Case Digest: Manila Polo Employees v. Manila Polo Club

G.R. No. 172846: July 24, 2013




On December 13, 2001, the Board of Directors of respondent Manila Polo Club, Inc., unanimously resolved to completely terminate the entire operations of its Food and Beverage (F & B) outlets, except the Last Chukker, and award its operations to a qualified restaurant operator or caterer.

Subsequently, on March 22, 2002, respondents Board approved the implementation of the retrenchment program of employees who are directly and indirectly involved with the operations of the F & B outlets and authorized then General Manager Philippe D. Bartholomi to pay the employees separation pay. On even date, respondent sent notices to the petitioner and the affected employees (via registered mail) as well as submitted an Establishment Termination Report to the DOLE.

On June 17, 2002, the parties agreed to submit before VA Diamonon the lone issue of whether the retrenchment of the 117 union members is legal. On August 28, 2002, VA Diamonon dismissed petitioners complaint for lack of merit, but without prejudice to the payment of separation pay to the affected employees.

Upon an exhaustive examination of the evidence presented by the parties, the CA affirmed in toto the VAs Decision and denied the substantive aspects of petitioners motion for reconsideration; hence, this petition.

ISSUE: Whether or not members of petitioner union were illegally dismissed

HELD: No. CA decision sustained.

Labor Law

It is apparent from the records that this case involves a closure of business undertaking, not retrenchment. The legal requirements and consequences of these two authorized causes in the termination of employment are discernible.

While retrenchment and closure of a business establishment or undertaking are often used interchangeably and are interrelated, they are actually two separate and independent authorized causes for termination of employment.

Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of business occasioned by lack of work and considerable reduction in the volume of business.

Closure of a business or undertaking due to business losses is the reversal of fortune of the employer whereby there is a complete cessation of business operations to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped.

One of the prerogatives of management is the decision to close the entire establishment or to close or abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce capitalization.

While the Labor Code provides for the payment of separation package in case of retrenchment to prevent losses, it does not obligate the employer for the payment thereof if there is closure of business due to serious losses.

For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of the law if a court interferes with management's prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment.

While petitioner did not sufficiently establish substantial losses to justify closure of its F & B Department on this ground, there is basis for its claim that the continued maintenance of said department had become more expensive through the years. An evaluation of the financial figures appearing in the audited financial statements prepared by the SGV & Co. shows that ninety-one to ninety-six (91%-96%) percent of the actual revenues earned by the F & B Department comprised the costs and expenses in maintaining the department. Petitioner's decision to place its F & B operations under a concessionaire must then be respected, absent a showing of bad faith on its part.

In fine, management's exercise of its prerogative to close a section, branch, department, plant or shop will be upheld as long as it is done in good faith to advance the employer's interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement.

Guided by the foregoing, the Court shall refuse to dwell on the issue of whether respondent was in sound financial condition when it resolved to stop the operations of its F & B Department. As stated, an employer can lawfully close shop anytime even if not due to serious business losses or financial reverses. Furthermore, the issue would entail an inquiry into the factual veracity of the evidence presented by the parties, the determination of which is not the SCs statutory function. Indeed, petitioner is asking the SC to sift through the evidence on record and pass upon whether respondent had, in truth and in fact, suffered from serious business losses or financial reverses.

That task, however, would be contrary to the well-settled principle that this Court is not a trier of facts, and cannot re-examine and re-evaluate the probative value of the evidence presented to the VA and the CA, which formed the basis of the questioned decision.

Further, there is nothing on record to indicate that the closure of respondents F & B Department was made in bad faith. It was not motivated by any specific and clearly determinable union activity of the employees; rather, it was truly dictated by economic necessity. Despite petitioners allegations, no convincing and credible proofs were presented to establish the claim that such closure qualifies as an act of union-busting and ULP. No evidence was shown that the closure is stirred not by a desire to avoid further losses but to discourage the workers from organizing themselves into a union for more effective negotiations with the management.