CARMELCRAFT CORPORATION &/OR CARMEN V. YULO, PRESIDENT AND GENERAL MANAGER, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, CARMELCRAFT EMPLOYEES UNION, PROGRESSIVE FEDERA…

The Court is appalled by the degree of bad faith that has
characterized the petitioners’ treatment of their employees.  It borders on pure disdain.  And on top of this, they now have the
temerity to seek from us a relief to which they are clearly not entitled.  The petition must be dismissed.

The record shows that after its registration as a labor union,
the Carmelcraft Employees Union sought but did not
get recognition from the petitioners. 
Consequently, it filed a petition for certification election in June
1987.  On July 13, 1987,
Carmelcraft Corporation, through its president and
general manager, Carmen Yulo, announced in a meeting
with the employees that it would cease operations on August 13, 1987, due to serious financial
losses.  Operations did cease as
announced.  On August 17, 1987, the union filed a complaint with
the Department of Labor against the petitioners for illegal lockout, unfair
labor practice and damages, followed the next day with another complaint for
payment of unpaid wages, emergency cost of living allowances, holiday pay, and
other benefits.  On November 29, 1988, the Labor Arbiter declared
the shutdown illegal and violative of the employees’
right to self-organization.  The claim
for unpaid benefits was also granted.^[1]
After reviewing the decision on appeal, the respondent NLRC declared:

WHEREFORE, premises considered, the appealed decision is modified.  In addition to the underpayment in their
wages, emergency living allowance, 13th month pay, legal holiday pay and
premium pay for holidays for a period of three years, the respondents are
ordered to pay complainants their separation pay equivalent to one-half month
pay for every year of service, a fraction
of six months or more shall be considered as one (1) whole year.

The rest of the dispositions stand.^[2]

We do not find that the above decision is tainted with grave abuse of discretion.  On the contrary, it is conformable to the
pertinent laws and the facts clearly established at the hearing.

The reason invoked by the petitioner company to justify the
cessation of its operations is hardly credible; in fact, it is preposterous
when viewed in the light of the other relevant circumstances.  Its justification is that it sustained losses
in the amount of P1,603.88 as of December
31, 1986.^[3]
There is no report, however, of its operations during the period after that
date, that is, during the succeeding seven and a half months before it decided
to close its business.  Significantly,
the company is capitalized at P3 million.^[4]
Considering such a substantial investment, we hardly think that a loss of the
paltry sum of less than P2,000.00 could be considered serious enough to call
for the closure of the company.

We agree with the public respondent that the real reason for the
decision of the petitioners to cease operations was the establishment of
respondent Carmelcraft Employees Union.  It was apparently unwelcome to the
corporation, which would rather shut down than deal with the union.  There is the allegation from the private
respondent that the company had suggested that
it might decide not to close the business if the employees were to
affiliate with another union which the management preferred.^[5]
This allegation has not been satisfactorily disproved.  At any rate, the finding of the NLRC is more
believable than the ground invoked by the petitioners.  Notably, this justification was made only
eight months after the alleged year-end loss and shortly after the respondent
union filed a petition for certification election.

The act of the petitioners was an unfair labor practice
prohibited by Article 248 of the Labor Code, to wit:

ART. 248.  Unfair labor
practices of employers.  – It shall
be unlawful for an employer to commit any of the following unfair labor
practice:

(a) To interfere with, restrain or coerce employes
in the exercise of their right to self-organization;

More importantly, it was
a defiance of the constitutional provision guaranteeing to workers the
right to self-organization and to enter into collective bargaining with
management through the labor union of their own choice and confidence.^[6]

The determination to cease operations is a prerogative of
management that is usually not interfered with by the State as no business can
be required to continue operating at a loss simply to maintain the workers in
employment.^[7]
That would be a taking of property without due process of law which the
employer has a
right to resist.  But where it is
manifest that the closure is motivated not by a desire to avoid further losses
but to discourage the workers from organizing themselves into a union for more
effective negotiations with the management, the State is bound to intervene.

And, indeed, even without such motivation, the closure cannot be
justified because the claimed losses are obviously not serious.  In this situation, the employees are entitled to separation
pay at the rate of one-half month for every year of service under Art. 283 of
the Labor Code.

The contention of the petitioners that the employees are estopped from claiming the alleged unpaid wages and other
compensation must also be rejected.  This
claim is based on the waivers supposedly made by the complainants on the
understanding that “the management will implement prospectively all
benefits under existing labor standard laws.” The petitioners argue that
this assurance provided the consideration that made the quitclaims executed by
the employees valid.  They add that the
waivers were made voluntarily and contend that the contract should be respected
as the law between the parties.

Even if voluntarily executed, agreements are invalid if they are
contrary to public policy.  This is
elementary.  The protection of labor is
one of the policies laid down by the Constitution not only by specific
provision but also as part of social justice. 
The Civil Code itself provides:

ART. 6.  Rights may be
waived, unless the waiver is contrary to law, public order, public policy,
morals, or good customs, or prejudicial to a third person with a right recognized by law.

ART. 1306.  The contracting
parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.

The subordinate position of the individual employee vis-a-vis management renders him especially
vulnerable to its blandishments and importunings, and
even intimidations, that may result in his improvidently if reluctantly signing
over benefits to which he is clearly entitled. 
Recognizing this danger, we have consistently held that quitclaims of
the workers’ benefits will not estop them from
asserting them just the same on the ground that public policy prohibits such
waivers.

That the employee has signed a satisfaction receipt does not result
in a waiver; the law does not consider as valid any agreement to receive less
compensation than what a worker is entitled to recover.  A deed of release or quitclaim cannot bar an
employee from demanding benefits to which he is legally entitled.^[8]

Release and quitclaim is inequitable and incongruous to the
declared public policy of the State to afford protection to labor and to assure
the rights of workers to security of tenure.^[9]

We
find also untenable the contention of Carmen Yulo
that she is not liable for the acts of the petitioner company, assuming it had
acted illegally, because the Carmelcraft Corporation
is a distinct and separate entity with a legal personality of its own.  Yulo claims she is
only an agent of the company carrying out the decisions of its board of
directors.  We do not agree.  Our finding is that she is in fact and legal
effect the corporation, being not only its president and general manager but
also its owner. ^[10]

Moreover, and this is a no
less important consideration, she is raising this issue only at this
tardy hour, when she should have invoked this argument earlier, when the case
was being heard before the labor arbiter and later in the NLRC.  It is too late now to shunt these
responsibilities to the company after she herself had been found liable.

All told, the conduct of the petitioners toward the employees has
been less than commendable.  Indeed, it
is reprehensible.  First, the company
inveigled them to waive their claims to compensation due them on the promise
that future benefits would be paid (and to make matters worse, there is no
showing that they were indeed paid). 
Second, it refused to recognize the respondent union, suggesting to the
employees that they join another union acceptable to management.  Third, it threatened the employees with the
closure of the company and then actually did so when the employees insisted on
their demands.  All these acts reflect on
the bona fides of the petitioners and unmistakably
indicate their ill will toward the employees.

The petitioners obviously regard the private respondents as mere
servants simply because they are paid employees.  That is a mistake.  Laborers are not just hired help to be exploited,
without the right to defend and improve their interests.  The working class is an equal partner of
management and should always be treated as such.

The more labor is prevented from pursuing its legitimate demands
for its protection and enhancement, the more it is likely to lose faith in our
free institutions and to incline toward ideologies offering a more attractive
if deceptive regime.  One way of
disabusing our working men and women of this delusion is to assure them that
under our form of government, the interests of labor deserve and will get
proper recognition from an enlightened and compassionate management, no less
than the total sympathy of a solicitous State.

WHEREFORE, the petition is DISMISSED and the challenged
decision is AFFIRMED, with
costs against the petitioner.  It is so
ordered.

Narvasa, (Chairman), Gancayco, and Medialdea, JJ., concur.

Griño-Aquino, J., on leave.

^[1]
Rollo, pp. 12-13.

^[2]
Ibid., p. 19.

^[3]
Id., p. 14.

^[4]
Id., p. 6.

^[5]
Id., pp. 26-29.

^[6]
Art. XIII, Sec. 3, Constitution.

^[7]
Columbia Development Corp. v. Minister of Labor and Employment, 146 SCRA
42; LVN Pictures and Workers Association v. LVN Pictures, 35 SCRA 147;
Phil. American Embroideries, Inc. v. Embroidery & Garment Workers
Union, 26 SCRA 634.

^[8]
Fuentes vs. NLRC, 167 SCRA 767, citing MRR Crew Union v. PNR, 72
SCRA 88.

^[9]
Cuales v. NLRC, 121 SCRA 812.

^[10]
Rollo, pp. 52-53.