G.R. No. 155710. January 20, 2014
FIRST DIVISION [ G.R. No. 155710, January 20, 2014 ] MARCO A. LEGASPI, CORAZON C. DE CASTRO, ELSIE T. ORGIL, LILIA C. SARIP, NIMFA B. CARRIDO, DIVINAGRACIA M. VALLE, MARIA ANGELI R. OLORIS, JOSIE C. MORALES, DORIS O. SUAREZ, AND ROBERTO G. VALLE, PETITIONERS, V. NATIONAL LABOR RELATIONS COMMISSION, HON. FATIMA JAMBARO-FRANCO, LBC MANAGEMENT SERVICES, INC., CARLOS ARANETA, BEATRIZ G. PELAEZ, LBC EXPRESS, INC., NICOLAS D. GANALONGO, AND ITS RESPONSIBLE OFFICERS AND DIRECTORS, RESPONDENTS.Under review is the decision promulgated on August 1, 2002,[1] whereby the Court of Appeals (CA) found no grave abuse of discretion committed by the National Labor Relations Commission (NLRC) in affirming the decision of the Labor Arbiter dismissing the complaint of the petitioners for illegal dismissal and remanding the case of one petitioner for further proceedings.
Antecedents
The petitioners, except Roberto G. Valle, were employed in the Accounting and Auditing Departments of Luzon Brokerage Corporation (LBC) until sometime between June and September 1992 when they were transferred to LBC Management Services, Inc. (LBC-MSI),[2] then newly created to provide consultancy, auditing, and accounting services to the corporations comprising the LBC Group of Companies. The income in LBC-MSI's operations came from the retainer fees collected from the corporations it serviced. It also offered its services to clients other than the LBC Group of Companies.[3] As the consequence of the petitioners' transfer, they received their separation pay and were offered the same salary and fringe benefits, but they lost their seniority status and were treated as new hires.[4]A few years later, the LBC Group of Companies was reorganized.[5] Due to financial difficulties, the management decided to terminate the business operations of LBC-MSI. On September 14, 1996, the petitioners were informed of the impending dissolution of LBC-MSI effective October 1, 1996. All employees of LBC-MSI were convened in a meeting to discuss the options available to them in the face of the imminent closure. At the meeting, Beatriz Pelaez, LBC-MSI's President, laid down the available options and the corresponding emoluments, specifically, that whoever would be electing to stay on would be absorbed as employees by LBC Express, Inc. and LBC Group of Companies as new hires, but each employee would still receive separation pay at the rate of 15 days’ salary for every year of service regardless of the option chosen.[6]
The petitioners conveyed their sentiments through an appeal filed on September 19, 1996.[7] The appeal went unheeded. Several employees opted to join their respective new employers as new hires, but others, being satisfied with their separation pay, decided to leave. Meanwhile, some employees were re-employed by various LBC affiliates from September 23 to 27, 1996.[8]
The petitioners rejected the options, and instead demanded that LBC-MSI could not cease its operations. They claimed that should the closure of business proceed the employees re-hired by other companies of the LBC Group of Companies must be paid their separation pay in lump sum equivalent to one month salary for every year of service.
Rejecting the demands, the respondents issued a memorandum informing the petitioners of their separation from the company effective immediately. They received their termination letters on October 5 to 7, and October 9, 1996.[9]For his part, Valle alleged that he joined LBC Express, Inc. in September 1976, and was made Vice-President for Operations of the LBC Systems, Inc. on October 1, 1993; that on August 5-10, 1995, he and the President of LBC Systems, Inc. called on the provincial branches in line with their Total Quality Management program;[10] that on August 12, 1995, Mr. Carlos Araneta, the owner and chairman of the LBC Group of Companies asked about the pending proof of delivery (POD) cards in the distribution centers and offices; that the POD cards established that the cargoes, parcels, and letters were delivered to the customers; that if the POD cards were not forwarded to the LBC branches receiving the cargoes, parcels, and letters, the company would have nothing by which to inform the customers about the whereabouts of the cargoes, parcels, and letters; that because of the delays, many senders of cargoes, parcels, and letters complained, thereby jeopardizing the reputation of the company;[11] that he clarified that the pending POD cards had been due to the reorganization, and were just received by his office; and that the employees would not be able to start sorting until the cargoes' current load had been forwarded.
A couple of days later, Valle and the President of LBC Systems, Inc. received the following memorandum from Nicolas Ganalongo, Special Assistant to the Chairman, which stated in part:However, on August 31, 1995, Valle was terminated from his employment. He received only P10,886.48 as separation pay despite his monthly salary at the time of termination being already P15,500.00.[13]
In view of the deplorable delay in the sorting and distribution of the PODS as expressed by the area Vice President, DFC President and your own admission, Ms. Fe Raya, President of LBC Express will immediately take over the operation of LBC Systems.
Pursuant to the above you are to go on leave.
x x x x
Ms. Fe Raya has been tasked to reorganize LBC Systems to effect the following:
1. Immediately update the PODS and reorganize LBC Systems to avoid a similar situation.
x x x x[12]
LBC Systems, Inc. countered that the dismissal of Valle was for gross inefficiency and gross and habitual neglect of his duties as Vice President for Operations;[14] that the incomprehensible delays in the distribution and forwarding of over 50,000 POD cards to the distribution centers demonstrated the negligent and indifferent attitude of Valle in performing his duties; that the failure to forward the POD cards to the LBC branches that received the cargoes necessarily created disorder and confusion within the system; and that the result was the impression among the clients that the company was unreliable.[15]
Between October 25, 1996 and December 13, 1996, the petitioners filed individual complaints for illegal dismissal in the Arbitration Branch of the NLRC-National Capital Region (NCR).
After the parties could not settle their dispute, the Labor Arbiter directed them to submit their respective pleadings.
In a decision dated February 2, 1998,[16] the Labor Arbiter dismissed the complaints for illegal dismissal but ordered LBC-MSI and its officers and directors to give separation pay to the petitioners, except Valle. The Labor Arbiter declared that Valle was illegally dismissed, and directed LBC Express, Inc. and Nicolas Ganalongo to pay to him backwages and separation pay according to the Labor Arbiter's computation.
The petitioners filed a partial appeal to the NLRC.
In its decision dated November 4, 1999,[17] the NLRC affirmed the Labor Arbiter with the modification of the amount awarded to petitioners Maria Angeli R. Oloris and Nimfa B. Carrido. The NLRC ruled that the petitioners were validly dismissed by virtue of the dissolution of the LBC-MSI; and that the case of Valle was being remanded to the Labor Arbiter for further hearing, on the ground that LBC Express, Inc. and LBC Systems, Inc. were two different entities, and Valle was actually an employee of LBC Systems, Inc. instead of LBC Express, Inc. as found by the Labor Arbiter.
The petitioners' motion for reconsideration was denied by the NLRC in its resolution dated June 19, 2000.[18]
The petitioners assailed the NLRC's decision to the CA on certiorari, averring that the NLRC thereby committed abuse of discretion in not finding that they had been illegally dismissed, in remanding the case of Valle to the Labor Arbiter for further proceedings, and in not awarding damages to them.
On August 1, 2002, the CA dismissed the petition for certiorari,[19] declaring that the NLRC did not gravely abuse its discretion in upholding the Labor Arbiter's ruling that: (a) the petitioners were validly dismissed in view of the dissolution of the LBC-MSI; (b) the cessation of the business operations of the employer was a proper ground for dismissal in the absence of bad faith on the part of the employer; and (c) the finding that LBC Systems, Inc., not LBC Express, Inc., was Valle's employer.
Issues
In this appeal, the petitioners assert that:A. THE HONORABLE COURT OF APPEALS HAS COMMITTED REVERSIBLE ERROR WHEN IT DID NOT FIND THE PUBLIC RESPONDENTS TO HAVE ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RENDERING THE QUESTONED JUDGMENT WHEN, OBVIOUSLY, PETITIONERS WERE DISMISSED FROM WORK BY THE PRIVATE RESPONDENTS WITHOUT ANY JUST AND AUTHORIZED CAUSE.The pivotal issues raised are essentially factual ones, and can be summed up as follows:
B. THE HONORABLE COURT OF APPEALS HAS COMMITTED REVERSIBLE ERROR WHEN IT DID NOT FIND THE PUBLIC RESPONDENTS TO HAVE ACTED WITH GRAVE ABUSE OF DISCRETION WHEN THEY DID NOT ADJUDGE THE PRIVATE RESPONDENTS GUILTY OF VIOLATING ARTICLES 277 (B), 282 AND 283 OF THE LABOR CODE, AS AMENDED.
C. THE HONORABLE COURT OF APPEALS HAS COMMITTED REVERSIBLE ERROR IN NOT FINDING AND CONCLUDING THAT PUBLIC RESPONDENT NLRC HAD ACTED WITH GRAVE ABUSE OF DISCRETION IN REMANDING THE CASE OF PETITIONER ROBERTO VALLE TO THE LABOR ARBITER FOR FURTHER PROCEEDINGS WHEN, OBVIOUSLY, AS THE RECORDS SHOW, PETITIONER VALLE IS AN EMPLOYEE OF LBC EXPRESS, INC.
D. THE HONORABLE COURT OF APPEALS HAS COMMITTED REVERSIBLE ERROR WHEN IT DID NOT FIND THE PUBLIC RESPONDENTS TO HAVE ACTED WITH GRAVE ABUSE OF DISCRETION WHEN THEY DID NOT ADJUDGE THE PRIVATE RESPONDENTS LIABLE TO THE PETITIONERS FOR ACTUAL, MORAL, AND EXEMPLARY DAMAGES.[20]
(1) Whether the petitioners were illegally dismissed; and,The petitioners took to task the CA for upholding the congruent findings of the Labor Arbiter and the NLRC that they had been validly dismissed; that the closure of the business had unduly prejudiced them because they had "rendered long and dedicated years of services with the respondent companies;"[21] and that Valle had been an employee of LBC Express, Inc., not of LBC Systems, Inc.
(2) Whether Valle was an employee of LBC Express, Inc.
Ruling
We deny due course to the appeal.A careful examination of the records turned up nothing to warrant a result different from the common findings of the CA, the NLRC and the Labor Arbiter on the issue of termination from employment of the petitioners other than Valle. We reiterate that the petitioners (except Valle) were the employees of LBC-MSI. Their employment could be terminated only if the following requisites concurred, namely: (a) the dismissal was any of the just and authorized causes expressed in Articles 282, 283, and 284 of the Labor Code; and (b) they were accorded due process of law, the most basic of which was the opportunity to be heard and to defend themselves.
The closure of the establishment is one of the authorized causes for the valid termination of employment. The conditions for such a cause are delineated in Article 283 of the Labor Code, which provides:
Article 283. 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 establishment 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 closures 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.The closure or cessation of business is the complete or partial cessation of the operations or shut-down of the establishment of the employer. It is carried out to either stave off financial ruin or to promote the business interest of the employer. Unlike retrenchment, closure or cessation of business as an authorized cause of termination of employment need not depend on evidence of actual or imminent reversal of the employer's fortune for its validity. Article 283 authorizes termination of employment regardless of the underlying reasons and motivations, be they financial losses or not.[22] Article 283 similarly mandates that employees laid off from work due to closures not due to business losses be paid separation pay equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months of service shall be considered as a whole year.
The decision to close business is a management prerogative exclusive to the employer, the exercise of which prerogative no court or tribunal can interfere with, except only when the employer fails to prove compliance with the requirements of Article 283, to wit: (a) that the closure/cessation of business is bona fide, i.e., its purpose is to advance the interest of the employer and not to defeat or circumvent the rights of employees under the law or a valid agreement; (b) that written notice was served on the employees and the Department of Labor and Employment (DOLE) at least one month before the intended date of closure or cessation of business; and (c) that, in case of closure/cessation of business not due to financial losses, the employees affected have been given separation pay equivalent to one-half month pay for every year of service or one month pay, whichever is higher.[23]
The CA, NLRC, and the Labor Arbiter all found that the cessation of the respondents' operations was bona fide and not a mere subterfuge to jeopardize the petitioners' interest. Even as the law was solicitous of the welfare of the employees, it must equally protect the right of an employer to exercise what is clearly a management prerogative. The exercise is to be upheld as long as it was made in good faith to advance the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under the law, or under a valid agreement.[24]
Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if it is not suffering from serious business losses or financial reverses, as long as it pays its employees their termination pay in the amounts corresponding to their lengths of service. To unjustly interfere in management's prerogative to close or cease its business operations just because said business operation or undertaking is not suffering any loss would, indeed, be stretching the intent and spirit of the law.[25]
Considering that the petitioners were effectively separated from work due to an authorized cause, and that they were paid their separation pay, which they freely and voluntarily accepted, the respondent is under no obligation to keep them under its employ or to pay them any damages for that reason.
The sole contention raised by Valle concerns the determination of an employer-employee relationship between him and LBC Express, Inc., the existence of which is a question of fact that should be supported by substantial evidence.[26]
The Labor Arbiter pertinently held as to Valle that LBC Express, Inc. was his real employer, to wit:
The respondent LBC Express, Inc. and Nicolas Ga[r]longo are hereby directed to pay, jointly and severally, complainant Roberto G. Valle the amount of SIX HUNDRED TWENTY ONE THOUSAND TWO HUNDRED FIFTY PESOS (P621,250.00) representing his backwages and separation pay x x x.[27]Both the NLRC and the CA rejected this holding of the Labor Arbiter, and instead ruled that Valle's true employer was LBC Systems, Inc. They thus called for Valle's complaint to be "remanded to the Labor Arbiter a quo for further hearing insofar as LBC Systems, Inc. is concerned."[28] Although it does not review errors that raise factual questions, the Court deems it proper then to exercise its equity jurisdiction in order to review and re-evaluate the factual issues and to look into the records and re-examine the questioned findings in light of the conflict in the factual findings of the Labor Arbiter, on one hand, and the NLRC and the CA, on the other.[29]
The well-settled tests to determine the existence of an employer-employee relationship are fourfold, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power to control the employee's conduct. Of these, the most important is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.[30]
In determining the existence of an employer-employee relationship, the rule of thumb remains to be that the onus probandi falls on the claiming employee to establish or substantiate his claim by the requisite quantum of evidence.[31] There is no particular form of evidence required to prove the existence of the employer-employee relationship, for any competent and relevant evidence may be admitted for that purpose. Yet, any finding that the relationship exists must rest on substantial evidence[32] - that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.[33]
Alas, Valle did not adduce substantial evidence as basis for claiming employer-employee relationship between LBC Express, Inc. and himself. He failed to do so although it was against LBC Express, Inc. that he had filed the complaint for illegal dismissal. All he presented was the acknowledgment receipt of his separation pay bearing the name of LBC Express, Inc., and his bare assertion that "in the middle part of 1995, however, the functions of LBC Systems, Inc. was realigned and reintegrated in the functions of LBC Express, Inc."[34] Nor did he adduce competent proof showing that LBC Express, Inc. engaged his services again after he had been named Vice-President for Operations of LBC Systems, Inc.; or that LBC Express, Inc. paid his salaries, except that appearing on the acknowledgment receipt of his separation pay; or that he reported to LBC Express, Inc.; or that LBC Express, Inc. could dictate what his conduct should be while at work. Clearly, he did not establish his employment with LBC Express, Inc. based on the above-cited four-fold test. That such a crucial and important circumstance would end up with a dearth of supporting evidence was puzzling, considering that the determination of which company was ultimately liable to Valle is the lone issue submitted to us.
The significance of the determination of which between LBC Express, Inc. and LBC Systems, Inc. was Valle's employer could not be denied. Although included in the claim of Valle, the former was not his employer.
The latter was inarguably his employer, except that it was not impleaded as to the claim of illegal dismissal.
In contrast, both the NLRC and the CA concluded that Valle was employed by LBC Systems, Inc. The Court agrees. Valle's own statement that he was initially hired by LBC Express, Inc. in 1976 but was made the Vice-President for Operations of LBC Systems when "[t]he Distribution Department of LBC Express, Inc. was spun-off and became LBC Systems, Inc. in October 1, 1993"[35] rendered it evident that LBC Express, Inc. was separate and distinct from LBC Systems, Inc. His pleadings did not allege or state that LBC Express, Inc. absorbed LBC Systems, Inc., or that the two entities merged. Although the Labor Arbiter did not indicate that LBC Systems, Inc. was no longer Valle's employer, or that LBC Systems, Inc. was the alter ego of LBC Express, Inc., it became perplexing why the Labor Arbiter still held LBC Express, Inc. liable as Valle's employer when the records indicated that LBC Express, Inc. had ceased to be his employer since 1993, the time when its Distribution Department was spun-off to become LBC Systems, Inc.
WHEREFORE, the Court DENIES the petition for review on certiorari; and AFFIRMS the decision promulgated on August 1, 2002 by the Court of Appeals.
No pronouncement on costs of suit.
SO ORDERED.
[1] Rollo, pp. 133-142; penned by Associate Justice Jose L. Sabio, Jr. (retired /deceased), and concurred in by Associate Justice Hilarion L. Aquino (retired), and Associate Justice Danilo B. Pine (retired).[2] Id. at 168.
[3] Id. at 531.
[4] Id. at 168.
[5] Id. at 530.
[6] Supra note 4.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id. at 468-469.
[12] Id. at 281.
[13] Id. at 282.
[14] Id. at 317.
[15] Id. at 469.
[16] Id. at 145-161.
[17] Id. at 165-174.
[18] Id. at 175-177.
[19] Id. at 133-142.
[20] Id. at 75.
[21] Id. at 26.
[22] Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc., Labor Union-Super, G.R. No. 166760, August 22, 2008, 563 SCRA 93, 105.
[23] Mac Adams Metal Engineering Workers Union-Independent v. Mac Adams Metal Engineering, G.R. No. 141615, October 24, 2003, 414 SCRA 411, 417.
[24] J.A. T. General Services v. National Labor Relations Commission, G.R. No. 148340, January 26, 2004, 421 SCRA 78, 89.
[25] Id.
[26] Masonic Contractor, Inc. v. Madjos, G.R. No. 185094, November 25, 2009, 605 SCRA 721, 725.
[27] Rollo, p. 160.
[28] Id. at 173.
[29] Masing and Sons Development Corporation v. Rogelio, G.R. No. 161787, July 27, 2011, 654 SCRA 490, 499.
[30] Lambo v. National Labor Relations Commission, G.R. No. 111042, October 26, 1999, 317 SCRA 420, 427.
[31] Javier v. Fly Ace Corporation, G.R. No. 192558, February 15, 2012, 666 SCRA 382, 396.
[32] Id.
[33] Id. at 395.
[34] Rollo, p. 46.
[35] Rollo, p. 68.
