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 August 31, 1982, respondent Nixon Sioco, the company’s President and General Manager, informed Raposon that the company was closing its business due to heavy losses. He was given P1,000.00 and considered separated from service. Raposon subsequently filed a complaint for illegal dismissal.
The Labor Arbiter ruled in favor of Raposon, declaring his dismissal illegal and ordering reinstatement with full backwages. The NLRC initially affirmed this decision in a resolution dated July 15, 1985. However, upon private respondents’ motion for reconsideration, the NLRC reversed itself in a resolution dated December 27, 1985, dismissing the complaint for lack of merit. It held the dismissal was in good faith due to business closure, ordering only separation pay. The NLRC denied Raposon’s two motions for reconsideration, prompting this petition for certiorari.

ISSUE

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

RULING

Yes, the NLRC committed grave abuse of discretion. The Supreme Court reinstated the Labor Arbiter’s decision finding illegal dismissal.
The legal logic centers on the employer’s failure to substantiate its claim of closure due to serious business losses, a justified ground for termination under then Article 284 (now Article 283) of the Labor Code. The Court emphasized that while management has the prerogative to dismiss, it must be based on a valid and just cause supported by substantial evidence. Here, the respondent company presented no evidence—such as financial statements or audit reports—to prove it was actually suffering from business reverses or had ceased operations at the time of dismissal. The Labor Arbiter correctly noted the company was still operational and had not even served the required written notice to the employee and the Ministry of Labor.
The NLRC erred in shifting the burden of proof to the employee, a sales manager, to disprove the company’s financial condition. The burden to prove a valid dismissal for an authorized cause always rests on the employer. Furthermore, the petitioner’s acceptance of the P1,000.00 did not estop him from contesting the dismissal’s legality, as receipt of separation pay is not a bar to such a challenge. The Supreme Court also found significant that both the Solicitor General and the NLRC’s own chief legal officer supported the petition and recommended reinstating the initial NLRC resolution affirming the Labor Arbiter.
Consequently, the Court SET ASIDE the NLRC resolutions dated December 27, 1985, May 20, 1986, and November 14, 1986. It REINSTATED the NLRC resolution of July 15, 1985, which affirmed the Labor Arbiter’s decision, with the modification that back salaries shall be limited to three years.