CASE DIGEST
FLB Construction v.
Trinidad
G.R. No. 194931 |
October 6, 2021
THIRD DIVISION, ZALAMEDA,
J.
Illegal Dismissal; Failure
to substantiate its business closure; Backwages
An employer must prove the closure of its business in full and complete compliance with all statutory requirements prior to the date of the finality of the award of backwages and/or separation pay in order to have the separation pay be computed until the date of actual closure of business. Otherwise, the separation pay shall be computed until the finality of the resolution or decision of the Court.
FLB Construction, operated by spouses Fidel and Marlyn Bermudez, hired respondents Susana Trinidad, Alicia Perdido, and Daniel Sebastian in various capacities. In 2006, the respondents claimed they were instructed to stop reporting for work and subsequently filed complaints for unpaid wages and benefits. The company contended it was suffering financial losses, resulting in periodic work schedules, which respondents allegedly refused, eventually abandoning their jobs. However, no documentary evidence was provided to support payment or proper business closure.
The Labor Arbiter found for the
respondents, awarding unpaid salaries and 13th-month pay, but did not grant
separation pay due to the company’s closure. The NLRC affirmed this decision,
emphasizing the employer's burden to prove payment. The Court of Appeals
modified this ruling, declaring the respondents illegally dismissed since the
company’s closure was not properly substantiated.
Whether the respondents were illegally dismissed due to FLB Construction’s failure to substantiate its business closure.
YES. The Supreme Court upheld the CA’s finding that the employees were not properly dismissed. The Supreme Court ruled that FLB Construction failed to prove a bona fide closure of its business. The company did not provide necessary documentation, such as financial statements or proper notices to the Department of Labor and Employment (DOLE), to substantiate its claims of financial losses and closure.
Petitioners failed to show proof it served written notices to its workers and to the DOLE at least one (1) month before the intended date of closure of its business establishment. Moreover, petitioners failed to substantiate its claim that their closure was due to heavy financial losses. They did not submit financial statements prepared by independent auditors, balance sheets showing profit and loss, or annual income tax returns.
Thus, the closure of the business
without compliance with statutory requirements (notice to DOLE and proof of
financial losses) rendered the dismissal illegal. The Court ruled that
employees are entitled to separation pay but not backwages due to the closure
of operations.
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