G.R. No. 224099 - Zambrano vs. Philippine Carpet Manufacturing Corp.

Petitioners were employees of Philippine Carpet Manufacturing Corporation (Phil Carpet).
On January 3, 2011, they were notified of their termination effective February 3, 2011, due to cessation of operations from serious business losses.
Petitioners claimed the dismissal was unjust and violated due process, alleging that the closure was a pretense to transfer operations to Pacific Carpet Manufacturing Corporation (Pacific Carpet).
They asserted that job orders were transferred to Pacific Carpet and machinery was moved between the two companies.
Petitioners argued that their dismissal constituted unfair labor practice as it involved the mass dismissal of union officers and members of the Philippine Carpet Manufacturing Employees Association (PHILCEA).

Phil Carpet contended that it permanently closed due to a decline in demand for its products, citing financial losses from 2006 to 2010.
The company implemented cost-cutting measures, including voluntary redundancy and early retirement programs.
Phil Carpet claimed compliance with Labor Code requirements for closure, including notifying the Department of Labor and Employment (DOLE) and paying separation pay to employees.

The Labor Arbiter dismissed the complaints for illegal dismissal and unfair labor practice, ruling that the termination was due to the legitimate closure of Phil Carpet.
The Arbiter noted that the closure was economically necessary and that the company had complied with procedural requirements.
The petitioners had accepted their separation pay and executed release and quitclaims.

The National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's decision, stating that Phil Carpet's financial statements demonstrated continuous losses leading to closure.
The NLRC found that Phil Carpet complied with the Labor Code's procedural requirements for business closure.

The Court of Appeals (CA) upheld the NLRC's findings, ruling that the closure was not made in bad faith and was due to economic necessity.
The CA found no evidence supporting the claim that job orders were transferred to Pacific Carpet or that machines were moved improperly.
The CA concluded that the dismissal of union officers and members did not constitute unfair labor practice, as the closure was justified by serious business losses.

The Court ruled that the petitioners were terminated for an authorized cause under Article 298 of the Labor Code, which allows termination due to business closure.
The Court emphasized that the closure must be bona fide and not intended to circumvent employee rights.
The findings of the labor tribunals were affirmed, indicating that Phil Carpet's closure was legitimate due to serious business losses.

The Court found that the petitioners failed to prove that their dismissal constituted unfair labor practice.
The burden of proof lies with the alleging party, and the petitioners did not provide sufficient evidence to support their claims.
The Court noted that the closure was not an attempt to undermine the rights of employees to organize.

The Court upheld the separate corporate personality of Pacific Carpet, stating that mere o...continue reading