Abella vs. NLRC, Gr No. 71813, July 20, 1987

Abella vs. NLRC, Romeo Quitco and Ricardo Dionele G.R. No. 71813, July 20, 1987 FACTS: Petitioner Rosalinda Abella leased a farm land in Monteverde,  Negros Occidental known as Hacienda Danao-Ramona Danao-Ramona for a period of  ten years, renewable, at her option, for another ten years on June 27, 1960. On August 13, 1970, petitioner opted to extend the lease for  another ten years. During the existence of the lease she employed Ricardo Dionele, Sr., a farmworker since 1949 and Romeo Quitco who started as regular farmworker in 1968. Upon the expiration of her  leasehold rights, petitioner dismissed private respondents.

On Nov. 20, 1981, private respondents filed a complaint at the Ministry of Labor and Employment, Bacolod City for overtime pay, illegal dismissal and reinstatement of backwages. Labor Arbiter ruled that dismissal is warranted by closure of business but awarded separation pay. On appeal at NLRC, aforesaid decision was affirmed and appeal dismissed. Motion for Reconsideration Reconsideration was denied. ISSUE: Are private respondents entitled to separation pay? RULING: Yes, as correctly pointed out by the Labor arbiter, the applicable law at bar is Art. 284 of the Labor Code as amended by BP 130 which mandates a separation pay of at least 1 month pay for every year of  service if termination is due to installation of labor saving devices or  redundancy and in cases of retrenchment to prevent losses or closure of operations, separation pay will be equivalent to one month pay or  one-half one pay for every year of service whichever is higher and serving a notice of termination to the workers and the Ministry of  Labor and Employment 1 month before intended date of termination.

Petitioner’s contention that aforesaid provision violates constitutional guarantee against impairment of obligations and contracts because upon leasing of said Hacienda Danao-Ramona neither she nor the lessor contemplated the creation of the obligation to pay separation  pay to the workers at the end of the lease is untenable. In  Anucension vs. NLRC , the Court ruled that “the prohibition is not to be read with literal exactness…for it prohibits unreasonable impairment only.” And added that in the implementation and interpretation of the provisions of the Labor Code, the workingman’s welfare should be the  primordial and paramount consideration and all doubts should always  be resolved in favor of labor. The policy is to extend the law’s reach to a greater number of employees who can avail of the benefits under  the law which is in consonance with the avowed policy of the State to give maximum aid and protection to labor.