ALABANG COUNTRY CLUB VS NATIONAL LABOR RELATIONS COMMISSION

ALABANG COUNTRY CLUB

VS

NATIONAL LABOR RELATIONS COMMISSION
466 SCRA 329 (2005)

The court cannot interfere with management’s prerogative to close or cease its business operation just because the business is not suffering from any loss or because of the desire to provide the workers continued employment.
Petitioner Alabang Country Club, Inc. (ACCI) requested its Internal Auditor Irene Campos-Ugalde to conduct a study on the profitability of its Food and Beverage Department (F & B Department). Irene found out that the business had been incurring substantial losses. Consequently, the management decided to transfer the operation of the department to La Tasca Restaurant Inc. (La Tasca). ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated and that they would receive separation pay.

The private respondent Alabang Country Club Independent Employees Union (Union) filed before the National Labor Relations Commission (NLRC) a complaint for illegal dismissal, unfair labor practice, regularization and damages with prayer for the issuance of a writ of preliminary injunction against ACCI.

The Labor Arbiter (LA) dismissed the complaint for illegal dismissal which was upheld by the NLRC. The Court of Appeals (CA) reversed the decisions of the LA and NLRC.

ISSUE:
Whether or not the ACCI can terminate its business operation

HELD:
One of the prerogatives of management is the decision to close the entire establishment or to close or abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce capitalization. While the Labor Code provides for the payment of separation package in case of retrenchment to prevent losses, it does not obligate the employer for the payment thereof if there is closure of business due to serious losses.

As in the case of retrenchment, however, for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees, it must be proven that the losses incurred are substantial and actual or reasonably imminent; that the same increased through a period of time; and that the condition of the company is not likely to improve in the near future.

The closure of operation of an establishment or undertaking not due to serious business losses or financial reverses includes both the complete cessation of operations and the cessation of only part of a company’s activities.

For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of the law if a court interferes with management’s prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment.