Abasolo v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioners were employed by La Union Tobacco Redrying Corporation (LUTORCO). In March 1993, Compania General de Tabaccos de Filipinas (TABACALERA) took over LUTORCO's tobacco operations. Petitioners were asked to file applications for employment with TABACALERA, and they were caught unaware of the change in ownership and its effect on their employment status. Procedural History: On March 17, 1993, petitioners filed a complaint for separation pay against LUTORCO, alleging termination of employment due to the sale and turnover to TABACALERA. LUTORCO defended by stating it ceased operations due to losses and that TABACALERA would assume seniority rights. Labor Arbiter Ricardo N. Olairez dismissed the complaint for lack of merit, ruling that petitioners were not entitled to separation pay under Article 283 of the Labor Code as LUTORCO ceased operations due to losses and TABACALERA assumed seniority rights. The Petition: Petitioners appealed to the National Labor Relations Commission (NLRC). LUTORCO, in its opposition, alleged that it continued to operate and that petitioners refused to work with TABACALERA despite notice, claiming petitioners were seasonal workers not entitled to separation pay. The NLRC affirmed the dismissal, holding there was no closure or termination, but a "non-hiring due mainly to [petitioners] own volition," and that Article 283 applies only to regular, not seasonal, employees. Petitioners filed a petition for certiorari with the Supreme Court, alleging grave abuse of discretion by the NLRC.
Issue(s)
Whether the NLRC committed grave abuse of discretion in ruling that there was no dismissal or termination of services. Whether the NLRC committed grave abuse of discretion in ruling that petitioners were not regular employees. Whether the NLRC committed grave abuse of discretion in not awarding separation pay to the petitioners.
Ruling
The petition is GRANTED. The assailed Resolutions of the NLRC are REVERSED and SET ASIDE. La Union Tobacco Redrying Corporation is ORDERED to pay petitioners separation pay equivalent to one (1) month, or one-half (1/2) month pay for each year of service, whichever is higher, provided they rendered service for at least six (6) months in a given year, and to pay ten percent (10%) of the total amount due as attorney's fees. The NLRC is ordered to compute the total separation pay.
Ratio Decidendi
On the issue of whether there was a dismissal or termination of services: The Supreme Court ruled that the employment of petitioners with LUTORCO was technically terminated when TABACALERA took over LUTORCO's tobacco re-drying operations in 1993. The records showed that petitioners were not formally notified of the impending sale and its consequences on their employment. They only came to know of the sale when TABACALERA took over the operations. The Court found LUTORCO's allegation that TABACALERA assured petitioners' seniority rights to be unsubstantiated. Furthermore, the Court clarified that while there is no law requiring the purchaser of a company to absorb its employees, the purchasing company can give preference to qualified separated employees. In this case, petitioners were required to file new applications, effectively being hired as new employees by TABACALERA. The Court also dismissed LUTORCO's contention that petitioners severed the relationship by choosing to work with TABACALERA, deeming the offer to return to work as an afterthought and noting that resignation must be voluntary and with intent to relinquish. On the issue of whether petitioners were regular employees: The Supreme Court held that petitioners were regular employees, despite being seasonal workers. The Court applied the primary standard for determining regular employment, which is the reasonable connection between the activity performed by the employee and the usual trade or business of the employer, and whether the activity is necessary or desirable. Petitioners had served LUTORCO for many years, some for over 20 years, performing services indispensable to the business. The Court reiterated that seasonal workers who are called to work from time to time and are temporarily laid off during the off-season are not separated from service but are considered on leave until re-employed. The Court distinguished the present case from Mercado, Sr. v. NLRC, where the seasonal workers were free to contract their services to other farm owners, indicating a lack of continuous need for their services by the employer. On the issue of entitlement to separation pay: Given that petitioners were deemed regular employees whose employment was technically terminated due to the sale of operations, they are entitled to separation pay under Article 283 of the Labor Code. The Court clarified that Article 283 applies to closures or cessation of business operations, whether complete or partial. The Court further elaborated on the computation of separation pay for seasonal workers, citing Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC, stating that separation pay should be equivalent to one month's pay, or one-half month's pay for every year of service, whichever is higher, provided they rendered service for at least six months in a given year. "Month pay" was understood as the average monthly pay during the last season worked.
Main Doctrine
Seasonal workers who have rendered service for many years, performing services necessary and indispensable to the employer's business, are considered regular employees entitled to separation pay in case of closure or cessation of business operations, even if their work is intermittent.