G.R. No. 119085 . September 9, 1999.
RESTAURANTE LAS CONCHAS and/or DAVID GONZALES, petitioners, vs. LYDIA LLEGO, SERGIO DANO, EDWARD ARDIANTE, FEDERICO DE LA CRUZ, SHERILITA ANIEL, LORNA AZUELA, ZENAIDA HERMOCILLA, FELICIDAD ROLDAN, HELEN MANALAYSAY, LUZ BALDELAMAR, FELICIDAD MENDOZA, DOLORES BAQUIZO, RODOLFO BAS, CIRIACO BATITES, and THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, respondents.

FACTS

Private respondents were employees of petitioner Restaurante Las Conchas. While they were employed, the Restaurant Services Corporation (allegedly the operator, with petitioners David Gonzales and Elizabeth Anne Gonzales as officers/directors) became involved in an unlawful detainer case with Ayala Land, Inc. over the restaurant’s premises. Ayala Land, Inc. obtained a favorable judgment, which was affirmed on appeal. Petitioners attempted but failed to find a new location at Ortigas Center, leading to the business shutdown on February 28, 1994, and the termination of private respondents’ employment. Private respondents filed a complaint for separation pay and 13th month pay. The Labor Arbiter dismissed the complaint, but the NLRC reversed the decision and ordered petitioners to pay separation benefits. Petitioners’ motion for reconsideration was denied.

ISSUE

1. Whether the NLRC committed grave abuse of discretion in reversing the Labor Arbiter’s decision and ordering payment of separation pay.
2. Whether the NLRC committed grave abuse of discretion in not considering petitioners’ evidence supporting their defense of serious business losses.
3. Whether petitioners David Gonzales and Elizabeth Anne Gonzales can be held personally liable for the separation pay.

RULING

The petition is bereft of merit.
On the first and second issues: Petitioners claimed the closure was due to serious business losses, thus exempting them from paying separation pay under Article 283 of the Labor Code. The Court ruled that while the law does not obligate payment of separation benefits when closure is due to serious losses, the employer bears the burden of proving such losses. Petitioners failed to meet this burden. The allegation of business losses was raised for the first time on appeal to the NLRC and was not raised during the Labor Arbiter hearings, making it a mere afterthought. The evidence presented (statements of assets and liabilities and Income Tax Returns) were not certified by a CPA, an accounting firm, or the BIR. They were mere self-serving declarations devoid of probative value. While technical rules of evidence are not controlling in NLRC proceedings, the evidence must have a modicum of admissibility. Self-serving documents, like those submitted, are treated as a mere scrap of paper. The private respondents’ failure to object does not give these documents credence, as petitioners failed to show they fall under an exception to the hearsay rule.
On the third issue: Petitioners David and Elizabeth Anne Gonzales argued they could not be held personally liable as the corporation has a separate personality. The Court ruled they could be held liable. The complaint was filed against Restaurante Las Conchas and the spouses David and Elizabeth Anne Gonzales as owner, manager, and president. The Restaurant Services Corporation was not a party respondent and was only mentioned in petitioners’ Motion to Dismiss. Petitioners did not adduce evidence to prove the corporation owned the restaurant. The Court cited established doctrine that corporate directors and officers are personally liable for the payment of employees’ wages and monetary benefits if they acted with malice or bad faith, or if the corporation is used to evade a lawful obligation. The failure to pay separation pay due to closure, despite the legal obligation, constitutes bad faith making the responsible officers personally liable.