SUBMITTED TO: Atty.

Velasco

Ever Electrical v. Samahang Manggagawa (AJG)

G. R. No. 194795
June 13, 2005
Mendoza, J.
I.

PARTY LITIGANTS
Petitioners: Ever Electrical Manufacturing, Inc., Vicente Go
Respondents: Samahang Manggagawa ng Ever Electrical/
Namawu Local 224 rep. by Felimon Panganiban

II.

FACTS

Petitioner Ever Electrical Manufacturing, Inc. (EEMI) is a

corporation engaged in the business of manufacturing
electrical parts and supplies. Respondents are members of the
workers union.
EEMI closed its operations on October 11, 2006 resulting in
the termination of its employees. Hence, the union filed for
illegal dismissal with prayer for benefits- 13th month,
separation, damages, and attorneys fees. They allege that
the closure was without any warning, notice, or memo, in full
disregard of the requirements under Labor Code.
EEMI explained that the closure of the business is because of
the losses due to the following factors:
In 1995, it invested 500 million in Orient Bank.
During the Asian Currency crises, various economies in
Southeast Asian Region were hurt badly, and EEMI was
directly affected and suffered huge losses.
1996 EEMI obtained a loan in the amount of P121,
400,000.00 from United Coconut Planters Bank (UCPB). As
security for the loan, EEMIs land and its improvements,
including the factory, were mortgaged to UCPB.
EEMI further suffered from losses because of the entry of
cheap goods from China and other Asian countries.
Lastly, the closure of Orient Bank added to its financial
woes because it is where most of its resources were
invested. It was not able to meet its obligations to UCPB.
In an attempt to save the company, EEMI entered into
a dacion en pago arrangement with UCPB which, in effect,
transferred ownership of the companys property to UCPB.
Originally, EEMI wanted to lease the premises to continue its
business operation but under UCPBs policy, a previous debtor
who failed to settle its loan obligation was not eligible to lease
its acquired assets.
Hence they mutually agreed to circumvent this policy.
UCPB agreed to lease it to an affiliate corporation, EGO
Electrical Supply Co, Inc. (EGO), for and in behalf of EEMI.
However, after a while, despite their lease contract, UCPB
instituted an unlawful detainer suit against EGO. The writ

was issued, hence EEMIs employees was not able to enter

the factory.
III.

ISSUES
1. Whether the CA erred in finding that the closure of EEMIs
operation was not due to business losses.
2. Whether the CA erred in finding Vicente Go solidarily liable with
EEMI.

IV.

RULING
Petition is Partially Granted.
The CA held that respondents were entitled to separation pay
and 13th month pay because the closure of EEMIs business
operation was effected by the enforcement of a writ of
execution and not by reason of business losses.
August 31, 2010 decision of the court is AFFIRMED with
Modification that Vicente Go is not solidarily liable with Ever
Electrical Manufacturing, Inc.