G.R. No. 174184 - G.J.T. Rebuilders Machine Shop vs. Ambos

G.J.T. Rebuilders Machine Shop is a single proprietorship owned by Godofredo and Juliana Trillana, engaged in steel works and metal fabrication.
The business employed three machinists: Ricardo Ambos, Russell Ambos, and Benjamin Putian.
The machine shop operated from a rented space in the Far East Asia (FEA) Building located on Shaw Boulevard, Mandaluyong City.

On September 8, 1996, a fire partially destroyed the FEA Building.
In response to the damage, the building owner notified all tenants to vacate by the end of September 1996 for safety concerns.
Despite the notice, G.J.T. Rebuilders continued its operations in the condemned building until it was ultimately forced to leave when the owner refused further accommodation.

Following the building owner’s final refusal, G.J.T. Rebuilders closed its machine shop on December 15, 1997.
Subsequent to the closure, the business filed an Affidavit of Closure on February 16, 1998, and a sworn application to retire its operations before the Mandaluyong City Treasurer on February 25, 1998.

Ricardo, Russell, and Benjamin, having lost their jobs without receiving separation pay, filed a complaint for illegal dismissal before the Labor Arbiter.
The employees sought separation pay, additional allowances, and attorney’s fees, contending that their dismissal—although tied to the closure—entitled them to statutory benefits.

In their defense, G.J.T. Rebuilders, along with the Trillana spouses, argued that the closure was necessitated by serious business losses, not by a mere circumvention of labor law benefits.
They presented a financial statement covering the fiscal years 1996 and 1997 as proof of these losses, noting a net income in 1996 and a net loss of P316,210.00 in 1997.
The financial statement was belatedly subscribed under oath by the preparatory Certified Public Accountant, a point raised by the respondents to question its credibility.

The Labor Arbiter (Leda) found that G.J.T. Rebuilders failed to produce convincing evidence of serious business losses, thereby ruling in favor of the employees by awarding separation pay and attorney’s fees.
The National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision by accepting the claim of serious business losses based on the financial statement, albeit with a noted decline in demand after the fire incident.
The NLRC’s ruling was later challenged; the Court of Appeals reversed the NLRC decision, holding that the evidence was insufficient and inappropriately authenticated, thereby reinstating the award of separation pay.
Ultimately, petitioners filed a Petition for Review on Certiorari before the Supreme Court to contest the Court of Appeals’ decision.

Petitioners contended that the financial evidence covering 1996 and 1997 sufficiently proved a serious pattern of business losses, justifying the closure without the payment of separation pay.
Respondents argued that a two-year period was insufficient to demonstrate a continuing pattern of losses, particularly when one of the fiscal years showed a net income, and that the financial statement’s belated oath subscription undermined its evidentiary value.
Furthermore, respondents emphasized that even if losses were sustained, the failure to comply with the notice requirement under Article 283 of the Labor Code mandated the award of separation pay and nominal damages.

Whether G.J.T. Rebuilders sufficiently proved that it suffered serious business losses to justify closing its establishment without paying the statutory separation pay.
Whether the financial evidence provided—a two-year financial statement with inconsistent performance and issues of authentication—satisfies the burden of proof for establishing serious business losses.
Whether the failure to comply with the notice requirement under Article 283 of the Labor Code renders G.J.T. Rebuilders liable to pay nominal damages to the employees.
Whether the award of attorney’s fees is justified in this case, given the procedural and substantiative findings.