Philippine Tobacco Flue-Curing & Redrying Corporation v. National Labor Relations Commission

PANGANIBAN, J.:

This case involves two groups of seasonal workers who claimed separation benefits after the closure of petitioner's tobacco processing plant in Balintawak, Metro Manila and the transfer of its tobacco operations to Candon, Ilocos Sur. Petitioner refuses to grant separation pay to the workers belonging to the first batch (referred to as the Lubat group), because they had not been given work during the preceding year and, hence, were no longer in its employ at the time it closed its Balintawak plant. Likewise, it claims exemption from awarding separation pay to the second batch (the Luris group), because the closure of its plant was due to "serious business losses,"

as defined in Article 283 of the Labor Code. In resolving this controversy, this Court issues the following rulings: (1) the aforecited Article 283 applies to both complete and partial cessation of operations; (2) "serious business losses" that would have exempted petitioner from paying separation benefits were not proven by its "recasted financial statements"; (3) the employer's refusal to rehire the first batch of employees had no legal justification and was thus an illegal dismissal; and (4) the second batch of employees are entitled to the separation pay provided by the Labor Code "in cases of closure .

. . not due to serious business losses."

The Case The foregoing point encapsulate our ruling on the present Petition for Certiorari, assailing the August 30, 1996 Decision of the National Labor Relations Commission (NLRC)1 in NLRC NCR Case No. 00-08-06061-94 and NLRC Case No. 08-06082-94, the dispositive portion of which reads: WHEREFORE, the instant appeals are hereby dismissed for lack of merit.2 The NLRC upheld the November 27, 1995 Decision of the labor arbiter3 which disposed: WHEREFORE, premises considered, respondent PHILIPPINE TOBACCO FLUE-CURING and REDRYING CORPORATION is hereby ordered to pay within ten (10) days from receipt hereof herein complainants (Lubat group) their respective separation pay, equivalent to one-half month pay for every year of service considering the above stated conditions, as follows: under Lubat Group: Mary Jane Estaris - P9,206.25 (P122.75 x 15 days x 5 yrs.); Eufrecina Javier - P9,131.25 (P121.75 x 15 days x 5 yrs.); Ofelia Plandez - P10,957.50 (P121.75 x 15 days x 6 yrs.); Edgardo Pormento - P5,310 (P118 x 15 x 3 yrs.); Cresencia Tiu - P7,140 (P119 x 15 days x 4 yrs.); Ma.

Victoria Leon - P7,305 (P121.75 x 15 days x 4 yrs.); Ligaya Lubat - P11,047.50 (122.75 x 15 days x 6 yrs.); Gellen Eulalia - P12,888.75 (P122.75 x 15 days x 7 yrs.); and Aida Licudo - P18,630 (P124.20 x 15 days x 10 yrs.); and [u]nder Luris group: Erlinda Borce - P37,116 (P154.65 x 15 days x 21 yrs.) - (less) of P11,598.75); Dominga Ayala - P56,477.94 (P156.40 x 15 days x 32 yrs.) - P18,594.06); Carmelita Apanto - P42,720.20 (P154.65 x 15 days x 22 yrs.) - P13,757.74); Aida Albaniel - P6,693.75 (P148.75 x 15 days x 5 yrs.) - P4,462.50); Salvacion Sorio - (P51,034.50 (P154.65 x 15 days x 30 yrs.) - P18,558.00); Petronila Samon Petronilo Samson) - P13,567.50 (P150.75 x 15 days x 9 yrs.) P6,783.75); Erlinda Caranay - P34,615.81 (P153.65 x 15 days x 20 yrs.) P11,479.19); Rosalie Tiu - P11,231.25 (P149.75 x 15 days x 7 yrs.) - P4,492.50); Milagros Quismundo - P44,943.73 (P154.65 x 15 days x 26 yrs.) - P16,149.78); Luz dela Cruz - P13,567.50 (P150.75 x 15 days x 9 yrs.) - P6,783.75); Vivian Derla - P13,477.50 (P149.75 x 15 days x 8 yrs.) - P4,492.50); Irene Eniego - P7,475.31 (P149.75 x 15 days x 5 yrs.) - (P3,755.94); Vicenta Garcia - P44,618.56 (P155.35 x 15 days x 26 yrs.) - P15,967.94); Yolanda Ignacio - P7,400.31 (P148.75 x 15 days x 5 yrs.) - P3,755.94); Adoracion Ladera P18,276 (P152.30 x 15 days x 12) - P9,138); Luciana Luris - P64,577.78 (P159 x 15 days x 35 yrs.) - P18,975.97); Gloria Mendez - P32,266.50 (P153.65 x 15 x 18 yrs.) - P9,219 Leonila Mendoza - P41,485.50 (P153.65 x 15 days x 23 yrs.) - P11,523.75); Rebecca Morales - P29,835 (P153 x 15 x 17 yrs.) - P9,180); Teresita Tiu - P27,657 (P153.65 x 15 x 17 yrs.) - P11,523.75); Emelita Quilano - P23,901.06 (P148.75 x 15 x 5 yrs.) - P3,755.94); Julieta Pedrigal - P54,622.68 (P156.40 x 15 x 32 yrs.) - P20,449.32); Antonia Reyes - P52,410.26 (P155.35 x 15 x 33 yrs.) - P24,487.99); Josefa Rosales - P32,291.83) P153.65 x 15 x 18 yrs.) - P9,193.67); Francisca Tismo - P25,377.67); (P153.65 x 15 x 5 yrs.) - P9,193.58); Norma Aguirre - P11,300.25 (P150.75 x 15 x 8 yrs.) P6,783.75); Carolina Aviso - P4,522.50 (P150.75 x 15 x 4 yrs.) - P4,522.50); Amelia Bautista - P13,567.50 (P150.75 x 15 x 9 yrs.) - P6,783.75); Rosa Borja - P2,863.75 (P145 x 15 x 3 yrs.) - P3,661.25); Apolonia Castillo - P27,540 (P153 x 15 x 17 yrs.) - P11,475); Carmelita Cayetano P34,571.25 (P153.65 x 15 x 20 yrs.) - P11,523.75); Roselfida Centina - P11,231.25 (P149.75 x 15 x 7 yrs.) - P4,492.50); Patria Bustillo - P39,461.41 (P154.65 x 16 x 24 yrs.) - P16,212.59); Felicidad Cipriano - P11,306.25 (P150.75 x 15 x 8 yrs.) - P6,783.75); Marina Corpuz - P15,716.25 (150.75 x 15 x 10 yrs.) - P6,783.75); Matilde Corpuz - P34,312.50 (P152.50 x 15 x 20 yrs.) - P11,437.50); Josefina Cuenza - P70,241.05 (P159.85 x 15 x 40 yrs.) - P25,668.95); Bienvenida De Guzman - P68,974.45 (P159.15 x 15 x 39 yrs.) - P24,128.30; Eugenio dela Cruz - P30,281.21 (P153.65 x 15 x 17 yrs.) - P8,899.54); Maria Pineda - P11,306.25 (P150.75 x 15 x 8 yrs.) - P6,783.75); Panchita Narca - P34,571.25 (P153.65 x 18 x 20) - P11,523.75); Crisanta Mulawin - P25,389.98 (P153.65 x 15 x 15 yrs.

- P9,181.87); Virginia Mengolio - P34,571.25 (P153.65 x 15 x 20 yrs. - P11,523.75); Rosario Osma - P25,286.14 (P153. x 15 x 15 yrs.) - P9,138.80); Arceli Madrilejo - P51,034.50 (P154.65 x 15 x 28 yrs.) - P13,918.50); Christopher Labador - P13,507.57 (P149.75 x 15 x 8 yrs.) - P4,462.43); Candelaria Lazona - P39,435.80 (P154.65 x 15 x 22 yrs.) - P11,598.75); Angelita Lestingyo - P56,469.28 (156 x 15 x 32 yrs.) - P18,602.72); Carmelita Espiritu - P20,499.75 (P151.85 x 15 x 13 yrs.) - P9,111); Helen Estaris - P11,156.25 (P148.75 x 15 x 7 yrs.) - P4,462.50); Rosa Japson - P29,961.75 (P153.65 x 15 x 18 yrs.) - P11,523.75); Ardionela Lazona - P13,479.50) (P149.75 x 15 x 8 yrs.) - P4,490.50), Ariel Ultra - P20,773.70 (P150.75 x 15 x 13 yrs.) - P8,622.55); Reynante Tumbucon - P4,343.50 (P147.75 x 15 x 7 yrs.

- P6,738.75); Antenor Remollino - P13,609.36) P148-75 x 15 x 8 yrs.) - P4,240.64); Alexander Remollino - P7,425.56 (P148.75 x 15 x 5 yrs.) - P3,760.69); Arnaldo Napalit - P27,817.29 (P152.30 x 15 x 16 yrs. - P8,734.71); Macario Moriel - P37,046.96 (153.65 x 15 x 22 yrs. - (P13,657.57); Joselito Licudo - P5,135 (P147.75 x 15 x 4 yrs.

- P3,730.69); Paterno Lavalle - P7,350.56 (P147.75 x 15 x 5 yrs. - P3,730.69); Jerry Licudo - P11,257.05 (P149.75 x 15 x 7 yrs. - P4,466.70); Cesar Samson - P2,918.06 (P147.75 x 15 x 3 yrs.

- P3,730.69); Eduardo Esguerra, Jr. P20,412 (P151.20 x 15 x 15 yrs. - P13,608); Ramises Centaran - P17,970 (P149.75 x 15 x 8 yrs. less the amount advanced to him if any; Juan Bustillo - P9,665.26 (P148.75 x 15 x 6 yrs.

- P3,722.24); Rolando Albaniel - P20,351.25 (P150.75 x 15 x 12 yrs. - P6,783.75); Reynaldo Aquino - P27,475.35 (P150.75 x 15 x 16 yrs. - P8,704.65); Jaime Esguerra - P3,175.20 (P151.20 x 15 x 19 yrs.

- P11,340); Armando Japson - P11,156.25 (P148.75 x 15 x 7 yrs. - P4,462.50); Fernando Esguerra - P15,723[.]75 (P149.75 x 15 x 9 yrs. - P4,492.50); Carlito Eniego - P13,066.14 (P145.94 x 15 x 8 yrs.

- P4,446.66); Carlito Eniego - P13,066.14 (P145.95 x 15 x 8 yrs. - P4,446.66); Reynaldo Dayot - P9,566.81 (P147.75 x 15 x 6 yrs. - P3,730.69); Marcelo Dayot - P9,074.36 (P149.75 x 15 x 7 yrs.

- P6,649.39); Rodolfo Cerbite - P24,873.75 (P150.75 x 15 x 16 yrs. - P11,306.25); Artemio Boquilla - P44,362.93 (P153.65 x 15 x 25 yrs. - P13,255.82); and the following subject to the no.

of years provided they rendered at least one (1) month service each season as appearing in their personnel and service records. Pascuala Aguja - P48,399.75 (P153.65 x 15 x 26 yrs. - P11,523.75); Eric Aguja - P9,667.50 (P118 x 15 x 8 yrs.

- P4,492.50); Celestina Aquino - P11,257.51 (P149,75 x 15 x 8 yrs. - P6,712.49); Reynaldo Barquin - P13,519.26 (P149.75 x 15 x 9 yrs. - P6,696.99); Felomena Bagonia - P24,716.25 (150 x 15 x 14 yrs.

- P6,783.75); Rosita Bagonia - P42,386.26 (P149.75 x 15 x 24 years. - P11,523.75); Regina Benitez - P56,586.75 (P151 x 15 x 28 yrs. - P6,833.25); Edgardo Bergano - P9,784.75 (P149.40 x 15 x 6 yrs.

- P3,661.25); Rodolfo Borromeo - P26,979.81 (P150 x 15 x 18 yrs. - P13,520.19); Ludivico Dalay - P14,180.36 (P152.50 x 15 x 10 yrs. - P8,694.64); Ascilipiades Goyena - P27,020.63 (P150 x 15 x 18 yrs.

- P13,479.37); Remedios Goyena - P22,511.25 (P150 x 15 x 13 yrs. - P6,738.75); Oscar Emnace - P17,970 (P149.75 x 15 x 8 yrs. less the amount he received if any); Gertrudes Guiao P59,670 (P153 x 15 x 29 yrs.

- P6,885); Lolita Musne - P53,394.36 (P154,65 x 15 x 29 yrs. - P13,878.39); Alberto Parama -P12,161.25 (P140 x 15 x 9 yrs. - P6,738.75); Luningning Peralta - P48,448.50 (P153.65 x 15 x 26 yrs.

- P11,475); Amelia Ranches - P58,102.04 (P157.60 x 15 x 34 yrs. - P22,273.96); Ernesto San Juan - P11,261.25 (P149.75 x 15 x 7 yrs. - P4,462.50); Liwayway San Juan - P67,655.08) P160.35 x 15 x 39 yrs.

- P26,149.67); Ricardo Triumfante - P8,986.00 (P149.75 x 15 x 7 yrs. - P6,738.75); Lorena Torcido - P11,231.25 (P149.75 x 15 x 8 yrs. - P6,738.75); Priscilla Villasin - P64,162.50 (P147.50 x 15 x 29 yrs.

less any amount she received from the respondent; Luzviminda Villegas - P13,478 (P149.75 x 15 x 8 yrs. - P4,492.00); Rosile Verzosa - P13,387.50 (P149. x 15 x 8 yrs.

- P4,492.50); Charito Isidro - P53,997 (P155.85 x 15 x 32 yrs. - P20,811); Peter Labayne - P17,130.36 (P150.45 x 15 x 7 yrs. - P15,132.38); Shirley Lubat - P13,773 (P149.75 x 15 x 8 yrs.

- P4,196.22); or a total sum of P2,811,724.33, plus ten (10%) percent attorney's fee, or a grand total sum of P3,092,896.76. As . .

. data o[n] their salary rates were not indicated on record, the claims of complainants Milagros Calubayan, Carmencita Cruz, Armando Goyena, Erlinda Nakpil, Pacita Narca, Virgilio Punzalan, Roberto Reduta, Maritess Medina, Nestor Medina, and Dominga Siababa can not be ascertained, and therefore, the same should be dismissed but without prejudice. With respect to the other claims of the above Luris group including their charge of illegal dismissal, they are hereby dismissed for lack of merit.4 The Facts The facts are summarized in the challenged NLRC Decision as follows: These refer to the consolidated cases for payment of separation pay lodged by [the] Lubat Group, and for illegal dismissal and underpayment of separation pay by [the] Luris group, with prayers for damages and attorney's fees against the above respondents.

The record reveals that all complainants in both cases were former workers of respondent with their respective periods of employment and latest wages stated in the parties' pleadings/[a]nnexes. On August 1, 1994, due to supposed serious financial reverses and losses suffered by respondent and its desire to prevent further losses, a notice of permanent closure of its red[r]ying operations at Balintawak, Quezon City and transfer [of] the same to Candon, Ilocos Sur was served to the DOLE. On August 3, 1994, complainants were also notified of the said decision to close and transfer.

On August 16, 1994, their separation benefits were given to them but allegedly [based on] wrong computation when management did not consider 3/4 of their length of service as claimed by complainants (Luris group). While the Lubat group were not granted . .

. separation pay as their previous seasonal service [was] not continuous, and as of August, 1994, they were not employed ther[e]with as declared by respondent Based on the complaint and from the above facts, the issues are as follows: 1) Whether or not the Lubat Group are entitled to the payment of separation pay[:] 2) Whether or not the Luris Group can be legally awarded separation pay differentials[,] or whether or not the computation adopted by respondent in granting complainants' separation pay is erroneous[;] and 3) Whether or not the Luris group can be properly allowed backwages and damages by reason of their alleged illegal dismissal, and for both groups, attorney's fees[.] In [its] position paper respondent maintains that [the] Lubat group are not entitled to separation pay for the reason that they were not among those separated or could not have been separated from employment on August 3, 1994 due to such closure and transfer as they were not employed or did not report for work at the plant for the 1994 tobacco season as shown by [the] company's records.

As to the Luris group, although being questioned by this group, respondent considers the following formula in determining the length of service in years as basis for computing the separation pay of this group to be fair and reasonable and . . .

supported by Article 283 of the Labor Code, as amended, such as the total number of working days actually worked over total number of working days in a year (303 days), multipl[ied] by the daily rate and further multipl[ied] by 15 days. Respondent explains that this is so because complainants' nature of work is seasonal as they are employed every year only during the tobacco season which may fall within the months of February to November but actually work for a period of less [than] six (6) months for each season. The law qualifies tenure for purposes of separation benefits as based on "service"

and not "employment". With these considerations, respondent claims that complainants' relief for separation pay differentials must fail.

On the charge of illegal dismissal by the Luris group, respondent asserts that complainants were separated from employment for [a] just cause that is the closure of its REDRYING operations at the Balintawak Plant and the transfer of the same to Candon, Ilocos Sur which was authorized by the law and the parties' CBA. The decision of management to close and transfer its tobacco processing and REDRYING operations was based on the fact that it had consistently incurred a net loss from these operations, its principal line of business, although its audited financial statement showed a net profit after tax from 1990 to 1993 based on over-all operations. Moreover, respondent points out that as the Luris group and the DOLE were served a written notice at least one (1) month before the intended date of closure effective on Sept.

15, 1994, the due process requirement was met. Viewed from the above, respondent cannot prosper. On the other hand, the Lubat group declare that originally there were seven complainants but eight were added.

Being seasonal workers, they were hired by respondent to operate the Balintawak factory from January to September, averaging 6 to 8 months annually. As alleged by them, when they reported for their annual shift, respondent refused to extend them assignment for no apparent reason up to the end of the season in August, 1994. When they ask[ed] for separation pay, respondent told them that because they were not in the payroll for 1994, no such benefit would be paid to them.

It is their contention that complainants are entitled to separation pay [of] at least one-half month pay for every year of service[,] as they were illegally dismissed[,] to be computed each season ranging from 6 to 8 months [which] should be considered as one year, contrary to the respondent's basis which is the total no. of days they actually rendered service. To back up the above, complainants cite a case wherein the Supreme Court held that seasonal employees are not strictly speaking, separated from the service but merely considered on leave of absence without pay until reemployed.

Their employment relationship is never severed but only suspended. For the prosecution of this case, complainants were forced to hire the services of counsel for which they claim . .

. attorney's fees. As far as the Luris group are concerned, they state that they were factory workers of respondents numbering one hundred (100) whose names, periods of employment and latest salaries are contained in the lists attached to their position paper.

As claimed by this group, on August 3, 1994, respondents told them that their services were already terminated and all of them dismissed as the factory would be transferred to Candon, Ilocos Sur. Letter-notices dated August 3, 1994, (Annexes F, F-1 and F-2 to their position paper) showing that the date when they were notified of the closure was the same date they were instantly dismissed although it is admitted in the notice that their decision to transfer was made as early as March 5, 1994. Furthermore, complainants question the basis of the computations of their separation benefits which should include the period when there [was] no work to be done in a year.

[B]ecause of necessity, they received the short amount as their separation pay by way of voucher but "under protest" as shown in Annexes C-C-1 to C-5 to their pleading. With the sudden transfer of the machiner[y] of respondents without giving them advance notice leaving them with insufficient separation pay, complainants experienced serious anxiety and wounded feelings for which they p[r]ay for damages including attorney's fees.

Consequently, complainants also pray for backwages, allowance and other benefits from the date of their illegal dismissal up to the final disposition of the case. Furthermore, complainants maintain that since the company is being transferred to the province, the former's separation may be considered compulsory retirement under R.A.

7641, providing for one-half month pay benefit for every year of service, and under Section 3, Rule V, Book III of the Labor Code, as amended for which they also demand payment thereof; Complainants also submitted the computation of their differential in separation pay (addendum and supplemental addendum to their position paper) Annex "G", "G-1" to "G-4". To state the facts simply, 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 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 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. Instead, petitioner awarded them separation pay computed according to the following formula: total no. of days actually worked