GR 156644; (July, 2008) (Digest)
G.R. No. 156644; July 28, 2008
Universal Robina Sugar Milling Corporation (URSUMCO) and/or Renato Cabati, as Manager, Petitioners, vs. Agripino Caballeda and Alejandro Cadalin, Respondents.
FACTS
Petitioner URSUMCO, a sugar milling corporation, implemented a company-wide compulsory retirement policy in 1991, mandating retirement 30 days after an employee attains age 60. Respondents Agripino Caballeda and Alejandro Cadalin, a welder and a crane operator respectively, were retired by URSUMCO upon reaching 60 years old in 1997. Both accepted their retirement benefits and executed quitclaims. Subsequently, they filed complaints for illegal dismissal, arguing that their compulsory retirement was invalid under Republic Act No. 7641 (The Retirement Pay Law), which sets the compulsory retirement age at 65. They contended that the company policy, being contrary to law, rendered their termination illegal.
The Labor Arbiter ruled in favor of the respondents, declaring their dismissal illegal. The National Labor Relations Commission (NLRC) reversed, upholding the validity of the retirement. The Court of Appeals then reinstated the Labor Arbiter’s decision, prompting URSUMCO’s petition to the Supreme Court.
ISSUE
Whether the compulsory retirement of the respondents under the company policy, which set the retirement age at 60, constituted illegal dismissal.
RULING
The Supreme Court ruled in favor of the petitioners, upholding the validity of the respondents’ retirement. The legal logic centered on the hierarchy of laws and agreements governing retirement. The Court clarified that while R.A. 7641 sets a minimum compulsory retirement age of 65, it does not prohibit parties from agreeing on a lower age. Article 287 of the Labor Code, as amended, allows retirement to be governed by a collective bargaining agreement (CBA) or other applicable employment contract.
In this case, the company’s 1991 retirement policy constituted a valid retirement plan. For respondent Cadalin, a union member, the 1993 CBA expressly stipulated that retirement benefits would be “in accordance with law,” which the Court interpreted as an adoption of the existing company plan. For respondent Caballeda, the policy was a standing company rule accepted upon continued employment. Since the policy was established before R.A. 7641’s effectivity and was not superseded by the CBA, it remained enforceable. The respondents’ acceptance of benefits and execution of quitclaims, absent proof of vitiated consent, further estopped them from claiming illegal dismissal. Therefore, their retirement under the company policy at age 60 was legal.