G.R. No. 110861 – ORO ENTERPRISES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and LORETO L. CECILIO, respondents.

VITUG, J.

Rule Synopsis

R.A. No. 7641, granting employees retirement pay (under circumstances provided) in the absence of a CBA or agreement is a social legislation which may be given retroactive effect.

Facts

Loreto Cecilio worked for Oro Enterprises, Inc. (Oro) for 41 years until his retirement on September 3, 1990. He filed a “Claim for Retirement Pay,” on the basis of then Sec. 14(a) of the Labor Code IRR which provides:

Sec. 14. Retirement benefits.—a) An employee who is retired pursuant to a bonafide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy shall be entitled to all the retirement benefits provided therein or to termination pay equivalent at least to one-half month salary for every year of service, whichever is higher, a fraction of at least six (6) months being considered as one whole year.

Oro offered to give him a house, but the same did not materialize. Cecilio thus filed a complaint before the Office of the Labor Arbiter.

The Labor Arbiter granted Cecilio’s claim for retirement benefits but denied his claim for damages. Both appealed. During the pendency of the appeal, on January 7, 1993, R.A. No. 7641 took effect, Art. 287 thereof states:

Art. 287. Retirement.—Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

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In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be 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 being considered as one whole year.

Unless the parties provide for broader inclusions, the term “one half (1/2) month salary’ shall mean 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.

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Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code.

The NLRC affirmed, Cecilio was also awarded attorney’s fees. In affirming, it upheld the retroactive application of above mentioned provision in the case of Cecilio. The SC affirmed, finding no grave abuse of discretion on the part of NLRC.

Issues

May R.A. No. 7641 favorably apply to Cecilio’s case?

Ruling and Discussion

Yes. R.A. No. 7641 may favorably apply to Cecilio’s case.

RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that—absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer—can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law’s enactment but retroactively to the time said employment contracts have started.

Social legislation should be interpreted in favor of workers in the light of the Constitutional mandate that the State shall afford protection to labor (Allied Investigation Bureau, Inc. vs. Ople).

It is a well-settled principle that police power legislation intended to
promote public welfare applies to existing contracts (Id). A police power measure being remedial in character covers existing situations; otherwise, it would be self-defeating (Ongsiako v. Gamboa). The ‘constitutional guaranty of non-impairment [of obligations of contracts] is limited by the exercise of the police power of the State, in the interest of public health, safety, morals and general welfare (Abe v. Foster Wheeler Corporation).

dispositive

Petition dismissed, judgment affirmed.