DANZAS INTERNATIONAL V. DAGUMAN (LABOR)

FACTS: Petitioners aver that they were compelled to close the company's brokerage department, to which losses were alleged traceable due to incorrect handling of sales, in order to prevent further losses which threatened the company's viability. Essentially, petitioners invoke a blend of retrenchment to prevent losses and closure of a section of the company's business to justify the termination of private respondents.

HELD: UNJUSTIFIED TERMINATION, either as retrenchment to prevent losses because petitioners' evidence to prove business losses or closure of the establishment because the brokerage department did not actually cease operations.

The condition of business losses justifying retrenchment is normally shown by audited financial documents as well as annual income tax returns. Financial statements must be prepared and signed by independent auditors otherwise, they may be assailed as self-serving. Parenthetically, if the business losses that justify the closure of the establishment are duly proved, the right of affected employees to separation pay is lost for obvious reasons. Otherwise, the employer closing his business is obligated to pay his employees their separation pay.