Labor Woes and the NLRC -part 4-

Part 4:

The Verdict (transcript)

Republic of the Philippines
Department of Labor and Employment
National Capital Region Arbitration Branch Quezon City

NLRC CASE NO. NCR-00-06-05501-07




NLRC CASE NO. NCR-00-06-05718-07





Submitted for resolution is a consolidated case of money claims for unpaid salaries or wages, 13th month pays, separation pays, allowances, for an award of damages filed be the above-indicated complainants on various dates against the aforecited respondents.

Complainants Bacar, Reyes and Feliciano were all managerial employees while Emmanuel Feliciano worked as Quality Monitor. As such, they continuously performed their jobs as designated until April 30, 2007 when complainants as well as other employees received a memo issued by the Board informing the former of the corporation’s “temporary closure”. It turned out however, to be a permanent or total closure. Hence, firmly believing that complainants are entitled to their separation pays and other unpaid salaries, they filed the instant complaint with this forum.

Complainants strongly contend the closure effected by respondents was defective and runs contrary to law because of the following reasons: 1. There was no legal basis for such total closure. The financial statements of the company accountant showed that even at 50% depreciation, the remaining assets are still sufficient to cover the obligations which the company incurred as well as the severance pay of all employees; 2. The only reason why it was not done was because of the refusal of the remaining board members in the country (respondents Michelle Marin and Kristine Rodrigo) to cooperate with Daisy Bongais who is also a member of the Board to prepare the board resolution stating the liquidation of said assets; 3. Contrary to Marin’s defense that she acted in good faith, her vehement refusal to help out in the liquidation of the company’s assets considering that she is a corporate officer, is a manifestation of bad faith; and 4. Respondents did not comply with the mandatory notice requirement which is the sending of a simultaneous notice to the employees and to the DOLE at least 30 days before the intended closure.

The purpose of the notice requirement is for the employees to be able to seek substitute employment and for the DOLE to ascertain whether such closure is bona fide or not. Hence, complainants pray for the granting of all the reliefs which they seek to recover in their position papers.

On the other hand, respondent Marin argues that the complaint with respect to her should be dismissed due to the following reasons. 1. She is only holding the position of Administrative Manager, as such she was just a mere employee of respondent corporation and has no hand on the complaint filed by the complainants; 2. The liabilities and other money claims should be borne by the corporation and not its officers or stockholders because a corporation has a personality separate and distinct from the stockholders; and 3. Respondent corporation has already ceased totally its operations due to serious financial reverses as evidenced with the leaving of all corporate officers who are foreigners out of the country in April 2007, so she and the remaining officers should not be made liable to pay complainants’’ separation pays and other accountabilities of the corporation. Hence, respondent prays for the dismissal of the instant complaint for lack of merit.

The issues to be resolved in the instant case are the following:
1. Whether or not the closure of the respondent corporation’s business was bona fide or valid; and
2. Whether or not complaints are entitled to the money claims which they seek to recover.
There is no doubt that under Article 283 of the Labor Code, total or complete closure of a business due to serious financial reverses is one of the authorized causes for the termination of the employment of the affected employees and the business establishment is not obliged to pay the separation pays of the affected employees.

Nevertheless, for such closure to be legal or valid, it must comply with the mandatory requirement of sending simultaneous notices to both the affected employees and the nearest Department of labor and Employment which has the jurisdiction over the working place of the business establishment concerned, at least 30 days before the intended closure.

In the instant case, this forum finds no iota of evidence of compliance to the aforesaid requirements. The notice to the employees is intended to forewarn them of the impending closure in order that they could seek substitute employments and for the DOLE to investigate whether the closure is bona fide or was just concocted to circumvent the law and evade existing legitimate obligation to the affected employees. Hence, the total closure effected by the above indicated respondents is defective and was not bona fide as it was intended to circumvent the statutory law. The corporate officers impleaded are therefore obligated to pay the respective separation pays of herein complaint.

Besides, a close perusal of the affirmative allegation of both party-litigants shows that respondents did not refute or impugn the allegation or complainants as attested by the company’s accountant, that the assets of the company are still more than sufficient to cover the existing obligation and payment of separation pays but respondents Marin and Rodrigo simply refused to open the corporation’s bank accounts to settle even just the severance pay of complainants. Such attitude of the aforecited officers was a manifestation of their bad faith which under the law makes them liable for the unsettled obligations towards the employees-complainants.

Moreover, this forum cannot acquiesce with the defense of respondent Marin that as an Administrative Officer or Manager, she is a mere employee of the corporation, who cannot therefore, be made liable to the claims of complainant. She is estopped to deny she is an employee and a member of the board at the same time.

Since respondents did not controvert the claims of complainants that they were not paid their remaining salaries, 13th month pay and allowance, all of these should be integrated in their respective severance or separation pays.

WHEREFORE, premises all considered, judgment is hereby rendered ordering respondents jointly and severally liable to pay the respective separation pays of complainants at one half (1/2) month pay for every year of service, plus their unpaid salaries, 13th month pay and allowances, to wit:

{Payment computation for John Dale Bacar, Jesus Joseph Reyes, Richelle Ramas-Feliciano and Emmanuel Feliciano}

Quezon City, Philippines,
21 September 2007.
Labor Arbiter

legal/labor 4849239476544566536

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