Businessday Information Systems and Services, Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Businessday Information Systems and Services, Inc. (BSSI), engaged in the manufacture and sale of computer forms, suffered financial reverses, leading to its creditors taking possession of its assets. As a retrenchment measure, some plant employees, including the private respondents, were laid off on May 16, 1988, and paid separation pay equivalent to one-half (1/2) month's pay for every year of service. These employees signed releases and quitclaims. BSSI retained some employees to attempt rehabilitation as a trading company. However, approximately two and a half months later, these remaining employees were discharged due to the company's decision to cease business operations altogether. This second batch of employees received separation pay equivalent to a full month's salary for every year of service, plus a mid-year bonus. Procedural History: The twenty-seven (27) private respondents filed separate complaints against BSSI and its president/manager, Raul Locsin, alleging discrimination in the payment of separation benefits. The cases were consolidated. The Labor Arbiter ruled in favor of the complainants, ordering the respondents to pay separation pay differentials and mid-year bonus for 1988. The National Labor Relations Commission (NLRC) affirmed this decision. Petitioners' motion for reconsideration was denied, leading to the present petition. The Petition: Petitioners Businessday Information Systems and Services, Inc. and Raul Locsin seek to annul and set aside the NLRC decision, arguing that there was no unlawful discrimination and that Raul Locsin should not be held personally liable.
Issue(s)
Whether there was impermissible discrimination in the payment of separation benefits to the private respondents. Whether the private respondents are entitled to a mid-year bonus. Whether petitioner Raul Locsin is personally liable for the money claims of the respondent employees.
Ruling
The resolution of the NLRC ordering the petitioner company to pay separation pay differentials to the private respondents is AFFIRMED. However, the award of mid-year bonus to them is hereby deleted and set aside. Petitioner Raul Locsin is absolved from any personal liability to the respondent employees.
Ratio Decidendi
On the issue of discrimination in separation pay: The Court affirmed the NLRC's finding of impermissible discrimination. While the law recognizes an employer's right to retrench or close operations, it mandates equal treatment in the payment of separation benefits. The justification that the higher benefits for the second and third batches were an expression of gratitude for their efforts to save the company was found implausible, especially since some employees in the first batch had rendered more years of service but received less pay. The Court reiterated that management prerogatives are not absolute and are subject to legal limits and principles of fair play and justice, citing UST vs. NLRC. Article 283 of the Labor Code protects workers whose employment is terminated due to closure or reduction of personnel, implying a need for equitable treatment. On the claim for mid-year bonus: The Court deleted the award of the mid-year bonus. It is settled doctrine that the grant of a bonus is a prerogative, not an obligation, of the employer, entirely dependent on its financial capability. Given that the company was experiencing financial reverses and was in fact moribund, and the private respondents did not work for the entire period for which the bonus was claimed, there were valid reasons for not granting the bonus. Requiring payment would penalize the company for its generosity to employees who remained until the end. This aligns with the principle established in Traders Royal Bank vs. NLRC. On the personal liability of Raul Locsin: The Court found merit in the contention that Raul Locsin should be absolved from personal liability. A corporate officer is generally not personally liable for the money claims of discharged employees unless they acted with evident malice and bad faith in terminating employment. The Court found no evidence in this case to support a finding of bad faith or malice on the part of Locsin in carrying out the retrenchment and closure. Therefore, he could not be held personally and solidarily liable with the company, consistent with the ruling in Garcia vs. NLRC.
Main Doctrine
An employer may not, in the guise of exercising management prerogatives, pay separation benefits unequally, as such discrimination breeds resentment and ill-will. A corporate officer is not personally liable for money claims of discharged employees unless they acted with evident malice and bad faith.