GR 78350; (September, 1991) (Digest)
G.R. No. 78350 September 11, 1991
SAN FELIPE NERI SCHOOL OF MANDALUYONG, INC., ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, ROMAN CATHOLIC ARCHBISHOP OF MANILA, ET AL., respondents.
FACTS
Petitioners were the incorporators and trustees of San Felipe Neri School of Mandaluyong, Inc., a corporation that owned and operated the school. Private respondents were its former teachers. On April 18, 1981, the petitioner-school corporation executed a Deed of Absolute Sale, transferring all its real and personal properties to the Roman Catholic Archbishop of Manila (RCAM) for P400,000. The teachers were not notified of this sale.
Upon reporting for work for the next school year in May 1981, the teachers discovered the school was under new ownership and management by RCAM. The new owner required them to apply as new probationary employees, effectively disregarding their past service. When the teachers inquired about their rights, the former owners referred them to RCAM. Consequently, the teachers filed a complaint for separation pay against the school corporation, its individual trustees/incorporators, and RCAM.
ISSUE
Whether the sale of the school’s assets constituted a termination of the teachers’ employment, entitling them to separation pay from the selling employer.
RULING
Yes. The Supreme Court affirmed the NLRC’s award of separation pay but modified the liability to apply solely to the corporate entity, San Felipe Neri School of Mandaluyong, Inc., upholding its separate juridical personality from its individual incorporators and trustees.
The legal logic is grounded in the protection of labor and the employer’s duty in cases of business closure or transfer. The Court ruled that the outright sale of all corporate assets effectively resulted in the closure of the school’s operation by the former owner. The failure to notify the employees of the sale and its consequences on their employment amounted to a termination of their services. Citing Central Azucarera del Danao v. Court of Appeals, the Court emphasized that the absence of prior notice to employees, leaving them uncertain of retention by the new owner, technically constitutes termination. Consequently, the selling employer is liable for separation pay. The claim that there was merely a change of ownership without termination was rejected, as the complete asset sale severed the employer-employee relationship with the former owner. However, liability rests with the corporate employer alone, not its individual stockholders, absent evidence justifying piercing the corporate veil.