CLOSURE OF BUSINESS

Q. X was employed by petitioner Restaurante Las Conchas while the latter

was involved in a legal battle with company Y over the land being allegedly
occupied by the petitioner. Company Y was able to obtain a favorable
judgment which eventually caused petitioner to vacate the premises. As no
other suitable location was found for petitioner to move, the restaurant was
forced to close down, thereby resulting in the termination of employment of
X. No separation pay was given to X based on the argument of petitioner
that only closure of business not due to business losses mandates
payment of separation pay to dismissed employees. Should separation be
given and should the manager of the Restaurante Las Conchas be held
liable as a corporate officer?

A: The Court rules that the burden of proof that business losses actually
occurred rests on the employers. Since no statements of assets and
liabilities certified by a CPA or accounting firm was offered, nor the
corporations Income Tax Return certified by the BIR was shown, such
business losses were not proven. As regards the liability of the manager,
generally, the officers and members of a corporation are not personally
liable for the acts done in the performance of their duties. An exception is
when the employer corporation is no longer existing and is unable to
satisfy the judgment in favor of the employees. In such a case, the
officers should be held liable for acting on behalf of the
corporation. (Restaurante Las Conchas and/or David Gonzales vs.
Llego, 314 SCRA 24, Sept. 9, 1999)