GR 165757; (October, 2006) (Digest)
G.R. No. 165757 ; October 17, 2006
GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO CHENG, respondents.
FACTS
Respondent Galaxie Steel Corporation, due to serious business losses amounting to approximately P127 million from 1997 to mid-1999, decided to close its business. It filed a written notice of closure with the Department of Labor and Employment (DOLE) on July 30, 1999, effective August 31, 1999, and posted the notice on the company bulletin board. Subsequently, petitioners, the union and its members, filed a complaint for illegal dismissal and unfair labor practice, alleging the closure was motivated by anti-union sentiment following a petition for certification election.
The Labor Arbiter declared the closure valid due to serious losses but awarded separation pay and other benefits. The National Labor Relations Commission (NLRC) modified this decision, dismissing the complaint for illegal dismissal and unfair labor practice. It held that closure due to serious business losses negates the obligation to pay separation pay under Article 283 of the Labor Code but ordered the grant of financial assistance equivalent to ten days’ salary per year of service. The Court of Appeals affirmed the NLRC’s decision.
ISSUE
The primary issues were: (1) whether the closure constituted unfair labor practice; (2) whether petitioners were entitled to separation pay; and (3) whether the posted notice complied with statutory requirements.
RULING
The Supreme Court denied the petition, affirming the appellate court with modification. On the first issue, the Court upheld the uniform factual findings of the Labor Arbiter, NLRC, and Court of Appeals that the closure was due to serious business losses, not anti-union animus. Substantial evidence, including audited financial statements, supported this conclusion, and the timing of the closure relative to union activity alone does not prove unfair labor practice.
On the second issue, the Court ruled that separation pay is not required under Article 283 when closure is due to serious business losses. The law mandates separation pay only for closures not due to such losses. However, the grant of financial assistance by the NLRC, as a measure of social justice, was sustained.
On the third issue, the Court found that Galaxie failed to comply with the 30-day written notice requirement to both the employees and the DOLE under Article 283. Merely posting the notice on the bulletin board and filing with DOLE one month before closure was insufficient for individual notice. Applying the doctrine in Agabon v. NLRC, the dismissal for an authorized cause (closure) remains valid, but the employer must pay nominal damages for the procedural lapse. The Court thus ordered Galaxie to pay each petitioner P20,000 as nominal damages.