The Court of Appeals (CA) ruled that the 191 dock workers who lost their jobs in 2006 were not illegally dismissed when their employer, Brightstar Cargo Handlers, Inc. stopped its operations for its failure to renew its service contract with Harbour Centre Port Terminal, Inc.

In a decision penned by Associate Justice Ramon R. Garcia, the Special Fifth Division of the appellate court said the suspension of a firm’s operations for economic reasons is “recognized as a valid exercise of management prerogative which the State does not usually interfere with as no business or undertaking is required to continue operating at a loss simply because it has to maintain its workers in employment.”

Such an act, the CA added would be tantamount to taking property without due process of law.

However, since Brightstar acknowledged the displaced 191 workers as their regular employees, the CA upheld the ruling of the labor arbiter as affirmed by the National Labor Relations Commission ordering Brightstar to pay each of the 191 workers unpaid salaries for the period April 17 to 29, 2006, 13th month pay (2006), and service incentive leave for 2004-2006.

“We likewise uphold the award of nominal damages of P7,150 for Brightstar’s failure to notify the 191 individual petitioners prior to the company’s temporary suspension of its business,” the court added.

Associate Justices Magdangal M. De Leon and Pampio A. Abarintos concurred in the decision.

Brightstar, an independent contractor which supplies labor to perform maritime service (stevedoring, dockhandling, domestic vessel crewing, maritime terminal operation) signed a one-year agreement with Harbour in December 2003 to provide stevedoring service at Harbour’s terminal.

The agreement was extended for another year. However, before the expiration of the extended contract on April 30, 2006 Brightstar sought the renewal of its contract with Harbour which the latter refused because of the increase in the proposed fees of Brightstar.

For lack of business opportunities, Brightstar was constrained to suspend its operations temporarily without informing the petitioners who were caught by surprise and displaced by the incident.

The CA said Brightstar availed of the bona fide suspension of its business operation for a period not exceeding six months which did not terminate employment.