G.R. No.

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.
PARAS, J.:
Facts:
Petitioner Abella leased a farmland from Ramona for a period of 10 years and renewable for another 10
years at the option of the former. Abella hired the private respondents Quitco and Dionele. Abella renewed
the lease for another ten years. At the expiration of the lease, she dismissed both private respondents
and turned over the hacienda to the owners. Private respondents filed a complaint against petitioner for
overtime pay, reinstatement, and illegal dismissal. The Labor Arbiter ruled that the dismissal was
warranted by the cessation of business, but the respondents are entitled to separation pay, invoking Art.
284 of the Labor Code, as amended.
Issue: Whether or not private respondents are entitled to separation pay.
Held: The Court upheld the ruling of the Labor Arbiter that Article 284 is the applicable law in this case.
Art 284, as amended refers to employment benefits to farm hands who were not parties to petitioner's
lease contract with the owner of Hacienda Danao-Ramona. That contract cannot have the effect of
annulling subsequent legislation designed to protect the interest of the working class.
Petitioner claims that since her lease agreement had already expired, she is not liable for payment of
separation pay. Neither could she reinstate the complainants in the farm as this is a complete cessation or
closure of a business operation, a just cause for employment termination under Article 272 of the Labor
Code.
On the other hand, the legal basis of the Labor Arbiter in granting separation pay to the private
respondents is Batas Pambansa Blg. 130, amending the Labor Code, Section 15 of which, specifically
provides:
Sec 15 Articles 285 and 284 of the Labor Code are hereby amended to read as follows:
xxx

xxx

xxx

Art. 284. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establisment or undertaking unless the closing
is for the purpose of circumventing the provisions of this title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay
for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closure or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)

month pay for every year of service whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

There is no question that Article 284 of the Labor Code as amended by BP 130 is the law applicable in
this case.
Article 272 of the same Code invoked by the petitioner pertains to the just causes of termination. The
Labor Arbiter does not argue the justification of the termination of employment but applied Article 284 as
amended, which provides for the rights of the employees under the circumstances of termination.
It is well-settled that in the implementation and interpretation of the provisions of the Labor Code and its
implementing regulations, the workingman's welfare should be the primordial and paramount
consideration. It is the kind of interpretation which gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that "all
doubts in the implementation and interpretation of the provisions of this Code including its implementing
rules and regulations shall be resolved in favor of labor." The policy is to extend the applicability of the
decree to a greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection to labor.
PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the July 16, 1982 Decision of
the Labor Arbiter and the April 8, 1985 Resolution of the Ministry of Labor and Employment are hereby
AFFIRMED.