Art. 297.

CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSO

NNEL. The employer may also terminate the employment of any em
ployee due to the installation of labor-saving devices, redundancy, re
trenchment to prevent losses or the closing or cessation of operatio
n of the establishment or undertaking unless the closing is for the p
urpose of circumventing the provisions of this Title, by serving a writ
ten notice on the workers and the Ministry of Labor and Employme
nt at least one (1) month before the intended date thereof. In case
of termination due to the installation of labor-saving devices or redu
ndancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one
(1) month pay for every year of service, whichever is higher. In case
of retrenchment to prevent losses and in cases of closures or cessati
on of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equi
valent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year.

Under Article 297 of the Labor Code, closure or cessation of busines

s operation as valid and authorized ground of employment terminati
on is not limited to those resulting from business losses or reverses.
But SEPARATION PAY SHOULD BE PAID TO EMPLOYEES where the
closure is not due to losses. (J.A.T. General Services, G.R. No. 148340
, January 26, 2004) (Quoted in Mac Adams Metal Engineering Worke
rs Union, et. al. v. Mac Adams, etc., G.R. No. 141615, October 24, 20
03).

Under Article 297 of the Labor Code, cessation of business operation

s not due to business reverses is subject to three (3) requirements,
namely: (a) service of a written notice the employees and to the DO
LE at least one (1) month before the intended date thereof; (b) the
cessation of or withdrawal from business operations must be bona fi
de in character; and (c) payment to the employees of termination p
ay amounting to at least one-half month pay for each year of servic
e, or one month pay, whichever is higher. (Mobil Employees Associat
ion [MEA] and Inter-Island Labor Organization [ILO] v. NLRC, et. al.,
G.R. No. 79329, March 28, 1990)