Banco De Oro Unibank vs.

Sagaysay
GR No. 214961,
Sept 16, 2015
DOCTRINE: A retirement plan based on a company policy implemented prior to the hiring of an
employee is deemed to have been accepted upon employment
FACTS: On May 16, 2006, Guillermo Sagasyay was hired by Banco De Oro (BDO) as Senior
Accounting Assistant as a result of a merger with united Overseas Bank with BDO as the surviving bank.
Guillermo was employed in UOB for two years and in Metrobank for twenty-eight (28) years. On January
8, 2010, BDO informed Sagaysay that he will be formally retired on September 1, 2010 pursuant to the
company’s retirement plan which mandates its retirement age at sixty (60) years old. Since he had an
outstanding loan and his children were still in college, Sagaysay requested that his services be extended
up to May 16, 2011 so that he could render at least five (5) years of employment which would
consequently entitle him to 50% of his basic pay for every year of service upon his retirement. 69 | P a g e
Labor Standards Law Midterms Case Digests 2017 – Urbiztondo EH 401 BDO did not grant his wishes.
As of his last day of work, he was earning a monthly salary of P28,048.00. Sagaysay signed a Release,
Waiver and Quitclaim for an in consideration of P98,376.14. The quitclaim stated that in consideration of
the amount given to him, he released and discharged the bank, its affiliates and subsidiaries from any
action, suit, claim, or demand in connection with his employment. Sagaysay filed a complaint for illegal
dismissal with reinstatement and payment of backwages, moral damages, exemplary damages, and
attorney’s fee against BDO before the Labor Arbiter. He claimed that his family suffered damages
amounting to P2,225,403.00, the amount which he would have received if he was made to retire at the age
of sixty-five (65). BDO on its part said that he was already paid the amount of P98,376.14 and stressed
that Sagaysay was not dismissed but retired from service.
The Labor Arbiter (LA) stressed that Sagaysay was illegally dismissed and that he was forced to avail of
an optional retirement age of sixty (60) which was contrary to the provisions of Article 287 of the Labor
Code. In addition, the LA said that he did not freely assent to the retirement plan and he was only made to
sign a quitclaim in exchange for a small consideration. BDO appealed to the NLRC arguing that Sagaysay
freely assented to its retirement plan.
The NLRC reversed the ruing of the LA and explained that BDO’s retirement plan was effecting as early
as June 1, 1994. When Sagaysay was employed on May 16, 2006, the retirement plan was already in full
force and effect.
NLRC concluded that when Sagaysay accepted his employment with BDO, he assented to the provisions
of the retirement plan.
NLRC found it difficult to believe that Sagaysay did not famliarize the retirement policy of the bank,
considering that he has previously worked for two other banks.
The Court of Appeals reversed the ruling of NLRC, saying that there was no negotiation between BDO
and Sagaysay and therefore there was no mutual agreement. It stated that Sagaysay was forced to
participate in the retirement plan.
ISSUE: Whether the June 1, 1994 retirement plan is valid and effective against Sagaysay.
RULING: Yes. According to Article 287 of the Labor Code, The provisions will only be applied in
absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment. The Labor Code permits the employers and employees to fix applicable retirement age,
provided that the benefits under the Collective Bargaining Agreement or any other agreements shall not
be less than those provided by the Code. In the previous Cases decided by the Court, the retirement plans
were adopted after the employees were hired by their employer. Therefore they may contest to the
validity of the same unless they consented to its implementation. However, in the present case, the
retirement plan came before the hiring of Sagaysay. Sagaysay was sufficiently informed of the retirement
plan. It has been twelve (12) years from the inception of the retirement plan, which was prior to the hiring
of Sagaysay, up to the present, no employee questioned the retirement plan. Further, by accepting the
employment offer of BDO, Sagaysay was deemed to have assented to all existing rules, regulations and
policy of the bank, including the retirement plan. BDO also issued a memorandum on June 1, 2009
regarding the implementation of its retirement program, reiterating that the normal retirement date was
the first day of the month following the employees sixtieth (60th) birthday, this memorandum was
addressed to all employees and officers. Having knowledge of the retirement plant, he had every
opportunity to question the same, but he did not. Lastly, the most convincing detail that Sagaysay
assented to the retirement plan was his emails to the bank. In those e-mails, he did not contest to the
validity of the retirement plan and even recognized its provisions, he even requested that his services be
extended. The Cercado Case, which was heavily relied upon by the Court of Appeals is inapplicable. In
the Cercado case, the petitioner was employed two years before the adoption of the employer’s retirement
plan, logically, her employment contract did not include the retirement plan. The Court in the Cercado
case held that because of the automatic application of the retirement plan to the current employees
without they voluntary consent, the employee was forced to participate. Further, in the case relied upon
by the CA, the employee refused the early retiremet package provided by the employer, from the
beginning she was adamant that she did not consent to the retirement plan of her employer. In the case at
bar, Sagaysay signed a quitclaim and received at amount of P98,376.14. Given that Sagaysay is a
seasoned banker, spending 34 years of his life working in different banking establishments, it cannot be
said that he was naive in dealing with his employer and that he failed to exercise his free and voluntary
will when faced with the documents relating to his retirement.