Philippine Tobacco Vs NLRC AYON

PHILIPPINE TOBACCO FLUE-CURING & REDRYING CORPORATION, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, et al , respondents., G.R. No. 127395,

Dec 10, 1998
FACTS:
There are two groups of employees, namely, the Lubat group and the Luris group. The Lubat group is
composed of petitioner’s seasonal employees who were not rehired for the 1994 tobacco season. At
the start of that season, they were merely informed that their employment had been terminated at the
end of the 1993 season. They claimed that petitioner’s refusal to allow them to report for work
without mention of any just or authorized cause constituted illegal dismissal. In their Complaint, they
prayed for separation pay, back wages, attorney’s fees and moral damages.
On the other hand, the Luris group is made up of seasonal employees who worked during the 1994
season. On August 3, 1994, they received a notice informing them that, due to serious business losses,
petitioner planned to close its Balintawak , Quezon City plant and transfer its tobacco processing and
redrying operations to Ilocos Sur. Although the closure was to be effective September 15, 1994, they
were no longer allowed to work starting August 4, 1994.
The cases were consolidated.
ISSUES:
1. Did petitioner prove “serious business losses,” its justification for the nonpayment of
separation pay?
2. Was the dismissal of the employees valid?
RULING:
The petition is not meritorious.

1. Serious Business Losses Not Proven
Article 283 of the Labor Code prescribes the requisites and the procedure for an employee’s dismissal
arising from the closure or cessation of operation of the establishment.
The present case involves the closure of merely a unit or division, not the whole business of an
otherwise viable enterprise. Although Article 283 uses the phrase “closure or cessation of operation
of an establishment or undertaking,”, the said statutory provision applies in cases of both complete
and partial cessation of the business operation.
Petitioner did not actually close its entire business. It merely transferred or relocated its tobacco
processing and redrying operations. Moreover, it was also engaged in, among others, corn and rental
operations, which were unaffected by the closure of its Balintawak plant. Petitioner was not able to
prove serious financial losses arising from its tobacco operations.
Petitioner was not able to establish that the closure of its business operations in its Balintawak plant
was in fact due to serious financial losses. Therefore, under the last two sentences of Article 283 of the
Labor Code, the dismissed employees belonging to the Luris group are entitled to separation pay
“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.”
2. Lubat Group Illegally Dismissed

Petitioner illegally dismissed the members of the Lubat group when it refused to allow them to work
during the 1994 season. The nature of the relationship of seasonal workers is such that during off
season they are temporarily laid off but during summer season they are re-employed, or when their
services may be needed. They are not strictly speaking separated from the service but are merely
considered as on leave of absence without pay until they are re-employed. The Court considered a
seasonal worker “in regular employment” in cases involving the determination of an employer-
employee relationship and security of tenure.
The employer-employee relationship between herein petitioner and members of the Lubat group was
not terminated at the end of the 1993 season. From the end of the 1993 season until the beginning of
the 1994 season, they were considered only on leave but nevertheless still in the employ of petitioner.
Petitioner is liable for illegal dismissal and should be responsible for the reinstatement of the Lubat
group and the payment of their back wages. However, since reinstatement is no longer possible as
petitioner has already closed its Balintawak plant, respondent members of the said group should
instead be awarded normal separation pay (in lieu of reinstatement) equivalent to at least one month
pay, or one month pay for every year of service, whichever is higher. It must be stressed that
the separation pay being awarded to the Lubat group is due to illegal dismissal; hence, it is different
from the amount of separation pay provided for in Article 283 in case of retrenchment to prevent
losses or in case of closure or cessation of the employer’s business, in either of which the separation
pay is equivalent to at least 1 month or 1/2 month pay for every year of service, whichever is higher.
The formula that petitioner proposes, wherein a year of work is equivalent to actual work rendered for
303 days, is both unfair and inapplicable, considering that Articles 283 and 284 provide that in
connection with separation pay, a fraction of at least six months shall be considered one whole year.
Under these provisions, an employee who worked for only six months in a given year — which is
certainly less than 303 days — is considered to have worked for one whole year.
WHEREFORE, the assailed Decision of Respondent NLRC is hereby AFFIRMED WITH THE
MODIFICATION.

Philippine Tobacco Vs NLRC AYON

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PHILIPPINE TOBACCO FLUE-CURING & REDRYING CORPORATION, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, et al , respondents., G.R. No. 127395,

The cases were consolidated.

The petition is not meritorious.

2. Lubat Group Illegally Dismissed

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