Facts:
Petitioner Alabang Country Club Inc. (ACCI), is a stock, non-profit corporation that operates and maintains a country club and various sports and recreational facilities for the exclusive use of its members. Sometime in 1993, Francisco Ferrer, then President of ACCI, requested its Internal Auditor, to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). Consequently, report showed that from 1989 to 1993, F & B Department had been incurring substantial losses.
Realizing that it was no longer profitable for ACCI to maintain its own F & B Department, the management decided to cease from operating the department and to open the same to a contractor, such as a concessionaire, which would be willing to operate its own food and beverage business within the club. Thus, ACCI sent its F & B Department employee’s individual letters informing them that their services were being terminated and that they would be paid separation pay. The Union in turn, with the authority of individual respondents, filed a complaint for illegal dismissal.
Issue:
Whether or not the club’s right to terminate its employees for an authorized cause, particularly to secure its continued viability and existence is valid.
Held:
When petitioner decided to cease operating its F & B Department and open the same to a concessionaire, it did not reduce the number of personnel assigned thereat. It terminated the employment of all personnel assigned at the department.
Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding, the Court finds that individual respondents were dismissed on the ground of closure or cessation of an undertaking not due to serious business losses or financial reverses, which is allowed under Article 283 of the Labor Code.
The closure of operation of an establishment or undertaking not due to serious business losses or financial reverses includes both the complete cessation of operations and the cessation of only part of a company’s activities.
