Case Summary (G.R. No. 78350)
Sale of the School and Subsequent Events
On April 18, 1981, San Felipe Neri School executed a Deed of Absolute Sale transferring ownership of its assets to RCAM, which included real estate, personal property, and operational control of the school. Following the sale, the former teachers were shocked to find out that their employment was terminated without prior notification, and they were required to reapply for their jobs under a new employment contract with the RCAM, which did not recognize their prior service.
Legal Proceedings Initiated by Respondents
In response to their termination, the former teachers filed a complaint against the petitioners and RCAM for separation pay. The issue was initially adjudicated by Labor Arbiter Reynaldo M. Maraan, who ruled in favor of the respondents, ordering the petitioners to pay separation pay based on their length of service, while dismissing the claims against the RCAM.
Petitioners’ Appeal to the NLRC
The petitioners contested the Labor Arbiter’s decision, asserting that there was no employer-employee relationship between them and the respondents post-sale, claiming they were merely stockholders of a corporation separate from the employment of the respondents. They argued that the change in ownership did not constitute a termination of employment and thus, respondents were not entitled to separation pay.
NLRC’s Affirmation of Labor Arbiter’s Decision
On February 12, 1987, the National Labor Relations Commission (NLRC) upheld the Labor Arbiter’s ruling, affirming that the sale of the school represented a closure which effectively terminated the employment of the teachers. The NLRC remarked that the obligation for separation pay remained intact despite the ownership transfer since there was no legal provision that exempted petitioners from liabilities owing to the employees.
Supreme Court Ruling on the Matter
The Supreme Court addressed the main issue of whether the transfer of ownership led to an effective termination of employment for the respondents. It clarified that while the change in ownership generally does not eliminate the employer’s obligations to its employees, the absence of a stipulation regarding the status of employees in the deed of sale necessitated a finding of termination. The court emphasized that all rights and obligations related to employment, including the right to separation pay, remained intact under the prevailing labor laws.
Implications of Ownership Transfer on Employee Rights
The court pointed out that despite the continued operation of the school by RCAM, the former employees’ rights were compromised as they were not formally notified about the sale nor offered a
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Case Citation
- G.R. No. 78350
- Decided on September 11, 1991
- 278 Phil. 484
Parties Involved
- Petitioners:
- San Felipe Neri School of Mandaluyong, Inc.
- Rosa A. Salazar
- Faustino F. Bonifacio, Jr.
- Domingo Angeles
- Fr. Anastacio Gapac
- Mariano de Leon
- Magdalena Angeles
- Respondents:
- National Labor Relations Commission (NLRC)
- Roman Catholic Archbishop of Manila (RCAM)
- Gorgonia Maramag, et al. (former teachers of the school)
Procedural History
- The case originates from a petition for certiorari to review and set aside resolutions of the NLRC dated February 12, 1987, and April 7, 1987.
- The NLRC affirmed the decision of Labor Arbiter Reynaldo M. Maraan in Case No. AB-9-676-81, which found the petitioners solidarily liable for the payment of separation pay to the private respondents.
Facts of the Case
- Background of the Parties:
- Petitioners were incorporators and trustees of San Felipe Neri School of Mandaluyong, Inc., which employed the private respondents as teachers.
- Transaction Details:
- On April 18, 1981, a Deed of Absolute Sale was executed between petitioners and RCAM, transferring ownership of the school’s real and personal properties.
- Post-Sale Developments:
- Upon reporting for work in May 1981, private respondents learned of the sale and were informed that the school was under new management, requiring them to apply anew for their positions.
- The new management (RCAM) did not recognize the respondents' previous service, leading to their complaint for separation pay and other claims against the petitioners and RCAM.