Almirante: Reinstatement after suspension of operations

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Friday, July 25, 2014

Dominador Almirante
Labor case digest

LAST Oct. 18, 2000, a fire occurred in the inspection and receiving/repair/packing area of petitioner SKM Art Craft Corp.’s premises in Intramuros, Manila. The fire investigation report stated that the structure and the beach rubber building were destroyed. Also burned were four cargo containers and a trailer truck. The estimated damaged was P22 million.

Last May 8, 2000, petitioner informed respondents that it would suspend its operations for six months, effective May 9, 2000. After the lapse of the six-month suspension of operations, however, petitioner failed to recall respondents. The latter filed complaints for illegal dismissal against petitioner. Did the complaints find merit?


The Supreme Court (First Division) ruling: Yes.

IN Valdez v. NLRC, 349 Phil. 760, 765-766 (1998), we explained: 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. By the same token and applying said rule by analogy, if the employee was forced to remain without work or assignment for a period exceeding six months, then he is in effect constructively dismissed.

In Waterfront Cebu City Hotel v. Jimenez, G.R. No. 174214, June 13, 2012, 672 SCRA 185, 192-193, we also said: Under Art. 286 of the Labor Code, a bona fide suspension of business operations for not more than six (6) months does not terminate employment.

After six (6) months, the employee may be recalled to work or be permanently laid off.

In this case, more than six (6) months have elapsed from the time the Club ceased to operate. Hence, respondents’ termination became permanent.

Indeed, petitioner’s manifestation dated October 2, 2001 that it is willing to admit respondents if they return to work was belatedly made, almost one year after petitioner’s suspension of operations expired in November 2000. We find that petitioner no longer recalled, nor wanted to recall, respondents after six months.

(SKM Art Craft Corp. vs. Efren Bauca, et. al., G.R. No. 171282, Nov. 27, 2013).

Published in the Sun.Star Cebu newspaper on July 26, 2014.


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