Labor2-espina V Ca

PILAR ESPINA, et. al. vs. CA and Monde M.Y. San Biscuit Corp. and M.Y.San Biscuit, Inc. (2007) Ponente: J. Chico-Nazario FACTS: 1) M.Y. San Biscuits, Inc. (Respondent M.Y. San) previously made biscuits. Later, the M.Y. San Worker’s Union was informed of the closure of business operations of M.Y. San because of the intended sale of the business to Monde M.Y. San Corp (Respondent Monde) and their termination. Thus, the union and management made an Agreement: management will pay tax-free separation package with a cut-off date for length of service; all terminated employees will get the cash equivalent of vacation and sick leaves; M.Y. San will submit list of all employees to new owner for rehiring, subject to new qualifications. 2) After the sale, Monde began operating. All former employees of M.Y. San, including petitioners Espina, et.al., started working for Monde on a contractual basis. Later, petitioners were terminated so they filed a complaint for illegal dismissal and underpayment with the NLRC. 3) Petitioners alleged that M.Y. San stopped its operations but three days after, resumed its operation with the same management and the sale of M.Y. San to Monde was merely a ploy to circumvent the Labor Code. 4) Respondent M.Y. San insisted that its employer-employee relationship with petitioners had ceased to exist, thus, the complaint for illegal dismissal against it could no longer prosper. Monde says that they conducted a performance evaluation and that the petitioners did not qualify. Petitioners either resigned, refused to report for work, or failed to qualify after the probationary employment period. Those who didn’t report for work were mailed notices that they were dismissed due to AWOL/gross and habitual neglect of duties. 5) The Labor Arbiter dismissed the case for lack of merit saying that M.Y. San’s sale to Monde is its sole prerogative and Monde established just and authorized causes for termination. So, petitioners went to CA and appealed + filed an MR to dismissal. ISSUE: 1) WON closure of M.Y. San due to its sale to Monde is valid? - YES, valid. 2) WON Espina, et. al. were illegally dismissed? - NO, petitioners not illegally dismissed. HELD:

Work is a necessity that has economic significance deserving legal protection. However, employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. This mass of privileges comprises the so-called management prerogatives. State has the right to determine whether an employer’s privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor. One of the rights accorded an employer is the right to close an establishment or undertaking. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. The right to close the operations of an establishment or undertaking is explicitly recognized under the Labor Code as one of the authorized causes in terminating employment of workers, the only limitation being that the closure must not be for the purpose of circumventing the provisions on terminations of employment embodied in the Labor Code and may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer. Under Article 283 of the Labor Code, three requirements are necessary for a valid cessation of business operations, namely: (1) service of a written notice to the employees and to the DOLE at least one (1) month before the intended date thereof; (2) the cessation must be bona fide in character; and (3) payment to the employees of termination pay amounting to at least one half (1/2) month pay for every year of service, or one (1) month pay, whichever is higher. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. Burden of proof is upon the employer. Respondent M.Y. San in good faith complied with the requirements for closure; sold and conveyed all its assets to respondent Monde for valuable consideration; and there were no previous labor problems. Thus, since respondent M.Y. San’s closure and cessation of business was lawful, there was no illegal dismissal of petitioners to speak of. Monde exercised in good faith its management prerogative in terminating Espina, et. al. who had been habitually absent, neglectful of their work, and rendered unsatisfactory service, to the damage and prejudice of the company.