TERMINATION OF EMPLOYMENT

 EMPLOYEE‟S RIGHT TO DISCIPLINE; NATURE OF RIGHT

o The employer‟s right to conduct the affairs of his business,
according to its own discretion and judgment, includes the
prerogative to instill discipline in its employees and to impose
penalties, including dismissal, upon erring employees. The
only criterion to guide the exercise of its management
prerogative is that the policies, rules and regulations on work-
related activities of the employees must always be fair and
reasonable and the corresponding penalties, when prescribed,
commensurate to the offense involved and to the degree of the
infraction.

 ACTUAL AND CONSTRUCTIVE DISMISSAL

A.) Actual Dismissal

B.) Constructive Dismissal - act of quitting because continued

employment is rendered impossible, unreasonable or unlikely as in
the case of an offer involving a demotion in rank and a diminution in
pay.

 GROUNDS FOR TERMINATION

o JUST CAUSES (LABOR CODE)

ART. 282. Termination by employer. - An employer may terminate

an employment for any of the following causes:
a. Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in
connection with his work;
b. Gross and habitual neglect by the employee of his duties;
 c. Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
d. Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family
or his duly authorized representatives; and
e. Other causes analogous to the foregoing.

A. SERIOUS MISCONDUCT
o Improper conduct, or wrong conduct. It is a transgression of
some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character and implies wrongful
intent and not a mere error in judgment.
o Must be in connection with the employee‟s work to constitute
just cause for his separation.
o Elements:
1. an improper act, willful in nature
2. serious, not minor
3. of a grave and aggravated character not merely trivial or
unimportant
4. work related – in connection with the employees work or
in transgression with established company policy
5. it must show that the employee has become unfit to
continue working for the employer
o Examples:
1. Sleeping in post, gross insubordination, dereliction of
duty and challenging superior officers to a fight –
security guard is supposed to protect property from loss
or pilferage
2. Extra-marital relationship: both are married in a private
educational institution
 3. Inadequate cause: Teacher falling in love with a student
after termination they got married. SC ruled that there is
no evidence of immorality and the dismissal is invalid.

B. WILLFUL DISOBEDIENCE
o When there is wanton disregard to follow the orders of the
employer - Includes company rules and regulations of
discipline
o Must be Willful and intentional;
o Willful - it is characterized by a wrongful perverse mental
attitude rendering the employee‟s act inconsistent with the
proper subordination
o Orders, regulations or instructions of the employer against
which the employee willfully disobeys must be:
a. reasonable and lawful -refers both to kinds and character
of the direction and commands and the manner in which
they are made or given
b. sufficiently known to the employee- either written or oral
order or instruction that is conveyed to the employee like
a code of conduct or lawful verbal instruction (Reason:
how could you follow something which you do not
know)
c. in connection with the duties which the employee has
been engaged to discharge
o Examples:
a. refusal by a secretary to make a report
b. transferring to another work without resignation as
required
c. If a secretary refuses to write a check even if the employee
knows that there are insufficient funds because it only
involves the mechanical act of writing. If the order was to
deliver the check thereby exposing the company to
 criminal liability then the order already becomes
unlawful.
d. Refusal to render overtime work
e. Refusal to stop the fight between two employees despite
order by the superior
f. Failure to follow a valid transfer

C. GROSS AND HABITUAL NEGLECT OF DUTY

o Absence of that diligence that an ordinarily prudent man
would use in his own affairs
o Neglect of duty vs. misconduct: Neglect of duty is an omission
or failure to do what is required compared to serious
misconduct which requires a positive act
o Gross – grave or serious
o Habitual – repetition of a similar act
o General Rule: Neglect of duty must be BOTH gross and
habitual
o Exception: where an employee may be terminated on the
ground of gross negligence even if it is not habitual- that
is if there is substantial damage or injury to the employer
o Example: When a Bank teller left a deposited amount
unattended in the counter when the SOP requires them to put
the money in a safe place resulting in the loss of the money.
Although it was just one incident, considering that the amount
there is 50,000. Even when there is no habituality, SC said that
the neglect of duty is gross, because it is a very basic
requirement of a teller to safe keep any deposits made by the
creditors. Employer has to pay that to the customer.
o Other Examples: Excessive absenteeism especially if
managerial position where punctuality is in demand
D. FRAUD/WILLFUL BREACH OF TRUST
o Any commission or concealment which involves a breach of
legal duty, trust and confidence justly reposed, and is injurious
to another
o Applicable to those with Positions of Trust and Confidence
o Cases involving employees occupying positions of trust
and confidence – managerial employees or those vested
with powers or prerogatives to lay down management
policies/hire, transfer, suspend, layoff, recall, discharge,
assign or discipline employees or effectively recommend
managerial sanctions
o where the employee is routinely charged with the care
and custody of the employer‟s money or property –
cashiers, auditors, property custodians
o Who in the normal and routine exercise of their functions
regularly handle significant amounts of money or
property
o Elements of Fraud:
1. Committed against the employer or his representative
2. In connection with the employee‟s work
3. Position of the employee must be with trust and
confidence
o Elements of Breach of Trust:
1. Breach must be work-related
2. Position must be impressed with trust and confidence
such as positions having the custody of funds, money or
other company property
o Limitations for Loss of Confidence:
o The grounds must not be: 1) merely simulated 2) used as
a subterfuge for cause which are improper, illegal or
unjustified 3) arbitrarily asserted 4) mere afterthought to
justify earlier action taken in bad faith but must be
 genuine 5) employee holds position of trust and
confidence
o Example: Falsification of Time Cards – involving security
guards who falsified it when in fact they went to a hunting trip
and red handed punching not only his card but another

E. COMMISSION OF CRIME BY EMPLOYEE AGAINST THE PERSON

OF EMPLOYER, HIS IMMEDIATE FAMILY, OR AUTHORIZED
REPRESENTATIVES
o Immediate members limited to spouse, ascendants,
descendants, or legitimate, natural, or adopted brother and
sisters of employer or his relative by affinity in same degrees
and those by consanguinity within the fourth civil degree (Art
11. RPC)
o Conviction is not necessary to effect termination on this
ground;
o The quantum of evidence is merely substantial evidence to
terminate an employee under these grounds – that relevant
evidence as a reasonable man might accept as valid to support
a conclusion
o Crimes against person: murder, physical injuries, homicide

F. OTHER ANALOGOUS CAUSES

o These are causes that are in one or more respects similar to the
above mentioned causes, and have been deliberated by the SC.

I. ABANDONMENT (Analogous to Gross and Habitual Neglect

of Duty)
o Elements:
1. Long absence from work without valid reason –
inquire as to the reason of the absence first
 2. Clear intention to sever the employer-employee
relationship – determinative factor
o Employee‟s intention to severe er-ee relationship is
manifested through his acts like while working for your
employer you are working for another

II. SEXUAL HARASSMENT (Analogous to Serious Misconduct)

o REPUBLIC ACT NO. 7877 - Anti-Sexual Harassment Act
of 1995
o Note: Gravamen of the Offense: not the mere violation of
one‟s sexuality but the abuse of power by the employer
who has a duty to protect his employee against over-sex.

Section 3. Work, Education or Training -Related, Sexual

Harassment Defined. – Work, education or training-related
sexual harassment is committed by an employer, employee,
manager, supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having
authority, influence or moral ascendancy over another in a
work or training or education environment, demands, requests
or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for
submission is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual
harassment is committed when:
(1) The sexual favor is made as a condition in the hiring
or in the employment, re-employment or continued
employment of said individual, or in granting said
individual favorable compensation, terms of conditions,
promotions, or privileges; or the refusal to grant the
sexual favor results in limiting, segregating or classifying
the employee which in any way would discriminate,
 deprive or diminish employment opportunities or
otherwise adversely affect said employee;
(2) The above acts would impair the employee's rights or
privileges under existing labor laws; or
(3) The above acts would result in an intimidating,
hostile, or offensive environment for the employee.

Sec. 5.Liability of the Employer, Head of Office, Educational or

Training Institution. – The employer or head of office,
educational training institution shall be solidarily liable for
damage arising from the acts of sexual harassment committed
in the employment, education or training environment if the
employer or head of office, educational or training institution is
informed of such acts by the offended party and no immediate
action is taken thereon.

III. GROSS INEFFICIENCY OR POOR PERFORMANCE

(Analogous To Gross And Habitual Neglect Of Duty)
o When you terminate an employee on the ground of gross
inefficiency:
1. Employer must prove that it has set standards of
performance expected of the employee
2. These standards must be reasonable and in
connection with the employee‟s work
3. And there must be proof that the employee failed to
meet the standards despite the
4. Given reasonable opportunity to meet the same.

IV. DRUG ABUSE – RA 9165 (Analogous To Serious Misconduct)

Comprehensive Dangerous Drugs Act of 2002 RA 9165
 V. ATTITUDE PROBLEM (Analogous To Breach Of Trust)
o If you are an employee, you should be a team player. But
if you have an attitude problem, that will be detrimental
to your employer which makes it a ground for
termination.
o Ex. Managerial employee‟s refusal to carry out the
company policies because you disagree

VI. DISLOYALTY/CONFLICT OF INTEREST (Analogous To

Willful Breach Of Trust/Loss Of Confidence)
o Holding a position in conflict with the present position
o Ex: your employer is engaged in softdrinks business and
you establish a company of the same business in
competition with your employer.

VII. LACK OF COMMON SENSE (Analogous To Gross And

Habitual Neglect Of Duty)

VIII. ENFORCEMENT OF UNION SECURITY CLAUSE

o Another cause for termination is dismissal from
employment due to the enforcement of the union security
clause in the CBA.
o "Union security" is a generic term, which is applied to
and comprehends "closed shop," "union shop,"
"maintenance of membership," or any other form of
agreement which imposes upon employees the obligation
to acquire or retain union membership as a condition
affecting employment.
o In terminating the employment of an employee by
enforcing the union security clause, the employer needs
only to determine and prove that: (1) the union security
clause is applicable; (2) the union is requesting for the
 enforcement of the union security provision in the CBA;
and (3) there is sufficient evidence to support the decision
of the union to expel the employee from the union. These
requisites constitute just cause for terminating an
employee based on the union security provision of the
CBA.

IX. COMMISSION OF PROHIBITED ACTS DURING STRIKE

Prohibited acts during strike – Art. 264
X. HANCOCK case THEFT AGAINST A CO- EMPLOYEE-
ANALOGOUS TO SERIOUS MISCONDUCT
theft by an employee of a credit card. A cause analogous to
serious misconduct is a voluntary and/or willful act or
omission attesting to an employee's moral depravity.
XI. YRASEGUI case OBESITY- ANALOGOUS TO WILFUL
DISOBEDIENCE Flight attendant who did not meet the
minimum weight requirement. Obesity as a ground for
termination is a just cause because it is for the safety of the
steward and passengers. Analogous to Wilful disobedience.

o AUTHORIZED CAUSES

Art. 283. Closure of establishment and reduction of personnel.

– The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of
termination due to the installation of laborsaving devices or
 redundancy, 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 cessation of operations of
establishment or undertaking not due to serious business losses
or financial reverses, the separation pay shall be equivalent 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.

AUTHORIZED CAUSES:

1. Installation of Labor-Saving Devices

2. Redundancy
3. Retrenchment to Prevent Losses
4. Closing or Cessation of Operation of the Establishment or
Undertaking unless the closing is for the purpose of
circumventing the provisions of law.

OTHER AUTHORIZED CAUSES:

1. Total and Permanent Disability of An Employee
2. Disease Not Curable in Six Months
3. Valid Application of a Union Security Clause
4. Expiration of Period in Term Employment
5. Completion of Project in Project Employment
6. Failure in Probation
7. Sale Amounting to Closure of Business
8. Relocation of Business to a Distant Place
9. Defiance of Return-to-Work Order
10. Commission of Illegal Acts in a Strike
 11. Non-feasible Reinstatement
12. Floating Status or Off-Detail Beyond Six Months
13. Resignation
14. Violation of a Contractual Commitment e.g. being a consultant
to a competitor
15. Retirement
16. Death of employee

A. INSTALLATION OF LABOR SAVING DEVICE

o Refers to the reduction of the number of workers in a
company‟s factory made necessary by the introduction of
machinery in the manufacture of its products is justified. There
can be no question as to the right of the manufacturer to use
new labor saving devices with a view to effecting more
economy and efficiency in its method of production.
o Example:
1. flexible work schedule
2. reduction of workdays- normal workdays per week is
reduced but it should not be more than 6 months
3. compressed work week: more than 8 hours but less than
12 hours per day
4. work rotation: one group MWF, other group TTHS
5. flexi holiday: employees avail holidays on some other
day but no diminution of benefits
6. gliding or flexi-time schedule: EE chooses when to arrive
and depart but not less than the required hours of work
7. These are tentative or short term labor and cost saving
measures.
o In case of termination due to the installation of labor saving
devices, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one month pay or to at
 least one month pay for every year of service, whichever is
higher. (Article 283, Labor Code.)

B. REDUNDANCY
o Exists where the services of an employee are in excess of what
is reasonably demanded by the actual requirement of the
enterprise
o Position is redundant, not the worker
o Employer has no legal obligation to keep in its payroll more
employees than are necessary for the operation of its business
o Causes:
o Over hiring of workers
o Decreased volume of business
o Dropping of a particular product line or service activity
previously undertaken or
o Streamlining of operations
o Lack of demand for products
o Requisites For A Valid Redundancy Program; Criteria In
Implementing A Redundancy Program
o For a valid implementation of a redundancy program, the
employer must comply with the following requisites:
(1) written notice served on both the employee and the
DOLE at least one month prior to the intended date of
termination;
(2) payment of separation pay equivalent to at least one
month pay or at least one month pay for every year of
service, whichever is higher;
(3) good faith in abolishing the redundant position; and
(4) fair and reasonable criteria in ascertaining what
positions are to be declared redundant.
 o Among the accepted criteria in implementing a redundancy
program are:
(1) preferred status;
(2) efficiency; and
(3) seniority

C. RETRENCHMENT TO PREVENT LOSSES

o Requisites:
(1) Losses are substantial and not merely de minimis in extent o
If the loss purportedly sought to be forestalled by retrenchment
is clearly shown to be unsubstantial and inconsequential in
character, the bona fide nature of the retrenchment would
appear to be seriously in question.
(2) Loss must be reasonably imminent, as such imminence can
be perceived objectively and in good faith by the employer. o
There should in other words be a certain degree of urgency, for
the retrenchment, which is after all a drastic recourse with
serious consequences for the livelihood of the employees retires
or otherwise laid-off.
(3) It must be reasonably necessary and likely to effectively
prevent the expected losses.
(4) Alleged losses must be proved by sufficient and convincing
evidence.

o All 4 requisites must be present.

o Financial statements duly audited by an independent external
auditor is the best and most reliable method to determine the
existence of losses
o Income tax return is NOT reliable to prove losses because it is
self- serving.
o It is NOT required that an employer be required to experience
actual loss before retrenchment can be valid because if the law
requires actual loss before the declaration of retrenchment it
would violate due process since it would tantamount to
deprivation of right to property.
o Must resort first to labor and cost saving measures or devices
before resorting to retrenchment.
o To show serious business losses, FS would show that the
retained earnings is impaired
o If you are suffering from business losses, you need not pay
separation pay. But it would not stop employees from filing a
petition for involuntary insolvency against the employer in
order to enforce the workers preference. But that is inferior to
secured creditors.
o Causes:
o Lack of work
o Business recession
o Fire
o Criteria who to retrench (fair and reasonable):
i. Efficiency Rating (Performance Evaluation)
ii. Less Preferred Status
iii. Seniority
iv. Physical fitness
v. Age
vi. Size of the family
vii. Proof of financial loses

o REDUNDANCY VS RETRENCHMENT
o Redundancy – results from the fact that the position of the
employee has become superfluous, an excess over what is
actually needed even if the business has not suffered serious
reverses
 o Effect: separation pay for redundancy is higher than that
for retrenchment
o Retrenchment – linked with losses; cost cutting measure
made immediately necessary by business reduction or
reverses

o TEMPORARY VS PERMANENT RETRENCHMENT

o Permanent Retrenchment – Art 283
o Temporary Retrenchment – Art 286 – when the six-month
period is over and the employee still willing to work is
not recalled, he is deemed separated or constructively
dismissed.

D. CLOSURE OF BUSINESS
o It is NOT necessary that the entire business will close, it may
just be a department, division or section.
o The significance of the qualification (not due to serious business
reverses) in the law for closure is that separation pay is not
given if it is due to serious business losses (North Davao
Mining case)
o North Davao Mining vs NLRC, 1996: the corporation is owned
and managed by Philippine Government and had to close in
1992 because for the past five years has been incurring mind
boggling losses averaging 3billion per year and in 1991 its
liabilities exceeded its assets by 20,392. Justice Panganiban
explained that Art 283 governs the grant of separation benefits
in case of closures or cessation of operation of business
establishments NOT due to business losses or financial reverses
. If closure is due to financial losses that amounted to 20 billion,
Labor Code does not impose ny obligation upon the employer
to pay separation benefits
 o See Guidelines On The Procedure For Closure Of Business
Under RA 9231 (DOLE DEPT. CIRCULAR NO. 3, S. 2009)

o ANALOGOUS AUTHORIZED CAUSES

o Termination of lease contract

o Non-renewal of permit to operate – analogous to closure
or cessation

REQUISITES FOR VALID TERMINATION

1. Substantive due process – the existence of just cause and authorized

cause.
2. Procedural due process – refers to the manner of dismissal whether
there was compliance with the prior notice rule or the twin notice
requirement.

LABOR CODE Article 277. Miscellaneous Provisions. x x x (b) Subject to

the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and
without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought
to be terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and
to defend himself with the assistance of his representative if he so desires
in accordance with company rules and regulations promulgated pursuant
to guidelines set by the Department of Labor and Employment. Any
decision taken by the employer shall be without prejudice to the right of
the worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or
authorized cause shall rest on the employer. The Secretary of the
Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie
finding by the appropriate official of the Department of Labor and
Employment before whom such dispute is pending that the termination
may cause a serious labor dispute or is in implementation of a mass lay-off.
(As amended by Section 33, Republic Act No. 6715, March 21, 1989)

PREVENTIVE SUSPENSION

o Preventive suspension may be defined as the temporary removal of

an employee charged for violation of company rules from his present
status or position. Preventive suspension is usually imposed against
subject employee while the company is conducting an investigation
for his alleged violation in order to prevent him from causing further
harm or damage to the company or his coemployees.
o Preventive suspension is not a disciplinary measure, and should not
be confused with suspension imposed as a penalty.
o LEGAL BASIS - The right of employer to impose preventive
suspension is not found in the Labor Code itself. The oft-cited legal
basis for imposition of preventive suspension is Section 8 and Section
9 of Rule XXIII, Book V, of the Omnibus Rules Implementing the
Labor Code, as amended by Department Order No. 9, Series of 1997,
which read as follows:

Section 8. Preventive suspension. – The employer may place the

worker concerned under preventive suspension only if his
continued employment poses a serious and imminent threat to
the life or property of the employer or of his co-workers.

Section 9. Period of suspension. – No preventive suspension shall

last longer than thirty (30) days. The employer shall thereafter
reinstate the worker in his former or in a substantially equivalent
position or the employer may extend the period of suspension
provided that during the period of extension, he pays the wages
 and other benefits due to the worker. In such case, the worker
shall not be bound to reimburse the amount paid to him during
the extension if the employer decides, after completion of the
hearing, to dismiss the worker.

o Interestingly, the above-quoted provisions are no longer reproduced

in the present Omnibus Rules, as amended by Department Order No.
40, Series of 2003, which supersedes Department Order 9-97.
o It is opined, however, that the removal of said provisions from the
omnibus rules did not diminish the right of the employer to impose
preventive suspension, considering that the justification for
upholding the right is necessity itself, i.e., when continued
employment poses threats to the life of the employer or his co-
worker.

STATUTORY DUE PROCESS VS. CONSTITUTIONAL DUE PROCESS

Agabon vs. NLRC, G.R. No. 158693, November 17, 2004

To be sure, the Due Process Clause in Article III, Section 1 of the

Constitution embodies a system of rights based on moral principles so
deeply imbedded in the traditions and feelings of our people as to be
deemed fundamental to a civilized society as conceived by our entire
history. Due process is that which comports with the deepest notions of
what is fair and right and just. It is a constitutional restraint on the
legislative as well as on the executive and judicial powers of the
government provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has
two aspects: substantive, i.e, the valid and authorized causes of
employment termination under the Labor Code; and procedural, i.e., the
manner of dismissal. Procedural due process requirements for dismissal
are found in the Implementing Rules of PD 442, as amended, otherwise
known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as
amended by Department Order Nos. 9 and 10. Breaches of these due
process requirements violate the Labor Code. Therefore, statutory due
process should be differentiated from failure to comply with constitutional
due process. Constitutional due process protects the individual from the
government and assures him of his rights in criminal, civil or
administrative proceedings; while statutory due process found in the Labor
Code and Implementing Rules protects employees from being unjustly
terminated without just cause after notice and hearing.

PRIOR NOTICE AND HEARING RULE

Before an employee is terminated, he must be given notice about the

termination and should be given an ample opportunity to be heard.
Ideally, this should be done by personally handing a copy of the notice to
the employee concerned. However, if this is not possible, the notices may
be served on the employee‟s last known address either by ordinary or
registered mail (from legal viewpoint, registered mail is preferred).

Dismissals based on just causes contemplate acts or omissions attributable

to the employee while dismissals based on authorized causes involve
grounds - business or health - allowing the employer to terminate. A
termination for an authorized cause requires payment of separation pay.
When the termination of employment is declared illegal, reinstatement and
full backwages are mandated under art. 279 of the Labor Code. If
reinstatement is no longer possible where the dismissal was unjust,
separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under art. 282 of
the Labor Code, the employer must give the employee two written notices
and a hearing or opportunity to be heard before terminating the
employment, that is, a notice specifying the grounds for which dismissal is
sought and, after hearing or opportunity to be heard, a notice of the
decision to dismiss; and (2) if the dismissal is based on authorized causes
under arts. 283 and 284 of the Labor Code, the employer must give the
employee and the Department of Labour and Employment written notices
30 days prior to the effectivity of the separation.

PROCEDURAL REQUIREMENT FOR JUST CAUSES

Sec. 2, Rule I, Book VI of the Implementing Rules:

(1) Notice to explain

(2) Ground relied upon

(3) Facts which constitute the ground

(4) Giving the employee a reasonable opportunity to prepare and explain

his side

(5) Intention of the employer to dismiss

(6) Notice of conference or investigation

(7) Notice of decision

o Purpose of the first notice: In notice to explain you have to give

him an opportunity to respond to the charges, by responding to
the charges he can decide to respond or deny, or admit it or not
respond at all.
o First notice requires ample opportunity to be heard. Reasonable
opportunity under the omnibus rules means every kind of
assistance that management may provide. This period should
constitute at least 5 calendar days so that employee may study the
situation, gather evidence and prepare intelligently his defense. 5
days, this is not provided in the Labor Code but in one case
(Genuino vs. NLRC, GR No. 142732-33, December 4, 2007)
o What is important is that the employee is given opportunity to be
heard. No prohibition of extension of the 5 year period.
o What is important is there is a substantial compliance with the 5
day period to explain, it‟s not something that is needed to be
strictly complied.
o Conduct of hearing is not mandatory since it is only written in the
IRR and not in the Labor Code itself. IRR is not the law, they are
merely interpretation for enforcement. What is important is the
ample opportunity to be heard. When the SC looked for conduct
of hearing in the LC, they found none, and so they ruled that if
there is a conflict between the IRR and the law, the law prevails.
Furthermore, the IRR only sought for substantial compliance.
(Telecommunications vs. Garriel citing Perez)
o Probationary employee may be terminated from just cause,
authorized cause or failure to meet the standards
o failure of an employee to meet the standards of the employer in
the case of probationary employment, it shall be sufficient that a
written notice of termination for failure to qualify is served the
employee within a reasonable time from the effective date of
termination
o if employer fails to satisfy written notice for failure to give notice,
employer is liable for nominal damages
o Project employees may be terminated for just cause but NOT for
failure to qualify with the standards
o If project employee is terminated but NOT for a just cause, entitled
for reinstatement, backwages- same rule with seasonal employee
o If dismissal is done in bad faith- under the civil code, employee is
entitled to damages
o Instances when formal conference or hearing is mandatory:
1. when the employee himself requests
2. when it is a company practice
3. when it involves substantial evidentiary disputes
 4. and other similar instances (Perez vs. PT&T)

o Right to confront witness against employee

o Employee has the right to confront the witness against him.
It is necessary to controvert the grounds imputed against
him. To rebut the charges.
o However, the employee may waive his right to confront the
witness against him.
o Employer does NOT have the obligation to give employee
the right to confront the witness against him.

o Right to Counsel
o Employee has a right to counsel during investigation, this
right is also waivable.
o Employer is under NO obligation to provide employee a
counsel.
o Employee is supposed to invoke these rights. If not invoked,
may be validly waived. If he invokes the right and the
employer denies it then violation of due process.

Effect Relief available to employee

 Dismissal VALID General Rule: None (Basis: Art. 279)
with Just Exception: Employee may be awarded
Cause and Separation Pay as financial assistance
with Prior provided that the dismissal was for a
Notice just cause which does not involve
serious misconduct or those reflecting
on his moral character (Discerning
Compassion Doctrine)
 Dismissal VALID Nominal Damages (see Agabon and
with Just Jaka cases)
Cause but
 with no Prior
Notice
 Dismissal INVALID – 1. Reinstatement without loss of
without Just Illegal seniority rights and other privileges
Cause but Dismissal and;
with Prior 2. Full backwages, inclusive of
Notice allowances and other benefits or
their monetary equivalent
computed from the time his
compensation was withheld up to
the time of his actual reinstatement
 Dismissal INVALID – 1. Reinstatement
without Just Illegal 2. Full backwages and other
Cause and Dismissal benefits
without 3. Damages
Prior Notice

DISCUSSION ON DISMISSAL WITH JUST CAUSE BUT WITHOUT

PRIOR NOTICE:

Agabon et al., G.R.No. 158693, November 17, 2004

In this case, the Supreme Court revisited Serrano and re-examined the lack
of statutory basis in the Labor Code for declaring as "ineffectual or
defective" a dismissal of an employee for a valid or authorized cause but
without complying with the employee's statutory right to due process.
Following the 1989 vintage case of Wenphil (170 SCRA 69 [1989]), the
present rule now as laid down in Agabon et al. is to hold the dismissal as valid (no
longer defective or ineffectual) but with the qualification, that the employer will
have to pay the "validly" dismissed employee the sum of P30,000 as nominal
damages for non-observance by the employer of the employee's right to due process.
In the mind of the High Court, P30,000 was considered as a “stiffer"
sanction than the P1,000 which it originally awarded in Wenphil. Being a
landmark decision by the Supreme Court en banc, Agabon et al., is now the
leading authority used by many human resource practitioners and
management lawyers, citing it with distinction to overturn previous
decisions of the High Court based on Serrano (Caingat vs. NLRC, G.R. No.
154308, March 10, 2005; Chua vs. NLRC, G.R. No. 146780, March 11, 2005;
Glaxo Wellcome Phils., vs. Nagkaisang Empleyado ng Wellcome, G.R. No.
149349, March 11, 2005).

Notably however, as what the Supreme Court said in reversing Serrano,

social justice is not based on rigid formulas set in stone. A few months ago
after enunciating Agabon et al., the cash equivalent, so to speak, of the
"belated due process" rule was further clarified by the Supreme Court in
the more recent en banc case of Jaka Food Processing vs. Pacot et al., (G.R.
No. 151378, March 28, 2005). Here, the Court found the need to make a
material distinction as regards the gravity of the sanction which an
employer should be meted in case it violates the employee's right to due
process. Thus in this recent case, the cash equivalent may be "tempered" or
made "stiffer", depending on the cause for termination. In other words, the
P30,000 indemnity in Agabon, et al., is not a uniform amount of indemnity
to be applied in all cases of termination for cause when there is non-
compliance with due process.

Clearly then, the Court laid down the following parameters:

 if the dismissal is based on just cause under Article 282 but the
employer failed to comply with the notice requirement, the sanction
to be imposed upon him should be tempered because the dismissal
was, in effect initiated by an act imputable to the employee; and

 if the dismissal is based on authorized cause under Article 283 but

the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was initiated
by the employer's exercise of his management prerogative. In Jaka
Food Processing Corp., a P50,000 award was considered by the
Supreme Court as a "stiffer" sanction.
PROCEDURAL REQUIREMENT FOR AUTHORIZED CAUSES

1. service of a written notice to the (show cause letter)

a. employee and (so that he can look for another job)
b. the appropriate Regional Office of the DOLE (so that it can
check the validity or legality of the dismissal bec. The Sec. of
Labor can suspend the effect of the termination bec. That could
result to mass lay off as provided in Art. 277(b))
c. at least 30 days before the effectivity of the termination
2. specifying the ground or grounds of termination

 Termination due to completion of the contract or phase thereof- no

prior notice required
 Termination due to failure of an employee to meet the standards for
probationary employment- written notice is served the employee
within reasonable time from effective date of termination.
 Personal service of notice is required.
 Notice of termination is served at the nearest regional office of DOLE
having jurisdiction over the workplace
 But nothing is stopping you from serving the notice of termination to
the head office of DOLE because that is still substantial compliance.

EFFECT OR CONSEQUENCE OF A VALID DISMISSAL

ART. 283. Closure of establishment and reduction of personnel.- The

employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of
laborsaving devices or redundancy, 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
cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent
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.

 ¾ ART 283 applies to employees whose employment are validly

terminated
 Relief is separation pay

 General Rule: When an employee is dismissed and the dismissal

complies with both substantive and procedural due process,
separation pay is not given.
o Exception: If one is dismissed based on a just cause, and such
cause does not constitute serious misconduct nor reflect the
employees‟ moral character, Separation pay may be validly
awarded to the employee concern. This is called the
DISCERNING COMPASSION DOCTRINE.
 The award of Separation Pay is called a FINANCIAL ASSISTANCE
and is awarded based on equity. It is a measure of social justice
where the employee is validly dismissed for causes not constituting
serious misconduct or those reflecting on his moral character.
  In most cases, the Supreme Court awarded financial assistance
equivalent to one-half month pay for every year of service.

JUST CAUSE

Separation pay, in lieu of reinstatement, shall include the amount

equivalent at least to one (1) month salary or to one (1) month salary for
every year of service, whichever is higher, a fraction of at least six (6)
months being considered as one (1) whole year including regular
allowances. If the employee is not regular, he is not included.

AUTHORIZED CAUSE

Separation pay is as follows: a) In case of termination due to the installation

of labor-saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least one (1) month pay or to at
least one (1) month pay for every year of service, whichever is higher. b) In
case of retrenchment to prevent losses and in cases of closures 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 (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. c) In cases of closures or cessation of operations of
establishment or undertaking due to serious business losses or financial
reverses, there shall be no separation pay.

EFFECT OR CONSEQUENCE OF AN INVALID DISMISSAL

ART. 279. Security of tenure. - In cases of regular employment, the

employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. (As amended by Section 34, Republic
Act No. 6715, March 21, 1989).

RELIEFS AVAILABLE TO UNJUSTLY DISMISSED EMPLOYEE

(1) Backwages

(2) Reinstatement

(3) Separation Pay

(4) Damages (Moral and Exemplary when warranted)

BACKWAGES

Backwages – salary, or compensation, benefits, or their monetary

equivalent from the time it was withheld from the employee without
deduction on employee‟s earnings elsewhere during the time of his illegal
dismissal until his reinstatement

The salary that the employee would have earned had he no been illegally
dismissed. It is computed from the date of the illegal dismissal up to the
date of the illegal dismissal up to the date of the employee‟s actual
reinstatement.

The basic figure to be used in the computation of backwages due to the

employee should include not just the basic salary, but also the regular
allowances that he had been receiving such as the emergency living
allowance and 13th month pay mandated by the law (Paramount Vinyl
Product vs. NLRC)
Facilities should not be included in the computation of backwages for the
reason that such are given free, to be used only for official tour of duty and
not for personal use.

REINSTATEMENT OR SEPARATION PAY IN CASE REINSTATEMENT

IS NO LONGER FEASIBLE

 General Rule: Restoration of the employee to his previous position or to

a substantially equivalent position without loss of seniority rights and
other privileges.
 When one is entitled to reinstatement and position does not exist
anymore, EE may be reinstated to a substantially equivalent position.
If no substantial equivalent position is available, or the establishment
closed, EE may be entitled to separation pay. (Sec. 4. Book VI or IRR)
 Separation pay is at least 1 month or 1 month for every year of
service whichever is higher
 Exceptions (Instances when reinstatement is no longer available which
entitles EE to separation pay):
1. Strained relations - must be so compelling and so serious in
character that the continued employment of the EE is so obnoxious
to the person/ business of the ER and that the continuation of
such employment has become inconsistent with peace and
tranquility which is an ideal atmosphere in every workplace;
2. when reinstatement has become impossible because of a
supervening event Example: abolition in good faith the position
the worker once occupied, absence of equivalent position
3. Closure of the establishment
4. If the employee is already beyond retirement age (65 years old)
5. where an employee elects a separation pay
SEPARATION PAY will be given 30 days after the service of notice of the
termination. This is so because it is only then that they are considered
separated from service

 Installation of Labor saving devices and redundancy – 1 month pay

or at least 1 month pay for every year of service whichever is higher
 Retrenchment to prevent losses/ Closure not due to serious business
losses or financial reverses- equivalent to 1 month pay or at least
(1/2) one half month pay for every year of service whichever is
higher
 Closure due to serious business losses- no separation pay is given

Effect Relief available to employee

 Dismissal VALID None
with -entitled to Separation Pay
Authorized
Cause and
with Prior
Notice
 Dismissal VALID Nominal Damages („stiffer‟ because
with prerogative was exercised by the
Authorized employer)
Cause but Exception: see Industrial Timber case
with no Prior
Notice
 Dismissal INVALID – 1. Reinstatement without loss of
without Illegal seniority rights and other
Authorized Dismissal privileges and;
Cause but 2. Full backwages, inclusive of
with Prior allowances and other benefits or
Notice their monetary equivalent
computed from the time his
compensation was withheld up
to the time of his actual
 reinstatement
3. Damages – if termination was
attended by fraud
 Dismissal INVALID – Same as above
without Illegal
Authorized Dismissal
Cause and
without
Prior Notice

DISMISSAL FOR FALSE OR NON-EXISTENT CAUSE

 Dismissal of an employee on no grounds or on fabricated cause.

 NOT the same as termination for a just cause.
 There was this time during Marcos where an employee was not able
to report to work because he was detained by the Marcos soldiers. So
his employer terminated him for abandonment of work which is
analogous to gross and habitual neglect of duty, but there was no
gross and neglect of duty because he was behind bars there was no
intent to sever his employment. The dismissal was found to be illegal
but due to a false or inexistent cause, so what is the significance of
that? On the matter of reinstatement and payment of back wages
which he is entitled.

CORPORATE OFFICERS

“Corporate officers” in the context of PD 902-A are those officers of a

corporation who are given that character either by the Corporation Code or
by the corporation‟s by-laws. Under Section 25 of the Corporation Code,
the “corporate officers” are the president, secretary, treasurer and such
other officers as may be provided for in the by-laws.
The burden of proof is on the party who makes the allegation. Here,
petitioner merely alleged that respondent was a corporate officer.
However, it failed to prove that its by-laws provided for the office of “vice
president for nationwide expansion.” Since petitioner failed to satisfy the
burden of proof that was required of it, we cannot sanction its claim that
respondent was a “corporate officer” whose removal was cognizable by the
SEC under PD 902-A and not by the NLRC under the Labor Code.

An “office” is created by the charter of the corporation and the officer is

elected by the directors or stockholders. On the other hand, an employee
occupies no office and generally is employed not by the action of the
directors or stockholders but by the managing officer of the corporation
who also determines the compensation to be paid to such employee.

Persons Liable:

(1) Art. 289. Who are liable when committed by other than natural person. -
If the offense is committed by a corporation, trust, firm, partnership,
association or any other entity, the penalty shall be imposed upon the
guilty officer or officers of such corporation, trust, firm, partnership,
association or entity.

(2) BP 68 (Corporation Code of the Philippines) Sec. 31. Liability of

directors, trustees or officers. – Directors or trustees who willfully and
knowingly vote for or assent to patently unlawful acts of the corporation or
who are guilty of gross negligence or bad faith in directing the affairs of the
corporation or acquire any personal or pecuniary interest in conflict with
their duty as such directors or trustees shall be liable jointly and severally
for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons.
 General Rule: Officers of a corporation are not personally liable for
their official acts unless it is shown that they have exceeded their
authority.
o Exceptions:
a) "Where the incorporators and directors belong to a single
family, the corporation and its members can be considered as
one in order to avoid its being used as an instrument to commit
injustice," or to further an end subversive of justice.
b) In the case of Claparols vs. CIR involving almost similar facts
as in this case, it was also held that the shield of corporate
fiction should be pierced when it is deliberately and
maliciously designed to evade financial obligations to
employees.