31 Businessday Information Systems and Services v NLRC

Businessday Information Systems and Services, Inc. v. NLRC G.R. No. 103575 | 05 April 1993 TOPIC: Limits of MP PONENTE: J. Griño-Aquino

AUTHOR: TIGLAO NOTES:  Appeal from the NLRC Decision by Petition for Certiorari.  BSSI is a corporation engaged in the business of manufacturing and sale of computer forms.  Take note of the separation pay received.

CASE LAW/ DOCTRINE:  LABOR LAWS AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; EMPLOYER MAY NOT, IN THE GUISE OF EXERCISING MANAGEMENT PREROGATIVES, PAY SEPARATION BENEFITS UNEQUALLY; CASE AT BAR. — Petitioners' right to terminate employees on account of retrenchment to prevent losses or closure of business operations, is recognized by law, but it may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously than others... xxx Clearly, there was impermissible discrimination against the private respondents in the payment of their separation benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others. Management prerogatives are not absolute prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758). Article 283 of the Labor Code, as amended, protects workers whose employment is terminated because of closure of the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA 141, 145). FACTS:  Businessday Information Systems and Services Inc. (BSSI) and its President/Manager (Raul Locsin) sought to annul an NLRC Decision which affirmed the finding that BSSI is liable to pay the respondents separation pay differentials and mid-year bonus.  BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its creditors namely the DBP and the Asset Privatization Trust (APT) took possession of BSSI’s assets including its manufacturing plant in Marilao, Bulacan.  Due to the action of its creditors, BSSI had to lay off some plant employees, after prior notice, as a retrenchment measure. They were provided separation pay equivalent to ½ month pay for every year of service. Upon receipt, they signed individual releases and quitclaims in favor of BSSI.  Not all employees were laid off. Some were retained in an attempt to rehabilitate the company.  Unfortunately, 2 and ½ months later, the remaining employees were also laid off when the company decided to end the business altogether. Unlike the first batch of laid employees, this batch received separation pay equivalent to a full month’s salary for every year of service plus mid-year bonus.  Due to this obvious discrimination, the first batch of laid employees (27) filed a protest against BSSI and Raul Locsin.  During the conciliation proceedings with the Labor Arbiter, BSSI denied that there was unlawful discrimination in the payment of separation benefits to the first batch of laid workers. BSSI argued that they were paid “retrenchment” benefits mandated by law, while the remaining employees were granted higher “separation” benefits because their termination was on account of the closure of the business.  Labor Arbiter Decision: In favor of the first batch of laid employees.  NLRC: Affirmed Decision of the Labor Arbiter. MR was likewise denied. ISSUE(S):  W/N BSSI is liable for separation pay differentials and mid-year bonus to the first batch of laid employees. HELD:  Yes, BSSI is liable to pay separation pay differentials to the employees. However, mid-year bonus is deleted and set aside. Further, Raul Locsin is absolved from any personal liability. RATIO:  While the law recognizes BSSI’s right to terminate its employees on account of retrenchment to prevent losses or closure of business operations, it may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously.  The NLRC observed that the business climate did not improve during the small gaps in between the retrenchment.  There was obviously discrimination against the first batch of employees. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant greater benefits to some and less to others.  Management prerogatives are not absolute prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair play and justice. Article 283 of the Labor Code protects workers whose employment is terminated because of closure of the establishment or reduction of personnel.  In so far as the mid-year bonus, it is settled doctrine that the grant of a bonus is a prerogative, not an obligation, of the employer. The matter of giving a bonus over and



above the worker’s lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. The fact that the BSSI was no longer profitable and that the workers did not work up to the middle of the year were valid reasons for not granting them a mid-year bonus. As regards Raul Locsin, he is not liable as a corporate officer unless he acted with evident malice and bad faith in terminating their employment. No evidence was presented.