Retirement is voluntary in nature. If there is no agreement between the parties that an employee can be retired at an earlier date, the provisions of Article 287 [now Article 302] of the Labor Code shall apply.

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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 an employee who was only 63 years old and told she was considered retired but later on amended her complaint to include retirement can be considered as illegally dismissed from service

SC Ruling:

The SC affirmed the decision of the CA.

Petitioner Paz initially filed a Complaint for illegal dismissal seeking separation pay, but later amended her Complaint into one for payment of retirement pay. Despite the amendment, she maintained in her subsequent pleadings that she had been made to retire even before she reached the compulsory retirement age of 65 under Article 287, as amended.

Petitioner Paz alleged that respondent NTRCI required her to report on March 18, 2003 for the 2003 tobacco season, but she suffered a mild stroke sometime in April. Nevertheless, respondent NTRCI extended her employment contract until May 18, 2003 when she was informed that she was retired under company policy.

Since petitioner Paz was “unlearned and not knowledgeable in law, [she] just accepted such fact and waited to be paid her separation/retirement benefit as promised by . . . NTRCI.” Unfortunately, after a year of waiting, respondent NTRCI only offered her around ­12,000.00 for all her services since 1974.

Petitioner Paz’s amendment of her Complaint was not fatal to her cause of action for illegal dismissal. First, petitioner Paz never abandoned her argument that she had not reached the compulsory retirement age of 65 pursuant to Article 287, as amended, when respondent NTRCI made her retire on May 18, 2003.

Learn more about instances when Retirement can be deemed as illegal dismissal in a book Guide to Valid Dismissal of Employees Second Edition 

NTRCI failed to prove a valid company retirement policy, yet it required its workers to retire after they had reached the age of 60.

“Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.” Article 287, as amended, allows for optional retirement at the age of at least 60 years old.

Consequently, if “the intent to retire is not clearly established or if the retirement is involuntary, it is to be treated as a discharge.” Paz never abandoned her argument of illegal dismissal despite the amendment of her Complaint. This implied lack of intent to retire until she reached the compulsory age of 65. Thus, she should be considered as illegally dismissed from May 18, 2003 until she reached the compulsory retirement age of 65 in 2005 and should be entitled to full backwages for this period.

Since the exact number of days petitioner Paz would have worked between May 18, 2003 until she would turn 65 in 2005 could not be determined with specificity, the SC thus awarded full backwages in the amount of ­22,200.00 computed by multiplying ­185.00 by 20 days, then by three months, then by two years.


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