Rizada vs. NLRC

Quitclaims, waivers, or releases are looked upon with disfavor and are contrary to public policy when they undermine the workers' legal rights; the filing of a complaint for illegal dismissal effectively negates the employer's theory of abandonment; and a purchaser of a business who continues its integral operations in an essentially unchanged manner is solidarily liable with the former owner for the monetary claims of the employees. Because the employees were made to sign blank sheets, the quitclaims cannot bar their claims; because they immediately sought legal recourse, they did not abandon their employment; and because the new owner continued the business and required employees to re-apply rather than retaining them, the dismissal was illegal and both owners are jointly and severally liable.

Ten regular employees of Cebu Star Press—holding positions such as typesetter, offset operator, driver, and utility man, with tenures ranging from four to over forty years—received sub-standard wages and benefits. The employer required them to affix their signatures on blank vouchers and payroll forms, while the actual amounts they received were reflected in machine tapes initialed by the cashier. In October 1987, the employees were verbally informed by owner Regino Alvarez of the impending sale of the business to Emiliano Rizada. When the employees sought verification of the sale and their employment status, Alvarez reacted with hostility and threatened to file for bankruptcy. On November 28, 1987, the employees received a notice of termination effective November 30, 1987. Upon reporting for work on December 1, 1987, management refused them entry.

• Employment and Benefits: The complainants were long-term employees of Cebu Star Press, owned by Regino Alvarez. They received wages and benefits below the standards prescribed by law. The employer circumvented labor standard laws by requiring employees to sign blank vouchers and payroll forms; the actual amounts received by the employees were evidenced only by machine tapes initialed by the cashier.
• Sale and Termination: In October 1987, Regino Alvarez informed the employees of the sale of Cebu Star Press to his nephew, Emiliano Rizada. The employees requested documents regarding the transfer to verify their employment status, but Alvarez responded with hostility and threats of bankruptcy. On November 28, 1987, the employees received a notice terminating their employment effective November 30, 1987. When they reported for work on December 1, 1987, they were refused entry.
• Liability and Succession: Emiliano Rizada made a downpayment for the business on November 21, 1987, and the Deed of Absolute Sale was executed on July 30, 1988. Rizada required the employees to re-apply with the new management rather than retaining them, asserting his management prerogative to select his own employees and disclaiming liability for their length of service under the old management. The Deed of Sale did not mention the status of the employees.

Petitioners maintained that the NLRC gravely abused its discretion in affirming the Labor Arbiter's decision. Petitioners argued that the quitclaims and resignation letters executed by the employees were valid and barred the claims for monetary benefits. Petitioners contended that the employees were not illegally dismissed but had abandoned their employment. Petitioners further asserted that the monetary awards were based on incompetent evidence (machine tapes and canteen vales) rather than the payroll and DOLE findings. Finally, petitioner Rizada argued that he could not be held jointly and severally liable with Alvarez because he took full control of the business only on July 30, 1988—eight months after the complaint was filed—and relied on his uncle's assurance that all employee claims had been settled.

Respondents countered that the quitclaims were void for being contrary to public policy, as the employees were made to sign blank sheets of paper upon hiring. Respondents argued that the employees were illegally dismissed, as evidenced by the termination letter giving only three days' notice, and that filing a complaint for illegal dismissal negated any claim of abandonment. Respondents maintained that Rizada was solidarily liable because he bought the business with knowledge of the outstanding obligations, continued the integral business operations unchanged, and the Deed of Sale was silent on the status of the employees, thereby implying assumption of responsibility.

• Procedural Issues: Whether the NLRC committed grave abuse of discretion in affirming the Labor Arbiter's factual findings and conclusions.
• Substantive Issues: Whether quitclaims and waivers executed by the employees bar their claims for labor standard benefits. Whether the employees abandoned their employment or were illegally dismissed. Whether the purchaser of the business is solidarily liable with the former owner for the monetary claims of the employees.

• Procedural: The Court found no grave abuse of discretion on the part of the NLRC. Factual findings of the Labor Arbiter and the NLRC, when supported by substantial evidence and absent grave abuse of discretion, are binding and conclusive upon the Court. The Court upheld the NLRC's reliance on machine tapes and canteen vales as competent evidence of non-payment of benefits, noting that the employer failed to produce employment records as required by the Implementing Rules of the Labor Code.
• Substantive: The Court ruled that the quitclaims are void and contrary to public policy. Because the employees were made to sign blank sheets of paper, the quitclaims cannot bar claims for the full measure of their legal rights. The Court held that the employees were illegally dismissed and did not abandon their work. To constitute abandonment, two elements must concur: (1) failure to report for work without valid reason, and (2) a clear intention to sever the employer-employee relationship. The filing of a complaint for illegal dismissal effectively negates the employer's theory of abandonment. Furthermore, the employees were deprived of procedural due process because they were given only a three-day notice of termination, violating the one-month notice requirement and the twin-notice rule. The Court ruled that Emiliano Rizada is solidarily liable with Regino Alvarez. The change of ownership did not automatically terminate the employer-employee relationship, especially because the purchaser continued the integral business operations in an essentially unchanged manner. Because the Deed of Sale was silent on the status of the employees, the law presumes that the purchaser assumed responsibility for them. Rizada's knowledge of the outstanding obligations and his requirement that employees re-apply further justified solidary liability.

• Ineffectivity of Quitclaims — Quitclaims, waivers, or releases are looked upon with disfavor and are contrary to public policy when they undermine the workers' legal rights. They are ineffective to bar claims for the full measure of the workers' legal rights, especially when executed under circumstances that vitiate consent, such as signing blank sheets of paper upon hiring.
• Abandonment of Work — To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts. The filing of a complaint for illegal dismissal effectively negates the employer's theory of abandonment.
• Solidary Liability of Successor Employer — The disposition of assets or change of ownership of a business does not automatically terminate the employer-employee relationship when the purchaser continues the integral business operation of the former management in an essentially unchanged manner. If the deed of sale is silent on the status of the employees, it is presumed that the purchaser assumed responsibility for such employees, making the new owner solidarily liable with the former owner for the employees' claims.

• "Pacta privata juri publico derogare non possunt. Private agreements (between parties) cannot derogate from public right. ... It should be borne in mind that in this jurisdiction, quitclaims, waivers, or releases are looked upon with disfavor. ... They are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the workers' legal rights."
• "To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and being manifested by some overt acts."
• "...the disposition of assets, or change of ownership ... of a business does not automatically terminate employer — employee relationship, especially when the purchaser ... continued the integral business operation of the former management (employer) in an essentially unchanged manner, the same not being one of the causes for termination of employees under the law."

• Peftok Integrated Services, Inc. v. NLRC, 293 SCRA 507 — Cited for the doctrine that private agreements cannot derogate from public right and that quitclaims, waivers, or releases are looked upon with disfavor and are contrary to public policy.
• Central Azucarera del Danao v. Court of Appeals, 137 SCRA 295 — Cited as controlling precedent for the principle that a change of ownership does not automatically terminate the employer-employee relationship when the purchaser continues the business operations unchanged, and that silence in the deed of sale presumes assumption of employee responsibility.
• Antonio M. Villanueva v. Abednego O. Adre, 172 SCRA 876, and Valderrama v. NLRC, 256 SCRA 466 — Cited to support the imposition of continuing joint and several personal liabilities upon successors in interest, ensuring that workers are not deprived of their rights by a change in management or ownership.
• Shin I Industrial v. NLRC, 164 SCRA 8 — Cited for the principle that abandonment is a matter of intention and cannot be lightly inferred or legally presumed from equivocal acts.
• Toogue v. NLRC, 238 SCRA 241, and Tolong Aqua Culture Corp. v. NLRC, G.R. No. 122268 — Cited for the rule that an employee who forthwith takes steps to protest dismissal, such as immediately filing a complaint for illegal dismissal, cannot be said to have abandoned work.
• Tanala v. NLRC, G.R. No. 116588 — Cited for the twin-notice rule requirement in terminating employees, mandating a notice apprising the employee of the acts or omissions for which dismissal is sought, and a subsequent notice informing the employee of the decision to dismiss.

• Article 1306, New Civil Code — Provides that 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. Applied to invalidate the quitclaims which were contrary to public policy.
• Section 2, Rule XIV, Implementing Rules of the Labor Code — Requires the employer seeking to dismiss a worker to furnish a written notice stating the particular acts or omissions constituting the grounds for dismissal. Applied to show that the employees were deprived of procedural due process when given only a three-day notice.
• Section 10, Rule X, Book III, Implementing Rules of the Labor Code — Requires employers to keep employment records of employees within the company premises. Applied to uphold the Labor Arbiter's findings on the employees' length of service and monetary claims, as the employer failed to produce such records to controvert the employees' assertions.

Melo, Panganiban, and Gonzaga-Reyes, JJ., concur.