In Cheniver Deco Print Technics Corporation v. NLRC, the Supreme Court clarified that the relocation of a business can be considered a cessation of operations entitling employees to separation pay, even if the company’s overall business continues. This ruling protects employees from being forced to resign due to significant changes in their workplace location. The court emphasized that a company’s prerogative to relocate must be balanced with the employees’ right to just compensation when such relocation leads to the termination of their employment. This decision reinforces the principle that employers must provide adequate relief to employees when business decisions result in job losses, even if those decisions are made for legitimate reasons.

When a Company Moves: Can Employees Claim Separation Pay?

Cheniver Deco Print Technics Corporation decided to relocate its printing business from Makati to Sto. Tomas, Batangas, due to the expiration of its lease contract and concerns raised by local authorities. Employees were given the option to transfer with the company, but many found the new location inaccessible and chose not to move. Consequently, they filed a complaint against Cheniver Deco Print Technics Corporation for unfair labor practice, illegal dismissal, and various unpaid benefits. The central legal question was whether the company’s relocation constituted a cessation of operations that would entitle the affected employees to separation pay.

The Labor Arbiter initially ruled that the transfer was valid and absolved the company of unfair labor practices and illegal dismissal. However, the arbiter directed the company to pay separation pay and other money claims. The NLRC affirmed this decision, with a modification to delete the award of attorney’s fees. Cheniver Deco Print Technics Corporation then filed a petition alleging grave abuse of discretion, arguing that the relocation was not a closure or retrenchment and that the employees had effectively resigned. The Supreme Court, however, found that the relocation was indeed a cessation of operations in Makati, entitling the employees to separation pay.

The Supreme Court emphasized that the phrase “closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses” under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a company’s business. Citing Philippine Tobacco Flue-Curing & Redrying Corp. vs. NLRC, the Court underscored that even if a company does not completely close its entire business but merely relocates a part of its operations, this can still be considered a closure for which workers are entitled to separation pay. The court acknowledged Cheniver Deco Print Technics Corporation’s legitimate reason for relocating due to the lease expiration. However, it asserted that the company must provide relief to its employees in the form of severance pay. The court referenced E. Razon, Inc. vs. Secretary of Labor and Employment, where the cancellation of a management contract led to the termination of employment, requiring the employer to pay separation pay despite the cancellation being beyond their control.

According to Article 283 of the Labor Code, an employer may terminate employment due to the closure or cessation of operations. This provision requires the employer to serve a written notice to the workers and the Ministry of Labor and Employment at least one month before the intended date. The law states:

“ART. 283. Closure of establishment and reduction of personnel. — The employer may terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.”

Since the closure of Cheniver Deco Print Technics Corporation’s business in Makati was not due to serious business losses, the Supreme Court ruled that the company must provide separation pay equivalent to at least one month or one-half month’s pay for every year of service, whichever is higher. The Court dismissed the company’s contention that the employees had resigned, emphasizing that the relocation made the workplace hardly accessible, leading to the employees’ separation against their will. This was not a voluntary resignation. The Court noted that it would be illogical for the employees to resign and then file a complaint for illegal dismissal.

The Supreme Court also addressed the company’s claim of forum shopping. The Court clarified that the private respondents’ claims were based on underpayment of wages, legal holiday pay, service incentive leave pay, and 13th-month pay, whereas other cases filed separately by some of the employees involved different issues, such as diminution of salary and reinstatement. The Court thus found no basis for the forum shopping charge, as the causes of action, subject matter, and issues were not identical. Finally, the Court dismissed the company’s allegation that the claims of some employees had already been paid through a previous wage order, clarifying that the wage differential received by the employees was distinct from the monetary benefits they were claiming in this case.

FAQs

What was the key issue in this case?	The key issue was whether the relocation of a business constituted a cessation of operations that entitled employees to separation pay under Article 283 of the Labor Code.
What did the Supreme Court rule?	The Supreme Court ruled that the relocation of Cheniver Deco Print Technics Corporation’s plant from Makati to Batangas was a cessation of operations in Makati, entitling the affected employees to separation pay.
What is the basis for separation pay in this case?	The separation pay is based on Article 283 of the Labor Code, which provides for separation pay in cases of closure or cessation of operations not due to serious business losses.
How is the separation pay calculated?	The separation pay is calculated as at least one month or one-half month’s pay for every year of service, whichever is higher.
Did the Court consider the employees to have resigned?	No, the Court dismissed the company’s argument that the employees had resigned, stating that the relocation made the workplace inaccessible, leading to their involuntary separation.
What was the company’s reason for relocating?	The company relocated due to the expiration of the lease contract on its Makati premises and concerns raised by local authorities.
What is the significance of Article 283 of the Labor Code?	Article 283 of the Labor Code outlines the conditions under which an employer may terminate employment due to closure or cessation of operations and the corresponding separation pay entitlements.
What was the basis for dismissing the forum shopping charge?	The forum shopping charge was dismissed because the other cases filed by some employees involved different issues, such as diminution of salary and reinstatement, indicating distinct causes of action.

The Supreme Court’s decision in Cheniver Deco Print Technics Corporation v. NLRC clarifies the rights of employees when a company relocates its business. It reinforces the principle that employers must provide adequate compensation to employees who are displaced due to business decisions, ensuring that employees are not unfairly disadvantaged by changes in their workplace location. This ruling serves as a critical reminder of the balance between a company’s operational flexibility and its responsibility to its workforce.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Cheniver Deco Print Technics Corporation vs. National Labor Relations Commission, G.R. No. 122876, February 17, 2000