Backwages and Retirement: When Prior Court Decisions Can Be Reopened

The Supreme Court recently clarified important rules on illegal dismissal, retirement, and the finality of judgments in Ondevilla v. Colegio de San Juan de Letran (Laguna) (G.R. No. 278615, June 29, 2026). The case involves a long-serving school executive who was demoted and later forced out. The ruling offers practical guidance for both employees and employers on when a case can be reopened and what remedies are available.

Facts of the Case

Rodolfo C. Ondevilla worked for Colegio de San Juan de Letran in Calamba, Laguna for over 14 years, rising to Assistant Vice President for Finance. In June 2018, new management took over and appointed him to a lower position—Controller—which he considered a demotion. The school later claimed he was merely a consultant, not a regular employee. When his contract as Controller expired on August 29, 2019, the school treated him as retired.

Ondevilla filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, and the National Labor Relations Commission (NLRC) affirmed, but modified the reckoning period for backwages. The Court of Appeals (CA) then ruled that Ondevilla was illegally dismissed on August 29, 2019, and that he had opted to retire on July 31, 2020.

Issue: When Can Prior Decisions Be Reopened?

The central question was whether the CA could re-examine the NLRC's findings, particularly on the date of dismissal and retirement. The Supreme Court noted that while a Rule 45 petition generally cannot review factual findings, an exception exists when the NLRC and the CA contradict each other. Here, the appellate court and the labor tribunal disagreed on key facts, so the Court could step in.

However, the Court also stressed that findings which have become final can no longer be re-litigated. The NLRC's ruling that Ondevilla was a regular employee had already attained finality, so the CA correctly refused to revisit that issue.

Ruling: No Express Agreement to Retire Early

The Supreme Court ruled that Ondevilla was illegally dismissed on August 29, 2019, and that he did not voluntarily retire. Under Article 302 of the Labor Code, an employee may optionally retire at age 60 but can only be compulsorily retired at 65. The Court emphasized that acceptance of an early retirement option must be explicit, voluntary, free, and uncompelled.

The CA had interpreted a letter from Ondevilla as an election to retire on July 31, 2020. The Supreme Court disagreed, noting that the letter was merely a response to a demand for payment of a cash advance, not a clear retirement notice. Since Ondevilla never expressly agreed to retire early, he could not be considered retired before reaching 65.

Consequences: Backwages and Separation Pay

Because Ondevilla was illegally dismissed, he was entitled to full backwages from August 29, 2019 until his compulsory retirement age of 65 on August 29, 2024. The Court also awarded separation pay in lieu of reinstatement, since reinstatement was no longer possible after he reached retirement age.

The Court clarified that a Division ruling cannot override an En Banc decision. Citing Laya, Jr. v. Philippine Veterans Bank, the Court held that separation pay should be granted when reinstatement is no longer feasible due to the employee reaching compulsory retirement age.

Practical Takeaways

• Finality matters: Once a labor ruling becomes final, it cannot be re-opened. Parties should raise all issues early in the proceedings.
• Early retirement requires clear consent: An employee cannot be retired before age 65 unless they explicitly and voluntarily agree. A passive response to an employer's demand is not enough.
• Backwages run until compulsory retirement: An illegally dismissed employee is entitled to backwages from the date of dismissal until they reach the compulsory retirement age of 65.
• Separation pay may still be awarded: Even if reinstatement is impossible due to retirement, separation pay in lieu of reinstatement is generally granted.
• Tax disputes belong to the BIR: Issues involving the withholding of taxes, such as under the TRAIN Law, are within the jurisdiction of the Commissioner of Internal Revenue, not labor tribunals.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.