SUPREME COURT indorsementaddressed to the Director of Public Works, approved the
FIRST DIVISION recommendation of the latter that Rosario Street and Rizal Avenue be closed to
MAXIMO CALALANG,
Petitioner,
-versus- G.R. No. 47800
December 2, 1940
A. D. WILLIAMS, ET AL.,
Respondents.
x--------------------------------------------------x
DECISION
LAUREL, J.:
MaximoCalalang, in his capacity as a private citizen and as a taxpayer of Manila,
brought before this court this petition for a writ of prohibition against the
respondents, A. D. Williams, as Chairman of the National Traffic Commission;
Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of
Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of
Manila; and Juan Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic Commission, in its resolution of
July 17, 1940, resolved to recommend to the Director of Public Works and to the
Secretary of Public Works and Communications that animal-drawn vehicles be
prohibited from passing along Rosario Street extending from Plaza Calderon de la
Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to
5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at Antipolo
Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the
date of the opening of the Colgante Bridge to traffic; that the Chairman of the
National Traffic Commission, on July 18, 1940 recommended to the Director of
Public Works the adoption of the measure proposed in the resolution
aforementioned, in pursuance of the provisions of Commonwealth Act No. 548
which authorizes said Director of Public Works, with the approval of the Secretary
of Public Works and Communications, to promulgate rules and regulations to
regulate and control the use of and traffic on national roads; that on August 2,
1940, the Director of Public Works, in his first indorsement to the Secretary of
Public Works and Communications, recommended to the latter the approval of the
recommendation made by the Chairman of the National Traffic Commission as
aforesaid, with the modification that the closing of Rizal Avenue to traffic to animal-
drawn vehicles be limited to the portion thereof extending from the railroad
crossing at Antipolo Street to Azcarraga Street; that on August 10, 1940, the
Secretary of Public Works and Communications, in his second
traffic of animal-drawn vehicles, between the points and during the hours as above
indicated, for a period of one year from the date of the opening of the Colgante
Bridge to traffic; that the Mayor of Manila and the Acting Chief of Police of Manila
have enforced and caused to be enforced the rules and regulations thus adopted;
that as a consequence of such enforcement, all animal-drawn vehicles are not
allowed to pass and pick up passengers in the places abovementioned to the
detriment not only of their owners but of the riding public as well.
It is contended by the petitioner that Commonwealth Act No. 548 by which the
Director of Public Works, with the approval of the Secretary of Public Works and
Communications, is authorized to promulgate rules and regulations for the
regulation and control of the use of and traffic on national roads and streets is
unconstitutional because it constitutes an undue delegation of legislative power.
This contention is untenable. As was observed by this court in Rubi vs. Provincial
Board of Mindoro (39 Phil, 660, 700), “The rule has nowhere been better stated
than in the early Ohio case decided by Judge Ranney, and since followed in a
multitude of cases, namely: ‘The true distinction therefore is between the
delegation of power to make the law, which necessarily involves a discretion as to
what it shall be, and conferring an authority or discretion as to its execution, to be
exercised under and in pursuance of the law. The first cannot be done; to the latter
no valid objection can be made.’ (Cincinnati, W. & Z. R. Co. vs. Comm’rs.Clinton
County, 1 Ohio St., 88.) Discretion, as held by Chief Justice Marshall in Wayman vs.
Southard (10 Wheat., 1) may be committed by the Legislature to an executive
department or official. The Legislature may make decisions of executive
departments or subordinate officials thereof, to whom it has committed the
execution of certain acts, final on questions of fact. (U.S. vs. Kinkead, 248 Fed., 141.)
The growing tendency in the decisions is to give prominence to the ‘necessity’ of
the case.”
Section 1 of Commonwealth Act No. 548 reads as follows:
“SECTION 1. To promote safe transit upon, and avoid obstructions
on, roads and streets designated as national roads by acts of the
National Assembly or by executive orders of the President of the
Philippines, the Director of Public Works, with the approval of the
Secretary of Public Works and Communications, shall promulgate
the necessary rules and regulations to regulate and control the
use of and traffic on such roads and streets. Such rules and
regulations, with the approval of the President, may contain
provisions controlling or regulating the construction of buildings
or other structures within a reasonable distance from along the
national roads. Such roads may be temporarily closed to any or all
 classes of traffic by the Director of Public Works and his duly
authorized representatives whenever the condition of the road or
the traffic thereon makes such action necessary or advisable in
the public convenience and interest, or for a specified period, with
the approval of the Secretary of Public Works and
Communications.”
The above provisions of law do not confer legislative power upon the Director of
Public Works and the Secretary of Public Works and Communications. The authority
therein conferred upon them and under which they promulgated the rules and
regulations now complained of is not to determine what public policy demands but
merely to carry out the legislative policy laid down by the National Assembly in said
Act, to wit, “to promote safe transit upon and avoid obstructions on, roads and
streets designated as national roads by acts of the National Assembly or by
executive orders of the President of the Philippines” and to close them temporarily
to any or all classes of traffic “whenever the condition of the road or the traffic
makes such action necessary or advisable in the public convenience and interest.”
The delegated power, if at all, therefore, is not the determination of what the law
shall be, but merely the ascertainment of the facts and circumstances upon which
the application of said law is to be predicated. To promulgate rules and regulations
on the use of national roads and to determine when and how long a national road
should be closed to traffic, in view of the condition of the road or the traffic thereon
and the requirements of public convenience and interest, is an administrative
function which cannot be directly discharged by the National Assembly. It must
depend on the discretion of some other government official to whom is confided
the duty of determining whether the proper occasion exists for executing the law.
But it cannot be said that the exercise of such discretion is the making of the law. As
was said in Locke’s Appeal (72 Pa. 491): “To assert that a law is less than a law,
because it is made to depend on a future event or act, is to rob the Legislature of
the power to act wisely for the public welfare whenever a law is passed relating to a
state of affairs not yet developed, or to things future and impossible to fully know.”
The proper distinction the court said was this: “The Legislature cannot delegate its
power to make the law; but it can make a law to delegate a power to determine
some fact or state of things upon which the law makes, or intends to make, its own
action depend. To deny this would be to stop the wheels of government. There are
many things upon which wise and useful legislation must depend which cannot be
known to the law-making power, and, must, therefore, be a subject of inquiry and
determination outside of the halls of legislation.” (Field vs. Clark, 143 U. S. 649, 694;
36 L. Ed. 294.)
In the case of People vs. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077,
promulgated June 12, 1939, and in Pangasinan Transportation vs. The Public Service
Commission, G.R. No. 47065, promulgated June 26, 1940, this Court had occasion to
observe that the principle of separation of powers has been made to adapt itself to
the complexities of modern governments, giving rise to the adoption, within certain
limits, of the principle of “subordinate legislation,” not only in the United States and
England but in practically all modern governments. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the laws, the rigidity of the
theory of separation of governmental powers has, to a large extent, been relaxed
by permitting the delegation of greater powers by the legislative and vesting a
larger amount of discretion in administrative and executive officials, not only in the
execution of the laws, but also in the promulgation of certain rules and regulations
calculated to promote public interest.
The petitioner further contends that the rules and regulations promulgated by the
respondents pursuant to the provisions of Commonwealth Act No. 548 constitute
an unlawful interference with legitimate business or trade and abridge the right to
personal liberty and freedom of locomotion. Commonwealth Act No. 548 was
passed by the National Assembly in the exercise of the paramount police power of
the state.
Said Act, by virtue of which the rules and regulations complained of were
promulgated, aims to promote safe transit upon and avoid obstructions on national
roads, in the interest and convenience of the public. In enacting said law, therefore,
the National Assembly was prompted by considerations of public convenience and
welfare. It was inspired by a desire to relieve congestion of traffic. which is, to say
the least, a menace to public safety. Public welfare, then, lies at the bottom of the
enactment of said law, and the state in order to promote the general welfare may
interfere with personal liberty, with property, and with business and occupations.
Persons and property may be subjected to all kinds of restraints and burdens, in
order to secure the general comfort, health, and prosperity of the state (U.S. vs.
Gomez Jesus, 31 Phil., 218). To this fundamental aim of our Government the rights
of the individual are subordinated. Liberty is a blessing without which life is a
misery, but liberty should not be made to prevail over authority because then
society will fall into anarchy. Neither should authority be made to prevail over
liberty because then the individual will fall into slavery. The citizen should achieve
the required balance of liberty and authority in his mind through education and
personal discipline, so that there may be established the resultant equilibrium,
which means peace and order and happiness for all. The moment greater authority
is conferred upon the government, logically so much is withdrawn from the
residuum of liberty which resides in the people. The paradox lies in the fact that the
apparent curtailment of liberty is precisely the very means of insuring its
preservation.
The scope of police power keeps expanding as civilization advances. As was said in
the case of Dobbins vs. Los Angeles (195 U.S. 223, 238; 49 L. ed. 169), “the right to
exercise the police power is a continuing one, and a business lawful today may in
the future, because of the changed situation, the growth of population or other
causes, become a menace to the public health and welfare, and be required to yield
to the public good.” And in People vs. Pomar (46 Phil., 440), it was observed that
“advancing civilization is bringing within the police power of the state today things
which were not thought of as being within such power yesterday. The development
of civilization, the rapidly increasing population, the growth of public opinion, with
an increasing desire on the part of the masses and of the government to look after
and care for the interests of the individuals of the state, have brought within the
police power many questions for regulation which formerly were not so
considered.”
The petitioner finally avers that the rules and regulations complained of infringe
upon the constitutional precept regarding the promotion of social justice to insure
the well-being and economic security of all the people. The promotion of social
justice, however, is to be achieved not through a mistaken sympathy towards any
given group. Social justice is “neither communism, nor despotism, nor atomism, nor
anarchy,” but the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception
may at least be approximated. Social justice means the promotion of the welfare of
all the people, the adoption by the Government of measures calculated to insure
economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of
the members of the community, constitutionally, through the adoption of measures
legally justifiable, or extraconstitutionally, through the exercise of powers
underlying the existence of all governments on the time-honored principle of
saluspopuliestsupremalex.
Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a
combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about “the greatest good to
the greatest number.”
IN VIEW OF THE FOREGOING, the Writ of Prohibition Prayed for is hereby
denied, with costs against the petitioner. So ordered.
Avanceña, C.J., Imperial, Diaz and Horrilleno, JJ., concur.
FACTS: The National Traffic Commission recommended the Director of Public Works
and to the Secretary of Public Works and Communication that animal-drawn vehicles
be prohibited from passing along Rosario St. extending from Plaza Calderon de la
Barca to Dasmarinas St. from 7:30 am to 12 pm and 1:30 pm to 5:30 pm and also
along Rizal Avenue from 7 am to 11 pm from a period of one year from the date of the
opening of Colgante Bridge to traffic. It was subsequently passed and thereafter
enforce by Manila Mayor and the acting chief of police. MaximoCalalang then, as a
citizen and a taxpayer challenges its constitutionality.
ISSUE:  Whether or not the rules and regulation promote social justice.  
HELD:  YES, it still promotes social justice. In enacting the said law, the National
Assembly was prompted by considerations of public convenience and welfare.  
The promotion of Social Justice is to be adhered not through a mistaken sympathy
towards any given group (e.g. the poor - because social justice is bringing the
greatest good to the greatest number, not necessarily just the poor like the drivers of
the animal-drawn vehicles).  
Social justice:   
: "neither communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic force by the State
so that justice in its rational and objectively secular conception may at least be
approximated.      
: the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of
society, through the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the     community, constitutionally, through the
adoption of measures legally justifiable, or extra-constitutionally, through the exercise
of powers underlying the existence of all governments on the time-honored principle
of saluspopuliestsupremalex.      
: must be founded on the recognition of the necessity of interdependence among
divers and diverse units of a society and of the protection that should be equally and
evenly extended to all groups as a combined force in our social and economic life,
consistent with the fundamental and paramount     objective of the state of promoting
the health, comfort and quiet of all persons, and of bringing about "the greatest good
to the greatest number."  
RATIO: 
(1) Liberty is a blessing without which life is a misery, but liberty should not be made
to prevail over authority because then society will fall into anarchy.  
(2)The citizen should achieve the required balance of liberty and authority in his mind
through education and personal discipline so that there may be established the
resultant equilibrium, which means peace and order and happiness of all. 
 Republic of the Philippines . . . that she has been employed and faithfully worked for petitioner
SUPREME COURT continuously for forty-one (41) years until she reached the age of
Manila 65 on 19 August 1990; that when she requested petitioner for her
"retirement or termination pay," the President of the company
THIRD DIVISION  refused to comply; and that the lot being offered to her which is
located in Bulacan would not meet her basic needs for subsistence
in the remaining years of her life."3
G.R. No. 110861 November 14, 1994
On 04 October 1990, petitioner filed its own position paper, stating 
ORO ENTERPRISES, INC., petitioner,  that —
vs.
NATIONAL LABOR RELATIONS COMMISSION and LORETO L.
CECILIO, respondents. . . . private respondent was not dismissed from the service but
voluntarily stopped working on September 15, 1990; that it has no
collective bargaining agreement or any other agreement or
Reyes, Navarro & Associates for petitioner. established policy concerning payment of retirement benefits to
employees who reach a certain age except that which is required
Jose C. Espinas for private respondent. by the Social Security Law; that it has not agreed, whether
expressly or impliedly, to pay any retirement benefit to private
VITUG, J.: respondent or any of its employees; and that inLlora Motors,
Inc.,  and/or Constantino Carlota, Jr.  vs. Honorable Franklin Drilon,
et al., (G.R. No. 82895, Nov. 7, 1989), this Honorable Court . . .
In this petition for certiorari, Oro Enterprises, Inc., seeks a reversal of the 22nd March ruled that payment of retirement benefits cannot be required in the
1993 decision and 29th May 1993 order of respondent National Labor Relations absence of a collective bargaining agreement or other contractual
Commission (NLRC) directing petitioner to pay private respondent Loreto Cecilio basis or 
retirement pay in the amount of P61,500.00. any established employer policy providing the grant of such
retirement benefits.4
Private respondent was first employed by petitioner in August of 1949. After working
continuously with the company for forty one (41) years, private respondent On 11 February 1991, Labor Arbiter Edilberto J. Pangan, to whom the case was
manifested, on 03 September 1990, her intention to retire from work by filing with assigned, rendered a decision, the dispositive portions of which read:
petitioner a "Claim for Retirement Pay."
DAHIL DITO, inuutusanang Oro Enterprises, Inc. nabayaran and
In her claim, private respondent pleaded that "the retirement pay she (was) receiving nagsusumbongnasi Bb. Loreto L.
from the Social Security System in the total sum of five  Ceciliongkanyangbayadsapamamahinga (Retirement Benefits),
hundred pesos (P500.00) a month could hardly (suffice to) meet her daily subsistence bataysakalahatingbuwansahodsabawatisangtaongpaglilingkod (half
. . . ."1 month pay for every year of service), nagkakahalagang ANIMNAPU
AT TATLONG LIBONG PISO (P63,000.00).
On 15 September 1990, petitioner wrote private respondent, informing her that it was
in no financial position to give her any retirement benefit apart from the retirement pay Gayon din, ipinag-uutosnabayaranngsampungbahagi (10%)
she was already receiving from the Social Security System ("SSS"). Nonetheless, she nangnasabinghalaga o ANIM NA LIBO AT TATLONG DAANG
was offered a house and lot located in San Jose, del Monte, Bulacan, in accordance PISO (P6,300.00) bilangbayadsamanananggol,
with a "plan"2 which was then still being conceived by the company president for sapaghahainngusapingito.
retiring employees. The offer did not materialize, nor did the proposed company plan
come into being, for one reason or another.
At angkabuuangdapatibayadngisinusumbong ay ANIMNAPU AT
SIYAM NA LIBO AT TATLONG DAANG PISO (P69,300.00).
On 26 September 1990, private respondent filed her complaint with the Office of the
Labor Arbiter (docketed as NLRC Case No. 00-09-05167-90). In her position paper,
she reiterated — Sapagkatsalatsasapatnabatayan, angkahilingansabayadpinsala, ay
IPINAG-KAKAIT (DENIED).

IPINAG-UUTOS.5
Petitioner appealed to the NLRC. Private respondent likewise interposed her own
appeal insofar as the decision denied her claim for damages.
During the pendency of the appeal, or on 07 January 1993, Republic Act ("R.A.") No.
76416 took effect, providing among other things, thusly:
Art. 287. Retirement. — Any employee may be retired upon
reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
xxxxxxxxx
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.
xxxxxxxxx
Violation of this provision is hereby declared unlawful and subject to
the penal provisions under Article 288 of this Code.7
On 22 March 1993, the NLRC rendered its decision awarding to private respondent a
retirement pay on the basis of Republic Act 7641; hence —
WHEREFORE, the respondent is hereby directed to pay
complainant a retirement pay of P61,500.00. Since complainant's
cause of action became meritorious only out of the curative effect of
R.A. 7641, her award of 10% attorney's fee must fail.8
Petitioner filed a motion for reconsideration. In an Order, dated 19 May 1993, the
NLRC denied the motion for lack of merit.
In the instant petition, Oro Enterprises ascribes grave abuse of discretion on the part
of the NLRC in applying R.A. No. 7641. Petitioner argues that the law, which became
effective only on 07 January 1993, cannot be given any such retroactive effect as to
cover private respondent who, at the age of 65 years, retired from employment with
petitioner on 03 September 1990.
At the time private respondent supposedly ceased to work with petitioner, Article 287
of the Labor Code, then in force, provided:
Art. 287. Retirement. — Any employee maybe retired upon
reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and
any collective bargaining or other agreement.
Rule 1, Book VI, of the Implementing Rules of the Labor Code, in turn,
expressed:
Sec. 13.Retirement. — In the absence of any collective bargaining
agreement or other applicable agreement concerning terms and
conditions of employment which provides for retirement at an older
age, an employee maybe retired upon reaching the age of sixty
(60) years.
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.
Private respondent, sustained by the Labor Arbiter, posits that there being no
collective bargaining agreement ("CBA") that granted retirement benefits,
conformably with Section 14 of the Implementing Rules aforequoted, she should be
entitled to a "termination pay equivalent at least to one-half month salary for every
year of service . . . .
This particular issue has long been put to rest. In Llora Motors, Inc.,  vs. Drilon, 179
SCRA 175, Mr. Justice Florentino P. Feliciano, speaking for the Court in an eruditely
written  ponencia, explained:
Section 14 (a) refers to "termination pay equivalent to at least one-
half (1/2) month for every year of service" while Section 14 (b)
mentions "termination pay to which the employee would have been
entitled had there been no such retirement fund" as well as
"termination pay the employee is entitled to receive." It should be
recalled that Sections 13 and 14 are found in Implementing Rule I
which deals with both "termination of employment" and "retirement."
It is important to keep the two (2) concepts of "termination pay" and
"retirement benefits" separate and distinct 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.9 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 whether
or not an additional retirement plan has been set up under an
agreement with the employer or under an "established employer
policy."
What needs to be stressed, however, is that Section 14 of
Implementing Rule I, like Article 287 of the Labor Code, does not
purport to require "termination pay" to be paid to an employee who
may want to retire but for whom no additional retirement plan had
been set up prior agreement with the employer. Thus, Section 14
itself speaks of an employee "who is retired pursuant to a bona-
fide retirement plan or in accordance with the applicable individual
or collective agreement or established employer policy." What
Section 14 of Implementing Rule I may be seen to be saying is that
where termination pay is otherwise payable to an employee under
an applicable provision of the Labor Code, and an additional or
consensual retirement plan exists, then payments under such
retirement plan may be credited against the termination pay that is
due, subject, however, to certain conditions. These conditions are:
(a) that payments under the additional retirement plan cannot have
the effect of reducing the amount of termination pay due and
payable to less than one-half (1/2) month's salary for every year of
service and (b) the employee cannot be made to contribute to the
termination pay that he is entitled to receive under some provision
of the Labor Code; in other words, the employee is entitled to the
full amount of his termination pay plus at least the return of his own
contributions to the additional retirement plan. 10
While there apparently was some kind of a retirement plan then being devised by the
company president for its retiring employees, it was, however, never formalized or
implemented. The Labor Arbiter found thusly:
Sausapingpinag-uusapan ay mayroongplanosapamamahinga
(retirement plan) at itonga, ay
angsinasabinglotenaipagkakaloobsamgamanggagawang may
mahigitnasampung (10) taongpaglilingkod, ngunithanggangngayon
ay ito ay isangpanaginiplamang. Wala pa, niisangnaisa-katuparan.
At isa pa, napakalayoangnasabingpook (San Jose del Monte,
Bulacan)
parasaisangkatuladngnagsusumbongupangdoonsiyatuluyanpuman
aw, sakabilangkanyangpag-iisa. Kaya'tangsinasabinglote ay
pansamantalang pang-palubag-looblamang, at
hindiseryosongbiyaya o tunayna alay-biyaya.11
It then goes without saying, applying Llora Motors, that the beneficial provisions of
Section 14 of Implementative Rules cannot properly be invoked by private
respondent.
Instead, the pivotal issue, in our view, is whether or not R.A. 7641 can favorably apply
to private respondent'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. On this score, the
case ofAllied Investigation Bureau, Inc., vs. Ople, 91 SCRA 265, finds strong
relevance:
1. There is no question that petitioner had agreed to grant
retirement benefits to private respondent. It would, however, limit
such retirement benefits only from the date of the effectivity of the
Labor Code. That is its contention. The refutation given in the
Comment of Solicitor General Estelito P. Mendoza is persuasive.
As was pointed out, "in the computation thereof, public respondents
acted judiciously in reckoning the retirement pay from the time
private respondent started working with petitioner since respondent
employee's application for retirement benefits and the company's
approval of the same make express mention of Sections 13 and 14,
Rule 1, Book VI of the Implementing Rules and Regulations of the
Labor Code as the basis for retirement pay. Section 14 (a) of said
rule provides that an employee who is retired pursuant to a  bona-
fide 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 to at least 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.'' Further it was
stated: "This position taken by public respondents squares with the
principle that social legislation should be interpreted in favor of
workers in the light of the Constitutional mandate that the State
shall afford protection to labor."
2. Petitioner's insistence that the retirement benefits should date
only from the time that the present Labor Code came into force
could be based on the assumption that it should not be given a
retroactive effect. That would be to ignore the well-settled principle
that police power legislation intended to promote public welfare
applies to existing contracts. It was held in Ongsiako v. Gamboa,
decided in 1950, that a police power measure being remedial in
character covers existing situations; otherwise, it would be self-
defeating. Abe v. Foster Wheeler Corporation, this Court, speaking
through Justice Barrera, is even more in point. In that case, the
contracts of employment were entered into at a time when there
was no law granting the workers said right. Such being the case, it
was then contended that the application as to them of the
 subsequent enactment would amount to an impairment of
contractual obligations. In refuting such a view, it was made clear in
the opinion that "constitutional guaranty of non-impairment . . . is
limited by the exercise of the police power of the State, in the
interest of public health, safety, morals and general welfare." The
latest reiteration of such a doctrine came in Gutierrez v.  Cantada,
decided barely a month ago.
3. Nor is it accurate to assert that the right to retirement benefits
started from the enactment of the present Labor Code. That would
be to ignore the social justice and protection to labor provisions of
the 1935 Constitution. In the leading case of Antamok Goldfields
Mining Company v.  Court of Industrial Relations, decided in 1940,
a concurring opinion of Justice Laurel to this effect was cited: "By
and large, these provisions in our Constitution all evince and
express the need of shifting emphasis to community interest with a
view to affirmative enhancement of human values." He had
occasion to repeat it in his well-known definition of social justice
in Calalang v.  Williams, decided the same year. Thus: "Social
justice is "neither communism, nor despositism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its rational
and objectively secular conception may at least be approximated.
Social justice means the promotion of the welfare of all the people,
the adoption by the Government of measures calculated to insure
economic stability of all the component elements of society, through
the maintenance of a proper economic and social equilibrium in the
interrelations of the members of the community, constitutionally,
through the adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle
of saluspopuliestsupremalex." The present Civil Code, which took
effect on August 13, 1950, has a chapter on labor contracts, the
first article of which recognizes that the relations between capital
and labor "are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good."
Republic Act 7641 took effect on 07 January 1993, while the appeal of private
respondent was still pending consideration by the NLRC. Still for determination at the
time was, among other things, the issue of whether or not private respondent has, in
fact, been effectively retired.
Petitioner asserts that private respondent has never reported for work after the
rejection of her application for retirement benefits. This claim is denied by private
respondent, who avers that she did report for work again but that petitioner has
refused to accept her on the ground of abandonment of duty. The Labor Arbiter has
made these findings:
Sasinasabingisinusumbongnaangnagsusumbongdaw ay kusang-
loobnatinalikuranangpaglilingkod (abandonment of work) ay
mahirappaniwalaan.
Angisangmanggagawanainingatanangmatapatniyangpaglilingkodsa
loobngmahabangpanahon, ay hindibastanalamanglilisan at
ipahahamakito.
Angisangmanggagawanasakanyanghulingtaonnangpaglilingkod, ay
walangdahilanna karaka-
rakanalilisanitoupangangbiyayangtatanggapin ay
masalalaysaalinlangan. Angsinasabingpag-lisan ay hindina-
aayonsakatutuhananngpangyayari (natural course of events),
kaya'thindinaminitomasasang-ayunan.
Angkatotohanannito, ay noongmalamanniGng. Marietta G.
Holmgren, Pangulongisinusumbong (Oro Enterprises, Inc.)
naangnagsusumbong ay naglilingkod pa, ay nagalitito at angsabi,
"pagnalamanng SSS na nag(papa)trabaho pa akona retired na, ay
malilintikan kami (referring to Oro Enterprises, Inc.) sa SSS. . . ."
Kaya'tnoongsiya (naglilingkod) ay pumasoknoongSetyembre 15,
1990, ay
sinabihansiyanaitonaangkahulihulihanniyangarawngpaglilingkod. At
simula noon ay hindinasiyapumasok. At
angsinasabingulatngpagputolngpaglilingkod (letter of termination)
na may petsangOktubre 12, 1990, ay walangsapatnabatayan. 12
The NLRC, in turn, has said:
After all, the least that could be said here is that the complainant
filed her claim for retirement pay only on January 7, 1993 the date
R.A. 
No. 7641 took effect and that against the backdrop that she retired
only on September 15, 1990, her monetary claim could be treated
as well filed within the three (3) years prescriptive period set by
law . . . . 13
Given the above findings, which must be accorded due respect, we cannot see our
way clear to attributing to NLRC grave abuse of discretion in concluding thereby that
private respondent's claim for retirement benefits should accordingly be held to fall
within the ambit of Republic Act No. 7641. Grave abuse of discretion, albeit an elastic
phrase, 14 has always been understood as a capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, such as, to exemplify, "where the
power is exercised in an arbitrary or despotic manner." 15
WHEREFORE, the petition for certiorari  is DISMISSED, and the decision of the
NLRC is AFFIRMED.
SO ORDERED.
Bidin, Romero and Melo, JJ., concur.
Feliciano, J., is on leave.
#Footnotes
6 An Act Amending Article 287 of Presidential Decree No. 442, As
Amended. Otherwise Known As The Labor Code Of The Philippines, By
Providing For Retirement Pay To Qualified Private Sector Employees In The
Absence Of Any Retirement Plan In The Establishment.
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.
xxxxxxxxx

Violation of this provision is hereby declared unlawful and subject to the penal provisions
4. closing or cessation of operation of the company; and
under Article 288 of this Code. 7

Article 284 referring to — NLRC rendered its decision awarding to private respondent a retirement pay on the basis of
Republic Act 7641. Petitioner argues that the law, which became effective only on 07 January
5. termination of services by reason of disease; and Sec. 4 (b), Rule I, Book 1993, cannot be given any such retroactive effect as to cover private respondent who, at the
VI of the Implementing Rules and Regulations relating to situations — age of 65 years, retired from employment with petitioner on 03 September 1990.

6. where reinstatement of the employee to his former position is required but Issue: Whether or not R.A. 7641 can favorably apply to private respondent’s case.
is not possible because the company has closed or ceased operations or
his former position no longer exists at the time of reinstatement (for reasons
not attributable to the fault of the employer). Held: 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
Facts: Private respondent was employed to the petitioner. After working continuously with
only from the date of the law’s enactment but retroactively to the time said employment
the company for forty one (41) years, private respondent manifested her intention to retire
contracts have started.
from work by filing with petitioner a “Claim for Retirement Pay.”
Petitioner’s insists the assumption that it should not be given a retroactive effect. That would
Petitioner wrote private respondent, informing her that it was in no financial position to give
be to ignore the well-settled principle that police power legislation intended to promote
her any retirement benefit apart from the retirement pay she was already receiving from the
public welfare applies to existing contracts. The contracts of employment were entered into
Social Security System (“SSS”). Nonetheless, she was offered a house and lot located in San
at a time when there was no law granting the workers said right. Such being the case, it was
Jose, del Monte, Bulacan, in accordance with a “plan” which was then still being conceived by
then contended that the application as to them of the subsequent enactment would amount
the company president for retiring employees. The offer did not materialize, nor did the
to an impairment of contractual obligations. In refuting such a view, it was made clear in the
proposed company plan come into being.
opinion that “constitutional guaranty of non-impairment . . . is limited by the exercise of the
police power of the State, in the interest of public health, safety, morals and general
During the pendency of the appeal, Republic Act No. 7641 took effect. Providing the
welfare.”
following:

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

xxxxxxxxx

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.