SC Rules: Employees Cannot Be Forced into Early Retirement

SC Rules: Employees Cannot Be Forced into Early Retirement

By Jerome Aning – TheNATIONWEEK.com | October 28, 2026

MANILA, Philippines – The Supreme Court (SC) has reiterated that employees in the private sector cannot be compelled into early retirement before the statutory age of 65 without their clear, express, and voluntary consent. This decision, rendered by the SC’s First Division last June 29 and made public on Tuesday, underscores the paramount importance of an employee’s security of tenure.

In the First Division, in the decision penned by Associate Justice Ramon Paul L. Hernando, the court granted the petition of Rodolfo C. Ondevilla, holding Colegio de San Juan de Letran in Laguna (CSJL) liable for illegal dismissal and ordering it to pay him full back wages, separation pay, full retirement benefits, and attorney’s fees.

The case stemmed from the illegal dismissal case filed in May 2019 by Ondevilla before the National Labor Relations Commission (NLRC) that reached the High Court six years later. Ondevilla passed away on May 24, 2025, and was substituted by his sister, one of his heirs, which is permitted under the country’s labor laws.

Ondevilla, who began his tenure as Comptroller at CSJL in 2004 and subsequently ascended to Assistant Vice President for Finance, experienced several renewed appointments. His career took a turn in 2018 during a management reorganization, leading to his reassignment as Controller. Despite his objections, citing a perceived demotion, he continued in the role, retaining his salary and benefits.

The crux of the dispute emerged on August 29, 2019, Ondevilla’s 60th birthday, when CSJL unilaterally deemed his appointment expired. Ondevilla promptly initiated a complaint for illegal dismissal. Both the Labor Arbiter and the NLRC arbitration branch in Calamba City, Laguna, sided with Ondevilla, affirming his illegal dismissal.

However, the Court of Appeals (CA), while also confirming the illegal dismissal, introduced a critical divergence: it concluded that Ondevilla had consented to an early retirement effective July 31, 2020, citing a letter he had sent to CSJL. Ondevilla vigorously contested this finding before the SC, steadfastly maintaining he never agreed to retire before reaching 65.

The Supreme Court concurred with Ondevilla’s assertion.

Under the Labor Code, the retirement age is primarily determined by existing agreements or employment contracts. Absent such provisions, the law sets the compulsory retirement age at 65 and the minimum age for optional retirement at 60.

“By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. Absent such an agreement, the retirement age shall be that fixed by law, and the above-cited law mandates that the compulsory retirement age is 65 years, while the minimum age for optional retirement is set at 60 years.”

The SC emphasized that any optional retirement plan hinges entirely on a voluntary agreement between employer and employee. The employee’s consent must be freely and expressly given, devoid of any pressure or coercion. This is because accepting optional retirement constitutes a fundamental waiver of the constitutional right to security of tenure.

“Settled is the rule that an employee in the private sector who did not expressly agree to an early retirement cannot be retired from the service before he reaches the age of 65 years. Acceptance by the employee of an early retirement age option must be explicit, voluntary, free, and uncompelled,” the court said, citing previous jurisprudence.

In this specific case, the court determined that Ondevilla’s purported early retirement was conspicuously not the product of a mutual agreement with CSJL. The Court observed that CSJL had never formally offered or proposed a retirement plan for Ondevilla’s free acceptance or rejection. Furthermore, there was no indication that CSJL was open to discussing his retirement options.

The SC meticulously analyzed Ondevilla’s letter to CSJL, concluding it was not a clear declaration of his choice for early retirement. Instead, it was a direct response to the school’s demand for the repayment of a cash advance he had received. The court further highlighted Ondevilla’s consistent objections to early retirement and his subsequent filing of an illegal dismissal complaint as compelling evidence of his unwavering intent not to opt for retirement before turning 65.

Consequently, by treating his involuntary retirement as an illegal dismissal, the SC ruled that Ondevilla is entitled to full back wages and separation pay in lieu of reinstatement. The court further awarded him retirement benefits covering his employment from June 16, 2004, until August 29, 2024, the date he would have reached the mandatory retirement age of 65. The NLRC arbitration branch has been directed to compute the total financial awards due to Ondevilla.

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