the Memorandum persisted, any collective challenge should have been undertaken by the NFL.

With respect to Agripino, petitioners claimed he was a seasonal/project worker because sugar milling was seasonal, and they asserted that his employment ended due to the expiration of the period stated in his contract. They alternatively argued that if he was not a project employee, retirement pay should be reduced proportionately based on the milling season’s limited months.

Respondents countered that the CA correctly found compulsory retirement was imposed unilaterally by the Memorandum, which they did not freely ratify or agree to. They argued that the resulting dismissal lacked valid cause and due process, contravened constitutional security of tenure, and violated Art. 287 of the Labor Code as amended. They further alleged they signed retirement documents only because they were left without work assignments and were denied further benefit processing unless they severed employment relations and complied with URSUMCO’s retirement requirements. Respondents also argued that the Rule 45 petition should not allow re-examination of facts and evidence, and that their acts were inconsistent with voluntary retirement.

Supreme Court’s Ruling on the Petition

The Supreme Court denied the petition and affirmed the CA.

Retroactive Application of RA 7641

The Court first held that the retroactivity of RA 7641 over prior employment contracts had been settled. It relied on Enriquez Security Services, Inc. v. Cabotaje, describing RA 7641 as a labor protection measure and a curative statute designed, absent an employer-made retirement plan or voluntary grant, to secure workers’ financial well-being in their retirement years. The Court reiterated the doctrine that RA 7641 may apply to labor contracts still existing at the time it took effect, and that benefits may be reckoned retroactively to the time employment contracts started.

The Court then emphasized two essential requisites for retroactive application: first, that the claimant was still employed at the time the law took effect; and second, that the claimant met the eligibility requirements for retirement benefits under the statute. Applying the doctrine, the Court found that when respondents were compulsorily retired, RA 7641 was already in full force and effect. It further held that petitioners failed to prove that respondents did not comply with statutory eligibility requirements. Accordingly, the Court allowed RA 7641’s retroactive application in the case.

Limitations on Review Under Rule 45

Second, the Court ruled that issues on whether Agripino was seasonal/project or regular required factual determinations. It reiterated that a Rule 45 petition raises only questions of law, subject to limited exceptions not applicable here. It explained that it could not re-evaluate probative value of evidence presented before the LA, NLRC, and CA.

The Court found it especially noteworthy that the LA, NLRC, and CA uniformly ruled that Agripino was not casual and was a regular employee. Since these findings were consistent across tribunals, the Court held them binding and found no reason to depart.

Voluntariness of Retirement, Quitclaims, and Illegal Dismissal

Third, the Court addressed whether respondents voluntarily retired or were forced to retire, amounting to illegal dismissal. The Court restated that retirement is the result of a bilateral act between employer and employee. While retirement age generally depends on agreement, it may also be fixed by law in the absence of relevant agreements. Under Art. 287 of the Labor Code as amended, the legally mandated compulsory retirement age was sixty-five years, and optional retirement could be taken beginning at age sixty, but not beyond

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