Article 283 of the labor code which covers

Article 283 of the Labor Code which covers retrenchment, reads as follows:
Art. 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to
xxx retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking xxx

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Niño Akeem V. Amistad EH 406 SY 2017 – 2018
In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to one (I) month pay or at least one-half ( /2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall he considered one (I) whole year. When petitioners
failed to make work available to the union members for a period of more than six months starting April 14, 1997 by failing to call the attention
of Del Monte on the latter’s obligations under the Contract of Use of Pier and to undertake a timely rehabilitation of the pier, they are deemed
to have constructively dismissed the union members.
SKM Art Craft Corp., vs. Bauca, et al., GR No. 171282, November 27, 2013
Principle: Article 286 of the Labor Code provides for a period where employers may suspend work where the employment is not deemed
terminated. Any period in excess of such would constitute a dismissal of the employment.
Facts: Respondents were hired by employed by petitioner which is engaged in handicraft business. On April 18, 2000 around 1 am, a fire
occurred within the petitioner’s premises which was used as receiving/repairing/packing area. The place was totally damaged, the estimated
was 22 million pesos. On May 8, 2000, petitioner informed respondents that it will suspend its operation for six months effective on May 9,
2000. On May 16, 2000 after receiving the notice of suspension of work, respondents filed a case for illegal dismissal. They alleged that
there was discrimination in choosing the workers to be laid off and that petitioner found out that respondents were members of a newly-
organized union.
Issues: 1. WON there was a bona fide suspension of work
2. WON there was illegal dismissal
Ruling: 1. The evidenced presented by the petitioner that its premises was burned down causing huge amount of damage against it thus
constituting a substantial loss of the petitioner. Thus Article 286 of the Labor Code applies.
Under Article 286 of the Labor Code, the bona fide suspension of the operation of a business or undertaking for a period not exceeding six
months shall not terminate employment. Consequently, when the bona fide suspension of the operation of a business or undertaking
exceeds six months, then the employment of the employee shall be deemed terminated.
Thus the bona fide suspension of work by the petitioner was valid.