Retirement by choice, not by calendar

In December 2025, House Bill 6954 was filed to lower the compulsory retirement age in the private sector from 65 to 60, with the objective of opening more employment opportunities for younger workers. Until it becomes law, however, reaching the age of 60 does not, by itself, terminate one’s employment. This was reaffirmed in a recent Supreme Court ruling.

In Rodolfo Ondevilla v Colegio de San Juan de Letran (Laguna) (G.R. 278615, 29 June 2026), the Supreme Court ruled that an employee who is retired early without his voluntary consent is illegally dismissed.

The employee was hired as comptroller in 2004 and later promoted to assistant vice president for finance, a position to which he was repeatedly reappointed. In 2018, following an organizational restructuring, he was reassigned as controller until 29 August 2019, his 60th birthday.

He protested his demotion, but his employer maintained that he was merely a consultant whose appointment had expired and directed him to turn over his functions. He subsequently filed a complaint for illegal dismissal.

The employer insisted that he was an independent contractor whose appointment had expired and that he had voluntarily chosen to retire on 31 July 2020.

The Labor Arbiter and the National Labor Relations Commission found that he was a regular employee who had been illegally dismissed. The Court of Appeals agreed but held that he had voluntarily opted to retire on 31 July 2020, based on a letter he had previously written. Consequently, his back wages were limited to that date.

Before the Supreme Court, the employee argued that the letter was merely a response to his employer’s demand that he settle his cash advances and did not constitute a waiver of his constitutional right to security of tenure.

The Supreme Court ruled in his favor.

Under Article 302 of the Labor Code, the retirement age is primarily determined by an applicable retirement agreement or employment contract. In the absence thereof, 60 is the minimum age for optional retirement, while 65 is the compulsory retirement age.

The Court emphasized that early retirement necessarily entails the surrender of an employee’s constitutional right to security of tenure. Hence, the employee’s acceptance must be explicit, voluntary, free and uncompelled.

In this case, the employer had neither offered a retirement plan nor shown any willingness to discuss retirement benefits. In fact, it even denied the employee’s entitlement to such benefits.

The letter relied upon by the Court of Appeals did not establish voluntary retirement. It was written merely to buy time in response to the employer’s demand for payment of cash advances, invoking the company’s practice of retiring employees at the end of the school year.

Such a letter could hardly be considered the deliberate and voluntary choice contemplated by law. The employee’s repeated objections and subsequent complaint for illegal dismissal further demonstrated that he never intended to retire early.

Accordingly, the Supreme Court awarded full back wages until he reached the compulsory retirement age of 65, together with separation pay, retirement benefits and attorney’s fees. Being a managerial employee, however, he was not entitled to the collective bargaining benefits reserved for rank-and-file employees. As he had passed away during the pendency of the case, the monetary awards accrued to his estate.

Whatever becomes of the proposed legislation lowering the compulsory retirement age, the prevailing law remains clear. In the absence of an applicable retirement agreement, an employee cannot be compelled to retire before reaching 65 without his explicit and voluntary consent. Otherwise, the termination constitutes illegal dismissal.

Retirement should be the product of a free and informed choice, not merely the passage of time. This ruling is a timely reminder that security of tenure remains a fundamental right deserving of protection, particularly for employees who have devoted many productive years to their employers.

For more of Dean Nilo Divina’s legal tidbits, please visit www.divinalaw.com. For comments and questions, please send an email to cad@divinalaw.com.