G.R. No. 115019 . April 14, 1997.
PHILIPPINE SCOUT VETERANS SECURITY AND INVESTIGATION AGENCY AND/OR SEVERO SANTIAGO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and MARIANO FEDERICO, respondents.

FACTS

Mariano Federico had worked as a security guard for petitioners for twenty-three years. On September 16, 1991, at age sixty, he tendered a letter citing physical disability and a desire to relocate to the province, which he termed a “withdrawal from occupation.” He subsequently sought either termination pay for his years of service or retirement benefits. Petitioners rejected both claims, arguing he voluntarily resigned and that no retirement plan or agreement existed. Federico filed a complaint with the Labor Arbiter on December 4, 1991.
The Labor Arbiter dismissed Federico’s claims but ordered petitioners to pay him P10,000.00 as financial assistance, an amount they had previously offered. On appeal, the NLRC reversed the Arbiter’s decision on December 28, 1993. It applied Article 287 of the Labor Code, as amended by Republic Act No. 7641 (effective January 7, 1993), retroactively to grant Federico retirement pay equivalent to fifteen days’ pay for every year of service.

ISSUE

Whether Article 287 of the Labor Code, as amended by R.A. 7641, can be applied retroactively to a complaint filed prior to its effectivity.

RULING

No, the amendment cannot be applied retroactively under the circumstances. The Supreme Court granted the petition and reinstated the Labor Arbiter’s award of financial assistance only. The legal logic hinges on the specific conditions required for the retroactive application of R.A. 7641 as established in jurisprudence, particularly CJC Trading, Inc. v. NLRC. For the law to apply retroactively, two circumstances must concur: (1) the claimant must still be an employee of the employer at the time the statute took effect, and (2) the claimant must be in compliance with the eligibility requirements under the statute.
In this case, while Federico met the second condition (being sixty years old with over twenty-three years of service), he failed the first. He had already severed his employment relationship by tendering his letter on September 16, 1991, which was prior to the effectivity of R.A. 7641 on January 7, 1993. The Court distinguished this from Allied Investigation Bureau, Inc. v. Ople, where a consensual basis for retirement existed, and aligned it with Llora Motors, Inc. v. Drilon and CJC Trading, where no such agreement or continuing employment existed. Since the employer-employee relationship had ceased before the law’s effectivity, Federico could not seek its beneficial provisions. He was therefore entitled only to the financial assistance originally offered and ordered by the Labor Arbiter.