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G.R.No.99859

TodayisThursday,November10,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION

G.R.No.99859September20,1996
PHILIPPINESCOUTVETERANSSECURITY&INVESTIGATIONSAGENCY,INC.,petitioner,
vs.
NATIONALLABORRELATIONSCOMMISSIONandPORPINGREGALADO,respondents.

PANGANIBAN,J.:
DoestheLaborCode,priortoitsamendmentbyRepublicActNo.
7641,1authorizethepaymentofretirementpayintheabsenceofaprovisionthereforinacollectivebargainingagreement
orotherapplicableemploymentcontract?

The instant petition for certiorari seeks to nullify the Decision of the National Labor Relations Commission 3
promulgated January 10, 1991, in NLRC Case No. 00050223689, entitled "Porping Regalado vs. Phil. Scout Veterans
Security&InvestigationAgency,Inc.and/orCol.CesarSaMacalalad",affirmingthelaborarbiter'sawardofretirementpayto
privaterespondent.

TheAntecedentFacts
Private respondent worked for the petitioner as a security guard since September 1963 until his retirement at the
ageof60onMarch20,1989,withamonthlysalaryofP1,480.00.Heformallyrequestedpetitionerforpaymentof
his retirement pay, but petitioner refused, stating that it would give him financial assistance instead, without
specifyingtheamount,whichofferwasrefusedbytheprivaterespondent.
On May 11, 1989, private respondent filed a complaint for nonpayment of retirement benefits against petitioner,
docketedasNLRCCaseNo.00050223689.Petitionerinitspositionpaperallegedthatprivaterespondentwas
notentitledtoretirementpaysincetherewasnocompanypolicywhichprovidedfornoranycollectivebargaining
agreementgrantingit.
On September 19, 1989, the arbiter rendered his decision in favor of private respondent. 4 Inasmuch as his
ratiocinationmaybeindicativeofthemindsetofourlaborofficialdom,wequotethesamebelow:

ItisadmittedthatitisprovidedinArticle287ofthelaborCodethatincaseofretirement,theemployee
shall be entitled to receive such retirement benefits as he may have earned under existing laws and
anyCBAorotheragreement.SincethereisnoCBAnorcompanypolicygrantingthesame,wehaveto
look into other articles of the Labor Code. Article 283 of the Labor Code requires employer to give
separation pay to employees who were retrenched at the rate of one month salary for every year of
servicewhentheterminationisaresultofinstallationoflaborsavingdeviceandonehalfmonthpayfor
every year of service in case of retrenchment due to prevent losses (sic), closure or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses.
Article284oftheLaborCodealsorequiresemployertopayanemployeehisseparationpayattherate
of onehalf month salary for every year of service when terminated due to incurable disease. An
analysisofthisarticlewillrevealthatitistheintentionoftheCodetoprovidesamefinancialassistance
tothesepeoplewhoaredislocatedeitherbecauseoflossofemploymentorduetodiseaseandyet,an
employeewhoretiresandironicallywhosecompanydoesnothaveanyCBAnorpolicyprovidingfor
retirementpaywillnotreceiveanyretirementpayforhimtoaugmentandsupplyhisneedsduringhis
oldage.Thismatterhastobecorrect(ed)anditwillbeaninjusticeifsuchretirementpaywillbedenied
tocomplainant.Afterall,thecompanyhasbenefittedfromtheserviceoftheemployee,hence,itisonly
fittingforthecompanytoprovidehimsomefundsforhisoldage.Also,equitydemandsthatincases
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where there is no CBA nor company policy providing a retirement pay, an employer must pay its
employeetheneededretirementpay.
WHEREFORE, judgment is hereby rendered ordering the respondent Phil. Scout Veterans Security
and Investigation Agency, Inc. to pay complainant his retirement pay at the rate of onehalf month
salaryforeveryyearofservice,afractionofatleastsix(6)monthsconsideredasoneyearofservice.
PetitionerappealedtotherespondentNationalLaborRelationsCommission,whichinitsnowassailedDecision 5
affirmedthearbiter:

An employee is entitled to retirement benefits even in the absence of a company retirement plan or
collectivebargainingagreement.ThisistheimportofArticle287oftheLaborCode,asamended,and
implementedbySections13and14,RuleI,BookV(sic)oftheRulesImplementingtheLaborCode.
Thisinacase,thisCommission(1stDivision)ruled:
With respect to the award of retirement benefits, the contention of respondentappellant that
complainant is not entitled to his claim of retirement benefits or to his termination or separation pay
because he was not retired under the bonafide retirement plan or under an individual or collective
bargainingagreementorundercompanypolicy,ishighlyuntenablebecauseRuleI,Sections13and
14, Book VI of the Rules Implementing the Labor Code taken together clearly states that, with or
without a retirement plan, individual or collective bargaining agreement or company policy, an
employee who retires or is retired at the age of sixty (60) or over, is entitled to termination pay
equivalenttoonehalfmonthsalaryforeveryyearofservice,afractionofatleastsix(6)monthsbeing
consideredasonewholeyear.
Moreover,ifsocialjusticeandcompassiontolabordemandthatterminationpaybegrantedtovictims
of mechanization, redundancy, retrenchment to avoid losses and which are, from the standpoint of
affectedemployeesusuallytemporarycontingencythatdonotpreventthemfromsoonerorlaterbeing
gainfullyemployedagain,wefeelthatthereisfargreaterneedtocushionretiredemployeesfromthe
difficulties attendant to old age and permanent idleness. And in protecting retired employees, we are
alsoprotectingtheirdependents.Thisistheessenceofsocialjustice.(AngelT.Tolentinovs.Standard
Wood Products Company, Inc. NLRC Case No. NCR5384782, NLRC First Division, Promulgated
July8,1987.)
Petitioner moved for reconsideration but respondent Commission denied the same for lack of merit. Hence, this
recourse.
This court issued a temporary restraining order on June 10, 1991, enjoining respondent Commission and its
representativesfromenforcingitsJanuary10,1991Decision.InaManifestationinLieuofCommentdatedJuly25,
1991,theSolicitorGeneralagreedwiththepetitioner'sposition.
TheIssues
PetitionerallegesthatrespondentCommissionactedwithgraveabuseofdiscretion:
A
...INAPPLYINGTHEPROVISIONSOFARTICLE283ANDARTICLE284OFTHELABORCODE
OFTHEPHILIPPINES,ASAMENDED,ASTHELAWTHATPROVIDEFORRETIREMENTPAYTO
PRIVATERESPONDENT.
B
. . . IN ISSUING THE QUESTIONED RESOLUTION WHICH RESULTED IN ADMINISTRATIVE
LEGISLATION.
Inanutshell,theissuehereiswhetherornotprivaterespondentislegallyentitledtoretirementbenefits.
TheCourt'sRuling
ThemaincontentionofbothpetitionerandtheSolicitorGeneralisthatthereisnocontractualnorstatutorybasisfor
thegrantofretirementpay,hence,saidawardisimproper.
Thepetitionisimpressedwithmerit.
The applicable provisions of the Labor Code on the matter of retirement are Art. 287 of the Labor Code, and
Sections13and14(a)ofRuleI,BookVIoftheImplementingRules,whichreadasfollows:
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Art.287,Retirement.Anyemployeemayberetireduponreachingtheretirementageestablishedinthe
collectivebargainingagreementorotherapplicableemploymentcontract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
haveearnedunderexistinglawsandanycollectivebargainingorotheragreement.
Sec. 13. Retirement. In the absence of any collective bargaining agreement or other applicable
agreementconcerningtermsandconditionsofemploymentwhichprovidesforretirementatanolder
age,anemployeemayberetireduponreachingtheageofsixty(60)years.
Sec.14.RetirementBenefits.(a)Anemployeewhoisretiredpursuanttoabonafideretirementplanor
in accordance with the applicable individual or collective agreement or established employer policy
shallbeentitledtoalltheretirementbenefitsprovidedthereinortoterminationpayequivalentatleast
to onehalf month salary for every year of service, whichever is higher, a fraction of at least six (6)
monthsbeingconsideredasonewholeyear.
Itisatonceapparentfromacursoryreadingofthearbiter'sdecisionthat,inmakingtheawardofretirementpay,he
was confronted by the lack of contractual or statutory basis therefor. Undaunted, he scavenged for a basis from
amongtheotherprovisionsoftheLaborCode.SeizinguponArticles283and284,heconcludedthatitisironical
and unjust that some financial assistance is provided for people who are dismissed from their jobs and who can
presumablystillfindotherworkandcontinuetoearnalivelihood,butnotforthosewhoareretiredandfacingthe
difficultiesattendanttooldageandpermanentidleness.Thisreflectionexudeswisdomunfortunately,itlackslegal
basis.
Goingevendeeper,respondentCommission,insteadofclearinguptheconfusion,addedtoitbyconstruingSection
13and14(a)ofRuleI,BookVIoftheImplementingRulesinrelationtoArt.287asbasisforthegrantofretirement
benefitstoprivaterespondent.
But far from being novel, this issue had already been settled in Abaquin Security and Detective Agency, Inc. vs.
Atienza,6wherethisCourtheld:
Construing these provisions in relation to the same issue presented in this petition, this Court in the
case of Llora Motors, Inc., and/or Constantino Carlota, Jr. vs. Hon. Franklin Drillon, et al., (G.R. No.
82895, November 7, 1989) clarified that Article 288 (now 287) does not itself purport to impose any
obligation upon employers to set up a retirement scheme for their employees over and above that
already established under existing laws. In other words, Article 287 recognizes that existing laws
already provide for a scheme by which retirement benefits may be earned or accrue in favor of
employees,aspartofabroadersocialsecuritysystemthatprovidesnotonlyforretirementbenefitsbut
also death and funeral benefits, permanent disability benefits, sickness benefits and maternity leave
benefits.
InLloraMotors,Inc.vs.Drilon,7thisCourtsoughttoendtheconfusioncausedbythewordingofSection14abovequoted,
and differentiated between the concepts of "termination pay" and "retirement benefits". We clarified that the phrase "pay
equivalentatleastonehalfmonthsalaryforeveryyearofservice,whicheverishigher"pertainstoterminationpay:

...Section14(a)refersto"terminationpayequivalenttoatleastonehalf(1/2)monthforeveryyearof
service" while Section 14 (b) mentions "termination pay to which the employee would have been
entitledhadtherebeennosuchretirementfund"aswellas"terminationpaytheemployeeisentitledto
receive."ItshouldberecalledthatSections13and14arefoundinImplementingRuleIwhichdeals
withboth"terminationofemployment"and"retirement."Itisimportanttokeepthetwo(2)conceptsof
"termination pay" and retirement benefits separate and distnct from each other. Termination pay or
separation pay is required to be paid by an employer in particular situations identified by the Labor
Code itself or by Implementing Rule I. Termination pay where properly due and payable under some
applicable provision of the Labor Code or under Section 4 (b) of Implementing Rule I, must be paid
whetherornotanadditionalretirementplanhasbeensetupunderanagreementwiththeemployeror
underan"establishedemployerpolicy.
Whatneedstobestressed,however,isthatSection14ofImplementingRuleI,likeArticle287ofthe
LaborCode,doesnotpurporttorequire"terminationpay"tobepaidtoanemployeewhomaywantto
retirebutforwhomnoadditionalretirementplanhadbeensetupbyprioragreementwiththeemployer.
Thus,Section14itselfspeaksofanemployee"whoisretiredpursuanttoabonafideretirementplanor
inaccordance with applicableindividualorcollective agreement orestablished employer policy." . . .
(emphasisintheoriginaltext.)
Consequently,theDecisioninquestionhastobestruckdownforbeinglegallyindefensible.

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WhileArticle287hassincebeenamendedbyRepublicActNo.7641(approvedonDecember9,1992)toreadas
follows:
xxxxxxxxx
Intheabsenceofaretirementplanoragreementprovidingforretirementbenefitsofemployeesinthe
establishment,anemployeeuponreachingtheageofsixty(60)yearsormore,butnotbeyondsixty
five(65)yearswhichisherebydeclaredthecompulsoryretirementage,whohasservedatleastfive
(5) years in the said equivalent to at least onehalf (1/2) month salary for every year of service, a
fractionofatleastsix(6)monthsbeingconsideredasonewholeyear.
Unless the parties provide for broader inclusions, the term "one half (1/2) month salary" shall mean
fifteen(15)daysplusonetwelfth(1/12)ofthe13thmonthpayandthecashequivalentofnotmorethan
five(5)daysofserviceincentiveleaves.
xxxxxxxxx
nevertheless,theaforequotedprovisions,whichcouldhavesavedthedayfortheprivaterespondent,cannot
beappliedinthiscase,sinceprivaterespondentretiredonMarch20,1989,oraboutthreeyearspriortothe
approvalofthenewretirementlaw.RA7641istobeeffectiveprospectively,absentaclearintentiononthe
part of the legislature to give it retroactivity. 8 "It is a rule of statutory construction that all statutes are to be
construed as having only a prospective operation unless the purpose ad intention of the Legislature to give them a
retrospectiveeffectisexpresslydeclareddeclaredorisnecessarilyimpliedfromthelanguageused.Ineverycaseof
doubt,thedoubtmustberesolvedagainsttheretrospectiveeffect.9

ThefactthatrespondentCommissionhadapriorrulinginasimilar
case 10grantingretirementbenefitsisofnomoment.Althoughitmaybetruethatthecontemporaneousconstructionofa
statute by executive officers tasked to enforce and implement said statute should be given great weight by the courts,
nevertheless, is such construction is erroneous 11 or is clearly shown to be in conflict with the governing statute or the
Constitutionorotherlaws, 12the same must be declared null and void. "It is the role of the Judiciary to refine and, when
necessary, correct constitutional (and/or statutory) interpretation, in the context of the interactions of the three branches of
thegovernment."13

HadrespondentCommissionsimplyfollowedourrulinginLloraMotors,thisproblemwouldnothavereachedthis
far.Besides,withLlora'spromulgationin1989,therulingintheTolentinocasewaseffectivelysuperseded.
Ithasbeenheldthat"(i)tisaxiomaticthatretirementlawsareliberallyconstruedandadministeredinfavorofthe
personsintendedtobebenefited.Alldoubtsastotheintentofthelawshouldberesolvedinfavoroftheretireeto
achieveitshumanitarianpurposes. 14Theintentionistoprovidefortheretiree'ssustenanceandhopefullyevencomfort,
whenhenolongerhasthestaminatocontinueearninghislivelihood.Unfortunately,suchinterpretationcannotbemadein
this case in the light of the clear lack of consensual and statutory basis of the grant of retirement benefits to private
respondent.

Inall,ithasbeensufficientlyshownthatrespondentCommissionactedingraveabuseofdiscretionbyaffirmingthe
grantofretirementbenefitstoprivaterespondentdespiteourpronouncementsonthematter.
WHEREFORE,theinstantpetitionisherebyGRANTEDandtheassailedDecisionSETASIDE.Nocosts.
SOORDERED.
Narvasa,C.J.,Davide,Jr.,MeloandFrancisco,JJ.,concur.
Footnotes
1ApprovedonDecember9,1992.
2 Second Division, composed of Comm. Rustico L. Diokno,ponente, and Pres. Comm. Edna BobtoPerez
andComm.DomingoH.Zapanta.
3LaborArbiterEduardoG.Magno.
4Rollo,p..3538.
5Rollo,p.1620.
6190SCRA460,465,October15,1990.
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7179SCRA175,183184,November7,1989.
8SeeBalatbatvs.CourtofAppeals,205SCRA419,426,January27,1993also,Article4,CivilCode.
9Balatbatvs.CourtofAppeals,supra,citingNilovs.CourtofAppeals,128SCRA519,525,April2,1984,in
turnquotingMr.JusticeMoreland.
10Tolentinovs.StandardWoodProductsCo.,Inc.,NLRCCaseNo.NCR5384782.
11Abaquin,supra,p.466,citingInsularBankofAsiaandAmericaEmployees'Union(IBAAEU)vs.Inciong,
132SCRA663,October23,1984.
12NestlePhil.,Inc.vs.CourtofAppeals,203SCRA504,510,November13,1991.
13Abaquin,supra,pp.466467.
TheLawphilProjectArellanoLawFoundation

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