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GALAXIE STEEL WORKERS UNION
(GSWU-NAFLU-KMU), EDUARDO FLORES, BONIFACIO LABACO, SALVADOR VERDEFLOR,
PAULITO NIEVES, NILO AMENAZOR, BENJAMIN BEDUYA, EUTIQUIO MENESES, CENON
LABACO, DANILO MARANAN, ELISEO LASTIMOSO, JAMES MADERAS, EFREN LABACO,
CESARIO BOLSICO, DARIO DECALAIN, SAMMY CEDENO, PRUDENCIO DELA CRUZ,
EDGARDO PASTRANA, DANILO BERMUDEZ, BILLY BLASCO, ROBERTO PEPINO, RUBEN
TENOSO, ORLANDO TUDILLA, JESSIE SACE, JUNE DALAYAT, FRANCISO LABACO,
EDIN DEMAYO, WILFREDO CHENG, JAIME GANDO, JOSELITO GUANZON, VICTOR
DELMUNDO, NATHANIEL PEROY, ROBERTO VIRTUDAZO, RICARDO HILAGA, RODRIGO
FIRMANEZ, RENE VILLA, VERGELIO ICO, NOLITO PANUNCIA, ALDRONICO BAHILLO,
FLORENCIO LANZADEROS, ROLLY ROTIL, BENJAMIN ESCANO, DOMINADOR ABAINCIA,
ROMEO LITANG, NELSON PETALIO, MARIO VILLAMOR, AGUSTIN CONSTANTINO,
HERMINIO AGUSTIN, VICTORIO NEMENZO, MABINI YARCIA, PERCY ZOSIMO,
ANGELITO DELOS REYES, ADVINCULA ELMEDULAN, GORGONIO BOLORAN, ALAN
MONIN, JESSIE PACALINGGA, and MICHAEL DACLAG,
Petitioners,
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G.R. No. 165757
October 17, 2006
- versus -
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NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO CHENG,
Respondents.
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D E C I S I O N
CARPIO MORALES, J.:
Assailed via Petition for Review are issuances of the Court of Appeals
in CA-G.R. SP No. 68669, to wit: Decision[1] dated March 26, 2004
denying petitioners’ petition for certiorari and upholding the decision
of the National Labor Relations Commission (NLRC) in NLRC NCR CA No.
026956-00, and Resolution dated October 19, 2004 denying petitioners’
motion for reconsideration of the decision.
Respondent Galaxie Steel Corporation (Galaxie) is a corporation engaged
in the business of manufacturing and sale of re-bars and steel billets
which are used primarily in the construction of high-rise
buildings. On account of serious business losses which occurred
in 1997 up to mid-1999 totaling around P127,000,000.00,[2] Galaxie
decided to close down its business operations.
chan robles virtual law library
Galaxie thus filed on July 30, 1999 a written notice with the
Department of Labor and Employment (DOLE) informing the latter of its
intended closure and the consequent termination of its employees
effective August 31, 1999.[3] And it posted the notice of closure
on the corporate bulletin board.[4]
On September 8, 1999, petitioners Galaxie Steel Workers Union and
Galaxie employees filed a complaint for illegal dismissal, unfair labor
practice, and money claims against Galaxie.
The Labor Arbiter, by decision of October 30, 2000, declared valid
Galaxie’s closure of business but nevertheless ordered it to pay
petitioner-employees separation pay, pro-rata 13th month pay, and
vacation and sick leave credits. The dispositive portion of the
decision reads:cralaw:red
WHEREFORE, judgment is
hereby rendered ordering Respondents to pay complainants separation
pay, pro-rata 13th month pay, and vacation leave and sick leave credits
in the following computed amounts:cralaw:red
x x x
Respondents are further ordered to pay complainants their
tax refund for 1999 and to pay 10% attorney’s fees based on the total
withheld labor standard benefits.
chan robles virtual law library
The complaint for unfair labor practice, illegal lockout,
wage differentials, and other money claims are hereby disallowed for
lack of merit.
SO ORDERED.[5]
On appeal, the NLRC upheld the Labor Arbiter’s decision but reversed
the award of pro-rata 13th month pay and vacation and sick leave
credits, the same not being among petitioners’ causes of action as in
fact they were not even mentioned in their pleadings.[6] And it
reversed too the award for separation pay, the closure of Galaxie’s
business being due to serious business losses. Nevertheless, the
NLRC directed Galaxie to grant petitioners, by way of financial
assistance, the same amount given to the employees who had executed
quitclaims. Thus the dispositive portion of the NLRC decision
read:cralaw:red
WHEREFORE, the decision
appealed from is hereby SET ASIDE. The complaint for unfair labor
practice and illegal dismissal is DISMISSED for lack of merit.
The respondent Galaxie Steel Corporation is hereby ordered to extend as
any by way of financial assistance the equivalent of ten (10) day’s
(sic) salary for every year of service to each of the following:
Eduardo Flores, Bonifacio Labaco, Salvador Verdeeflor, Paulito Nieves,
Nilo Amenazor, Benjamin Beduya, Eutiquio Meneses, Cenon Labaco, Danilo
Maranan, Eliseo Lastimoso, James Maderas, Efren Labaco, Cesario
Bolsico, Dario Cecalain, Sammy Cedeno, Prudencio dela Cruz, Edgardo
Pastrana, Danilo Bermudez, Billy Blasco, Roberto Pepino, Ruben Tenoso,
Orlando Dudilla, Jessie Sace, June Dalayat, Francisco Labaco, Edwin
Demayo, Wilfredo Cheng, Jaime Gando, Joselito Guanzon, Victor Delmundo,
Nathaniel Peroy, Roberto Virtudazo, Ricardo Hilaga, Rodrigo Firnanez,
Rene Villa, Vergelio Ico, Nolito Panuncio, Aldronico Bahillo, Florencio
Lanzaderos, Rolly Rotil, Benjamin Escano, Dominador Abaincia, Romeo
Litang, Nelson Petalio, Mario Villamor, Agustin Constantino, Herminio
Agustin, Victorio Nemenzo, Mabini Yarcia, Percy Zosimo, Angelito delos
Reyes, Advincula Elmedulan, Gorgonio Boloran, Alan Monin, Jessie
Pacalingga and Michael Daclag.
All other claims are DISMISSED for lack of merit.
SO ORDERED.[7]
Their motion for reconsideration having been denied,
petitioners filed a petition for certiorari with the Court of Appeals,
arguing that the NLRC acted with grave abuse of discretion in not
finding Galaxie guilty of unfair labor practice and of violating
petitioners’ right to notice of closure, and in deleting the award of
separation pay.
In the assailed decision,[8] the Court of Appeals upheld the NLRC
decision and accordingly denied petitioners’ petition for certiorari as
it did their motion for reconsideration.
Hence, the present petition for review which raises the following issues:cralaw:red
1. Whether or not [Galaxie]
is guilty of unfair labor practice in closing its business operations
shortly after petitioner union filed for certification election.
2. Whether or not petitioners are entitled to separation pay.
3. Whether or not the written notice posted by
[Galaxie] on the company bulletin board sufficiently complies with the
notice requirement under Article 283 of the Labor Code.
Petitioners contend that the Court of Appeals erred in not finding that
Galaxie’s closure of business operations was motivated not by serious
business losses but by their anti-union stance.
chan robles virtual law library
It is settled that this Court is not a trier of facts, a rule which
applies with greater force in labor cases where the findings of fact of
the NLRC are accorded respect and even finality, as long as they are
supported by substantial evidence from which an independent evaluation
of the facts may be made.[9] In this case, the Labor Arbiter, the NLRC,
and the Court of Appeals were unanimous in ruling that Galaxie’s
closure or cessation of business operations was due to serious business
losses or financial reverses, and not because of any alleged anti-union
position. This Court finds no reason to modify such finding.
In any event, petitioners contend that Galaxie did not serve written
notices of the closure of business operations upon its employees, it
having merely posted a notice on the company bulletin board.
Hence, petitioners conclude, following the doctrine in Serrano v.
National Labor Relations Commission,[10] Galaxie should be liable for
backwages from the date of dismissal until finality of the decision in
the case.
Further, petitioners contend that the appellate court’s upholding of
the deletion by the NLRC of separation pay is contrary to the ruling in
Banco Filipino Savings and Mortgage Bank v. National Labor Relations
Commission[11] which held that separation pay is proper in cases where
closure or cessation of business operations is due to serious business
losses or financial reverses.
Indeed, Galaxie’s documentary evidence shows that it had been
experiencing serious financial losses at the time it closed business
operations. As aptly found by the Court of Appeals:cralaw:red
The NLRC’s finding on the legality of the closure should be upheld for
it is supported by substantial evidence consisting of the audited
financial statements showing that Galaxie continuously incurred losses
from 1997 up to mid-1999, to wit: P65,753,480.65 in 1997,
P48,429,785.89 in 1998, and P13,204,389.97 in 1999; and of the various
demand notices of payments from creditor banks. Besides, the
petitioners had not presented evidence to the
contrary; nor did they establish that the closure was motivated by
Galaxie’s anti-union stance. True, the union was seeking the
holding of a certification election at the time that Galaxie closed its
business operation, but that, without more, was not sufficient to
attribute anti-unionism against Galaxie. (Underscoring supplied)
Upon the other hand, petitioners failed to present concrete evidence
supporting their claim of unfair labor practice. Unfair labor
practice refers to acts that violate the workers’ right to
organize,[12] and are defined in Articles 248 and 261 of the
Labor Code
The prohibited acts relate to the workers’ right to self-organization
and to the observance of Collective Bargaining Agreement without which
relation the acts, no matter how unfair, are not deemed unfair labor
practices.[13] chanroblesvirtualawlibrary
Respecting petitioners’ claim for separation pay, Article 283 of the Labor Code provides:cralaw:red
Art. 283. Closure of
establishment and reduction of personnel. — The employer may also
terminate the employment of any employee due to the installation of
labor saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions
of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation
of labor saving devices or redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least his one
(1) month pay or to at least one (1) month pay for every year of
service , whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of
establishment or under taking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year.
In North Davao Mining Corporation v. National Labor Relations
Commission,[14] this Court held that Article 283 governs the grant of
separation benefits "in case of closures or cessation of operation" of
business establishments "NOT due to serious business losses or
financial reverses x x x" Where, the closure then is due to
serious business losses, the
Labor Code
does not impose any obligation upon the employer to pay separation benefits.[15]
Explaining the policy distinction in Article 283 of the
Labor Code
, this Court, in Cama v. Joni’s Food Services, Inc., declared:[16]
chan robles virtual law library
The Constitution,
while affording full protection to labor, nonetheless, recognizes “the
right of enterprises to reasonable returns on investments, and to
expansion and growth.” In line with this protection afforded to
business by the fundamental law, Article 283 of the
Labor Code
clearly makes a policy distinction. It is only in instances of
“retrenchment to prevent losses and in cases of closures or cessation
of operations of establishment or undertaking not due to serious
business losses or financial reverses” that employees whose employment
has been terminated as a result are entitled to separation pay.
In other words, Article 283 of the
Labor Code
does not obligate an employer to pay separation benefits when the
closure is due to serious losses. To require an employer to be
generous when it is no longer in a position to do so, in our view,
would be unduly oppressive, unjust, and unfair to the employer.
Ours is a system of laws, and the law in protecting the rights of the
working man, authorizes neither the oppression nor the self-destruction
of the employer. x x x (Emphasis supplied)
The denial of petitioners’ claim for separation pay was thus in order.
Finally, with regard to the notice requirement, the Labor Arbiter
found, and it was upheld by the NLRC and the Court of Appeals, that the
written notice of closure or cessation of Galaxie’s business operations
was posted on the company bulletin board one month prior to its
effectivity. The mere posting on the company bulletin board does
not, however, meet the requirement under Article 283 of “serving a
written notice on the workers.” The purpose of the written notice
is to inform the employees of the specific date of termination or
closure of business operations, and must be served upon them at least
one month before the date of effectivity to give them sufficient time
to make the necessary arrangements.[17] In order to meet the
foregoing purpose, service of the written notice must be made
individually upon each and every employee of the company.
Nevertheless, the validity of termination of services can exist
independently of the procedural infirmity in the dismissal.
In Agabon v. National Labor Relations Commission,[18] the Court
deemed it best to revisit the doctrine in Serrano,[19] which was cited
by petitioners, in relation to Wenphil Corp. v. National Labor
Relations Commission.[20] After analyzing the consequences of the
divergent doctrines on employment termination, the Court held that in
cases involving dismissals for cause, but without observance of
statutory due process, the better rule is to abandon the Serrano
doctrine and to follow Wenphil by declaring that the dismissal was for
cause but imposing sanctions on the employer. By so doing,
dispensing justice not just to employees but to employers as well is
achieved.[21]
In Business Services of the Future Today, Inc. v. Court of Appeals,[22]
which reiterated the ruling in Agabon v. National Labor Relations
Commission,[23] this Court held that where the dismissal is for an
authorized cause, the lack of statutory due process should not nullify
the dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee, in the form of nominal damages,
for the violation of his right to statutory due process. chanroblesvirtualawlibrary
Ultimately, however, the amount of damages to be awarded the employee
is addressed to the sound discretion of the Court, taking into account
the relevant circumstances.[24]
chan robles virtual law library
Under the facts and circumstances attendant to the case, this
Court finds the amount of P20,000 in nominal damages sufficient
to vindicate each petitioner’s right to due process.
WHEREFORE, the assailed
Decision dated March 26, 2004 and Resolution dated October 19, 2004
issued by the Court of Appeals in CA-G.R. SP No. 68669 are AFFIRMED with the MODIFICATION that respondent Galaxie Steel Corporation is ORDERED
to pay each of the individual petitioners the amount of P20,000.00 as
nominal damages for non-compliance with statutory due process.
SO ORDERED.
Quisumbing, J., Chairperson,
Carpio, Tinga and Velasco, Jr., JJ., concur.
[1] Penned by Associate
Justice Lucas P. Bersamin and concurred in by Associate Justices
Godardo A. Jacinto and Elvi John S. Asuncion; CA Rollo, pp. 139-151.
[2] NLRC records, pp. 43-53.
[3] Id. at 64 & 109.
[4] Id. at 109.
[5] Id. at 164-167.
[6] Id. at 264.
[7] Id. at 265-266.
[8] CA rollo, pp. 139-151.
[9] Amadeo Fishing Corporation v. Nierra, G.R. No. 163099, October 4, 2005, 472 SCRA 13.
[10] 380 Phil. 416 (2000).
[11] G.R. No. 82135, August 20, 1990, 188 SCRA 700.
[12] Philcom Employees Union v. Philippine Global Communications, G.R. No. 144315, July 17, 2006.
[13] Ibid. citing Great Pacific Life Employees
Union v. Great Pacific Life Assurance Corporation, G.R. No. 126717, 11
February 1999, 303 SCRA 113; Cesario A. Azucena, Jr., II The Labor Code
with Comments and Cases 210 (5th ed. 2004) [The Labor Code with
Comments and Cases].
[14] 325 Phil. 202 (1996).
[15] North Davao Mining Corporation v. National
Labor Relations Commission, supra; Reahs Corp v. National Labor
Relations Commission, 337 Phil 698 (1997); Cama v. Joni’s Food
Services, Inc.,G.R. No. 153021, March 10, 2004, 425 SCRA 259; Alabang
Country Club, Inc. v. National Labor Relations Commission, G.R. No.
157611, August 9, 2005, 466 SCRA 329.
[16] Supra.
[17] DAP Corporation v. Court of Appeals, G.R. No. 165811, December 14, 2005, 477 SCRA 792.
[18] G.R. No. 158693, November 17, 2004, 442 SCRA 573.
[19] Supra.
[20] G.R. No. 80587, February 8, 1989, 170 SCRA 69.
[21] Agabon v. National Labor Relations Commission, supra.
[22] G.R. No. 157133, January 30, 2006, 480 SCRA 571.
[23] Supra.
[24] Agabon v. National Labor Relations
Commission, supra; TPI Philippines Cement Corporation v. Cajucom VII,
G.R. No. 149138, February 28, 2006, 483 SCRA 494.
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