CASE DIGEST: Abella vs NLRC G.R. No.

71813 July 20, 1987

Doctrine:
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.

Facts:

On June 27, 1960, herein petitioner Rosalina Perez Abella leased a farm land in
Monteverde, Negros Occidental, known as Hacienda Danao-Ramona, for a period of
ten (10) years, renewable, at her option, for another ten (10) years. On August 13, 1970,
she opted to extend the lease contract for another ten (10) years During the existence
of the lease, she employed the herein private respondents. Private respondent Ricardo
Dionele, Sr. has been a regular farm worker since 1949 and he was promoted to Cabo
in 1963. On the other hand, private respondent Romeo Quitco started as a regular
employee in 1968 and was promoted to Cabo in November of the same year. Upon the
expiration of her leasehold rights, petitioner dismissed private respondents and turned
over the hacienda to the owners thereof on October 5, 1981, who continued the
management, cultivation and operation of the farm.
On November 20, 1981, private respondents filed a complaint against the petitioner for
overtime pay, illegal dismissal and reinstatement with backwages.
Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982, ruled that the
dismissal is warranted by the cessation of business, but granted the private
respondents separation pay. The First Division of this Court, in a Resolution dated
March 31, 1986, resolved to give due course to the petition; and to require the parties to
submit simultaneous memoranda. In compliance therewith, the Solicitor General filed
his Memorandum on June 18, 1986 and petitioner on July 23, 1986.

Issue: W/ON PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY.

Held: Yes. Art. 284. Closure of establishment and reduction of personnel.There is no

question that Article 284 of the Labor Code as amended by BP 130 is the law applicable
in this case. The purpose of Article 284 as amended is obvious-the protection of the
workers whose employment is terminated because of the closure of establishment and
reduction of personnel. Without said law, employees like private respondents in the
case at bar will lose the benefits to which they are entitled — for the thirty three years of
service in the case of Dionele and fourteen years in the case of Quitco. Although they
were absorbed by the new management of the hacienda, in the absence of any showing
that the latter has assumed the responsibilities of the former employer, they will be
considered as new employees and the years of service behind them would amount to
nothing.