TERMINATION
Employee (Rank-and-File) Corporate Officer
Grounds: Under Philippine
jurisdiction, termination of
an employee made by the
employer can be classified
into two: a) Just Cause
(Article 297 of the Labor
Code, as amended); and b)
Authorized Cause (Articles
298 and 299 of the Labor
Code, as amended).
A.) Just Cause (Article 297
of the Labor Code, as
amended) – refers to those
causes or grounds that are
directly attributable to the
employee.
a) Serious misconduct or
willful disobedience by
the employee of the
lawful orders of his
employer or
Managerial Employee and a
Employee Corporate Officer
The power and discretion Same rules will apply
to terminate or remove with what discussed
director/corporate officers under the
are generally vested upon Termination of
the stockholders. This Employee (Rank-
discretion can be found its and-File)
basis on Section 27 of the
Revised Corporation
Code, to wit:
“SEC. 27. Removal of
Directors or Trustees. –
Any director or trustee of
a corporation may be
removed from office x x x x
x. Removal may be with or
without cause x x x x x x x
x.” (Emphasis supplied)
If the removal is with
cause, the Revised
Corporation Code also
provide for its grounds.
 representative in This can be found on
connection with his work; Section 26 of the Revised
Corporation Code which
b) Gross and habitual enumerates the following
neglect by the employee disqualification grounds
of his duties; for a director, trustee or
officer, to wit:
c) Fraud or willful breach
by the employee of the “SEC. 26.
trust reposed in him by Disqualification of
his employer or duly Directors, Trustees or
authorized representative; Officers – A person shall
be disqualified from being
d) Commission of a a director, trustee or
crime or offense by the officer of any corporation
employee against the if, within five (5) years
person of his employer or prior to the election or
any immediate member of appointment as such, the
his family or his duly person was:
authorized representative;
and (a) Convicted by final
judgment:
e) Other causes
analogous to the (1) Of an offense
foregoing. punishable by
imprisonment for a
B.) Authorized Cause period of exceeding
(Articles 298 and 299 of the six (6) years;
Labor Code, as amended) –
this refers to those causes (2) For violating this
that are brought about by Code; and
necessity and exigencies of
business or changing (3) For violating
economic conditions, or Republic Act No.
illness of the employee. 8799, otherwise
known as “The
a) Installation of labor- Securities
saving devices; Regulation Code”;

b) Redundancy; (b) Found

administratively liable for
c) Retrenchment to any offense involving
prevent losses; fraudulent acts; and

d) Closing or cessation of (c) By a foreign court or

operation of the equivalent foreign
establishment or regulatory authority for
undertaking not due to acts, violations or
serious business losses or misconduct similar to
financial reverses; those enumerated in
paragraphs (a) and (b)
e) Those who has been above.
found to be suffering from
any disease and whose The foregoing is without
 continued employment is
prohibited by or is
prejudicial to his health as
well as to the health of his
co-employees.
Procedure: A.) Termination by Just
Causes – “Two Notice Rule”
a) First Written Notice –
this notice shall contain
the following:
1) Specific causes or
grounds for termination as
provided for under Art.
297 of the Labor Code
and/or company policies,
if any;
2) Detailed narration of
facts and circumstances
prejudice to qualifications
or other disqualifications,
which the commission, the
primary regulatory
agency, or the Philippine
Competition Commission
may impose in its
promotion of good
corporate governance or
as a sanction in its
administrative
proceedings.” (Emphasis
supplied)
Under same Section 27 of Same rules will apply
the Revised Corporation with what discussed
Code, the procedure for under the
termination or removal of Termination of
a director/corporate officer Employee (Rank-
are stated as follows: and-File)
“SEC. 27. Removal of
Directors or Trustees – x
x x x x x x x x x by a vote
of the stockholders
holding or representing at
least two-thirds (2/3) of
the outstanding capital
 that will serve as basis for stock, or in a non-stock
the charge against the corporation, by a vote of
employee. A general at least two-thirds (2/3) of
description of the charge the members entitled to
will not suffice; and vote: Provided, That such
3) A directive that the removal shall take place
employee is given either at a regular meeting
opportunity to submit a of the corporation or at a
written explanation within special meeting called for
a reasonable period. the purpose, and in either
case, after previous notice
Reasonable period – should to stockholders or
be construed as a period of at members of the
least five (5) calendar days corporation of the
from receipt of the notice to intention to propose such
give the employee an removal at the meeting.”
opportunity to study the (Emphasis supplied)
accusation, consult or be
represented by a lawyer or Noteworthy also, aside
union officer, gather data andfrom the stockholders, the
evidence, and decide on the Securities and Exchange
defenses against the
Commission (SEC) may
complaint (Unilever vs. also motu proprio or upon
Rivera; G.R. No. 201701; 03 verified complaint, and
June 2013). after due notice and
hearing, order the removal
b) After serving the first of a director. (2nd
 written notice, the paragraph, Section 27 of
employer should afford the Revised Corporation
the employee ample Code)
opportunity to be heard
and to defend
himself/herself with the
assistance of his/her
representative if he/she
desires;

Ample opportunity to be
heard – means any
meaningful opportunity
(verbal or written) given to
the employee to answer the
charges against him/her and
submit evidence in support
of his/her defense, whether in
a hearing or conference or
some other fair, just, and
reasonable way. A formal
hearing or conference
becomes mandatory only
when requested by the
employee in writing or
substantial evidentiary
disputes exist or a company
rule or practice requires it, or
when similar circumstances
justify it (Perez vs. PTTC;
G.R. No. 152048; 07 April
2009).

c) Second Written Notice

– after determining that
termination is justified,
the employer shall serve
the employee a written
notice of termination,
indicating that:
1) all circumstances
involving the charge
against the employee has
been considered; and
2) the grounds have been
established to justify the
severance of their
employment.

Basis: Section 5.1, Rule 1-A

of the Implementing Rules
and Regulations of Book VI
of the Labor Code in
relation to Article 297 of the
Labor Code, as amended

B. Termination by
Authorized Causes

a) A written notice of
dismissal to the employee
specifying the ground/s of
termination (authorized
cause); and

b) A written notice,
specifying the ground/s of
termination (authorized
cause), submitted before
the appropriate Regional
Office of the Department
of Labor and Employment
at least 30 days prior to
the effectivity date of the
termination.

Basis: Section 5.3, Rule 1-A

of the Implementing Rules
and Regulations of Book VI
of the Labor Code in
relation to Article 298 and
 299 of the Labor Code, as
amended
Separation A. Termination by Just In the event that the Same rules will apply
Pay (if any): Causes director/corporate officer with what discussed
still has unpaid under the
An employee validly compensation Termination of
terminated by just causes is Employee (Rank-
not entitled to any separation and-File)
pay except as expressly
provided for in the company
policy or Collective
Bargaining Agreement
(CBA). [Section 5.5, Rule 1-
A of the Implementing Rules
and Regulations of Book VI
of the Labor Code]

B. Termination by
Authorized Causes

The general rule is that

separation pay shall be given
to employees terminated by
authorized cause/s.

The following are the rules

on payment of separation pay
to employee terminated due
to authorized cause/s:

a) Employees terminated
due to installation of
labor-saving devices or
redundancy, those
terminated employees are
entitled to at least one (1)
month pay or one (1)
month pay for every year
of service, whichever is
higher.

b) While, those
terminated by
retrenchment, or closing
or cessation of operation
of the establishment or
undertaking not due to
serious business losses or
financial reverses are
entitled to receive
separation pay equivalent
to one (1) month pay or at
least one-half (1/2) month
pay for every year of
 service, whichever is
higher.

c) An employee whose
employment is terminated
due to disease shall be
entitled to a separation
pay equivalent to at least
one (1) month salary or
one-half (1/2) month
salary for every year of
service, whichever is
higher.

It must also be noted that for

purposes of counting the
number of years of service, a
fraction of at least six (6)
months shall be considered
as one (1) whole year.

Basis: Section 5.5, Rule 1-A

of the Implementing Rules
and Regulations of Book VI
of the Labor Code in
relation to Article 298 of the
Labor Code, as amended.
Notwithstanding, the above
general rule admits only one
exception, which the only
time employers are not
compelled to pay separation
pay to employees is when the
closure or cessation from
business operations are duet
to serious business losses or
financial reverses. (G.J.T.
Rebuilders Machine Shop vs.
Ambos, et al; G.R. No.
174184; 28 January 2015)