Security of Tenure vs Valid Reassignment: Protecting Public Employees From Constructive Dismissal

The Supreme Court recently clarified the boundaries between an employer's right to reassign employees and an employee's constitutional right to security of tenure. In Ondevilla v. Colegio de San Juan de Letran (Laguna) (G.R. No. 278615, June 29, 2026), the Court ruled that a demotion that strips an employee of rank, status, and responsibilities may constitute constructive dismissal—even if the employee continues to receive the same salary. The case also settled when an employee may be deemed to have voluntarily retired, emphasizing that giving up security of tenure requires explicit, voluntary, and uncompelled consent.

The Facts of the Case

Rodolfo C. Ondevilla was hired by Colegio de San Juan de Letran (CSJL) in Calamba, Laguna in 2004 as Comptroller. Over the years, he rose to become Assistant Vice President (AVP) for Finance and Controller, a position renewed every three years until its expiration on June 30, 2018.

When a new management took over in June 2018, it implemented a new organizational structure. Ondevilla was appointed as Controller effective July 1, 2018, a position he claimed was a demotion in rank that substantially reduced his salaries and benefits. CSJL later insisted he was merely a consultant, not a regular employee. When his contract as Controller expired on August 29, 2019, CSJL treated him as retired. Ondevilla filed a complaint for illegal dismissal.

The Issue

The central questions were: (1) Was Ondevilla a regular employee or an independent contractor? (2) Did his reassignment to Controller amount to constructive dismissal? (3) Did he voluntarily retire on July 31, 2020, or was he illegally dismissed?

The Ruling: Demotion Can Be Constructive Dismissal

The Court upheld the finding that Ondevilla was a regular employee. His repeated renewals over 14 years, the nature of his functions, and company documents indicating his regular status all pointed to an employer-employee relationship.

On the reassignment issue, the Court agreed that Ondevilla's appointment as Controller on July 1, 2018 was a demotion. His rank, status, and responsibilities were altered. Even though he continued receiving the same salary, the demotion itself constituted constructive dismissal—a situation where continued employment becomes so unbearable that the employee is forced to resign.

However, the Court clarified that not every reassignment is illegal. A valid reassignment must not involve a diminution of rank, status, or compensation. Here, the change in rank and responsibilities crossed that line.

Retirement Requires Voluntary Consent

The Court rejected the Court of Appeals' finding that Ondevilla had opted to retire on July 31, 2020. Under Article 302 (formerly Article 287) of the Labor Code, as amended by Republic Act No. 7641, the compulsory retirement age is 65 years, while optional retirement may begin at 60.

The Court emphasized that an employee who does not expressly agree to early retirement cannot be retired before reaching 65. Acceptance of an early retirement option must be explicit, voluntary, free, and uncompelled. Ondevilla's letter, which the CA interpreted as a retirement election, was actually a response to CSJL's demand for payment of a cash advance. It was not an express notice of retirement.

Because Ondevilla never voluntarily agreed to retire, CSJL's act of treating his contract expiration as retirement was an illegal dismissal. The Court awarded full backwages from August 29, 2019 until his compulsory retirement age of 65 on August 29, 2024, plus separation pay in lieu of reinstatement, retirement benefits, and attorney's fees.

Practical Takeaways

• A demotion can be constructive dismissal even if salary remains the same, if it involves a reduction in rank, status, or responsibilities.
• Employers may reassign employees but must ensure the reassignment does not diminish rank, status, or compensation.
• Early retirement requires explicit consent. An employee cannot be retired before age 65 without a clear, voluntary, and uncompelled agreement.
• Managerial employees are generally not entitled to CBA benefits under Article 255 of the Labor Code, unless the employer extends them by established practice.
• Tax withholding disputes belong to the Commissioner of Internal Revenue, not labor tribunals, which have limited jurisdiction over labor disputes.

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