Termination by Operation of Law due to Failure to Reinstate After Six Months of Off Detail
Temporary suspension of operations is recognized as a valid exercise of management prerogative provided it is not carried out in order to circumvent the provisions of the Labor Code or to defeat the rights of the employees under the Code.
The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six ( 6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.
Article 301 (formerly Article 286) of the Labor Code provides that the employee is reinstated to his former position when there is an indication that he desires to return to work one month from the resumption of his employer’s operations after a bona fide suspension.
In the case of Keng Hua Paper Products vs. Ainza, G.R. No. 224097, February 22, 2023, Keng Hua ceased operations on 26 September 2009 and resumed only in May 2010. In their Petition, Keng Hua claim that it was only on 15 May 2010, that the company slowly resumed its operation although not yet normal.
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Most employees likewise resumed their services with Keng Hua except the complainants who had not returned from work since Keng Hua temporarily stopped operation due to Ondoy. To further prove that there was no dismissal of complainants, on 10 September 2012, Keng Hua included their names in the list of employees affected by its temporary closure due to heavy monsoon rains that they submitted to the DOLE field office.
Prior to that date, however, Keng Hua had already filed their complaint for illegal dismissal against Keng Hua.
Article 301 of the Labor Code decreed that a suspension of operations will not lead to termination of employment if the suspension does not exceed six months. The Supreme Court reiterated in Airborne Maintenance and Allied Services, Inc. vs. Egos, that the suspension of employment under Article 301 of the Labor Code is only temporary and should not exceed six months.
Clearly, there is more than six months between the onslaught of typhoon Ondoy in September 2009 and the resumption of Keng Hua’s operations in May 2010.
Complainants filed their complaint for illegal dismissal on 31 March 2011. Petitioners never showed proof that they actually called complainants back to work on May 2010. They merely asserted that complainants 
were not prevented from coming to work in May 2010.
Keng Hua even admit that they have not recalled complainants when the six-month period lapsed. To recall them with no work to do is simply illogical and would only drive Petitioners to even greater loss. Complainants’ employment was thus terminated by operation of law because their work suspension extended beyond the statutory six-month period.
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