G.R. No. 126749 - Suson vs. Court of Appeals

Shin Heung operated primarily as a manufacturer of a computer part called “deck” exclusively for Smart Electronics Manufacturing Service Philippines, Inc. (SEPHIL).
Due to dwindling sales and a marked decrease in demand, the company reduced its workforce from 2,000 to 991 employees.
The termination of its sole client’s contract by SEPHIL led the company to decide on a complete closure.
On April 18, 2013, Shin Heung issued a Memorandum to all employees announcing the impending closure effective July 31, 2013, and detailed the retrenchment procedures—including “last in, first out” and voluntary resignation options—along with the conditions for receiving separation pay in line with Article 283 of the Labor Code.

Shin Heung formally informed the Department of Labor and Employment (DOLE) of its intent to completely close operations on the same day as the employee notice.
The notice stressed that the closure was due to continuous business losses and the termination of its only client’s orders.
Retrenchment was scheduled to commence 30 days after the notice, with a provision for voluntary resignation wherein workers who resigned would receive separation pay earlier.
Prior to the scheduled closure, Shin Heung sought to recall its earlier notice (via a letter dated July 29, 2013) to DOLE, stating that additional clients had been found and that the company planned to resume limited operations.

Following the announcement, several employees inquired about the possibility of resigning for early receipt of separation pay.
Some workers submitted handwritten letters of resignation while others, opting not to resign, received termination notices at least 30 days prior to July 31, 2013.
The company subsequently initiated a sale of certain assets, including buildings, machinery, and equipment, and procured a loan to fund the separation pay amounting to P28,973,250.00.
After beginning the closure process, Shin Heung later resumed a limited part of its business operations using its remaining equipment and leased 80% of its premises to THN Autoparts Philippines, Inc. for a fixed period.
Petitioners, representing the dismissed employees, alleged that the retrenchment/closure was a ruse to circumvent their tenurial rights and filed separate claims for illegal closure, wrongful dismissal, reinstatement, backwages, additional separation pay, damages, and attorney’s fees.

Held that the dismissal was valid on the basis of an authorized closure of business.
However, for three complainants (Jervin Pasacsac, Edna Maravida, and Girlie Zamora), the Labor Arbiter ruled in their favor, awarding them backwages from the dates of termination until July 31, 2013.
Other causes of action were dismissed either due to voluntary resignation or lack of merit.

Reversed the Labor Arbiter’s ruling overall by declaring the dismissal as illegal for petitioners.
Found that the retrenchment was not substantiated by sufficient evidence of continuous losses.
Ordered the reinstatement of employees and payment of backwages (with deductions for previously received separation pay) while dismissing claims for those who failed procedural requirements.

Reinstated the decision of the Labor Arbiter favoring the validity of the company’s closure.
Found that the NLRC had committed grave abuse of discretion by overruling the evidence of substantial losses and the valid business judgment of Shin Heung.
Emphasized that the decision to resume partial operations did not negate the bona fide closure previously executed.
Petitioners’ subsequent motion for reconsideration was denied, affirming the dismissal as valid.

Whether Shin Heung’s decision to close its business, despite later resuming partial operations, constitutes a valid cessation of business.
Whether the resumption of limited operations negates or undermines the original determination of closure and the authorized cause of termination.

Whether the company’s actions—specifically, the voluntary resignations and terminations followed by limited operational resumption—indicate bad faith intended to circumvent the rights of its employees.
Whether the evidence presented, including audited financial statements and business performance records, sufficiently supports Shin Heung’s claim of substantial losses.

Whether the dismissal should be characterized as retrenchment to prevent losses or as a total closure/cessation of business.
The implications of such characterization on the entitlement (or lack thereof) of reinstatement, backwages, and other reliefs.