GR 228328; (March, 2020) (Digest)
G.R. No. 228328. March 11, 2020.
AIRENE T. UNERA, ET AL., REPRESENTED BY JEOFFREY M. MASIPAG AND RONALD M. YADAO, PETITIONERS, VS. SHIN HEUNG ELECTRODIGITAL, INC., / MR. SEUNG RAE CHO / JENNIFER VILLAMAYOR, RESPONDENTS.
FACTS
Respondent Shin Heung Electrodigital, Inc. (Shin Heung) was a company primarily engaged in manufacturing a computer part called “deck” exclusively for Smart Electronics Manufacturing Service Philippines, Inc. (SEPHIL). Due to dwindling sales and decreasing market demand for their product, Shin Heung was forced to reduce its labor force from 2000 to 991 employees. Eventually, after SEPHIL formally terminated its contract with the company, Shin Heung decided to close shop. It issued a Memorandum dated 18 April 2013, informing its employees of the company’s impending closure on 31 July 2013, citing the termination of its contract with its sole client, SEPHIL, and continuous decrease in market demand. The company paid separation benefits to its employees. Subsequently, Shin Heung resumed operations on a limited scale, rehiring 200 workers to manufacture a different product (a “cassette”) for a new client. Petitioners, former employees of Shin Heung, filed complaints for illegal dismissal, arguing that the closure was not done in good faith because the company resumed operations shortly after.
ISSUE
Whether or not petitioners were illegally dismissed.
RULING
No, petitioners were not illegally dismissed. The Supreme Court affirmed the Decision of the Court of Appeals, which reversed the NLRC’s ruling. The Court held that Shin Heung’s closure was due to legitimate business reasons—the loss of its sole client and the consequent lack of work. The payment of separation benefits and the observance of procedural due process (issuance of a notice of closure) supported the good faith of the closure. The subsequent resumption of limited operations with a new client and a different product did not automatically negate the good faith of the prior closure. The circumstances leading to the closure were properly evaluated, and it was determined that the closure was a legitimate exercise of management prerogative to prevent further losses, not a scheme to circumvent the workers’ rights. The wisdom of a business judgment to implement a cost-saving device is beyond the court’s determination, provided no arbitrary or malicious action is shown.