G.R. No. 73806 . March 21, 1990.
Tacloban Sagkahan Rice and Corn Mills, Co., and/or Tan Cheng Pian (alias Piana), Owner, petitioners, vs. The Honorable National Labor Relations Commission, Second Division, The Honorable Executive Labor Arbiter, Regional Arbitration Branch No. VIII, National Labor Relations Commission, Tacloban City, and, Carlito Codilan, Maximo Docena, Teofilo Trangria, Eugenio Go, and, Reynaldo Tulin, respondents.

FACTS

The private respondents were regular employees of the petitioner rice mill, with employment durations ranging from 1958 to 1977. On July 25, 1983, petitioner Tan Cheng Pian informed them to “look for another job” without providing any reason, leading to their termination. Consequently, the employees filed a complaint for illegal dismissal on August 23, 1983. During the proceedings, they sought separation pay instead of reinstatement, as they had already secured other employment. The Executive Labor Arbiter ruled in their favor, ordering the payment of separation pay, a decision affirmed in toto by the National Labor Relations Commission (NLRC).
Petitioners contested the ruling, arguing that the temporary stoppage of milling operations due to a lack of palay was a valid exercise of management prerogative, justifying a temporary lay-off. They asserted the respondents were seasonal workers subject to such lay-offs during off-seasons. Furthermore, petitioners claimed the employees’ subsequent refusal to accept an offer of reinstatement constituted voluntary abandonment of work, negating any claim for separation benefits.

ISSUE

The primary issue is whether the termination of the private respondents constituted illegal dismissal, thereby entitling them to separation pay.

RULING

The Supreme Court affirmed the NLRC resolution, ruling that the private respondents were illegally dismissed and were entitled to separation pay. The legal logic proceeded from three key determinations. First, the Court found the employees were regular, not seasonal, under Article 280 of the Labor Code, as their activities were necessary to the petitioner’s usual business. The petitioners failed to prove the employment was fixed for a specific season or project.
Second, the termination was illegal as it did not comply with Article 283 of the Labor Code, which allows dismissal only for authorized causes like closure or retrenchment. The alleged temporary stoppage due to “lack of palay” was not substantiated as a legitimate closure or retrenchment. This was evidenced by the petitioner’s own subsequent offer to reinstate the workers, which contradicted the claim of a necessary operational cessation.
Third, the employees’ refusal to accept the belated reinstatement offer did not constitute abandonment. Abandonment requires a clear intent to sever the employment relationship, which is incompatible with the immediate filing of an illegal dismissal complaint. The offer, made only after the complaint was filed, was correctly viewed as an attempt to evade liability. Since the dismissal was without lawful cause, and reinstatement was rendered impractical by the employees’ new employment, the award of separation pay was the proper remedy. The Court emphasized that management prerogative must be exercised without abuse of discretion, as it affects the worker’s fundamental right to livelihood.