​Sangwoo Phil. vs. Sangwoo Phils. Employees Union, December 9, 2013

Facts:
SPI temporarily ceased operations. Meanwhile, SPEU filed a complaint for unfair labor practice, illegal closure, illegal dismissal, damages and attorney’s fees before the NLRC. Subsequently, SPI posted, in conspicuous places within the Company notices of its permanent closure and cessation of business due to serious economic losses and financial reverses. In a Decision, the Labor Arbiter ruled in favor of SPI. The NLRC sustained the ruling of LA with modification. On appeal, the CA held that the minority employees are not entitled to separation pay considering that the company’s closure was due to serious business losses.

Issue:
Were the minority employees entitled to separation pay.

​Held:
No. Article 297 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. In this case, the LA, NLRC, and CA all consistently found that SPI indeed suffered from serious business losses which resulted in its permanent shutdown and accordingly, held the company’s closure to be valid.