ORO ENTERPRISES, INC vs.

NATIONAL LABOR RELATIONS COMMISSION

GR No. 110861 | November 14, 1994 | Vitug, J.

Statement of the issue

Whether or not RA 7641 may be given effect retroactive effect to private respondent’s case in
light of Section 14, Rule, Book VI of the Implementing Rules of Labor Code which provides that
in the absence of a collective bargaining agreement that grants retirement benefits, an employee
shall still be entitled to a termination pay equivalent at least to one-half month salary for every
year of service.
Complainant’s arguments
Petitioner posits that Republic Act No. 7641 cannot be given any such retroactive effect as to
cover private respondent who retired from employment with petitioner on September 3, 1990.

Respondent’s Arguments
Private respondents argues that since there is no collective bargaining agreement that granted
retirement benefits, she should be entitled to a “termination pay equivalent at least to one-half
month salary for every year of service pursuant to Section 14, Rule 1, Book VI of the
Implementing Rules of the Labor Code.

Decision of the Court

YES. The Court ruled that Private Respondent is entitled to a retirement pay on the basis of
Republic Act 7641. As enunciated in the case of Allied Investigation Bureau, Inc. vs Ople that in
saying that the right to retirement benefits started from the enactment of the present Labor Code
would be to ignore the social justice and protection to labor provisions of the 1935 Constitution.

Instruction Learned
Section 14 of the Implementing Rules of the Labor Code was given light in the case of Llora
Motors, Inc. vs Drilon in saying that where termination pay is otherwise payable to an employee
under an applicable provision of the Labor Code, and an additional or consencual retirement plan
exists, then payments under such retirement plan may be credited against the termination pay
that is subject to certain conditions. Furthermore, Petitioner’s insistence that Labor Code shall be
applied prospectively would be to ignore the well-settled principle that police power legislation
intended to promote public welfare applies to existing contracts.

Ratio
RA 7641 is a social legislation that 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 the said employment contracts have started.