EASTRIDGE GOLF CLUB v.

EASTRIDGE LABOR UNION

August 22, 2008 | Austria-Martinez., J. | Certiorari | Closure of Business
PETITIONER: Eastridge Golf Club, Inc
RESPONDENT: Eastridge Golf Club, Inc., Labor Union-SUPER and its members
SUMMARY: Petitioners were kitchen staff for Eastridge when they were terminated on the ground of closure of operations
of their department and its operations was replaced by a concessionaire.
DOCTRINE: Even though termination through cessation of operation needs not due to financial loss or to prove otherwise.
It is still important to comply to the requisites especially that the cessation was made bona fide.
FACTS:
1. Respondent were working as kitchen staff for the Food
and Beverage Department of the Petitioner. However,
due to downsizing and company reorganization, the
petitioner decided to turn over the operations of F&B
Department to a third-party concessionaire, thus
dismissing the services of the employees. The company
filed an Established Termination Report stating the
laying off of the respondents.
2. COMPLAINT: Illegal dismissal, Unfair labor practice
and payment of 13th month pay.
3. RESPONDENTS: Dismissal was not based on any of the
causes allowed by law, and it was effected without due
process. They further alleged that there was no real
transfer of operations with the following evidence:
(1)payslips, (2)Monthly payroll register, (3)Health
insurance payment, (4)Remmittance report, and (5) SSS
contribution payment return. All of which are issued or
paid by the petitioner itself.
4. PETITIONER: the company issued various office
memoranda informing respondents that, to minimize
company losses, the management decided to bid out a
part of its operations, specifically the F&B Department.
There further explained that the transfer of operations
was not intended to displace the workers, in facts, a
procedure was adopted by which the old F&B staff could
be rehired by the new concessionaire and several were
rehired. Those who failed to comply with this procedure
were considered resigned when the new operations took
over.
5. LA: Illegally dismissed. NLRC: Reversed. CA: LA
reinstated

3.

4.

ISSUE:WoN the petitioners were illegally dismissedYES.

RULING: Petition DENIED
RATIO:
1. Art 283 LC (Closure of establishment and reduction of
personnel) allows various modes of termination to wit:
(1) installation of labor saving devices, (2) redundancy,
(3) retrenchment to prevent losses, and (4) the closing or
cessation of operation of the establishment or
undertaking. Only the last two was held relevant in this
case.
2. Retrenchment or lay-off is the termination of
employment initiated by the employer, through no fault
of the employees and without prejudice of the latter,
during periods of business recession, industrial

5.

depression, or seasonal fluctuations, or during lulls

occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or
the introduction of new methods or more efficient
machinery or of authomation. However there are certain
substantive and procedural requirements to be followed
namely: (1) retrenchment is necessary to prevent losses
and that such losses are substantial and not merely flimsy
and actual or reasonably imminent, and that retrenchment
is the only effective measin to prevent it, (2) written
notice served to the employees and the DOLE at least 1
month prior to the intended date of retrenchment; and (3)
retrenched employees receive separation pay equivalent
to 1 month pay or at least month pay for every year of
service, which ever is higher. Failure to meet the
requirements will render the termination illegal.
On the other hand, Closure or Cessation of business is
the complete or partial cessation of the operations and/or
shutdown of the establishment of the employer. It is
carried out to either stave off (avoid) the financial ruin
or to promote business interest of the employer. Unlike
retrenchment, closure or cessation of business, as an
authorized cause of termination of employment, need not
depend for validity on evidence of actual or imminent
reversal of the employers fortune. Art 283 authorized
termination of employment due to business closure,
regardless of the underlying reasons and motivations
therefor, be it financial losses or not.
THe court here held that, the termination initiated by the
company is cessation and not retrenchment, since it
declared that operations of F&B department will cease,
and in its memoranda it clearly states the same.
HOWEVER, the PETITIONER IS NOT OUT OF THE
WOODS YET Cessation of operations cant be meddled
with by no court or tribunal except only when the
employers faild to comply with the requirements of
cessation under Art 283 to wit: (1) the closure/cessation
is bona fide, and not to defeat or circumvent the rights of
the employees under the law or valid agreement; (2)
written notice served to the employees and the DOLE 1
month before intended date of cessation, (3) and payment
of separation pay amounting to month for every year
of service or 1 month whichever is higher, in case
cessation is not due to financial losses, if due to financial
losses then no separation pay is due.
In this case, both CA and LA found that the cessation of
the F&B operations was a mere subterfuge in view of the
evidence presented by the employees. However
petitioner reasoned out that if it had no intenton of giving
up F&B operation, it would not have paid separation

benefit to its separated employees. HOWEVER, the

evidence presented by the respondents overwhelmingly
shows that petitioner did not cease its F&B operations
but merely simulated its transfer to the concessionare.
The payslip alone bears the nameof the petitioner. THe
pay roll register was verified by the petitioners Chief
accountant. The same verified the remittance documents

for Philhealth and SSS. This the same accountant was

also the one who cleared the respondents for their
quitclaims and release. Even more, the documents of the
petitioner to prove the taking over of a concessionaire
were also doubtful. The agreement between the petitioner
and the concessionaire is not notarized.