Facts:

• Rommel M. Zambrano and 40 other employees of Philippine Carpet Manufacturing Corporation (Phil Carpet) filed a petition for review on certiorari.
• The employees received termination notices effective February 3, 2011, citing cessation of operations due to serious business losses.
• Petitioners claimed their dismissal was unjust and violated due process, alleging the closure was a pretext to transfer operations to a subsidiary, Pacific Carpet Manufacturing Corporation.
• They asserted that job orders were shifted to Pacific Carpet and machinery was moved between October and November 2011.
• Phil Carpet defended itself by stating it suffered continuous financial losses, supported by audited financial statements, and complied with Labor Code requirements for business closure.
• The Labor Arbiter dismissed the complaints for illegal dismissal and unfair labor practice, ruling the termination was justified due to economic necessity.
• The National Labor Relations Commission (NLRC) affirmed this decision, and the Court of Appeals (CA) upheld the ruling as well.
• A motion for reconsideration by the petitioners was denied, leading to the current petition.

Issue:

• (Unlock)

Ruling:

• The Supreme Court ruled that:
  • The petitioners were terminated for a lawful cause.
  • Their termination did not constitute unfair labor practice.
  • Pacific Carpet could not be held liable for Phil Carpet's obli...(Unlock)

Ratio:

• The Court determined that the termination was justified under Article 298 of the Labor Code, which permits termination due to authorized causes like serious business losses.
• Evidence, including audited financial statements, showed Phil Carpet incurred significant losses over several years, justifying the closure.
• The Court emphasized that the closure was genuine and not intended to ev...continue reading