Abella v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioner Rosalina Perez Abella leased a farm land, Hacienda Danao-Ramona, from June 27, 1960, for ten years, renewable for another ten years. She employed private respondents Romeo Quitco and Ricardo Dionele, Sr. during her leasehold. Upon the expiration of her lease on October 5, 1981, petitioner dismissed the private respondents and turned over the hacienda to its owners. Procedural History: Private respondents filed a complaint for overtime pay, illegal dismissal, and reinstatement with backwages. The Labor Arbiter ruled that the dismissal was warranted by the cessation of business but granted separation pay, citing the closure not being due to business reverses. The National Labor Relations Commission (NLRC) affirmed this decision, and a subsequent motion for reconsideration was denied. The Petition: Petitioner seeks review of the NLRC Resolution, arguing that since her lease agreement expired, she is not liable for separation pay and that the closure of her operation constitutes a cessation of business, a just cause for termination under Article 272 of the Labor Code. She contends that the award of separation pay violates the constitutional guarantee against impairment of obligations and contracts.
Issue(s)
Whether or not private respondents are entitled to separation pay. Whether the award of separation pay violates the constitutional prohibition against impairment of obligations and contracts.
Ruling
The petition is devoid of merit. The July 16, 1982 Decision of the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are affirmed.
Ratio Decidendi
On whether private respondents are entitled to separation pay: The Court affirmed the Labor Arbiter's and NLRC's ruling that private respondents are entitled to separation pay. Article 284 of the Labor Code, as amended by Batas Pambansa Blg. 130, mandates separation pay in cases of closure or cessation of operations not due to serious business losses or financial reverses. The petitioner's leasehold rights expired, leading to the cessation of her operation of the farm. The law provides for separation pay in such instances, equivalent to at least one-half month's pay for every year of service. The Labor Arbiter correctly applied this provision, noting that the closure was not due to business reverses. The petitioner's contention that her lease expiration absolves her from liability is untenable under the said provision. The Court emphasized that the purpose of Article 284 is to protect workers whose employment is terminated due to business closure, ensuring they receive benefits for their years of service. On whether the award of separation pay violates the constitutional prohibition against impairment of obligations and contracts: The Court held that this contention is untenable. The prohibition against impairment of obligations of contracts is not absolute and can yield to the State's exercise of police power to safeguard the vital interests of its people. Legislation enacted for the promotion of the general good, such as labor protection laws, may modify or abrogate contracts already in effect. The Court cited Anucension v. National Labor Union and Basa v. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinas to support the principle that contracts are understood to be made with reference to the possible exercise of the State's police power. Article 284, as amended, refers to employment benefits for farmhands who were not parties to the petitioner's lease contract. The lease contract cannot annul subsequent legislation designed to protect the working class. Furthermore, the Court reiterated the well-settled principle that in the implementation and interpretation of labor laws, the workingman's welfare should be the primordial and paramount consideration, resolving doubts in favor of labor.
Main Doctrine
The constitutional prohibition against impairment of obligations of contracts is not absolute and yields to the State's exercise of police power to safeguard the vital interests of its people, particularly the protection of workers whose employment is terminated due to business closure.