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ZENAIDA PAZ v. NORTHERN TOBACCO REDRYING CO.

FACTS:

Zenaida Paz worked as a seasonal sorter for Northern Tobacco Redrying Co., Inc. (NTRCI) since 1974. In 2003, NTRCI informed Paz that she was considered retired under company policy, and a year later, she was informed that she would receive P12,000.00 as retirement pay. Paz, along with two other complainants, filed a Complaint for illegal dismissal, which was later amended to a Complaint for payment of retirement benefits, damages, and attorney's fees.

NTRCI argued that no Collective Bargaining Agreement (CBA) existed between the company and its workers and computed the retirement pay based on Article 287 of the Labor Code. NTRCI claimed that Paz only worked for at least six months in 1995, 1999, and 2000 out of her 29 years of service, resulting in a retirement pay of P12,487.50. The Labor Arbiter confirmed this retirement pay, but the National Labor Relations Commission modified it, stating that all the months Paz worked should be considered and divided by six to get the number of years for her retirement pay.

The Court of Appeals dismissed Paz's petition but modified the National Labor Relations Commission's decision by awarding financial assistance to Paz. Paz filed a petition before the Supreme Court seeking to reinstate the National Labor Relations Commission's computation, arguing that NTRCI failed to prove the alleged company policy on compulsory retirement and that the computation of retirement pay should be based on Article 287, as amended by Republic Act No. 7641. NTRCI argued that the ruling in Philippine Tobacco on computing separation pay for seasonal employees should be considered in retirement pay computation.

During the proceedings, it was established that Paz worked for NTRCI as a seasonal sorter for 29 years, performing necessary and indispensable work for the company. She filed a complaint for illegal dismissal, which was later amended to a complaint for payment of retirement pay, alleging that she was made to retire before reaching the compulsory retirement age of 65. NTRCI offered her a small amount for all her services since 1974, prompting her to pursue her complaint.

The National Labor Relations Commission recognized Paz's confusion regarding whether to file for illegal dismissal or retirement pay but found that she had not reached the retirement age of 65 when she was retired by NTRCI. The commission also determined that NTRCI failed to prove a valid retirement policy and that Paz was only 63 years old when she was retired.

ISSUES:

  1. Whether or not petitioner Paz was illegally dismissed.

  2. Whether or not petitioner Paz is entitled to full backwages.

  3. Did respondent NTRCI observe due process in the termination of petitioner Paz's employment?

  4. What is the proper computation of petitioner Paz's retirement pay?

  5. Whether the computation of retirement pay should consider a fraction of at least six months as one whole year.

  6. Whether there is sufficient evidence to determine the number of months the petitioner actually rendered work.

  7. Whether financial assistance should be granted to the employee

  8. Whether the award of financial assistance is in accordance with the principle of "compassionate justice" for the working class

RULING:

  1. Petitioner Paz was illegally dismissed from May 18, 2003 until she reached the compulsory retirement age of 65 in 2005. The lack of intent to retire until reaching the compulsory age of 65 implies that she should be considered as illegally dismissed during this period.

  2. Petitioner Paz is entitled to full backwages from May 19, 2003 until April 26, 2004, and an award of full backwages in the amount of P22,200.00 computed by multiplying her daily pay of P185.00 by 20 days, then by three months, then by two years.

  3. The Court found that respondent NTRCI did not comply with the due process requisites stated in the Omnibus Rules Implementing the Labor Code. Thus, petitioner Paz is entitled to nominal damages in the amount of P30,000.00.

  4. The Court applied Article 287 of the Labor Code, as amended by Republic Act No. 7641, in the absence of a retirement plan or agreement. It held that petitioner Paz is entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months considered as one whole year. The National Labor Relations Commission's computation of petitioner Paz's retirement pay based on her total years of service was affirmed.

  5. Yes. The court ruled that the computation of retirement pay should consider a fraction of at least six months as one whole year, based on Articles 283 and 284 of the Labor Code.

  6. Yes. The court upheld the factual findings of the Labor Arbiter and the Court of Appeals that the petitioner rendered at least six months of service for certain years.

  7. Yes, financial assistance should be granted to the employee. The Court acknowledged that financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. In this case, the employee had worked for the company for a significant period of time without any record of misconduct. Based on these special circumstances, the Court found that the employee merited equitable concessions through financial assistance.

  8. Yes, the award of financial assistance is in accordance with the principle of "compassionate justice" for the working class. The Court agreed with the Court of Appeals' ruling that the employee's circumstances "indubitably merit equitable concessions, via the principle of 'compassionate justice' for the working class." The award of financial assistance would provide sustenance and comfort for the employee after her long years of service.

PRINCIPLES:

  • Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee.

  • If the intent to retire is not clearly established or if the retirement is involuntary, it is treated as a discharge.

  • An award of full backwages is inclusive of allowances and other benefits or their monetary equivalent, from the time their actual compensation was withheld.

  • Employers must comply with both procedural and substantive due process in dismissing employees.

  • Due process in termination of employment:

  • An employee must be given written notice specifying the grounds for termination and a reasonable opportunity to explain his/her side.

  • There must be a hearing or conference during which the employee is given the opportunity to respond to the charges and present evidence or rebut the evidence presented against him/her.

  • A written notice of termination indicating that grounds have been established to justify the termination must be served on the employee.

  • Computation of retirement pay in the absence of a retirement plan or agreement:

  • An employee who reaches the compulsory retirement age of sixty (60) years or more, and has served at least five (5) years in the establishment, is entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service.

  • A fraction of at least six (6) months is considered as one whole year.

  • The term 'one-half (1/2) month salary' includes fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

  • A fraction of at least six months shall be considered one whole year in the computation of separation pay and retirement pay.

  • Petitions for review under Rule 45 can raise only questions of law.

  • Factual findings by quasi-judicial bodies are accorded great respect, especially when supported by substantial evidence.

  • Financial assistance may be awarded in exceptional circumstances as a measure of social justice and equitable concession.

  • Financial assistance may be granted as a measure of social justice and exceptional circumstances, and as an equitable concession.

  • The principle of "compassionate justice" for the working class may justify the award of financial assistance to deserving employees.

  • Labor law determinations are to be made not only based on reason, but also on compassion.