G.R. No. 141615 ; October 24, 2003
MAC ADAMS METAL ENGINEERING WORKERS UNION-INDEPENDENT, ET AL., petitioners, vs. MAC ADAMS METAL ENGINEERING, ET AL., and the COURT OF APPEALS, respondents.

FACTS

Petitioners, a union and 38 employees of Mac Adams Metal Engineering (MAME) and GBS Engineering Services (GBS), filed complaints for unfair labor practice (ULP), illegal dismissal, and non-payment of monetary benefits. They alleged that the closure of MAME and GBS was a union-busting scheme, contending the businesses continued operations under new names, MBS Machine and Industrial Supply and MVS Heavy Equipment Rental and Builders, which they impleaded as alleged run-away shops. Petitioners prayed for reinstatement with backwages or separation pay.
Private respondents, proprietors Lydia and Geronimo Sison, countered that the closure was legitimate. Lydia Sison decided to retire due to failing health, announcing the planned closure in a July 1992 meeting to give workers time to seek other employment. They wound down operations and declined new projects. They asserted that the union was formed only after the closure announcement and that subsequent union demands for excessive separation pay and concerted activities like strikes forced GBS to also close. They denied MBS and MVS were run-away shops, presenting evidence these were separate entities with distinct ownership, capital, personnel, equipment, and clientele.

ISSUE

Whether the closure of MAME and GBS was legitimate, thereby negating claims of unfair labor practice and illegal dismissal.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals. The closure was legitimate and in good faith, not an act of union busting. The legal logic rests on the principle that an employer has the right to close its business entirely due to serious business losses or, as here, the proprietor’s voluntary decision to retire for health reasons, provided it is done in good faith and not to circumvent the workers’ right to security of tenure. The Court found substantial evidence supporting the findings of the Labor Arbiter, NLRC, and Court of Appeals that respondents complied with legal requirements for closure, including serving advance notice to employees and formal written notices to the Department of Labor and Employment and other relevant government agencies one month prior to the effectivity date.
Since the closure was bona fide, there was no illegal dismissal, and thus no obligation to pay backwages. The lawful closure resulted in termination of employment, entitling the regular employees only to separation pay, which respondents had already tendered. The claim that MBS and MVS were run-away shops failed, as evidence proved they were distinct business enterprises. The Court upheld the factual findings of the quasi-judicial agencies, noting their conclusions are generally binding when supported by substantial evidence, absent a showing of arbitrariness.