CARMELCRAFT CORPORATION &/OR CARMEN V.

YULO, President and General

Manager, Petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, CARMELCRAFT
EMPLOYEES UNION, PROGRESSIVE FEDERATION OF LABOR, represented by its Local
President GEORGE OBANA, Respondents.

CRUZ, J.:

The Court is appalled by the degree of bad faith that has characterized the petitioners' treatment of
their employees. It borders on puredisdain. 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. chanroblesvirtualawlibrary  chanrobles virtual law library

The record shows that after its registration as a labor union, the Camelcraft 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, Camelcraft 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-month pay for every year of service, a fraction of
six months or more shall be considered as one (1) whole year. chanroblesvirtualawlibrary  chanrobles virtual law library

The rest of the disposition stand. 2  chanrobles virtual law library

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

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 relevent circumstances. Its
justification is that it sustained losses in the amount of P 1,603.88 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 P 3 million . 4 Considering such a substantial investment, we hardly think that a loss of
the paltry sum of less than P 2,000.00 could be considered serious enough to call for the closure of
the company.  chanroblesvirtualawlibrary chanrobles virtual law library

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.   chanroblesvirtualawlibrary chanrobles virtual law library
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:  chanrobles virtual law library

(a) To interfere with, restrain or coerce employees 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  chanrobles virtual law library

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.   chanroblesvirtualawlibrary chanrobles virtual law library

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.   chanroblesvirtualawlibrary chanrobles virtual law library

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.  
chanroblesvirtualawlibrary chanrobles virtual law library

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.   chanroblesvirtualawlibrary chanrobles virtual law library

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 win 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 chanrobles virtual law library

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 m the NLRC. It is too late now to shunt these responsibilities to the company
after she herself had been found liable. chanroblesvirtualawlibrary chanrobles virtual law library

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.   chanroblesvirtualawlibrary chanrobles virtual law library

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 interest . The working class is an equal partner of management and
should always be treated as such.   chanroblesvirtualawlibrary chanrobles virtual law library

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 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.   chanroblesvirtualawlibrary chanrobles virtual law library

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