Dear PAO,

I am 62 years old and I worked as a janitor for the same company for almost 35 years. Last week, my employer handed me a notice of dismissal, stating that my employment was immediately terminated because I am already “too old” to work. They did not give me any separation package or retirement benefit. I filed a complaint in the NLRC for illegal dismissal and for retirement benefit claim as my causes of action.

Before the filing of my position paper, my former employer reached out and offered to pay P207,000 as my retirement pay, on the condition that I desist from pursuing the case. The company lawyer told me that even if I win the labor case, the payment of my retirement benefits, which they are now willing to pay, would bar the payment of any separation benefits. Is this correct?

Florentino

Dear Florentino,

No, the payment of retirement benefits will not necessarily bar the payment of separation pay.

In Divine World College vs. Laoag, v. Mina, G.R. No. 195155, April 13, 2016, Ponente: Associate Justice Bienvenido Reyes, the Honorable Supreme Court stressed that separation pay and retirement pay are mutually exclusive benefits recognized in our jurisdiction, to wit:

“The award of separation pay is also distinct from the grant of retirement benefits. These benefits are not mutually exclusive as ‘retirement benefits are a form of rewards of an employee’s loyalty and service to an employer and are earned under existing laws, CBA, employment contracts, and company policies. Separation pay, on the other hand, is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment.’”

Thus, notwithstanding the payment of your retirement benefits, you may still be awarded separation pay if it is found that you were illegally dismissed and your reinstatement is no longer feasible.

It is worthy to note that being “too old” is not one of the just causes for terminating an employee under the Labor Code of the Philippines. Moreover, being 62 years of age merely classifies you as an “optional retiree” who may not be compelled to resign or be terminated without just cause. In the landmark case of Capili vs. NLRC, G.R. No. 120802, June 17, 1997, the Supreme Court discussed through then-associate justice Hilario Davide Jr. (who became Chief Justice), the two (2) types of retirement and emphasized that, for optional retirement, the prerogative solely rests on the employee, to wit:

“The article provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer’s retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer’s retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee.”

Hence, you cannot be compelled to retire, resign, or be terminated without just cause prior to the compulsory retirement age of 65. Since there was no valid cause for the termination of your employment, you may be entitled to both separation pay and retirement benefits, the latter being a reward for your 35 years of loyal service.

We hope that we are able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

We appreciate your trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected].