GR L 71813; (July, 1987) (Digest)
G.R. No. L-71813; July 20, 1987
ROSALINA PEREZ ABELLA/HDA. DANAO-RAMONA, petitioners, vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO and RICARDO DIONELE, SR., respondents.
FACTS
Petitioner Rosalina Perez Abella leased Hacienda Danao-Ramona under a contract renewable at her option. She employed private respondents Ricardo Dionele, Sr. and Romeo Quitco as regular farm workers, later promoting them to Cabo. Upon the expiration of her leasehold rights on October 5, 1981, Abella dismissed the respondents and turned over the hacienda to its owners, who continued its operation. The private respondents filed a complaint for illegal dismissal and sought reinstatement with backwages.
The Labor Arbiter ruled the dismissal was warranted due to the cessation of business from the lease expiration but granted separation pay. The National Labor Relations Commission affirmed this decision. The petitioner appealed, arguing she incurred no liability for separation pay due to the legitimate closure of her business operation.
ISSUE
Whether the private respondents are entitled to separation pay following the termination of their employment due to the expiration of the petitioner’s lease and consequent cessation of her business operation.
RULING
Yes, the private respondents are entitled to separation pay. The Court applied Article 284 of the Labor Code, as amended by Batas Pambansa Blg. 130, which mandates separation pay for employees terminated due to the closure or cessation of operations of an establishment, provided such closure is not due to serious business losses or financial reverses. The cessation here resulted from the lease expiration, not serious losses, thus triggering the statutory obligation.
The petitioner’s constitutional claim—that the law impaired her lease contract’s obligations—is untenable. The constitutional prohibition against impairment is not absolute; the state retains police power to enact social legislation for the protection of labor, a vital public interest. The separation pay law regulates the employer-employee relationship, to which the lessor was not a party, and does not alter the lease contract’s terms between the petitioner and the landowner. The Court emphasized the policy of resolving all doubts in favor of labor to give substance to the state’s duty to afford maximum protection to workers. The dismissal of the petition affirmed the award of separation pay computed at one-half month’s pay for every year of service.