Catotocan v. Lourdes School of Quezon City, Inc.

An employee who initially objects to an early retirement policy but subsequently accepts full retirement benefits without protest and avails of a re-hiring program offered exclusively to qualified retirees is estopped from later claiming illegal dismissal, as such post-retirement conduct constitutes voluntary and free assent to the retirement policy, distinguishing cases where the employee consistently refused to consent.

Editha Catotocan was employed by Lourdes School of Quezon City (LSQC), an educational institution run by the Capuchin Order, as a music teacher beginning in 1971. LSQC maintained a retirement plan providing for retirement at sixty years of age or separation pay depending on years of service. On November 25, 2003, LSQC issued Administrative Order No. 2003-004, an addendum to its retirement policy permitting the school to retire an employee upon reaching sixty years of age or completing thirty years of service, whichever comes first. Article 287 of the Labor Code governs retirement age, permitting employers and employees to fix the applicable retirement age at sixty years or below through agreement, with compulsory retirement set at sixty-five and optional retirement at sixty in the absence of any retirement plan.

Editha Catotocan began her employment with Lourdes School of Quezon City (LSQC) in 1971 as a music teacher, earning a monthly salary of Thirty Thousand and Eighty-One Philippine Pesos (Php30,081.00). By school year 2005-2006, she had served the institution for thirty-five years. LSQC maintained a retirement plan providing for retirement at sixty years of age or separation pay depending on years of service. On November 25, 2003, LSQC issued Administrative Order No. 2003-004, an addendum to its retirement policy, which provided that an employee may apply for retirement or be retired by the school upon reaching sixty years of age or completing thirty years of service, whichever comes first.

Catotocan and seven co-employees objected to the new policy. In a letter dated March 23, 2004, they appealed to the Provincial Minister and Provincial Council on Education for deferment of the thirty-year service provision, requesting instead that they be allowed to retire at sixty years of age so they could "fully enjoy the fruits" of their labor. LSQC Provincial Minister Fr. Troadio de los Santos replied on April 25, 2004, informing them that the contested retirement age was the same as in other schools' retirement plans. Catotocan and her co-employees wrote again on September 3, 2004, reporting that a survey of other private schools showed retirement at sixty years regardless of length of service, and asserting that they did not deserve to be retired and rehired when they remained capable of performing their duties. Fr. de los Santos advised them on October 12, 2004 to await the final determination of a pending case before the NLRC Arbitration Branch, Tiongson vs. Lourdes School, Quezon City, et al. (NLRC NCR Case No. 00-04-05164-04). On October 26, 2004, Catotocan and her co-employees sought intervention from the Department of Labor and Employment-National Capital Region (DOLE-NCR). During a meeting on November 22, 2004, the DOLE-NCR PACU officer advised that compelling retirement would amount to constructive dismissal. A follow-up meeting was scheduled for January 7, 2005, but school officials did not attend.

Notwithstanding these objections, LSQC Rector Fr. Cesar Acuin notified Catotocan by letter dated January 27, 2005 that she would be retired by the end of the school year for having served at least thirty years, with retirement pay computed at One Million Fifty-Two Thousand Eight Hundred Thirty-Five Philippine Pesos (Php1,052,835.00). At that time, Catotocan was fifty-six years old. A dialogue on March 3, 2005 with Fr. Luis Arrieta followed, during which the affected employees reiterated their objections to the thirty-year service requirement. LSQC nevertheless retired Catotocan sometime in June 2006 after she completed thirty-five years of service. Full retirement benefits were paid: sixty percent (Php571,701.00) was credited to a savings account she opened with Banco De Oro (BDO), the trustee bank, and the remaining forty percent (Php421,134.00) was paid in thirty-six equal monthly installments of Php11,698.17 until June 2009. Catotocan withdrew the proceeds without any notation that she was accepting under protest or without prejudice to filing an illegal dismissal case.

In the same January 27, 2006 letter communicating her retirement, Catotocan was informed that she could signify in writing her intent to continue serving the school on a contractual basis. She submitted a Letter of Intent on February 14, 2006, and was subsequently appointed Grade School Guidance Counselor for school year 2006-2007 under a contractual status. She was re-appointed for school years 2007-2008 and 2008-2009 in the same position. On August 16, 2006, Catotocan and other re-hired employees wrote to the LSQC Rector requesting inclusion in the school's health maintenance plan, referring to themselves as "retirees" and signing as "the retired employees." On January 29, 2009, Catotocan re-applied for the Guidance Counselor position, but LSQC no longer considered her application.

On June 25, 2009, Catotocan filed a complaint before the Labor Arbiter for illegal dismissal and monetary claims including step increment, moral and exemplary damages, and attorney's fees. The Labor Arbiter dismissed the complaint on March 26, 2010, finding that her subsequent actions — opening a savings account, withdrawing retirement benefits, and applying for contractual employment — constituted implied consent to the retirement policy and abandonment of her objection. The NLRC affirmed on October 20, 2010, holding that Catotocan performed all voluntary acts expected of a retired employee and could not be considered to have been forced to retire or illegally dismissed. Her motion for reconsideration was denied on May 13, 2011. The Court of Appeals dismissed her petition for certiorari on October 29, 2013, and denied reconsideration on July 15, 2014, agreeing that her post-retirement actions were tantamount to consent to the addendum.

• Stare Decisis: Catotocan argued that the Court of Appeals committed grave abuse of discretion in not applying the principle of stare decisis, there being a prior decision involving Lourdes School and the same issue of forced retirement before the age of sixty.
• Retirement by Acquiescence: Catotocan maintained that the Court of Appeals' finding that she retired by acquiescence or implication — based on her opening a bank account to receive retirement benefits after thirty years of service but before age sixty, and accepting three years of contractual employment — was contrary to the Jaculbe case and the doctrine in Lourdes A. Cercado vs. UNIPROM, Inc., where assent to early retirement before age sixty is valid only if expressly given and not by implied acts such as acceptance of retirement pay, and where such acceptance will not bar the pursuit of an illegal dismissal case.
• Estoppel: Catotocan asserted that estoppel should not apply after the acceptance of retirement pay and should not operate to waive her legal right to contest her illegal dismissal.

• Stare Decisis: Whether the Court of Appeals committed grave abuse of discretion amounting to lack of jurisdiction in not applying the principle of stare decisis, there being a prior decision on a similar case involving Lourdes School and the same issue of forced retirement before the age of sixty.
• Retirement by Acquiescence: Whether the Court of Appeals' finding that petitioner retired by acquiescence or by implication, when she opened a bank account to receive her retirement benefits after thirty years of service but before age sixty, and accepted three years of contractual employment, is contrary to the Jaculbe case and the Court doctrine in Cercado vs. UNIPROM, Inc., where assent to early retirement before age sixty is valid only if expressly given and not by implied acts as acceptance of retirement pay, and will not bar the pursuit of an illegal dismissal case.
• Estoppel: Whether estoppel will apply after the acceptance of retirement pay and will operate to waive the legal right to contest illegal dismissal.

• Stare Decisis: No. The Court of Appeals did not gravely abuse its discretion, as the prior cases cited by petitioner were distinguishable on their facts and did not compel a contrary ruling.
• Retirement by Acquiescence: No. Petitioner's post-retirement conduct — opening a bank account, accepting all retirement proceeds without protest, and availing of a re-hiring program exclusively offered to qualified retirees for three consecutive years — constituted voluntary assent to the retirement policy, distinguishing this case from Cercado and Jaculbe.
• Estoppel: Yes. Estoppel applies because petitioner's voluntary acts from June 2006 to June 2009, including receipt of full retirement benefits and acceptance of contractual re-employment as a qualified retiree, belied her claim of illegal dismissal and barred her from questioning the legality of the retirement policy.

• Stare Decisis: The principle of stare decisis was inapplicable because the prior decisions involving Lourdes School and the cited cases (Cercado and Jaculbe) were factually distinguishable. In those cases, there was no subsequent express acknowledgment of "retirement" by the employee. In Cercado, the employee was consistent in refusing to give consent to the retirement plan and in fact refused the check representing her retirement benefits. In the present case, Catotocan not only received all her retirement benefits but also applied for and availed of LSQC's re-hiring policy for retirees. The Court found no grave abuse of discretion in the Court of Appeals' refusal to mechanically apply those precedents to materially different facts.

• Retirement by Acquiescence: Retirement is the result of a bilateral act of the parties — a voluntary agreement between employer and employee whereby the latter, after reaching a certain age, agrees to sever employment. Under Article 287 of the Labor Code, the retirement age is primarily determined by the existing agreement or employment contract; only in the absence of such an agreement does the law fix compulsory retirement at sixty-five and optional retirement at sixty. The Labor Code permits employers and employees to fix the applicable retirement age at sixty or below, provided retirement benefits are not less than those provided by law. While acceptance of an early retirement age option must be explicit, voluntary, free, and uncompelled, and while an employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan — only the implementation may be unilateral, not the adoption of the plan. Due process requires only that notice of the employer's decision to retire an employee be given. Applying these principles, the Court found that Catotocan's subsequent actions after retirement were tantamount to consent to the addendum: (1) she opened a savings account with BDO, the trustee bank, after being notified of her retirement; (2) she accepted all proceeds of her retirement package — the lump sum and all monthly payments until June 2009 — without any notation that she was accepting under protest or without prejudice to filing an illegal dismissal case; and (3) there was no evidence that LSQC exerted undue influence to obtain her consent. Most tellingly, she availed of the contractual re-hiring provision of LSQC's retirement policy, which was offered exclusively to qualified retirees who had not yet reached sixty-five. By applying for and receiving contractual employment for three consecutive years under this retiree-only program, she acknowledged her retired status. In an August 6, 2006 letter to Fr. Acuin, she and co-employees expressly referred to themselves as "retirees" and signed as "the retired employees," showing no animosity toward LSQC. The filing of the illegal dismissal complaint was thus an afterthought following LSQC's denial of her fourth re-application.

• Estoppel: The voluntary nature of Catotocan's acts from June 2006 to June 2009 — receiving full retirement benefits, withdrawing the proceeds for personal use, and applying for and receiving salaries as Guidance Counselor under the re-hiring program — clearly belied her claim of illegal dismissal. Having performed all the acts that a retired employee would do under the new school policy, and having benefited from the proceeds of retirement and three years of subsequent employment, she was estopped from questioning the legality of the retirement policy. While acceptance of retirement pay and re-employment did not per se amount to a waiver of the right to contest forced retirement, the totality of her voluntary conduct — including the supervening event of repeated application and availment of the re-hiring program for qualified retirees — demonstrated free and voluntary consent to the retirement policy despite her initial opposition.

• Voluntary Assent to Early Retirement — Acceptance by employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan. Only the implementation and execution of the option may be unilateral, but not the adoption and institution of the retirement plan containing such option. In this case, the Court found that Catotocan's post-retirement conduct — opening a bank account, accepting all benefits without protest, and availing of a re-hiring program exclusive to retirees — constituted voluntary assent.

• Management Prerogative to Lower Retirement Age — The Labor Code permits employers and employees to fix the applicable retirement age at sixty years or below, provided that the employees' retirement benefits under any CBA and other agreements shall not be less than those provided therein. Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement age of sixty-five are not per se repugnant to the constitutional guaranty of security of tenure. LSQC's retirement plan, which allowed retirement upon thirty years of service, was upheld as valid.

• Due Process in Retirement — Due process only requires that notice of the employer's decision to retire an employee be given to the employee. The requirement that an employer must first consult its employee prior to retiring him was struck down as unduly constricting management's option to retire the employee.

• Estoppel in Labor Cases — An employee who voluntarily performs all acts expected of a retired employee — receiving full retirement benefits, withdrawing proceeds, and applying for re-employment under a program exclusive to qualified retirees — is estopped from later questioning the legality of the retirement policy and claiming illegal dismissal. The supervening event of repeated availment of a retiree-only re-hiring program reveals voluntary consent despite initial opposition.

• Distinguishing Cercado and Jaculbe — In Cercado vs. UNIPROM and Jaculbe vs. Silliman University, assent to early retirement before age sixty is valid only if expressly given and not by implied acts such as acceptance of retirement pay. These cases were distinguished from the present case because: (1) in those cases there was no subsequent express acknowledgment of "retirement" by the employee; (2) in Cercado, the employee consistently refused consent and refused the retirement check, whereas Catotocan received all benefits and availed of the re-hiring program; and (3) Catotocan's repeated application and availment of the re-hiring program for three consecutive years was a supervening event demonstrating voluntary consent.

• "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." — This passage defines the nature of retirement as a bilateral, voluntary act, establishing the foundational principle against which Catotocan's post-retirement conduct was measured.

• "Under this provision, the retirement age is primarily determined by the existing agreement or employment contract. Only in the absence of such an agreement shall the retirement age be fixed by law, which provides for a compulsory retirement age at 65 years, while the minimum age for optional retirement is set at 60 years." — This articulates the hierarchy of sources for determining retirement age — agreement first, then law — and is frequently cited in subsequent retirement jurisprudence.

• "Indeed, acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan." — This formulation balances management prerogative with employee consent, distinguishing the adoption of a retirement plan (mutual) from its implementation (potentially unilateral), and is the canonical statement of the doctrine applied in this case.

• "By her actuations, she is already estopped from questioning the legality of the new retirement policy." — This passage from the quoted NLRC finding, adopted by the Court, encapsulates the estoppel rationale: voluntary post-retirement conduct that is fully consistent with retired status bars a later claim of illegal dismissal.

• Pantranco North Express, Inc. vs. NLRC, 328 Phil. 470 (1996) — Controlling precedent followed. The Court upheld the retirement of an employee pursuant to a CBA allowing compulsory retirement upon completing twenty-five years of service. Interpreting Article 287, the Court held that the Labor Code permits employers and employees to fix the applicable retirement age lower than sixty years of age. This precedent supported the validity of LSQC's thirty-year service retirement provision.

• Cercado vs. UNIPROM, 647 Phil. 603 (2010) — Distinguished. The Court held that assent to early retirement before age sixty is valid only if expressly given and not by implied acts such as acceptance of retirement pay. Distinguished because Cercado consistently refused consent and refused the retirement check, whereas Catotocan received all benefits and availed of the re-hiring program.

• Jaculbe vs. Silliman University, 547 Phil. 352 (2007) — Distinguished. Similar to Cercado in requiring express assent to early retirement. Distinguished because in Jaculbe there was no subsequent express acknowledgment of "retirement" by the employee, unlike Catotocan who referred to herself as a "retiree" and availed of a retiree-only re-hiring program.

• PAL, Inc. vs. Airline Pilots Association of the Philippines, 424 Phil. 356, 365 (2002) — Followed. The Court struck down the requirement that an employer must first consult its employee prior to retiring him, holding that due process only requires notice of the employer's decision to retire an employee.

• Banco De Oro Unibank, Inc. vs. Sagaysay, G.R. No. 214961, September 16, 2015, 771 SCRA 78 — Cited for the proposition that the retirement age is primarily determined by the existing agreement or employment contract, and only in the absence of such an agreement shall the retirement age be fixed by law.

• Philippine Transmarine Carriers, Inc. vs. Legaspi, 710 Phil. 838, 850 (2013) — Cited for the principle that while the Court has been inclined toward the plight of workers, such inclination has not blinded it to the rule that justice is in every case for the deserving, to be dispensed in light of established facts and applicable law and doctrine.

• Article 287, Labor Code — Governs the age of retirement. In the absence of a retirement plan or agreement, an employee upon reaching sixty years or more but not beyond sixty-five (declared the compulsory retirement age), who has served at least five years, may retire and is entitled to retirement pay equivalent to at least one-half month salary for every year of service. The Court applied this provision to hold that the retirement age is primarily determined by the existing agreement or employment contract, and only in the absence of such an agreement shall the retirement age be fixed by law. LSQC's retirement plan, which allowed retirement upon thirty years of service, was thus valid under Article 287.

Carpio (Chairperson), Mendoza, Leonen, and Martires, JJ., concurred.