Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc., Labor Union-Super (2008)
See: Original Decision
Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc., Labor Union-Super, G.R. No. 166760, August 22, 2008, Per Austra-Martinez, J.:
1. Background
• Petitioner [employer] employed respondents as kitchen staff in its Food and Beverage (F&B) Department. Effective October 1, 1999, petitioner terminated the employment of respondents on the ground that the operations of the F&B Department had been turned over to concessionaire Mother’s Choice Meat Shop & Food Services. Petitioner filed with the Department of Labor and Employment (DOLE) an Establishment Termination Report, stating that it laid off the respondents due to company reorganization/downsizing and transfer of operations to a concessionaire.
2. SC Decision / Resolution
• It should be borne in mind that where the closure of business is found to be in bad faith, the dismissal of the employees shall be declared illegal and the employer held liable for their reinstatement and payment of full backwages, unless reinstatement is no longer feasible in which case the employer shall be liable for full backwages as well as separation pay at the rate of one month salary for every year of service, with a fraction of at least six months being considered as one year.
• If the closure of business due to serious business losses or financial reverses is shown to be in good faith, the resultant dismissal of the employees shall be upheld, with no separation benefits due them. If the closure of business is not due to serious business losses or financial reverses but it is shown to be in good faith, the resultant dismissal of the employees will still be upheld but the latter shall be entitled to separation pay at the rate of ½ month pay for every year of service or one month pay, whichever is higher.
• Both the CA and the LA found that the cessation of petitioner’s F&B operations was a mere subterfuge in view of evidence that the latter continued to act as the real employer by paying for the salaries and insurance contributions of the employees of the F&B Department even after the concessionaire allegedly took over its operations. The NLRC saw otherwise, holding that the said evidence did not establish that the cessation of petitioner’s F&B operations was in bad faith.
• Petitioner insists that the documentary evidence presented by respondents hardly establish that it remained the employer of the F&B staff even after the turn over of its operations to the concessionaire. Said evidence was even controverted by the quitclaims and release forms executed by the individual respondents which show that petitioner had paid separation benefits to those employees absorbed by the concessionaire,[60] Petitioner reasons out that if it had not given up its F&B operations, it would not have paid those employees separation benefits.
• Petitioner fails to persuade the Court.
• In Me-Shurn Corporation v. Me-Shurn Workers Union-FSM, the corporation shut down its operations allegedly due to financial losses and paid its workers separation benefits. Yet, barely one month after the shutdown, the corporation resumed operations. In light of such evidence of resumption of operations, the Court held that the earlier shutdown of the corporation was in bad faith.
• With a similar outcome was the closure of the brokerage department of the corporation in Danzas Intercontinental, Inc. v. Daguman. In view of evidence consisting of a mere letter written by the corporation to its clientele that its brokerage department was still operating but with a new staff, the Court declared the earlier closure of the corporation’s brokerage department not bona fide and ordered the reinstatement of its former staff, despite the latter having signed quitclaims and release forms acknowledging payment of separation benefits.
• The closure of a high school department in St. John Colleges, Inc. v. St. John Academy Faculty and Employees Union was likewise annulled upon evidence that barely one year after the announced closure, the school reopened its high school department. The Court found the closure of the high school in bad faith notwithstanding payment to the affected teachers of separation benefits.
• In Capitol Medical Center, Inc. v. Meris the hospital justified the closure of a unit and the dismissal of its head doctor by claiming that there was a dwindling demand for the unit’s services. However, upon examination of the records, the Court found that service demand had in fact been rising, thus negating the very reason proffered by the hospital in closing down the unit. On that score, the Court declared the action of the hospital in bad faith.
• The evidence presented by respondents overwhelmingly shows that petitioner did not cease its F&B operations but merely simulated its transfer to the concessionaire. The payslips alone, the authenticity of which petitioner did not dispute, bear the name of petitioner’s Eastridge Golf Club, Food and Beverage Department. The payroll register for the Food and Beverage Department is verified correct by petitioner’s Chief Accountant, Nestor Rubis. The Philhealth and Social Security System (SSS) remittance documents are likewise certified correct by the same Chief Accountant. These pieces of documentary evidence convincingly, even conclusively, establish that petitioner remained the employer of the F&B staff even after the October 1, 1999 alleged take-over by the concessionaire.
• Even petitioner’s own evidence adds weight to respondents’ evidence. The quitclaims and release forms which petitioner required respondents to sign at the time of the alleged cessation of petitioner’s F&B operations all bear the signature of its Chief Accountant. It was that same Chief Accountant who certified and verified as correct the payroll register and Philhealth/SSS remittance documents issued many months after the alleged cessation of the F&B operations.
• Moreover, the documents which petitioner attached to prove that the concessionaire took over the F&B operations are of doubtful veracity. For one, the October 1, 1999 Agreement (Food & Beverages Concessionaire) with Mother’s Choice Meat Shop & Food Services is not notarized, which is an unusual omission by a business entity such as petitioner. It is also curious that the Certificate of Registration of Business Name as well as the Mayor’s Permit are all in the name of Bilibiran Food Services, not Mother’s Choice Meat Shop & Food Services.
• There is no doubt, therefore, that the CA was correct in ruling that the cessation of petitioner’s F&B operations and transfer to the concessionaire were a mere subterfuge, and that the dismissal of respondents by reason thereof was illegal.
