G.R. No. 96982 . September 21, 1999.
EMILIANO A. RIZADA, doing a business under the name and style Cebu Star Press and REGINO ALVAREZ, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, TEOFILO RADAZA, FELIZARDO LEGAZPI, TEOFILO LUBAS, FELIPE C. ABARQUEZ, ELENO LOCAYLOCAY, HERMAN ARESCO, FRANCISCO VARGAS, DEMETRIO ABEJAR, ARMANDO ALVAREZ, and FRANCISCO ABELLANA, respondents.

FACTS

On December 7, 1987, Teofilo Radaza and nine other employees (private respondents) filed a complaint before the Regional Arbitration Branch, Region VII, Cebu City, against Cebu Star Press, Regino Alvarez, and Emiliano A. Rizada. The complaint alleged violations of labor standard laws regarding minimum wage, ECOLA, 13th month pay, service incentive leave pay, premium pay on holidays, and termination pay, as well as claims for moral and exemplary damages and attorney’s fees. The complainants detailed their employment dates, positions, weekly salaries, and Christmas bonuses received from 1984-1986. They alleged that they were made to sign blank vouchers and payrolls while only receiving amounts reflected in machine tapes, that they were verbally informed in October 1987 of a transfer of ownership to a certain Mel Rizada without proper documentation, and that their request for information was met with threats. They further stated that the Department of Labor and Employment had meted a fine of P10,800.00 against Cebu Star Press and Regino Alvarez for violating service incentive leave pay provisions. On November 28, 1987, they were served a notice of termination effective November 30, 1987, and were refused entry when they reported for duty on December 1, 1987. The petitioners, in their position paper, argued that any prior violations of labor laws had prescribed after three years and that the complainants had executed quitclaims. They also contended that the new management could not be held liable for the complainants’ length of service with the old management and had the prerogative to select its employees. The Labor Arbiter decided in favor of the complainants, ordering the petitioners to pay jointly and severally the amounts for separation pay, ECOLA, and service incentive leave, totaling P125,861.35, plus attorney’s fees of P12,586.13. The National Labor Relations Commission affirmed this decision.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in affirming the Labor Arbiter’s decision which held the petitioners solidarily liable for the payment of the complainants’ monetary claims arising from their termination.

RULING

The Supreme Court dismissed the petition and affirmed the decision of the National Labor Relations Commission. The Court held that the quitclaims executed by the employees were void for being contrary to law and public policy, as they waived benefits granted by labor laws. The Court found that the termination of the complainants was illegal. The petitioners failed to comply with the twin requirements of notice and hearing, as mandated by law. The notice of termination was served only two days before its effectivity, and there was no showing that the employees were given an opportunity to be heard. Furthermore, the alleged transfer of ownership did not relieve the petitioners of their liability. The new management, Emiliano Rizada, was considered the alter ego of the business and was held solidarily liable with Regino Alvarez for the claims of the employees. The Court emphasized that the choice of employees remains a management prerogative, but the dismissal of employees must be for a just or authorized cause and must comply with procedural due process. The petitioners’ failure to observe these requirements rendered the dismissal illegal.