Central Azucarera Del Danao v. Ca Case Digest

2A DIGESTS, SY 2015-2016

Corporat ion Law

Atty. Joey Ho!e"a

Central Azucarera del Danao v. CA No. L-41615 June 29, 1985 Efects on Employees o Corporaton!"usness-Enterprse #ransers FACTS This case involves separate cases for “Recovery of Termination Pay with Damages” under R.A. 177 !Termination Pay "aw# which ordered petitioner $entral A%ucerera !$entral Danao# to pay termination pay to private respondent !1# &ana'ay !railroad repair man# !(# $osculluela !superintendent of transportation unit# !)# Palma !machinist#. Private respondents were the regular employees of $entral Danao* the owner'operator of a sugar mill in Danao* +egros ,ccidental. -n 1/1* $entral Danao sold its sugar mill properties and other assets to Danao Development $orporation !Dadeco#. After which* in the same year* Dadeco too0 over the management and operation of the purchased sugar mill properties pursuant to a Deed of ale. 2nfortunately* the document did not contain the continued employment status of old employees of $entral Danao. Dadeco hired petitioner3s regular employees in accordance with its hiring and selection policies. During their new employment* private respondents were all terminated and as a conse4uence they filed separate complaints for recovery of termination pay with damages against Dadeco and $entral Danao. Dadeco denied lia5ility for termination pay asserting that they were not the employers for the period stated in the pleadings of the respondents6thus* a lac0 of cause of action. hile $entral Danao claimed that it was Dadeco who is lia5le since it had already sold all its assets via a Deed of ale. The $8- of +egros rendered 9udgment in favor of respondents and ordered $entral Danao !not Dadeco# to pay for termination pay* hence* this petition ISSUE/S hether or not the $8- and -A$ erred in ruling that: !1# Petitioner is lia5le to pay employees separation pays 1);'1/16<= !(# Respondents employment with petitioner was terminated when Dadeco purchased and assumed operation of the milling company 6<= !)# Respondent employees were not guilty of laches6+, HELD: Petitioner $entral Danao is lia5le for termination pay. !1# >!(# +o* the court did not err. There is no 4uestion that the closing of an esta5lishments operation may 5e considered as 9ust cause for termination of employment without a definite period. Although in this case* it stops short of “closing or cessation of operation” since it involves the sale of all or su5stantially all of the properties of $entral Danao to Dadeco. hile* what is authori%ed as 9ust cause for termination of employment is the closing or cessation of operation* the law also recogni%es the right of an employer to sell* dispose or lease his 5usiness enterprise provided that it is not intended to defeat the law. hen the sale happened* Dadeco as the purchasing corporation continued the integral 5usiness operation of its predecessor in an essentially unchanged manner6 that is milling of sugar cane and manufacture of centrifugal sugar. -n short* there was only a change of ownership or management of a 5usiness enterprise* although such situation is +,T one of the 9ust causes under the Termination Pay "aw to terminate employment without definite period. -t is also not synonymous to the closing or cessation of operation of an esta5lishment. Thus* the real issue in this case it whether or not the change of ownership or management of an esta5lishment or corporation 5y virtue of the sale of all or su5stantially all of its properties and assets operated to insulate the selling corporation from its o5ligation !simply put* if the sale included the o5ligation to its employees under the Termination Pay "aw#. 2nder the law the employer is not re4uired to served any notice nor pay the termination pay to employees concerned* -f the termination is without 9ust cause* the employer must serve timely notice to the employee otherwise the employee us o5liged to pay termination pay e?cept where other applica5le statutes provide a different remedy. At the same time* the court reconizes the riht o! the em"lo#er to mere or consolidate its $usiness %ith another and sell all o! its assets and "ro"erties& %hich ma# $rin dismissal& or termination o! its em"lo#e es in the "rocess' $ut such dismissal cannot $e used $# Arcaina ♠ Austria ♠ Bañadera ♠ Cheng ♠ Coloquio ♠ Diploma ♠ Fajardo ♠ Layno ♠ Lim, J. ♠ ere! ♠ "egis ♠ #illarin, $ L #illarin, .

2A DIGESTS, SY 2015-2016

Corporat ion Law

Atty. Joey Ho!e"a

em"lo#er to esca"e lia$ilit# to "a# !or termination "a#. Such sale or dis"osition must have $een attended %ith ood !aith to e(em"t !rom lia$ilit# . There %as no mention o! an# continued em"lo#ment $# Dadeco o! Central)s em"lo#ees and hired them under their o%n "olicies and terms. Also& the neotiations or the sale and assets o! "etitioner %ere held $ehind the $ac* o! the em"lo#ees %ho %ere ta*en $# sur"rise that ultimatel# terminated their em"lo#ment. Inasmuch that the# %ere not noti!ied o! the "lans& +ustice and e,uit# dictate that "rivate res"ondents their termination or se"aration "a# corres"ondin to the num$er o! #ears o! service %ithin CentraltoDanao. !)# +,* they are not. $entral Danao cannot ta0e refuge under the doctrine of laches to shield itself from an o5ligation created 5y law to protect the wor0ingman. D=+-=D D,$TR-+= !accdg. to $"@ outline# There is no law re4uiring that the purchaser should a5sor5 the employees of the selling company. ell' esta5lished is the principle “that it is within the employer3s legitimate sphere of management control of the 5usiness to adopt economic policies to ma0e some changes or ad9ustments in their organi%ation or operation that would insure profit or protect the investments of its stoc0holders. As in the e?ercise if such management prerogative* the employer may merge or consolidate its 5usiness with another or sell or dispose all or su5stantially all of its assets and properties which may 5ring a5out the dismissal or termination of its employees in the process.

Arcaina ♠ Austria ♠ Bañadera ♠ Cheng ♠ Coloquio ♠ Diploma ♠ Fajardo ♠ Layno ♠ Lim, J. ♠ ere! ♠ "egis ♠ #illarin, % L #illarin, .