GR 138826; (October, 2000) (Digest)
G.R. No. 138826 ; October 30, 2000
PROGRESSIVE DEVELOPMENT CORPORATION and/or MRS. JUDY A. ROXAS and DANTE P. VERAYO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, RHOLANDA ANDRES and ROY ROMANO, respondents.
FACTS
Petitioner Progressive Development Corporation (PDC) implemented a non-contributory retirement plan in 1980. Section 3 of the plan allowed for the optional retirement of any participant with twenty years of service, “at his option or at the option of the Company.” In 1994, PDC notified employees with over twenty years of service, including respondents Rholanda Andres and Roy Romano, of their retirement effective December 31, 1994. Andres had 23 years of service at age 45, while Romano had 20 years at age 38. They filed complaints for illegal retirement, contending the plan was invalid due to their lack of knowledge of it and that their retirement was a retaliatory measure for their union activities.
The Labor Arbiter dismissed the complaints, upholding the plan’s validity as part of the employment contract and consistent with Article 287 of the Labor Code. The National Labor Relations Commission (NLRC) reversed this decision, declaring that respondents were constructively terminated when forced to resign under the retirement program. The Court of Appeals affirmed the NLRC’s ruling.
ISSUE
Whether the retirement of respondents under PDC’s retirement plan constituted a valid exercise of management prerogative or an illegal constructive dismissal.
RULING
The Supreme Court granted the petition, reversing the NLRC and Court of Appeals and reinstating the Labor Arbiter’s decision. The Court held that the retirement plan was valid and formed part of the employment contract. The legal logic centered on the plan’s compliance with Article 287 of the Labor Code, which permits retirement as established in an applicable employment contract. The Court emphasized that the plan’s provision allowing the company to retire an employee with twenty years of service was explicitly confirmed as valid by the Director of the Bureau of Working Conditions, DOLE, whose pronouncement was entitled to substantial weight.
The Court found that the plan had been in effect and availed of by other employees since 1980, integrating it into the employment terms. Respondents’ claim of ignorance was unsubstantiated, especially for Andres, who, as a union chairman, was presumed familiar with company policies. The Court noted that both the Labor Arbiter and NLRC had dismissed the unfair labor practice allegation for lack of basis. Consequently, the company’s exercise of its option under the valid plan to retire respondents, who met the stipulated service requirement, was a legitimate management prerogative and did not constitute illegal dismissal.