[G.R. No. 121315.

July 19, 1999]

COMPLEX ELECTRONICS EMPLOYEES ASSOCIATION (CEEA
!"#!"$"%&"' (y )&$ u%)o% #!"$)'"%& CECILIA TALA*ERA, GEORGE
ARSOLA, MARIO +IAGO AN+ SOCORRO ,ONCAYAO, petitioners,
vs. T-E NATIONAL LA,OR RELATIONS COMMISSION,
COMPLEX ELECTRONICS CORPORATION, IONICS CIRC.IT,
INC., LA/RENCE 0.A, REME+IOS +E JES.S, MAN.EL
GON1AGA, ROMY +ELA ROSA, TERESITA AN+INO, ARMAN
CA,AC.NGAN,GERRY GA,ANA, E.SE,IA MARANAN 2%'
,ERNA+ET- GACA+, respondents.
[G.R. No. 122133 July 19, 1999]
COMPLEX ELECTRONICS CORPORATION, petitioner, vs. NATIONAL
LA,OR RELATIONS COMMISSION, COMPLEX ELECTRONICS
EMPLOYEES ASSOCIATION (CEEA, !"#!"$"%&"' (y .%)o%
P!"$)'"%&, CECILIA TALA*ERA, respondents.
+ E C I S I O N
4AP.NAN, J.:
These consolidated cases filed by Complex Electronics Employees Association (G.R. No.
12131! and Complex Electronics Corporation (G.R. No. 12213"! assail the #ecision of the
N$RC dated %arch 1&' 1(( )hich set aside the #ecision of the $abor Arbiter dated April 3&'
1((3.
The antecedents of the present petitions are as follo)s*
Complex Electronics Corporation (Complex! )as en+a+ed in the man,fact,re of electronic
prod,cts. -t )as act,ally a s,bcontractor of electronic prod,cts )here its c,stomers +a.e their
/ob orders' sent their o)n materials and consi+ned their e0,ipment to it. The c,stomers )ere
forei+n1based companies )ith different prod,ct lines and specifications re0,irin+ the
employment of )or2ers )ith specific s2ills for each prod,ct line. Th,s' there )as the A%3 $ine
for the Adapti.e %icro 3ystem' -nc.' the 4eril $ine for 4eril Co.' $td.' the $ite15n $ine for the
$ite15n 6hilippines Electronics Co.' etc.
The ran2 and file )or2ers of Complex )ere or+ani7ed into a ,nion 2no)n as the Complex
Electronics Employees Association' herein referred to as the 8nion.
5n %arch 9' 1((2' Complex recei.ed a facsimile messa+e from $ite15n 6hilippines
Electronics Co.' re0,irin+ it to lo)er its price by 1&:. The f,ll text reads as follo)s*
This is to inform yo,r office that Tai)an re0,ired yo, to red,ce yo,r assembly cost
since it is hi+her by & : and no lon+er competiti.e )ith that of mainland China. -t is
f,rther instr,cted that Complex 6rice be patterned )ith that of other so,rces' )hich is
1&: lo)er.
6lease consider and +i.e ,s yo,r re.ised rates soon.
;1<
Conse0,ently' on %arch (' 1((2' a meetin+ )as held bet)een Complex and the personnel of
the $ite15n 6rod,ction $ine. Complex informed its $ite15n personnel that s,ch re0,est of
lo)erin+ their sellin+ price by 1&: )as not feasible as they )ere already inc,rrin+ losses at the
present prices of their prod,cts. 8nder s,ch circ,mstances' Complex re+retf,lly informed the
employees that it )as left )ith no alternati.e b,t to close do)n the operations of the $ite15n
$ine. The company' ho)e.er' promised that*
1! Complex )ill follo) the la) by +i.in+ the people to be retrenched the necessary 1 month
notice. 4ence' retrenchment )ill not ta2e place ,ntil after 1! month from %arch &(' 1((2.
2! The Company )ill try to prolon+ the )or2 for as many people as possible for as lon+ as it
can by loo2in+ for /ob slots for them in another line if )or2load so allo)s and if their s2ills
are compatible )ith the line re0,irement.
3! The company )ill +i.e the employees to be retrenched a retrenchment pay as pro.ided for
by la) i.e. half a month for e.ery year of ser.ice in accordance )ith Article 2=3 of the $abor
Code of 6hilippines.
;2<
The 8nion' on the other hand' p,shed for a retrenchment pay e0,i.alent to one (1! month
salary for e.ery year of ser.ice' )hich Complex ref,sed.
5n %arch 13' 1((2' Complex filed a notice of clos,re of the $ite15n $ine )ith the
#epartment of $abor and Employment (#5$E! and the retrenchment of the ninety1se.en ((>!
affected employees.
;3<
5n %arch 2' 1((3' the 8nion filed a notice of stri2e )ith the National Conciliation and
%ediation ?oard (NC%?!.
T)o days thereafter' or on %arch 2>' 1((3' the 8nion cond,cted a stri2e .ote )hich
res,lted in a @yes@ .ote.
-n the e.enin+ of April "' 1((2' the machinery' e0,ipment and materials bein+ ,sed for
prod,ction at Complex )ere p,lled1o,t from the company premises and transferred to the
premises of -onics Circ,it' -nc. (-onics! at Cab,yao' $a+,na. The follo)in+ day' a total clos,re
of company operation )as effected at Complex.
A complaint )as' thereafter' filed )ith the $abor Arbitration ?ranch of the N$RC for ,nfair
labor practice' ille+al clos,reAille+al loc2o,t' money claims for .acation lea.e' sic2 lea.e' ,npaid
)a+es' 13th month pay' dama+es and attorneyBs fees. The 8nion alle+ed that the p,ll1o,t of the
machinery' e0,ipment and materials from the company premises' )hich res,lted to the s,dden
clos,re of the company )as in .iolation of 3ection 3 and =' R,le C---' ?oo2 D of the $abor
Code of the 6hilippines
;9<
and the existin+ C?A. -onics )as impleaded as a party defendant
beca,se the officers and mana+ement personnel of Complex )ere also holdin+ office at -onics
)ith $a)rence E,a as the 6resident of both companies.
Complex' on the other hand' a.erred that since the time the 8nion filed its notice of stri2e'
there )as a si+nificant decline in the 0,antity and 0,ality of the prod,cts in all of the prod,ction
lines. The deli.ery sched,les )ere not met promptin+ the c,stomers to lod+e complaints a+ainst
them. Fearf,l that the machinery' e0,ipment and materials )o,ld be rendered inoperati.e and
,nprod,cti.e d,e to the impendin+ stri2e of the )or2ers' the c,stomers ordered their p,ll1o,t
and transfer to -onics. Th,s' Complex )as compelled to cease operations.
-onics contended that it )as an entity separate and distinct from Complex and had been in
existence since G,ly ' 1(=9 or ei+ht (=! years before the labor disp,te arose at Complex. $i2e
Complex' it )as also en+a+ed in the semi1cond,ctor b,siness )here the machinery' e0,ipment
and materials )ere consi+ned to them by their c,stomers. Hhile admittin+ that $a)rence E,a'
the 6resident of Complex )as also the 6resident of -onics' the latter denied ha.in+ E,a as their
o)ner since he had no recorded s,bscription of 61'2&&'&&&.&& in -onics as claimed by the
8nion. -onics f,rther ar+,ed that the hirin+ of some displaced )or2ers of Complex )as an
exercise of mana+ement prero+ati.es. $i2e)ise' the transfer of the machinery' e0,ipment and
materials from Complex )as the decision of the o)ners )ho )ere common c,stomers of
Complex and -onics.
5n April 3&' 1((3' the $abor Arbiter rendered a decision the dispositi.e portion of )hich
reads*
H4EREF5RE' all the fore+oin+ premises bein+ considered' /,d+ment is hereby
rendered orderin+ the respondent Complex Electronics Corporation andAor -onics
Circ,it -ncorporated andAor $a)rence E,a' to reinstate the 31 abo.e1listed
employees to their former position )ith all the ri+hts' pri.ile+es and benefits
appertainin+ thereto' and to pay said complainants1employees the a++re+ate
bac2)a+es amo,ntin+ 62"'(9('=(1.=& as of April "' 1((3 and to s,ch f,rther
bac2)a+es ,ntil their act,al reinstatement. -n the e.ent reinstatement is no lon+er
feasible for reasons not attrib,table to the complainants' said respondents are also
liable to pay complainants1employees their separation pay to be comp,ted at the rate
of one (1! month pay for e.ery year of ser.ice' a fraction of at least six ("! months to
be considered as one )hole year.
F,rther' the aforenamed three (3! respondents are hereby ordered to pay /ointly and
solidarily the complainants1employees an a++re+ate moral dama+es in the amo,nt
of 61'&"2'&&&.&& and exemplary dama+es in the a++re+ate s,m of631'&&&.&&.
And finally' said respondents are ordered to pay attorneyBs fees e0,i.alent to ten
percent (1&:! of )hate.er has been ad/,dicated herein in fa.or of the complainants.
The char+e of slo)do)n stri2e filed by respondent Complex a+ainst the ,nion is
hereby dismissed for lac2 of merit.
35 5R#ERE#.
;<
3eparate appeals )ere filed by Complex' -onics and $a)rence E,a before the respondent
N$RC )hich rendered the 0,estioned decision on %arch 1&' 1((' the decretal portion of )hich
states*
H4EREF5RE' premises considered' the assailed decision is hereby ordered .acated
and set aside' and a ne) one entered orderin+ respondent Complex Electronics
Corporation to pay 31 complainants e0,i.alent to one month pay in lie, of notice
and separation pay e0,i.alent to one month pay for e.ery year of ser.ice and a
fraction of six months considered as one )hole year.
Respondents -onics Circ,it -ncorporated and $a)rence E,a are hereby ordered
excl,ded as parties solidarily liable )ith Complex Electronics Corporation.
The a)ard of moral dama+es is li2e)ise deleted for lac2 of merit.
Respondent Complex' ho)e.er' is hereby ordered to pay attorneyBs fees e0,i.alent to
ten (1&:! percent of the total amo,nt of a)ard +ranted the complainants.
35 5R#ERE#.
;"<
Complex' -onics and the 8nion filed their motions for reconsideration of the abo.e decision
)hich )ere denied by the respondent N$RC in an 5rder dated G,ly 11' 1((.
;><
4ence these petitions.
-n G.R. No. 12131' petitioner Complex Electronics Employees Association asse.erates that
the respondent N$RC erred )hen it*
I
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E$ECTR5N-C3 C5R65RAT-5N.
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$A?5R AR?-TER G53E #E DERA.
;=<
5n the other hand' in G.R. No. 12213"' petitioner Complex Electronics Corporation raised
the follo)in+ iss,es' to )it*
I
68?$-C RE365N#ENT N$RC ACTE# -N GRADE A?83E 5F #-3CRET-5N
A%58NT-NG T5 $ACJ 5F 5R -N ECCE33 5F G8R-3#-CT-5N -N
6R5%8$GAT-NG -T3 #EC-3-5N AN# 5R#ER #ATE# 1& %ARC4 1((' AN#
11 G8$I 1((' RE36ECT-DE$I' T4E 3A%E ?E-NG -N C5NTRADENT-5N 5F
T4E EC6RE33 %AN#ATE 5F T4E $AH G5DERN-NG T4E 6AI%ENT 5F
5NE %5NT4 6AI -N LIEU 5F N5T-CE' 3E6ARAT-5N 6AI AN#
ATT5RNEIB3 FEE3.
II
T4ERE -3 N5 A66EA$' N5R ANI 6$A-N' 36EE#I AN# A#EE8ATE
RE%E#I -N T4E 5R#-NARI C58R3E 5F $AH.
;(<
5n #ecember 23' 1(("' the 8nion filed a motion for consolidation of G.R. No. 12213" )ith
G.R. No. 12131.
;1&<
The motion )as +ranted by this Co,rt in a Resol,tion dated G,ne 23' 1((>.
;11<
5n No.ember 1&' 1((>' the 8nion presented additional doc,mentary e.idence )hich
consisted of a ne)spaper clippin+ in the %anila ?,lletin' dated A,+,st 1=' 1((> bearin+ the
pict,re of $a)rence E,a )ith the follo)in+ inscription*
RECERT-F-CAT-5N. The Cab,yao ($a+,na! operation of -onic Circ,its' -nc.
consistin+ of plants 2' 3' 9 and )as recertified to -35 (&&2 as electronics contract
man,fact,rer by the T8D' a ratin+ firm )ith head0,arters in %,nich'
Germany. $a)rence E,a' -onics president and chief exec,ti.e officer' holds the
pla0,e of recertification presented by G,nther Theis7 (3rd from left!' re+ional
mana+er of T8D 6rod,cts 3er.ices Asia d,rin+ ceremonies held at 3ta. Elena Golf
Cl,b. This is the first of its 2ind in the co,ntry that fo,r plants )ere certified at the
same time.
;12<
The 8nion claimed that the said clippin+ sho)ed that both corporations' -onics and
Complex are one and the same.
-n ans)er to this alle+ation' -onics explained that the photo )hich appeared at the %anila
?,lletin iss,e of A,+,st 1=' 1((> pertained only to respondent -onicsK recertification of -35
(&&2. There )as no mention abo,t Complex Electronics Corporation. -onics claimed that a mere
photo is ins,fficient to concl,de that -onics and Complex are one and the same.
;13<
He shall first del.e on the iss,es raised by the petitioner 8nion.
The 8nion anchors its position on the fact that $a)rence E,a is both the president of
Complex and -onics and that both companies ha.e the same set of ?oard of #irectors. -t claims
that b,siness has not ceased at Complex b,t )as merely transferred to -onics' a r,na)ay
shop. To pro.e that -onics )as /,st a r,na)ay shop' petitioner asserts that o,t of the =&'&&&
shares comprisin+ the increased capital stoc2 of -onics' it )as Complex that o)ns ma/ority of
said shares )ith 61'2&&'&&&.&& as its capital s,bscription and 699='&&&.&& as its paid ,p
in.estment' compared to 6=&&'&&&.&& s,bscription and 6329'"&.&& paid1,p o)in+ to the other
stoc2holders' combined. Th,s' accordin+ to the 8nion' there is a clear +ro,nd to pierce the .eil
of corporate fiction.
The 8nion f,rther posits that there )as an ille+al loc2o,tAille+al dismissal considerin+ that
as of %arch 11' 1((2' the company had a +ross sales of 6"1'(">'( from a capitali7ation
of 61'&&'&&&.&&. -t e.en ran2ed n,mber thirty amon+ the top fifty corporations in
%,ntinl,pa. Complex' therefore' cannot claim that it )as losin+ in its b,siness )hich
necessitated its clos,re.
Hith re+ards to $a)rence E,a' petitioner maintains that he sho,ld be made personally liable
to the 8nion since he )as the principal player in the clos,re of the company' not to mention the
clandestine and s,rreptitio,s manner in )hich s,ch clos,re )as carried o,t' )itho,t re+ard to
their ri+ht to d,e process.
The 8nionBs contentions are ,ntenable.
A Lr,na)ay shopM is defined as an ind,strial plant mo.ed by its o)ners from one location to
another to escape ,nion labor re+,lations or state la)s' b,t the term is also ,sed to describe a
plant remo.ed to a ne) location in order to discriminate a+ainst employees at the old plant
beca,se of their ,nion acti.ities.
;19<
-t is one )herein the employer mo.es its b,siness to another
location or it temporarily closes its b,siness for anti1,nion p,rposes.
;1<
A Lr,na)ay shopM in this
sense' is a relocation moti.ated by anti1,nion animus rather than for b,siness reasons. -n this
case' ho)e.er' -onics )as not set ,p merely for the p,rpose of transferrin+ the b,siness of
Complex. At the time the labor disp,te arose at Complex' -onics )as already existin+ as an
independent company. As earlier mentioned' it has been in existence since G,ly ' 1(=9. -t
cannot' therefore' be said that the temporary clos,re in Complex and its s,bse0,ent transfer of
b,siness to -onics )as for anti1,nion p,rposes. The 8nion failed to sho) that the primary reason
for the clos,re of the establishment )as d,e to the ,nion acti.ities of the employees.
The mere fact that one or more corporations are o)ned or controlled by the same or sin+le
stoc2holder is not a s,fficient +ro,nd for disre+ardin+ separate corporate personalities. Th,s'
in Indophil Textile Mill Workers Union vs. Calica'
;1"<
)e r,led that*
;-<n the case at bar' petitioner see2s to pierce the .eil of corporate entity of Acrylic'
alle+in+ that the creation of the corporation is a de.ise to e.ade the application of the
C?A bet)een petitioner 8nion and pri.ate respondent company. Hhile )e do not
disco,nt the possibility of the similarities of the b,sinesses of pri.ate respondent and
Acrylic' neither are )e inclined to apply the doctrine in.o2ed by petitioner in +rantin+
the relief so,+ht. The fact that the b,sinesses of pri.ate respondent and Acrylic are
related' that some of the employees of the pri.ate respondent are the same persons
mannin+ and pro.idin+ for a,xiliary ser.ices to the ,nits of Acrylic' and that the
physical plants' offices and facilities are sit,ated in the same compo,nd' it is o,r
considered opinion that these facts are not s,fficient to /,stify the piercin+ of the
corporate .eil of Acrylic.
$i2e)ise' in Del Rosario vs. National Laor Relations Commission'
;1><
the Co,rt stated that
s,bstantial identity of the incorporators of t)o corporations does not necessarily imply that there
)as fra,d committed to /,stify piercin+ the .eil of corporate fiction.
-n the recent case of !antos vs. National Laor Relations Commission"
;1=<
)e also r,led that*
The basic r,le is still that )hich can be ded,ced from the Co,rtKs prono,ncement
in !unio vs. National Laor Relations Commission' th,s*
xxx.. %ere o)nership by a sin+le stoc2holder or by another corporation of all or
nearly all of the capital stoc2 of a corporation is not of itself s,fficient +ro,nd for
disre+ardin+ the separate corporate personality.
-onics may be en+a+ed in the same b,siness as that of Complex' b,t this fact alone is not
eno,+h reason to pierce the .eil of corporate fiction of the corporation. Hell1settled is the r,le
that a corporation has a personality separate and distinct from that of its officers and
stoc2holders. This fiction of corporate entity can only be disre+arded in certain cases s,ch as
)hen it is ,sed to defeat p,blic con.enience' /,stify )ron+' protect fra,d' or defend crime.
;1(<
To
disre+ard said separate /,ridical personality of a corporation' the )ron+doin+ m,st be clearly and
con.incin+ly established.
;2&<
As to the additional doc,mentary e.idence )hich consisted of a ne)spaper clippin+ filed by
petitioner 8nion' )e a+ree )ith respondent -onics that the photoAne)spaper clippin+ itself does
not pro.e that -onics and Complex are one and the same entity. The photoAne)spaper clippin+
merely sho)ed that some plants of -onics )ere recertified to -35 (&&2 and does not sho) that
there is a relation bet)een Complex and -onics except for the fact that $a)rence E,a )as also
the president of -onics. 4o)e.er' as )e ha.e stated abo.e' the mere fact that both of the
corporations ha.e the same president is not in itself s,fficient to pierce the .eil of corporate
fiction of the t)o corporations.
He' li2e)ise' disa+ree )ith the 8nion that there )as in this case an ille+al loc2o,tAille+al
dismissal. $oc2o,t is the temporary ref,sal of employer to f,rnish )or2 as a res,lt of an
ind,strial or labor disp,te.
;21<
-t may be manifested by the employerBs act of excl,din+ employees
)ho are ,nion members.
;22<
-n the present case' there )as a complete cessation of the b,siness
operations at Complex not beca,se of the labor disp,te. -t sho,ld be recalled that' before the
labor disp,te' Complex had already informed the employees that they )o,ld be closin+ the $ite1
5n $ine. The employees' ho)e.er' demanded for a separation pay e0,i.alent to one (1! month
salary for e.ery year of ser.ice )hich Complex ref,sed to +i.e. Hhen Complex filed a notice of
clos,re of its $ite15n $ine' the employees filed a notice of stri2e )hich +reatly alarmed the
c,stomers of Complex and this led to the p,ll1o,t of their e0,ipment' machinery and materials
from Complex. Th,s' )itho,t the m,ch needed e0,ipment' Complex )as ,nable to contin,e its
b,siness. -t )as left )ith no other choice except to sh,t do)n the entire b,siness. The clos,re'
therefore' )as not moti.ated by the ,nion acti.ities of the employees' b,t rather by necessity
since it can no lon+er en+a+e in prod,ction )itho,t the m,ch needed materials' e0,ipment and
machinery. He 0,ote )ith appro.al the findin+s of the respondent N$RC on this matter*
At first +lance after readin+ the decision a 0,o' it )o,ld seem that the clos,re of
respondentBs operation is not /,stified. 4o)e.er' a deeper examination of the records
alon+ )ith the e.idence' )o,ld sho) that the clos,re' altho,+h it )as done abr,ptly
as there )as no compliance )ith the 3&1day prior notice re0,irement' said clos,re )as
not intended to circ,m.ent the pro.isions of the $abor Code on termination of
employment. The clos,re of operation by Complex on April >' 1((2 )as not )itho,t
.alid reasons. C,stomers of respondent alarmed by the pendin+ labor disp,te and the
imminent stri2e to be foisted by the ,nion' as sho)n by their stri2e .ote' directed
respondent Complex to p,ll1o,t its e0,ipment' machinery and materials to other safe
bonded )areho,se. Respondent bein+ mere consi+nees of the e0,ipment' machinery
and materials )ere )itho,t any reco,rse b,t to obli+e the c,stomersB directi.e. The
p,ll1o,t )as effected on April "' 1((2. He can see here that ComplexBs action'
standin+ alone' )ill not res,lt in ille+al clos,re that )o,ld ca,se the ille+al dismissal
of the complainant )or2ers. 4ence' the $abor ArbiterBs concl,sion that since there
)ere only t)o (2! of respondentBs c,stomers )ho ha.e expressed p,ll1o,t of b,siness
from respondent Complex )hile most of the c,stomerBs ha.e not and' therefore' it is
not /,stified to close operation cannot be ,pheld. The determination to cease
operation is a prero+ati.e of mana+ement that is ,s,ally not interfered )ith by the
3tate as no employer can be re0,ired to contin,e operatin+ at a loss simply to
maintain the )or2ers in employment. That )o,ld be ta2in+ of property )itho,t d,e
process of la) )hich the employer has the ri+ht to resist. (Col,mbia #e.elopment
Corp. .s. %inister of $abor and Employment' 19" 3CRA 92!
As to the claim of petitioner 8nion that Complex )as +ainin+ profit' the financial statements
for the years 1((&' 1((1 and 1((2 iss,ed by the a,ditin+ and acco,ntin+ firm 3ycip' Gorres and
Delayo readily sho) that Complex )as indeed contin,o,sly experiencin+ deficit and losses.
;23<
Nonetheless' )hether or not Complex )as inc,rrin+ +reat losses' it is still one of the
mana+ementKs prero+ati.e to close do)n its b,siness as lon+ as it is done in +ood faith. Th,s'
in Catatista et al." vs. NLRC and #ictorias Millin$ Co." Inc.
;29<
)e r,led*
-n any case' Article 2=3 of the $abor Code is clear that an employer may close or
cease his b,siness operations or ,nderta2in+ e.en if he is not s,fferin+ from serio,s
b,siness losses or financial re.erses' as lon+ as he pays his employees their
termination pay in the amo,nt correspondin+ to their len+th of ser.ice. -t )o,ld
indeed' be stretchin+ the intent and spirit of the la) if )e )ere to ,n/,stly interfere in
mana+ementKs prero+ati.e to close or cease its b,siness operations /,st beca,se said
b,siness operations or ,nderta2in+ is not s,fferin+ from any loss.
Goin+ no) to the iss,e of personal liability of $a)rence E,a' it is settled that in the absence
of malice or bad faith' a stoc2holder or an officer of a corporation cannot be made personally
liable for corporate liabilities.
;2<
-n the present case' )hile it may be tr,e that the e0,ipment'
materials and machinery )ere p,lled1o,t of Complex and transferred to -onics d,rin+ the ni+ht'
their action )as s,fficiently explained by $a)rence E,a in his Comment to the petition filed by
the 8nion. He 0,ote*
The fact that the p,ll1o,t of the machinery' e0,ipment and materials )as effected
d,rin+ ni+httime is not per se an indicia of bad faith on the part of respondent E,a
since he had no other reco,rse' and the same )as dictated by the pre.ailin+ mood of
,nrest as the laborers )ere already .andali7in+ the e0,ipment' bent on pic2etin+ the
company premises and threats to loc2 o,t the company officers )ere bein+
made. 3,ch acts of respondent E,a )ere' in fact' made p,rs,ant to the demands of
ComplexBs c,stomers )ho )ere already alarmed by the pendin+ labor disp,te and
imminent stri2e to be sta+e by the laborers' to ha.e their e0,ipment' machinery and
materials p,ll o,t of Complex. As s,ch' these acts )ere merely done p,rs,ant to his
official f,nctions and )ere not' in any )ay' made )ith e.ident bad faith.
;2"<
He percei.e no intention on the part of $a)rence E,a and the other officers of Complex to
defra,d the employees and the 8nion. They )ere compelled to act ,pon the instr,ctions of their
c,stomers )ho )ere the real o)ners of the e0,ipment' materials and machinery. The pre.ailin+
labor ,nrest permeatin+ )ithin the premises of Complex left the officers )ith no other choice b,t
to p,ll them o,t of Complex at ni+ht to pre.ent their destr,ction. Th,s' )e see no reason to
declare $a)rence E,a personally liable to the 8nion.
Anent the a)ard of dama+es' )e are inclined to a+ree )ith the N$RC that there is no basis
for s,ch a)ard. He a+ain 0,ote the respondent N$RC )ith fa.or*
?y and lar+e' )e cannot hold respondents +,ilty of ,nfair labor practice as fo,nd by
the $abor Arbiter since the clos,re of operation of Complex )as not established by
stron+ e.idence that the p,rpose of said clos,re )as to interfere )ith the employeesB
ri+ht to self1or+ani7ation and collecti.e bar+ainin+. As .ery clearly established' the
clos,re )as tri++ered by the c,stomersB p,ll1o,t of their e0,ipment' machinery and
materials' )ho )ere alarmed by the pendin+ labor disp,te and the imminent stri2e by
the ,nion' and as a protection to their interest p,lled1o,t of b,siness from Complex
)ho had no reco,rse b,t to cease operation to pre.ent f,rther losses. The indiscretion
committed by the 8nion in filin+ the notice of stri2e' )hich to o,r mind is not the
proper remedy to 0,estion the amo,nt of benefits d,e the complainants )ho )ill be
retrenched at the clos,re of the $ite15n $ine' +a.e a )ron+ si+nal to c,stomers of
Complex' )hich conse0,ently res,lted in the loss of employment of not only a fe)
b,t to all the of the )or2ers. -t may be )orth sayin+ that the ri+ht to stri2e sho,ld
only be a remedy of last resort and m,st not be ,sed as a sho) of force a+ainst the
employer.
;2><
He shall no) +o to the iss,es raised by Complex in G.R. No. 12213".
Complex claims that the respondent N$RC erred in orderin+ them to pay the 8nion one (1!
month pay as indemnity for fail,re to +i.e notice to its employees at least thirty (3&! days before
s,ch clos,re since it )as 0,ite clear that the employees )ere notified of the impendin+ clos,re of
the $ite15n $ine as early as %arch (' 1((2. %oreo.er' the abr,pt cessation of operations )as
bro,+ht abo,t by the s,dden p,ll1o,t of the c,stomers )hich rendered it impossible for Complex
to obser.e the re0,ired thirty (3&! days notice.
Article 2=3 of the $abor Code pro.ides that*
ART. 2=3. Clos,re of establishment and red,ction of personnel.11 The employer may
also terminate the employment of any employee d,e to the installation of labor sa.in+
de.ices' red,ndancy' retrenchment to pre.ent losses or the closin+ or cessation of
operation of the establishment or ,nderta2in+ ,nless the closin+ is for the p,rpose of
circ,m.entin+ the pro.isions of this Title' by ser.in+ a )ritten notice on the )or2ers
and the %inistry of $abor and Employment at least one (1! month before the intended
date thereof. x x x. (8nderlinin+ o,rs.!
The p,rpose of the notice re0,irement is to enable the proper a,thorities to determine after
hearin+ )hether s,ch clos,re is bein+ done in +ood faith' i.e.' for ona %ide b,siness reasons' or
)hether' to the contrary' the clos,re is bein+ resorted to as a means of e.adin+ compliance )ith
the /,st obli+ations of the employer to the employees affected.
;2=<
Hhile the la) ac2no)led+es the mana+ement prero+ati.e of closin+ the b,siness' it does
not' ho)e.er' allo) the b,siness establishment to disre+ard the re0,irements of the la). The
case of Ma$nolia Dair& 'roducts v. NLRC
;2(<
is 0,ite emphatic abo,t this*
The la) a,thori7es an employer' li2e the herein petitioners' to terminate the
employment of any employee d,e to the installation of labor sa.in+ de.ices. The
installation of these de.ices is a mana+ement prero+ati.e' and the co,rts )ill not
interfere )ith its exercise in the absence of ab,se of discretion' arbitrariness' or
malicio,sness on the part of mana+ement' as in this case. Nonetheless' this did not
exc,se petitioner from complyin+ )ith the re0,ired )ritten notice to the employee
and to the #epartment of $abor and Employment (#5$E! at least one month before
the intended date of termination. This proced,re enables an employee to contest the
reality or +ood faith character of the asserted +ro,nd for the termination of his
ser.ices before the #5$E.
The fail,re of petitioner to ser.e the )ritten notice to pri.ate respondent and to the
#5$E' ho)e.er' does not ipso %acto ma2e pri.ate respondentBs termination from
ser.ice ille+al so as to entitle her to reinstatement and payment of bac2)a+es. -f at
all' her termination from ser.ice is merely defecti.e beca,se it )as not tainted )ith
bad faith or arbitrariness and )as d,e to a .alid ca,se.
The )ell settled r,le is that the employer shall be sanctioned for non1compliance )ith
the re0,irements of' or for fail,re to obser.e d,e process in terminatin+ from ser.ice
its employee. -n Wenphil Corp. v. NLRC' )e sanctioned the employer for this fail,re
by orderin+ it to indemnify the employee the amo,nt of 61'&&&.&&. 3imilarly' )e
imposed the same amo,nt as indemnification in Ruer(orld )'hils.*" Inc. v. NLRC'
and' +urelio v. NLRC and +lhamra Industries" Inc. v. NLRC. 3,bse0,ently' the s,m
of 6'&&&.&& )as a)arded to an employee in World(ide 'apermills" Inc. v. NLRC'
and 62'&&&.&& in !eu$uero" et al." v. NLRC" et al. Recently' the s,m of 6'&&&.&&
)as a+ain imposed as indemnify a+ainst the employer. He see no .alid and co+ent
reason )hy petitioner sho,ld not be li2e)ise sanctioned for its fail,re to ser.e the
mandatory )ritten notice. 8nder the attendant facts' )e find the amo,nt of
6'&&&.&&' to be /,st and reasonable.
He' therefore' find no +ra.e ab,se of discretion on the part of the N$RC in orderin+
Complex to pay one (1! month salary by )ay of indemnity. -t m,st be borne in mind that )hat is
at sta2e is the means of li.elihood of the )or2ers so they are at least entitled to be formally
informed of the mana+ement decisions re+ardin+ their employment.
;3&<
Complex' li2e)ise' maintains that it is not liable for the payment of separation pay since
Article 2=3 of the $abor Code a)ards separation pay only in cases of clos,re not d,e to serio,s
b,siness re.ersals. -n this case' the clos,re of Complex )as bro,+ht abo,t by the losses bein+
s,ffered by the corporation.
He disa+ree.
Article 2=3 f,rther pro.ides*
x x x. -n case of termination d,e to the installation of labor sa.in+ de.ices or
red,ndancy' the )or2er affected thereby shall be entitled to a separation pay
e0,i.alent to at least his one (1! month pay or to at least one (1! month pay for e.ery
year of ser.ice' )hiche.er is hi+her. -n case of retrenchment to pre.ent losses and in
case of cessation of operations of establishment or ,nderta2in+ not d,e to serio,s
b,siness losses or financial re.erses' the separation pay shall be e0,i.alent to one (1!
month pay or at least one1half (1A2! month pay for e.ery year of ser.ice' )hiche.er is
hi+her. A fraction of at least six ("! months shall be considered one (1! )hole year.
-t is settled that in case of clos,res or cessation of operation of b,siness establishments not
d,e to serio,s b,siness losses or financial re.erses'
;31<
the employees are al)ays +i.en separation
benefits.
-n the instant case' not)ithstandin+ the financial losses s,ffered by Complex' s,ch )as'
ho)e.er' not the main reason for its clos,re. Complex admitted in its petition that the main
reason for the cessation of the operations )as the p,ll1o,t of the materials' e0,ipment and
machinery from the premises of the corporation as dictated by its c,stomers. -t )as act,ally still
capable of contin,in+ the b,siness b,t opted to close do)n to pre.ent f,rther losses. 8nder the
facts and circ,mstances of the case' )e find no +ra.e ab,se of discretion on the part of the p,blic
respondent in a)ardin+ the employees one (1! month pay for e.ery year of ser.ice as termination
pay.
/-ERE5ORE' premises considered' the assailed decision of the N$RC is AFF-R%E#.
SO OR+ERE+.
Davide" ,r." C.,. )Chairman*" Melo" 'ardo" and -nares.!antia$o" ,,." conc,r.
;1<
Rollo" of G.R. No. 122"3"' p. 2>&.
;2<
Id." at 2>1.
;3<
N$RC #ecision dated %arch 1&' 1((' rollo of G.R. No. 12131' p. >=.
;9<
3ec. 3. Notice o% strike or lockout.11 -n cases of bar+ainin+ deadloc2s' a notice of stri2e or loc2o,t shall be filed
)ith the re+ional branch of the ?oard at least thirty (3&! days before the intended dated thereof' a copy of said notice
ha.in+ been ser.ed on the other party concerned. -n case of ,nfair labor practices' the period of notice shall be
fifteen (1! days. 4o)e.er' in case of ,nfair labor practice in.ol.in+ the dismissal from employment of ,nion
officers d,ly elected in accordance )ith the ,nion constit,tion and by1la)s )hich may constit,te ,nion1b,stin+
)here the existence of the ,nion is threatened' the fifteen1day coolin+1off period shall not apply and the ,nion may
ta2e action immediately after the stri2e .ote is cond,cted and the res,lts thereof s,bmitted to the #epartment of
$abor and Employment.
3ec. =. Declaration o% strike and lockout.11 3ho,ld the disp,te remain ,nsettled after the lapse of the re0,isite
n,mber of days from the filin+ of the notice of stri2e or loc2o,t and the res,lts of the election re0,ired in the
precedin+ section' the labor ,nion may stri2e or the employer may loc2o,t its )or2ers. The re+ional branch or the
?oard shall contin,e mediatin+ and conciliatin+.
;<
Rollo of G.R. 12131' pp. >21>3.
;"<
Id." at ((11&&.
;><
Id." at 1&211&".
;=<
Id." at 31.
;(<
Rollo of G.R. No. 12213"' p. 21.
;1&<
Rollo of G.R. 12131' pp. 2>312>9.
;11<
Rollo of G.R. No. 12213"' p. (>.
;12<
Rollo of G.R. No. 12131' pp. 3=313=".
;13<
Id.' at 2=>12(1.
;19<
3ee Textile Hor2ers 8nion v. #arlin+ton %f+. Co.' 3=& 83 2"3' 12 $ Ed. 2d =2>' =' 3 Ct ((9.
;1<
Hilliam 6. 3tats2y' HE3TB3 $EGA$ T4E3A8R83A#-CT-5NARI' 3pecial #el,xe Edition' p. ">1.
;1"<
2& 3CRA "(> ;1((2<.
;1><
1=> 3CRA >>> ;1((&<.
;1=<
29 3CRA ">3 ;1(("<.
;1(<
Concept ?,ilders' -nc. v. National $abor Relations Commission' 2> 3CRA 19( ;1(("<N 6hilippine -nternational
?an2 v. Co,rt of Appeals' 22 3CRA 2( ;1(("<N I, v. National $abor Relations Commission' 29 3CRA 139
;1((<.
;2&<
%at,+,ina -nte+rated Hood 6rod,cts' -nc. v. Co,rt of Appeals' 2"3 3CRA 9(& ;1(("<.
;21<
Art. 212 (p!' $A?5R C5#E 5F T4E 64-$-66-NE3.
;22<
3ta. %esa 3lip)ays O En+ineerin+ Co. v. C-R' 9= 5.G. 333' as cited in -- C.A. A7,cena' T4E $A?5R C5#E
H-T4 C5%%ENT3 AN# CA3E3' Re.ised 1((3 Ed.' p.2(".
;23<
Records pp. 92>1939.
;29<
29> 3CRA 9" ;1((<.
;2<
A43A6hilippines' -nc. vs. Co,rt of Appeals' 2> 3CRA 31( ;1(("<.
;2"<
Rollo of G.R. No. 12131' p. 1=2.
;2><
Id." at. (>1(=.
;2=<
Coca Cola ?ottlers (6hils.!' -nc. v. N$RC" 1(9 3CRA (2 ;1((1<.
;2(<
22 3CRA 9=3 ;1(("<.
;3&<
6A$ v. N$RC' 22 3CRA 3&1 ;1((3<.
;31<
North #a.ao %inin+ Corp. vs. N$RC' 29 3CRA >21' ;1(("<N 3ee also* 3tate -n.estment 4o,se' -nc. vs. co,rt of
Appeals' 2&" 3CRA 39=' ;1((2<N %indanao Terminal and ?ro2era+e 3er.ice' -nc. vs. The 4on. %inister of $abor
and Employment' 23= 3CRA >>' ;1((9<.