G.R. No. 75374 November 14, 1994
Mindanao Terminal and Brokerage Service, Inc., petitioner, vs. The Honorable Minister of Labor and Employment and Paulino P. Pedronio, respondents.

FACTS

Pursuant to Presidential Decree No. 857 (Revised Charter of the Philippine Ports Authority) and its implementing regulations, which mandated only one cargo handling operator per port, petitioner Mindanao Terminal and Brokerage Service, Inc. (MINTERBRO) and other arrastre operators in the Port of Davao ceased operations. Their operations were integrated into a new corporation, Filipinas Port Services, Inc. (FILPORT). Private respondent Paulino P. Pedronio, along with 281 other MINTERBRO employees, was absorbed by FILPORT, which began operations on February 16, 1977. Due to the termination of his employment with MINTERBRO, Pedronio filed a complaint for separation pay. The Regional Director granted his claim, awarding P6,600 based on 22 years of service. The Minister of Labor affirmed this decision. MINTERBRO filed this special civil action, alleging grave abuse of discretion.

ISSUE

Whether private respondent Paulino P. Pedronio is entitled to separation pay from petitioner MINTERBRO due to the cessation of its operations pursuant to P.D. No. 857.

RULING

No. The Supreme Court ruled that MINTERBRO’s cessation of operations, compelled by law (P.D. No. 857), constituted a bona fide closure at a time when such closure was a just cause for termination of employment under the Labor Code prior to its amendment by Batas Pambansa Blg. 130. Prior to B.P. Blg. 130’s effectivity on August 21, 1981, a bona fide closure exempted the employer from liability for separation pay. Since Pedronio’s claim was filed before B.P. Blg. 130 took effect, MINTERBRO was not liable for separation pay. The Court found that the respondent Minister of Labor committed grave abuse of discretion in affirming the award of separation pay. The petition was granted, and the challenged orders were set aside.