A Critical Analysis of the Law and

Doctrines on Dismissal of Employees

Atty. VICENTE LEOGARDO, JR.
Director General, ECOP
Nov. 12, 2015
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Dismissal of Employees and Termination of
Employment Distinguished

1. Dismissal of employees refers to the unilateral action
of the employer to terminate the employment of the
employee for cause in accordance with law (Articles
282, 283 and 284)
It is an exercise of management prerogative

2. Termination of employment is a broader term which
includes not only dismissal for cause but all other
causes based on contract (project, seasonal, casual,
fixed period), resignation, retirement, death and
termination by the employee
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for an employee’s dismissal to be valid. 2. (Baguio Central University vs. the employer must meet these basic requirements of: (1) just or authorized cause (which constitutes the substantive aspect of a valid dismissal). Ignacio Gallente. and (2) observance of due process (the procedural aspect). No. Thus.Fundamental Principles on Dismissal of Employees Our Constitution. What this means is that an employer shall not dismiss an employee except for just or authorized cause and only after due process is observed. 2013). statutes and jurisprudence uniformly guarantee to every employee or worker tenurial security. 188267. Dec. R. G. 3 .

4 . Termination of Employment.: ART. Sec. On the other hand the statutes particularly refer to Art. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. inclusive of allowances. 1. – In cases of regular employment. 2. Art. . 279 as well as the other provisions in Title I. Security of Tenure. cont’d. XIII thereof. which prescribes that workers are entitled to security of tenure. Book VI of the Labor Code. 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. The Constitution referred to by the Supreme Court is the 1978 Constitution. Fundamental Principles . . 3. 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. 279.

The jurisprudence referred to in the “Fundamental Principles on Dismissal of Employees” is the prevailing doctrine on dismissal established in the en banc decision of the Supreme Court in Agabon and Agabon vs. the right to security of tenure was also assured in the 1973 Constitution (Sec. et al. In other words. R. While the Labor Code (1974) antedated the 1978 Constitution. Article II) 4. No. . 17. Fundamental Principles . 2004) 5 . cont’d. 158693. 3. security of tenure has been a constitutional right since 1973 5. (G. 9.. Nov. NLRC. .

The doctrine lays down two basic requirements for dismissal: a) A valid cause. Article III. Bill of Rights) 6 . The Prevailing Doctrine on Dismissal 1. Before 2004 observance of constitutional due process was required for a valid dismissal: “No person shall be deprived of life. and b) The observance of due process (manner of dis- missal). which constitutes the substantive aspect (legality of dismissal). nor shall any person be denied the equal protection of the laws. Due process as a manner of dismissal refers to statutory due process under the Labor Code 3. liberty. or property without due process of law. which constitutes the procedural aspect. 2.” (Sec. 1.

454 SCRA 119) 7 . the employer must pay an indemnity to the worker 5. 151378. The Prevailing Doctrine on Dismissal (cont’d) 3. 282 the sanction to be imposed should be tempered because the dismissal process was initiated by an act imputable to the employee 6. 2005. March 28. The failure of the employer to observe due process in the dismissal of a worker no longer renders the dismissal invalid. If the dismissal is based on an authorized cause under Art. Pacot.R. the sanction should be stiffer because the dismissal process was initiated by the exercise of management prerogative (Jaka Food Processing Corp. G. But for such failure. 4. vs. 283. No. If the dismissal is based on a just cause under Art.

Oct. No. No.00 (Celebes Japan Foods Corporation.R.R. 2004. G. If the dismissal was based on an authorized cause without the required notice. 17.00 (Agabon and Agabon vs NLRC. 442 SCRA 573) 8. The nominal damages awarded to the employee for a dismissal based on a just cause but without the notice requirement was fixed at P30. citing Jaka Food Processing Corp. 158693. G.000. 2. the amount fixed was P50. et al. 2009.. supra) 3/2/2011 ECOP-VRL 8 .000. Nov. 175855. The Prevailing Doctrine on Dismissal (cont’d) 7.

the employer may terminate the employment any time for just cause. The Law and Doctrine on Termination: Ante the Labor Code 1. A. or without just cause. 1052 as amended) which in effect provided: a) For employment without a definite period. No. by serving written notice to the employee at least 1 month in advance or 1/2 month for every year of service of the employee. whichever is l longer b) The employee who was not served such notice in case of termination without just cause shall be entitled to compensation from the date of termination in an amount equivalent to his wages corresponding to the required 9 period of notice. . The law governing termination previous to the Labor Code was the Termination Pay Law (R.

R. L-38482 June 18. 1973 Constitution): b) Since the right of an employee to his labor is in itself a property. his summary and arbitrary dismissal amounted to deprivation of his property without due process. The Law and Doctrine on Termination: Ante the Labor Code (cont’d) 2. the Supreme Court established the following precedent on the dismissal of employees: a) Failure to give advance notice to the employee was deemed as an infringement of his constitutional right to due process of law and equal protection of the laws (Art. vs. Sec. 1(1). No. 1976) 3. IV. the dismissal without advance notice was illegal 10 . because in its application. The Termination Pay Law was significant. Court of Appeals (G.“ (Batangas Laguna Tayabas Bus Co. Thus.

The impact of this doctrine whose application was carried over under of Labor Code had graver consequences for employers 6. The doctrine extended the illegality of dismissal even if there was valid cause but the employer failed to observe due process in dismissing the miscreant worker 11 . 279. in case of regular employment. The Law and Doctrine on Dismissal Up to 1989 (cont’d) 4. This precedential doctrine prevailed even after the effectivity of the Labor until year 1989 5. Under Art. a worker dismissed without just cause is deemed illegal and the worker shall be reinstated with full back wages and benefits 7.

In 1989. (en banc. the Supreme Court in an en banc decision held that the policy that dismissal of an employee was illegal if effected without due process even if there was valid cause. should be reexamined (Wenphil Corp. vs. No. It would demoralize the rank and file if the un- deserving if not undesirable remained in the service 4. 80587.R. NLRC & Mallare. But infraction of the due process requirement subjects the employer to sanction in the form of an indemnity award to the employee 12 . It ruled that If just cause was established. It was arbitrary and unfair to the employer to order reinstatement with back wages 3. 1989). Feb. 1989: Doctrine on Dismissal Reexamined 1. G. 2. 08.

000.00 to P10.000.00. 1989: Doctrine on Dismissal Reexamined (cont’d) 5. Award of indemnity depends upon the facts of each case and the gravity of the omission committed by the employer. Up to 2004 .000. P2. 7. The foregoing doctrine became known as the Wenphil or Belated Due Process Rule. P5. 9.000. 13 .00.00. the fines imposed for violations of the notice requirement had varied from case to case from P1. 8. Nevertheless the Court maintained the doctrine that failure to give an employee the benefit of a hearing before he was dismissed constituted an infringement of his constitutional right to due process of law.

117040. en banc (G. R. It does not apply to the exercise of private power. 2000: Wenphil Modified and Reversed 1. the Supreme Court in an en banc decision reversed its previous ruling that violation of the notice requirement by the employer before it dismissed an employee was a denial of constitutional due process (Ruben Serrano vs. such as the termination of employment by the employer under the Labor Code b) "The reason is simple: Only the State has authority to take the life. In 2000.” 3. NLRC & Isetann Department Store. or property of the individual. 14 . liberty. 27 Jan 2000): a) The due process clause of the Constitution is a limitation on governmental powers. The remedy is to order payment of full back wages to the employee from the time of his dismissal until final judgment that the dismissal was for a just cause. No.

7. but the employer did not give him and the DOLE a 30-day written notice of termination in advance. The employer must be sanctioned for failure to observe the requirements of due process (Sebuguero v. 5. if an employee is laid off for any of the causes in Arts. his dismissal must be upheld and he should not be reinstated. 283 in addition to back wages. But. the termination of his employment should not be considered void but he should simply be paid separation pay as provided in Art. 248 SCRA) 15 . This is because his dismissal is ineffectual. For the same reason. otherwise. However. NLRC. then the termination of his employment should be considered ineffectual 6. 283-284. 2000: Doctrines Modified and Reversed (cont’d) 4.

what happens to 16 benefits already received by the employee? . Imposes fiction of continued employer-employee relationship even after the employer had dismissed the employee 2. If award is reversed on appeal. Implications of Serrano doctrine on Dismissal Without Notice 1. Grants the following benefits to dismissed worker until date of finality of decision: a) Back wages for employees dismissed for just cause b) Back wages plus separation pay for employees dismissed for authorized causes c) Back wages plus separation pay for employees dismissed on account of closures due to serious business losses or financial reverses 3.

Thus. is entitled to nominal damages of P50. 17. an employee found legally dismissed. and that payment of back wages and other benefits. In 2004. et al. 17 .R.00 if his dismissal lacked proper notice in violation of his right to statutory due process 3. 158693.000. Nov. NLRC. 279: that termination is illegal only if it is not for any of the just or authorized causes provided by law. The Serrano ruling did not consider the full meaning of Art. vs. (G. 2004) 2. including reinstatement is justified only if the employee was unjustly dismissed. 2004: Serrano Doctrine Abandoned 1. the Supreme Court in an en banc decision abandoned the Serrano doctrine and reinstated the Wenphil doctrine but imposed stiffer sanctions on the employer in the form of nominal damages (Agabon. No. et al.

as amended by D. Book VI.. O. i.e.. 2004: Serrano Doctrine Abandoned (cont’d) 4. Thus. whose requirements are found in the Implementing Rules of the Labor Code. Rule I.e. i. Sec. Nos. the valid and authorized causes of employment termination 2) procedural. statutory due process under the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing 18 . 9 and 10 5. the manner of dismissal. Abagon differentiated statutory due process from constitutional due process: a) Due process under the Labor Code has 2 aspects: 1) substantive. 2.

2004: Serrano Doctrine Abandoned (cont’d) 6. b)) The dismissal is without just or authorized cause but due process was observed. From the foregoing doctrine the Supreme Court summarized four possible situations that may be derived in the dismissal of employees: a) The dismissal is for a just cause under Art. for an authorized cause under Art. 19 . On the other hand. 282 of the Labor Code. or for health reasons under Art. civil or administrative proceedings 7. 283. and due process was observed. constitutional due process protects the individual from the government and assures him of his rights in criminal. 284.

and d) The dismissal is for just or authorized cause but due process was not observed. 20 . 2004: Serrano Doctrine Abandoned (cont’d) c) The dismissal is without just or authorized cause and there was no due process.

Art. In the 2nd and 3rd situations where the dismissals are illegal. 3. 2. Implications of the Four Situations 1. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. 21 . 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full back wages. inclusive of allowances. In the 4th situation (just or authorized cause but due process was not observed). the dismissal should be upheld. with due process) the dismissal is undoubtedly valid and the employer will not suffer any liability. In the 1st situation (just or authorized cause.

However. Implications of the Four Situations (cont’d) 4. While the procedural infirmity cannot be cured. it should not invalidate the dismissal. 22 . the employer should be held liable for non-compliance with the procedural requirements of due process.

e.. like Constitutional due process. as amended Department Order No. i. the manner of dismissal. 23 . Procedural due process requirements for dismissal are found in the Implementing Rules of the Labor Code. i. Series of 2015 3. due process under the Labor Code.e. 2.. 147-15. Summing up. Epilogue 1. Breaches of these due process requirements violate the Labor Code. has two aspects: a) substantive. and b) procedural. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. the valid and authorized causes of employment termination under the Labor Code.

as the term suggests. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. 7. Social justice. Epilogue (cont’d) 4. 6. 8. . The law protecting the rights of the worker authorizes neither oppression nor self-destruction of the employer. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. 5. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. should be used 24 only to correct an injustice.

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