Actual service is the basis to determine the amount to which the retiring employee is entitled to.

While retirement law considers service of at least six months shall be considered as one whole year, the service must be established as a fact. Hence, in the following case the Supreme Court held as follows:

Zenaida Paz vs. Northern Tobacco Redrying, Inc., and/or Angelo Ang
G.R. No. 199554, February 18, 2015


Northern Tobacco Redrying Co., Inc. (NTRCI), a flue-curing and redrying of tobacco leaves business, employs approximately 100 employees with seasonal workers “tasked to sort, process, store and transport tobacco leaves during the tobacco season of March to September.”

NTRCI hired Zenaida Paz (Paz) sometime in 1974 as a seasonal sorter, paid ­185.00 daily. NTRCI regularly re-hired her every tobacco season since then. She signed a seasonal job contract at the start of her employment and a pro-forma application letter prepared by NTRCI in order to qualify for the next season.

On May 18, 2003, Paz was 63 years old when NTRCI informed her that she was considered retired under company policy. A year later, NTRCI told her she would receive ­12,000.00 as retirement pay.

Paz, with two other complainants, filed a Complaint for illegal dismissal against NTRCI. She amended her Complaint into a Complaint for payment of retirement benefits, damages, and attorney’s fees as ­12,000.00 seemed inadequate for her 29 years of service.

TRCI countered that no Collective Bargaining Agreement (CBA) existed between NTRCI and its workers. Thus, it computed the retirement pay of its seasonal workers based on Article 287 of the Labor Code.

NTRCI raised the requirement of at least six months of service a year for that year to be considered in the retirement pay computation. It claimed that Paz only worked for at least six months in 1995, 1999, and 2000 out of the 29 years she rendered service. Thus, Paz’s retirement pay amounted to ­12,487.50 after multiplying her ­185.00 daily salary by 22½ working days in a month, for three years.

LA Ruling:

The Labor Arbiter “[c]onfirm[ed] that the correct retirement pay of Zenaida M. Paz [was] ­12,487.50.

NLRC Ruling:

The National Labor Relations Commission modified the Labor Arbiter’s Decision. It likewise denied reconsideration.

CA Ruling:

The Court of Appeals dismissed the Petition and modified the National Labor Relations Commission’s Decision in that “financial assistance is awarded to Zenaida Paz in the amount of ­60,356.25


Whether or not the computation of retirement pay stating the formula based on number of years of service refers to actual service

SC Ruling:

There was no positive proof o[n] the total number of months [petitioner Paz] actually rendered work [for respondent NTRCI].”

On the other hand, both the Labor Arbiter and the Court of Appeals established from the records that she rendered at least six months of service for 1995, 1999, and 2000 only.

Based on these factual findings, retirement pay pursuant to Article 287 of the Labor Code was correctly computed at ­12,487.50 and was awarded to petitioner Paz.

Get the updated and re-numbered copy of the Labor Code 2017



error: Content is protected !!