G.R. No. 76936 August 17, 1989
VIRGILIO RAPOSON, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FIRST DIVISION, EXCELLENCE MARKETING AND NIXON SIOCO, respondents.

FACTS

Petitioner Virgilio Raposon was employed by private respondent Excellence Marketing from July 1972 until August 1982, his last position being Sales Manager. On 31 August 1982, respondent Nixon Sioco, the company’s President and General Manager, informed Raposon that the company was incurring heavy losses and was closing its business. Raposon was given P1,000.00 and considered separated from service. He subsequently filed a complaint for illegal dismissal.
The Labor Arbiter ruled in favor of Raposon, declaring his dismissal illegal and ordering his reinstatement with full backwages. The NLRC initially affirmed this decision in a resolution dated 15 July 1985. However, upon private respondents’ motion for reconsideration, the NLRC reversed itself in a resolution dated 27 December 1985, dismissing the complaint for lack of merit. The NLRC held the dismissal was in good faith due to alleged business reverses, noting Raposon’s acceptance of P1,000.00 and his presumed knowledge of the company’s financial condition as Sales Manager. Raposon’s two motions for reconsideration were denied.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in reversing its earlier resolution and ruling that petitioner Virgilio Raposon was not illegally dismissed.

RULING

The Supreme Court granted the petition, setting aside the NLRC resolutions dated 27 December 1985, 20 May 1986, and 14 November 1986, and reinstating the NLRC resolution of 15 July 1985 which affirmed the Labor Arbiter’s finding of illegal dismissal, with the modification that back salaries shall be limited to three years.
The legal logic is clear: termination of employment under Article 284 (now Article 283) of the Labor Code on the ground of closure requires the employer to prove the existence of serious business reverses or cessation of operation. The Court found that the respondent employer failed to present any evidence to substantiate its claim of business losses or actual closure at the time of dismissal. The Labor Arbiter correctly noted the absence of such proof and the fact that the company did not even serve the required written notice. The employer’s prerogative to dismiss must be exercised without grave abuse of discretion and based on a just cause supported by substantial evidence, which was lacking here.
The NLRC’s presumption that Raposon, as Sales Manager, knew of the company’s finances and that his acceptance of P1,000.00 constituted consent to termination, was erroneous. The burden of proof for a valid dismissal rests on the employer, not the employee. Furthermore, the receipt of separation pay does not estop an employee from contesting the legality of the dismissal. The Court also found it significant that both the Solicitor General and the NLRC’s own chief legal officer supported the petition and recommended reinstating the Labor Arbiter’s decision, underscoring the absence of a legal basis for the NLRC’s reversal.