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LAW ON TERMINATION

(Title I, Book VI)


[The Labor Code is renumbered
pursuant to RA 10151 as implement
by DOLE Department Advisory No. 01,
Series of 2015]

A. HISTORY

The earliest law on termination was Article 302 of the Code of Commerce,
which provided for the payment of a so-called mesada. The law provided that in
cases in which the contract of employment does not have a fixed period, any of
the parties may terminate it, advising the other party thereof one (1) month in
advance. But with the effectivity of the New Civil Code on August 30, 1950, Article
302 was repealed along with other provisions of said Code on Agency.

Later, Congress of the Philippines enacted Republic Act No. 1052, otherwise
known as the Termination Pay Law which took effect on June 12, 1954. This
was amended by Republic Act No. 1787 which took effect on June 21, 1957. It
was enacted for the purpose of giving the employer an opportunity to secure a
replacement and the employee a similar opportunity to find another employment
(Abe vs. Foster Wheeler Corp., G.R. No. L-14785; L-14923, November 29,
1960). The procedure is also to give aid (termination pay) to the laborer who,
suddenly deprived of his livelihood through dismissal without sufficient notice, would
have no means of supporting himself and his family until he has found another job
(Malate Taxicab and Garage vs. CIR, 99 Phil. 41).

The present law on termination requires that an employer can terminate the
services of an employee only for valid cause and just causes which must be
supported by substantial evidence (Pili vs. NLRC, 217 SCRA 338), after due
observance of procedural due process as prescribed by law or in accordance with
company policy, rules and regulations.

There are two requisites for a FAULTLESS DISMISSAL OR TERMINATION


OF EMPLOYMENT: (1) SUBSTANTIVE DUE PROCESS existence of a JUST
CAUSE (Art. 282, now Art. 297) or AUTHORIZED CAUSE (Art. 283, now Art. 298;
and Art. 284, now Art. 299); and (2) PROCEDURAL DUE PROCESS as prescribed
by LAW or COMPANY PROCEDURE, RULES & REGULATIONS over and above
what is prescribed by law. The substantive due process, insofar as just cause is
concerned, refers to the CONDUCT, ACT or OMISSION for which an employee is
sought to be dismissed; while the procedural due process refers to the MANNER by
which the dismissal is effected. Moreover, the NOTICE REQUIREMENT prescribed
by law on the INTENTION of the employer to sever the employees services is NOT
STRICTLY A DENIAL OF DUE PROCESS. This is because SUCH NOTICE is
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PRECISELY INTENDED to enable the employee not only to prepare himself for the
legal battle to protect his tenure, but also to find other means of employment and
ease the impact of the loss of his job and, necessarily, his income. (De Jesus v.
Supersonic Services, Inc., et al., G.R. No. 164662, 18 February 2013, citation
omitted)

While the dismissal of an employee is in accordance with what is prescribed


by LAW, the employers NON-COMPLIANCE with its own COMPANY PROCEDURE
in the dismissal of employee constitutes violation of procedural due process right of
the employee entitling him to nominal damages of P30,000.00. (Surigao del Norte
Electric Cooperative v. Gonzaga, G.R. No. 187722, 10 June 2013; Abbot
Laboratories v. Alcaraz, G.R. No. 192571, 23 July 2013)

THE BURDEN OF PROVING THAT THE EMPLOYEE WAS NOT


DISMISSED OR IF DISMISSED, THAT THE DISMISSAL WAS NOT ILLEGAL AND
FAILURE TO DISCHARGETHE SAME WOULD MEAN THAT THE DISMISSAL IS
NOT JUSTIFIED AND THEREFORE ILLEGAL. (Radar Security & Watchman
Agency, Inc. v. Castro, G.R. No. 211210, 2 December 2015, citing Abad v.
Roselle Cinema, 520 Phil. 135, 142, (2006).

The ONUS of PROVING that an employee WAS NOT DISMISSED from his
employment or, if DISMISSED, his dismissal was not illegal FULLY RESTS ON THE
EMPLOYER, and the failure to discharge the onus would mean that the dismissal
was not justified and was illegal (citing Great Southern Services Corp. v. Acuna,
G.R. No. 140189, 28 February 2005)

Nevertheless, where the employer denies having the dismissed the employee
as it did not issue any notice of termination nor did the employer commit any overt
and positive act indicating intention to dismiss, the burden is shifted to the employee
to prove the fact of dismissal.

B. COVERAGE and PURPOSE

The law on termination under the Labor Code applies to all establishments or
undertakings, whether for profit or not. The purpose of the law is to extend the
same right and benefits enjoyed by employees in profit establishments to employees
in non-profits establishments. The law is also designed to protect the employee
against arbitrary, oppressive and unceremonious dismissal or deprivation of his job
(Manggagawa ng Komunikasyon ng Pilipinas-FTWU vs. NLRC, 194 SCRA
573).

C. CONCEPT OF TERMINATION
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Termination is a comprehensive term used to describe dismissal or lay-off or


both. Dismissal is the discharge of an employee, a termination of employment in
private or public capacity at the instance or initiative of the employer. A
discharge, on the other hand, takes place when a clear intention is manifested by
the employer to dispense with the services of the employee. But there must be
some declaration that the services will no longer be accepted (Morabe, Law on
Termination, p. 3; Foz, NLRC Reports I). Lay-off is a termination initiated by the
employer, but without prejudice to reinstatement or recall of a worker who has been
temporarily separated. [Examples of cause for laying-off are: 1) breakdown of
machinery; b) shutdown for repairs; c) business reverses; d) lack of work or raw
material and others.] See Article 286 (now Art. 301) of the Labor Code, as
amended.

Another type of termination or separation, is quit (resignation), that is, one


initiated by the employee motivated by his own reasons such as obtaining a better
job, dissatisfaction with the terms and conditions of employment.

There could be a third type CONSTRUCTIVE TERMINATION, either at the


instance or initiative of the employer or by the employee. If by the EMPLOYER, it is
considered DISMISSAL IN DISGUISE, which is an ILLEGAL DISMISSAL; if it is by
the EMPLOYEE, it is considered as CONSTRUCTIVE OR VOLUNTARY
RESIGNATION, hence, VALID.

It would seem there are basically four (4) types of termination: (1) termination
initiated by the employee because of his fault, act or omission (Article 282, now Art.
297); (2) termination initiated by the employer (Art. 283, now Art. 298); and (3)
termination by an employee by written resignation or involuntary/constructive
resignation (Art. 285, now Art. 300); and (4) dismissal in disguise or constructive
dismissal effected by the employer.

Or, termination of employment may be categorized as follows: (1) Termination


due to just causes (Art. 297); (2) Termination due to authorized causes (Art. 298); (3)
Termination due to illness (Art. 299); and (4) Termination by an employee (Art. 300).

Termination-at-will is ANATHEMA to the public policies on labor protection


espoused by our laws and Constitution, which dictates that no worker shall be
dismissed EXCEPT for JUST and AUTHORIZED CAUSES provided by LAW and
AFTER DUE PROCESS having been complied with. (Continental Micronesia v.
Basso, G.R. Nos. 178382-83, 23 September 2015, citation omitted)

Termination of employment, is not a mere cessation or severance of


contractual relationship, but an economic phenomenon affecting members of
the family, and thus under the broad concept of social justice, the dismissal of
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employee is adequately protected by the laws of the State (Alhambra Industries,


Inc., vs. NLRC, 56 SCAD 664, G.R. No. 106771, 18 November 1994).

Termination of employment is not a mere cessation or severance of


contractual relationship between the employer and employee. It is also a
deprivation of ones property since employment is considered a property in the
constitutional sense; and in certain instances, employment is the only means of his
livelihood that not only affects himself but also his family. Thus, termination of
employment is furthermore considered as an economic phenomenon affecting
members of the family, and falls under the broad concept of social justice,
especially in termination of employees involving mass lay-off.

D. SECURITY OF TENURE

ARTICLE 279 (now Art. 294). Security of Tenure. - In case of


regular employment, the employer shall not terminate the
services of an employee except for a just cause (see Article 282,
LCP) or when authorized by this Title (see Articles 283 and 284,
LCP). [As amended by Section 34, RA 6715, 21 March 1989]

The term tenure means permanent or regular status granted a worker usually
after a probationary or trial period or after a prescribed period or length of services.
Security of tenure is thus the right of a worker to be secured or to continue in
employment until the same is terminated by virtue of a valid or just cause or on
grounds authorized by law. It is also intended to shield workers from unwarranted
and unconsented demotion and transfer. Considering that demotion or transfer
is, like dismissal, also a punitive action, the employee being demoted or transferred
should as in cases of dismissals, be given a chance to contest the same (Jarcia
Machine Shop and Auto Supply vs. NLRC, G.R. No. 118045, 02 January
1997).

a. Constitutional Basis.

The constitutional basis of this provision states that the State shall guarantee
the right of all workers to security of tenure found in Section 3, Article XIII [Social
Justice and Human Rights], 1987 Constitution.

The policy of the State is to ensure the rights of workers to security of


tenure. The guarantee is an act of social justice. (Ranice, et al., vs. NLRC, et
al., G.R. No. 68147, June 30, 1988).
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Such constitutional rights should not be denied on mere speculation of any


similar unclear or nebulous basis. (Hernandez vs. NLRC, et al., G.R. No. 84302,
August 10, 1989; Tolentino vs. NLRC, et al., G.R. No. 75380, July 31, 1987).

b. Security of Tenure does not exclusively


apply to regular employment only.

For while the rules on security of tenure are generally applicable to regular
employment, they equally applies to non-regular employment, such as

1. Probationary employee - Article 281 of the Labor Code, provides


that the services of an employee who has been engaged on a
probationary basis may be terminated for just cause or when he fails
to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time
of his engagement. Consequently, probationary employees enjoy
security of tenure during the period of probationary employment.

2. Handicapped workers - Article 80 in relation to Art 280 of the Labor


Code and Republic Act 7277 provides that handicapped workers
shall enjoy the same terms and conditions of employment and
the same compensation and privileges, benefits, incentives, or
allowances as a qualified able-bodied person or any other
regular employees. Hence, handicapped worker enjoys security of
tenure during the period of employment agreement. (Maritess
Bernardo, et al., vs. NLRC and FEBTC, G.R. No. 122917, July
19, 1999)

c. Security of tenure of managerial, supervisory and confidential


employees - they also enjoy security of tenure and may not be terminated without
just cause although there are causes valid for terminating managerial employees
other than those applicable for rank-and-file employees.

Managerial employees are tasked to perform key and sensitive functions, and
thus bound by more exacting work ethics. As a consequence, managerial
employees are covered by the TRUST AND CONFIDENCE RULE. The same holds
true for SUPERVISORY EMPLOYEES occupying positions of responsibility.
(Sagales v. Rustans Commercial Corp., G.R. No. 166554, 27 November 2008,
citations omitted).

Jurisprudentially, there may have been two (2) classes of positions of trust.
The first class consists of managerial employees. They are defined as those vested
with the powers or prerogatives to lay down management policies and to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees or
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effectively recommend such managerial actions. The second class consists of


cashiers, auditors, property custodians, etc. They are defined as those who in the
normal and routine exercise of their functions, regularly handle significant amounts
of money or property.1

Recently, the Supreme Court, in University of the Immaculate Conception


v. Office of the Secretary of Labor and Employment, et al., 2 has clarified what is
a position of trust and confidence and that confidentiality may attach to a
managerial, supervisory, or rank-and-file position. This latest ruling has defined a
confidential employee as one entrusted with confidence on delicate matters, or
with the custody, handling, or care and protection of the employers property; and
that the terms confidential employees and employees holding a position of
trust and confidence are fundamentally synonymous. The ruling proceeded to
3
articulate that the two categories mentioned in Mabeza v. NLRC are simply
subcategories of the broader category of confidential employees. 4

The fact that one is a managerial employee does not by itself exclude him
from protection of the constitutional guarantee of security of tenure. (Maglutac vs.
NLRC, et al., G.R. No. 78345, 21, September 1990; Cruz vs. Medina, G.R. No.
73053, 15 September 1989).

d. Security of tenure in the construction industry - Project


employees who have become regular shall enjoy security of tenure as provided
under in Section 3.1 of Department Order No. 19, s. 1993.

e. Security of tenure of househelpers - Articles 149 and 150


provides for indemnity for unjust termination (wages already earned plus 15 days
salary) and requirement of service termination notice (at least 5 days before
intended termination), otherwise, the termination is illegal. (See RA 7655, August
19, 1995; and the recent law, Kasambahay Law)

e. Security of tenure of teachers - No teacher may leave the service


without the consent of the school head. No teacher shall be suspended or separated
from the service during the pendency of his contract or appointment except for
cause and after due process. A teacher shall enjoy security of tenure after rendering
service for at least three consecutive (3) school years, which is equivalent to the
probationary period (Mt. Carmel College vs. NLRC, G.R. No. 117514, 10.4.96).

1
Hormillosa v. Coca-Cola Bottlers Phils., Inc., G.R. No. 198699, 9 October 2013, citing Bristol Myers
Squibb (Phils.), Inc. v. Baban, G.R. No. 167449, 17 December 2008.
2
G.R. No. 178086, 14 September 2015.
3
G.R. No. 118506, 18 April 1997.
4
University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R.
No. 178086, 14 September 2015.
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Note: (1) College and Higher Education or Tertiary Education: MORPHE 2008
or Manual of Regulations for Private Higher Education of 2008 (CHED Memorandum
Order No. 40, Series of 2008, 31 July 2008); and (2) Pre-school, elementary and
high school education: 2010 Revised Manual of Regulations for Private School in
Basic Education or DepEd Order NO. 88, Series of 2010, 24 June 2010)

Note that the probationary status (3 years) of teaching personnel is not


governed purely by the Labor Code. The Labor Code is SUPPLEMENTED with
respect to the period of probation by special rules found in the Manual of
Regulations of Private Schools.

Academic qualifications (i.e. full-time, masters degree, 3-year probationary


employment, satisfactory performance)

f. Security of tenure of apprentices - Either party to an apprentice


agreement may terminate the same after the probationary period only for a valid
cause as provided in Section 25, Rule VI, Book II of the Rules Implementing the
Labor Code. (see Articles 60 and 61 of the Labor Code)

E. DUE PROCESS TO INSURE SECURITY OF TENURE

No worker shall be dismissed except for a just or authorized cause as


provided in the Labor Code or by law and after due process. (Art. 279, Labor
Code; Section 1, Rule XIV, Book V and Section 2, Rule 1, Book VIi of the
Rules Implementing the Labor Code; Century Textile Mills, Inc., et al., vs.
NLRC, et al., G.R. No. 77859, 25 May 1988; Offshore Industries, Inc. vs.
NLRC, et al., G.R. No. 83108, 29 August 1989).

The right to due process of law is a constitutionally-guaranteed right. It is a


basic constitutional tenet that no person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be denied the equal
protection of the laws. (Section 1, Article III, Bill of Rights, 1987
Constitution).

But what is meant by due process of law? No exact definition has been
given to the expression, the reason being that the idea expressed therein is
applicable under so many diverse conditions as to make any attempt at precise
decision impossible. But, for our purpose, we can adopt and paraphrase Daniel
Websters famous definition of due process, as a procedure which hears before it
condemns, which proceeds upon inquiry, and renders judgment only after trial.

The right to labor is a constitutional as well as a statutory right. The right


of a person to his labor is deemed to be property within the meaning of
constitutional guarantees. That is his means of livelihood. He cannot be deprived
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of his labor or work without due process of law. (Offshore Industries, Inc. vs.
NLRC, et al., G.R. No. 83108, 29 August 1989) . The prerogative of
management to dismiss or lay-off an employee must be done without abuse of
discretion, for what is at stake is not only his position but also his means of
livelihood. (Remerco Garments Manufacturing, Inc. vs. Minister of Labor, et
al., 135 SCRA 167).

E.a. ASPECTS OF DUE PROCESS

The procedure for terminating an employee is found in Article 277 [b] of the
Labor Code. This procedure protects not only rank-and-file employees but also the
managerial employees. Both have the right to security of tenure as provided in the
Constitution. (Villarama vs. NLRC and Golden Donuts, Inc. G.R. No. 106341,
02 September 1994).

1. Two-fold due process requirement:

a. Substantive aspect; and


b. Procedural aspect (Balayan Colleges vs. NLRC, et al., G.R.
Nos.
101070 and 101289, 14 March 1996).

1.a. The just and lawful and authorized causes under Articles 282, 283
and 284, constitute the substantive aspect of due process (China City
Restaurant Corp. vs. NLRC, 217 SCRA 441) . In other words, the dismissal must
be for a valid or authorized cause as provided by law (San Miguel Corp. vs.
NLRC, G.R. No. 78277, 12 May 1989). The substantive aspect refers to the
legality or illegality of the act of dismissal.

1.b The rudimentary requirements of due process which consists of notice


and hearing, must also be observed before an employee may be dismissed
(Shoemart, Inc. vs. NLRC, G.R. No. 74229, 11 August 1989; Falguera vs.
Linsangan, 66 SCAD 659, G. R. No. 114848, 14 December 1995). The
procedural aspect refers to the legality or illegality of the manner of dismissal.

E.b STANDARDS OF DUE PROCESS; MANDATORY


NOTICE REQUIREMENTS

E.b.A. For termination of employees based on just causes as


defined in Article 282 of the Code, due process requires that the employer
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must furnish the worker sought to be dismissed with two (2) written notices before
termination of his employment, namely:

a. First notice in writing which informs the employee and specifying the
ground or grounds for termination and giving to said employee reasonable
opportunity or ample opportunity within which to explain his side;

Related SC decision:

1. In Maquiling v. Philippine Tuberculosis Society, Inc.,5 the Court


held that the first notice must inform outright the employee that an
investigation will be conducted on the charges specified in such notice
which, if proven, will result in the employees dismissal. The Court
explained the reason for this rule as follows:

This notice will afford the employee an opportunity to avail all


defenses and exhaust all remedies to refute the allegations hurled
against him for what is at stake is his very life and limb his
employment. Otherwise, the employee may just disregard the
notice as a warning without any disastrous consequence to be
anticipated. Absent such statement, the first notice falls short of
the requirement of due process. Ones work is everything, thus, it
is not too exacting to impose this strict requirement on the part of
the employer before the dismissal process be validly effected. This
is in consonance with the rule that all doubts in the implementation
and interpretation of the provisions of the Labor Code, including its
implementing rules and regulations, shall be resolved in favor of
labor.6

b. A hearing or conference during which the employee concerned, with


the assistance of counsel if the employee so desires, is given opportunity to respond
to the charge, present his evidence or rebut the evidence presented against him;
and

2. In FELICIDAD MIRANO ET AL. vs. NLRC, ET AL.,7 it was


accentuated by the Supreme Court that:

it is not enough that the employee be served with written notices,


viz (1) notice stating the charges against him; and (2) notice of the
decision to dismiss him. The employee must be afforded the opportunity
to be heard and to defend himself with the assistance of his
representative, if he so desires (ample opportunity). It must be stressed
that the ample opportunity contemplated by law connotes every kind of

5
G.R. No. 143384, 4 February 2005, 450 SCRA 465.
6
Id. at p. 477.
7
G.R. No. 121112, March 18, 1997.
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assistance that management must accord his employee to enable him to


prepare adequately for his defense, including legal representation.
Consultations and conferences are not a substitute for the actual
observance of notice and hearing.

Between these two notices, the worker must be afforded ample opportunity to
be heard.8

Under Article 277 (b) of the Labor Code, the employer must send the
employee who is about to be terminated, a written notice specifying the particular
acts or omissions for which the employer seeks his termination, and must give the
employee reasonable opportunity (5 days within which to explain, including
consultation with the union or lawyer to prepare written explanation) and ample
opportunity to be heard and to defend himself before serving a second written
notice informing the employee of the employers decision to terminate him.
Moreover, the law casts the burden on the employer to prove that the employee has
been served two (2) written notices and given ample opportunity to be heard before
he is dismissed.

It is significant to state that the opportunity to be heard afforded by law to the


employee is qualified by the word ample which ordinarily means considerably
more than adequate or sufficient.9 In this regard, the phrase ample opportunity
to be heard can be reasonably interpreted as extensive enough to cover actual
hearing or conference.10

An employees right to be heard in termination cases under Article 277(b) as


implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code should be interpreted in broad strokes. It is satisfied not only by a
formal face to face confrontation but by any meaningful opportunity to
controvert the charges against him and to submit evidence in support thereof.

It is not amiss to stress that the right to be heard or due process would be of
little avail if it does not include the right to be heard by counsel. Since even the
most intelligent or educated may have no skill in the science of law, particularly in
the rules of procedure, and, without counsel, he may be held liable or convicted of
the offenses or charges not because he is liable or guilty but because he does not
know how to establish his innocence. It is for this reason that the right to be heard
and assisted by counsel is deemed so important that it has become a constitutional
right, and it is so implemented that under prevailing jurisprudence and the rules of
procedure. It is not enough to ask the employee whether he desires the aid of a

8
See concurring and dissenting opinion, J. Velasco in Felix Perez and Amante Doria vs.
Philippine Telegraph & Telephone Company, G.R. No. 152048, April 7, 2009.
9
Websters Third New Collegiate International Dictionary Of The English Language Unabridged,
p. 74, 1993 edition, cited in Perez vs. PT & T Co., G.R. No. 152048, April 7, 2009.
10
Amante Doria vs. Philippine Telegraph & Telephone Company, supra.
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counsel, but it is an essential that one must be provided or grant him reasonable
time to procure an attorney of his own. There can be no due process accorded to a
person if he is not given the right to be heard through counsel or assisted by
counsel.11

The right to counsel and the assistance of one in investigations


involving termination cases is neither indispensable nor mandatory, except
when the employee himself requests for one or that he manifests that he wants a
formal hearing on the charges against him.12

It is worthy to note that the right to a hearing is not absolute and may be
waived under the due process clause. In fact, the right to be heard is as often
waived as it is invoked, and validly so long as the party is given an opportunity to be
heard.13 The circumstance that the chance to be heard is not availed of does not
disparage that opportunity and deprive the person of the right to due process. Due
process is not violated where a person is not heard because he has chosen, for
whatever reason, not to be heard. It should be obvious that if he opts to be silent
where he has a right to speak, he cannot later be heard to complain that he was
unduly silenced.14

c. Second written notice which informs the employee the


managements decision to terminate his employment services and
indicating that upon due consideration of all the circumstances, grounds
have been established to justify his termination.

NOTE: It bears stressing that an employee cannot be dismissed for an


offense falling under just causes in Art. 282 of the Labor Code, if it is not
alleged or included in the Notice/Charge Sheet, as this would violate his
constitutional rights to due process more particularly to be apprised of the
acts/omission by reason of which his dismissal has been decided upon. An
employee may be dismissed only if the grounds in the pre-dismissal notice
were the ones cited for termination of employment.15

Latest SC decision on ample opportunity to be heard/ hearing:

In the recent case of Felix Doria and Amante Doria vs. Philippine
Telegraph & Telephone Company and Jose Luis Santiago, G.R. 152048, April
7, 2009, the Supreme Court en banc, prescribe the guiding principles connection
with the hearing requirement in dismissal cases:
11
People vs. Liwanag, et al., G.R. No. 120468, August 15, 2001.
12
Quirico Lopez v. Alturas Group of Companies, G.R. No.191008, 11 April 2011, citations omitted.
13
Bautista v. Secretary of Labor and Employment, 196 SCRA 470).
14
Stronghold Insurance Co., Ltd. v. CA, G.R. No. 88050, 30 January 1992.
15
Glaxo-Wellcome vs. New-DFA, G.R. No. 149349, March 11, 2005.
Page 12 Law on Termination

(a) ample opportunity to be heard means any meaningful opportunity


(verbal or written) given to the employee to answer the charges
against him and submit evidence in support of his defense, whether
in a hearing, conference or some other fair, just and reasonable way.

(b) a formal hearing or conference becomes mandatory only (1) when


requested by the employee in writing or (2) substantial evidentiary
disputes exist or (3) a company rule or practice requires it, or (4)
when similar circumstances justify it.

(c) the ample opportunity to be heard standard in the Labor Code


prevails over the hearing or conference requirement in the
implementing rules and regulations.

However, the opinion of Justice Presbitero J. Velasco in this case is worthy of


note and should be given utmost consideration. J. Velasco opined that the actual
hearing or conference is mandatory in ALL dismissal cases contrary to the
pronouncement of the ponencia CJ Corona that 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.

J. Velasco ratiocinated that as provided under Art. 277 (b) of the Labor Code,
an employee whose employment is to be terminated should be given ample
opportunity to be heard and defend themselves. However, the word ample is
vague and not defined in the said provision. Since the meaning of this word is
unclear, then it should be given a liberal construction to favor labor. Ample means
considerably more than adequate or sufficient.16 Ample opportunity can be
construed to be broad enough to encompass an actual hearing or conference.
To be sure, opportunity to be heard does not exclude an actual or formal hearing
since such requirement would grant more than sufficient chance for an employee to
be heard and adduce evidence.

Moreover, J, Velasco, reasoned-out that (R)emoving the right of employees


to a hearing prior to termination would deprive them the opportunity to adduce their
evidence. Notice can be taken of the limited opportunity given to the employees by
the directive in the first written notice that embodies the charges. More often than
not, the directive is only for the employees to explain their side without affording
them the right to present evidence. Furthermore, a hearing gives employees the
chance to hire the services of counsel whose presence is beneficial to employees
during hearings because the counsel knows the intricacies of the law and the
strategies to defend the client something with which a lay person is most assuredly
not familiar. A mere first notice is not sufficient enough for employees to
16
Websters Third New International Dictionary of The English Language Unabridged 74 (1993).
Page 13 Law on Termination

assemble evidence for their defense. Most often, the first notice merely serves as
or is limited to a general notice which cites the company rules that were allegedly
violated by the employees without explaining in detail the facts and circumstances
pertinent to the charges and without attaching the pieces of evidence supporting the
same. Lastly, the holding of an actual hearing will prevent the railroading of
dismissal of employees as the employers are obliged to present convincing
evidence to support the charges. All in all, the advantages far outweigh the
disadvantages in holding an actual hearing.

Further, J. Velasco, cited the recent holdings of the Supreme Court which
explained the propriety and necessity of an actual hearing or conference before an
employee is dismissed. In King of Kings Transport, Inc. v. Mamac, G.R. No.
166208, June 29, 2007, 526 SCRA 116, reiterated in R.B. Michael Press v.
Galit, G.R. No. 153510, February 13, 2008, 545 SCRA 23 , the Supreme Court
explained that the requirement of a hearing or conference is a necessary and
indispensable element of procedural due process in the termination of
employees, thus:

To clarify, the following should be considered in terminating the


services of employees:

(1) The first written notice to be served on the employees


should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period.
Reasonable opportunity under the Omnibus Rules means every
kind of assistance that management must accord to the
employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union
official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order
to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice.
Lastly, the notice should specifically mention which company rules, if
any, are violated and/or which among the grounds under Art. 282 is
being charged against the employees.

(2) After serving the first notice, the employers should


schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented against
them by the management. During the hearing or conference, the
Page 14 Law on Termination

employees are given the chance to defend themselves personally,


with the assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties as
an opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified,


the employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds
have been established to justify the severance of their employment. 17

Finally, J. Velasco insisted that a liberal interpretation of Art. 277(b) of the


Labor Code would be in keeping with Art. XIII of the Constitution which dictates the
promotion of social justice and ordains full protection to labor. The basic tenet
of social justice is that those who have less in life must have more in law.
Social justice commands the protection by the State of the needy and the less
fortunate members of society. This command becomes all the more firm in labor
cases where security of tenure is also an issue.

It is the policy of the state to assure the right of workers to


security of tenure (Article XIII, Sec. 3 of the New Constitution, Section
9, Article II of the 1973 Constitution). The guarantee is an act of
social justice. When a person has no property, his job may
possibly be his only possession or means of livelihood.
Therefore, he should be protected against any arbitrary
deprivation of his job. Article 280 of the Labor Code has construed
security of tenure as meaning that the employer shall not terminate
the services of an employee except for a just cause or when
authorized by the code (Bundoc v. Peoples Bank and Trust
Company, 103 SCRA 599 [1981]). Dismissal is not justified for being
arbitrary where the workers were denied due process (Reyes v.
Philippine Duplicators, Inc., 109 SCRA 489 [1981]) and a clear
denial of due process, or constitutional right must be safeguarded
against at all times, (De Leon v. National Labor Relations
Commission, 100 SCRA 691 [1980]).18

In closing, J. Velasco reiterates that between an employer and an employee,


the latter is oftentimes on the losing or inferior position. Without the mandatory
requirement of a hearing, employees may be unjustly terminated from their work,
effectively losing their means of livelihood. The right of persons to their work is
considered a property right which is well within the meaning of the constitutional
17
King of Kings Transport, Inc., v. Mamac, G.R. No. 166208, June 29, 2007, 526 SCRA 116, 125-126
reiterated in R.B. Michael Press v. Galit, G.R. No. 153510, February 13, 2008, 545 SCRA 23,
18
No. L-68147, June 30, 1988, 163 SCRA 279, 284-285.
Page 15 Law on Termination

guarantee.19 Depriving employees their job without due process essentially amounts
to a deprivation of property without due process.

We have applied social justice even to cases of just dismissal to grant


equitable relief to laborers who were validly dismissed. We also termed social
justice as compassionate justice.20 Thus, the State should always show
compassion and afford protection to those who are in most needthe
laborers. Knowing that poverty and gross inequality are among the major problems
of our country, then laws and procedures which have the aim of alleviating those
problems should be liberally construed and interpreted in favor of the
underprivileged. Thus, social legislations, such as the Labor Code, should be
liberally construed to attain its laudable objectives.21

Note 1. INSTANCES WHERE HEARING IS NOT REQUIRED.

a. Termination due to authorized causes under Article 283, such as


installation of labor-saving devices, redundancy, retrenchment or
closure of business to prevent losses (Wiltshire File Company
vs. NLRC et al., G.R. No.82249, 7 February 1991);

b. Termination due to incurable disease under Article 284;

c. Termination after six (6) months of bona-fide suspension of


business operations (International Hardware, Inc. vs. NLRC,
et al., G.R. No. 80770, 10 August 1989);

d. Termination due to expiration of fixed-period employment


(Pantranco North Express, Inc., vs. NLRC et al., G.R. No.
106654, 16 December 1994; Brent School, Inc. vs. Zamora, et
al., G.R. No.48494, 05 February 1990).

e. Termination effected by employee under Article 285;

f. Termination of casual employment (Capule, et al., vs. NLRC,


et al., G.R. No. 90653, 12 November 1990);

g. Termination due to completion of a project in project


employment (Section 2.1 of DO #19, s. 1993) , but the employer
should submit the required termination report to the nearest DOLE
office as mandated under Policy Instruction No. 20;

19
Batangas Laguna Tayabas Bus Co. v. Court of Appeals, No. L-38482, June 18, 1976, 71 SCRA 470,
480.
20
Tanala vs. NLRC, G.R. No. 116588, January 24, 1996, 252 SCRA 314, 320-321.
21
Manahan v. Employees Compensation Commission, No. L-44899, April 22, 1981, 104 SCRA 198, 202.
Page 16 Law on Termination

h. Termination due to expiration of the period of probationary


employment (Manila Hotel Corp. vs. NLRC et al., G.R. No.
53453, 22 January 1986; AM Oreta & Co., vs. NLRC et al.,
G.R. No. 74004, 10 August 1989);

i. Termination due to lapse of season in case of seasonal


employment;

j. Termination due to expiration of tenure (Hilada vs. Leogardo, et


al., G..R. No 65863, 11 June 1986 ;

k. Termination due to abandonment, as long as the notice


requirement is complied with; and

l. Termination due to closure or stoppage of work by government


authorities.

Note 2. PREVENTIVE SUSPENSION.

During the pendency of the investigation, the employer may place the
employee under preventive suspension if his continued employment
poses a serious and imminent threat to life and property of the
employer or of his co-employee (Section 3, Rule XIV, Book V, Rules
and Regulations Implementing the Labor Code) . However, to suspend
an employee for absences or tardiness, there being no serious threat to
the life and property of the employer or of his co-employee, is not proper
(Global, Inc. vs. Atienza, 143 SCRA 069).

Under the Labor Code, the maximum period of suspension that could be
lawfully imposed is thirty (30) days. However, the same can be extended
provided the employer pays the suspended employee his wages and
other benefits. (Section 3, Rule XIV, Book V, Rules and Regulations
Implementing the Labor Code; Benguet Electric Cooperative, Inc. vs.
NLRC, G.R. No. 89070, 18 May 1992).

The act of the employer in asking the employee to go on leave without


pay (or so-called forced leave) to pave the way for the investigation of
the charges against him, is tantamount to preventive suspension (JRS
Business Corp. vs. NLRC, et al., G.R. No. 10889, 17 July 1995).

E.b.B For termination of employees based on authorized


causes defined in Article 283 and 284 of the Labor Code, the
requirements of due process shall be deemed complied with upon service of a
Page 17 Law on Termination

written notice to the employee and the appropriate DOLE Regional Office at
least thirty (30) days before the effectivity of the termination, specifying the
ground or grounds for the termination plus the payment of separation pay
equivalent of one (1) month pay or one-half (1/2) month pay for every year of
service, a fraction of at least six (6) months being considered as one (1) whole year.

Note 1. The mere posting of notice to terminate ones employment on the


employees bulletin board is not sufficient compliance with the
statutory requirement (Shoppers Gain Supermart vs. NLRC, 72 SCAD
379, G. R. No. 110731, 26 July 1996).

The payment of one (1) months salary in lieu of notice is not valid
(Guerrero vs. NLRC, 73 SCAD 579, G.R. No. 119842, 30 August
1996). The payment of thirty (30) days salary is not a substitute for the
required prior written 30-day notice (Ruben Serrano vs. NLRC and
Isetann Department Store, G.R. No. 117040, 17 January 2000).

F. JUST CAUSES AND AUTHORIZED CAUSES.

F.a JUST CAUSES refers to those instances enumerated under


Article 282, now Art. 297 [Termination by employer] of the Labor Code:

a) Serious misconduct;
b) Willful disobedience to lawful orders of the employer or his
representative in connection with his work;
c) Gross and habitual neglect of duty;
d) Fraud or willful breach of trust;
e) Commission of a crime against the person of the employer, his
representative or any immediate member of his family; and
f) Analogous causes.

1. Serious misconduct - is the improper or wrongful conduct. It is the


transgression of some definite or established rule of action, a dereliction of duty, and
implies wrongful intent and not mere error in judgment. The misconduct, however,
serious, must, nevertheless, be in connection with the employees work to
constitute just cause for his dismissal (RCPI vs. NLRC, and Villafuerte vs.
NLRC, 71 SCAD 654, G.R. No. 114777, 5 July 1996).

Examples: (a) Absence without leave and willful breach of trust (Palagpag vs.
NLRC, 218 SCRA 510);
(b) Destroying the properties of the company, assaulting the
Companys House Office while under the influence of liquor,
Page 18 Law on Termination

within the company premises during office hours (Club


Filipino, Inc. vs Sebastian, G.R. No. 85490, 23 July 1992);
(c) Fighting within companys premises and challenging a superior
to a fight (Dy Pao vs. Katipunan, 71 Phil. 285; Lusteveco
vs. CIR, 15 SCRA 660; Flores vs. NLRC, 70 SCAD 598,
G.R. No. 109362, 15 May 1996).

2. Willful disobedience is the refusal to do an act or obey a


reasonable and lawful order of the employer or his representative and sufficiently
known to the employee and in connection with the duties which the employee has
engaged to discharge (BLTB Co., vs. CA, 71 SCRA 470; Family Planning Org.
of the Philippines, Inc. vs. NLRC G.R. No. 75907, 23 March 1992).

Examples: (a) The unauthorized use of company vehicle (Family Planning Org.
of the Philippines, Inc. vs. NLRC G.R. No. 75907, 23
March 1992);

(b) Refusal to obey the lawful order of transfer, it being a company


policy & practice (Castillo vs. CIR, 39 SCRA 76).

3. Gross and habitual neglect of duty Gross neglect means an


absence of that diligence that an ordinarily prudent man would use in his own affairs.
The neglect of duties must not only be gross but also be habitual. Gross
negligence connotes want of care in the performance of ones duties. Habitual
neglect implies repeated failure to perform ones duties for a period of time (JBG
and Associates, Inc. vs NLRC, 69 SCAD 211, G.R. No. 109390, 7 March
1996).

Examples: (a) Habitual absenteeism without leave (San Miguel Brewery, 27


SCRA 71);

(b) Sleeping on the job (Ormoc sugar Co. vs. Osco Workers
Fraternity Labor Union, G.R. No. L-15826, 23 January
1961).

4. Fraud or willful breach of trust - Fraud has been defined as an


act, omission, or concealment which involves a breach of legal duty, trust, or
confidence justly reposed and is injurious to another. To constitute a just cause for
terminating the employees services, the fraud must be committed against the
employer or representative and in connection with the employees work. Thus, the
fraud committed by an employee against a third person not in connection with his
Page 19 Law on Termination

work which does not in any way involve his employer is not a ground for the
dismissal of the employee (Phil. Education Co. vs. Union of Phil. Education
Employees G.R. No. L-13778, 29 April 1960).

Examples: a). Supervisor initiating and leading the boycott (Top Form Mfg., Co.,
Inc. vs. NLRC, G.R. No. 65706, 11 December 1992).

b). Failure of cashier to account for the shortage of company funds,


(San Miguel Corp. vs. NLRC, G.R. No. 88268, 2 June
1992).

c). Attempt to cover-up the pilferage of the companys collections


(CDCP Tollways Operation Employees and Workers Union
vs. NLRC, G.R. Nos. 76818-19, 3 July 1992).

d). Stealing company property and caught in flagrante delicto (ZCWD


vs. Bartolome, 140 SCRA 432).

e) Failure to reach monthly sales quota cannot be considered an


intentional and unjustified act of respondent amounting to a willful
breach of trust on his part that would call for his termination based on
loss of confidence. (Norkis Distributor, Inc. vs. Delfin Descallar,
G.R. No. 185255, March 14, 2012).

This is simply not the willful breach of trust and confidence


contemplated in Article 282(c) of the Labor Code. Indeed, the low
sales performance could be attributed to several factors which
are beyond respondents control. To be a valid ground for an
employees dismissal, loss of trust and confidence must be based on a
willful breach.22 To repeat, a breach is willful if it is done intentionally,
knowingly and purposely, without justifiable excuse. 23

Note: Positions of trust and confidence:

1. Bookeeper or accounting clerk (Kwikway Engineering


Works vs. NLRC, G.R. No. 85014, 22 March 1991).
2. Puchaser (Ocean Terminal Services, Inc. vs. NLRC, G.R.
No. 85446, 17 May 1991).

22
Easycall Communications Phils., Inc. v. King, G.R. No. 145901, December 15, 2005, 478 SCRA
102, 111, citing Asia Pacific Chartering (Phils.), Inc. v. Farolan, 441 Phil. 776, 792 (2002) and National
Bookstore, Inc. v. Court of Appeals, 428 Phil. 235, 246 (2002).
23
National Bookstore, Inc. v. Court of Appeals, 428 Phil. 235, 246 (2002).
Page 20 Law on Termination

3. Accountant (Inter Capitol Mktg. Corp., vs. NLRC, G.R.


No. 90745, 10 October 1991).
4. Cashier (Garcia vs. NLRC, 71 SCAD 513 G.R. No.
119527, 3 July 1996).
5. Salesman (Filipro vs. NLRC, 145 SCRA 123).
6. Bank Teller (Galsim vs. PNB, 29 SCRA 293).
7. Ship Captain (Inter-Orient Maritime Enterprises vs.
NLRC, 54 SCAD 338, G.R. No. 115286, 11 August
1994).
8. Managerial employees (Marina Port Services, Inc. vs.
NLRC, G.R. No. 80962, 28 January 1991).

5. Commission of a crime by the employee - under the law


commission of a crime by the employee refers to an offense against the person of
his employer or any immediate member of his family or his duly authorized
representative. And thus, the conviction of a crime involving moral turpitude is not
analogous thereto as the element of relation to his work or to his employer is
lacking. (JISSCOR Independent Union vs. Hon. Ruben Torres, 221 SCRA
699).

Sexual harassment, now specifically punished under Republic Act No. 7877
(Anti-Sexual Harassment Act of 1995), is an example of a crime or offense which
may be committed by an employer against his employee (Villarama vs.
NLRC, 55 SCAD 180 Golden Donuts, G.R. No. 106341, 02 September 1994).
[see p. 22 on Article 285, Labor Code] cited in Ramon Formantes vs.
DUNCAN Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009)

6. Analogous causes - one is analogous to another if it is


SUSCEPTIBLE of COMPARISON with the latter, either in GENERAL as in SOME
SPECIFIC DETAIL or has CLOSE RELATIONSHIP with the latter (Lim vs. NLRC,
72 SCAD 642, G.R. No. 118434, 26 July 1996).

To be considered analogous to the just causes, a cause must be due to


voluntary and/or willful act or omission of the employee (Nadura vs. Benguet
consolidated, Inc., G.R. No. L-17780, 24 August 1962).

Examples: a). Violation of company rules and regulations, such as the no-smoking
or no-sleeping rule or the liquor ban rule (Castillo vs. CIR, 39
SCRA 76, Northern Motors vs. NLU, 102 Phil. 958; PAL vs.
NLRC, 124 SCRA 583).
Page 21 Law on Termination

b.) Theft of company property such as involvement in the loss or theft


of company cargoes (Seal Land Service Inc. vs. NLRC, G.R.
68212, 24 May 1985).

c). Immorality, drunkenness or fighting inside company premises may


constitute analogous causes (Qua vs. Hon. Jacobo Clave, G.R.
No. 49549; 30 August 1990).

d). Sexual harassment As a Manager, he is bound by a more


exacting work ethic. He failed to live up tot his higher standard of
responsibility when he succumb to his moral perversity
(Villarama vs. NLRC, 55 SCAD 180, G.R. No. 106341 2
September 1994 cited in Ramon Formantes vs. DUNCAN
Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4,
2009.)

e) Gross inefficiency (Lim vs. NLRC, 72 SCAD 642, G.R. No.


118434, 26 July 1996).

F.a.1. OTHER CAUSES RECOGNIZED UNDER OTHER


PROVISIONS OF THE LABOR CODE

1. Union officers who knowingly participate in an illegal strike are


deemed to have lost their employment (Article 264 [a], now Art. 279 [a],
Labor Code)

2. Any employee, union officer or mere member, who knowingly


participates in the commission of illegal acts during a strike
(irrespective of whether the strike is legal or illegal), is also
deemed to have lost his employment status. (ibid)

3. Strikers who violate orders, prohibitions and/or injunctions as


are issued by the Secretary of Labor and Employment or the
National Labor Relations Commission, may be imposed
immediate disciplinary action, including dismissal or loss of
employment status. (Article 263 [g], now Art. 278 [g], Labor Code).

4. Dismissal from employment may also be justified for violation of the union
security clause stipulated or constituted in the Collective Bargaining
Agreement (CBA) pursuant to Article 248 [e], now Art. 257, of the Labor
Code. The contracting union can demand from the employer the
dismissal of an employee who commits a breach of union security
arrangement, such as failure to join the union or to maintain his
membership in good standing. The contracting union can also demand for
Page 22 Law on Termination

the dismissal of a member who commits an act of disloyalty to the union,


such as when the member organizes a rival union. (Lirag Textile Mills vs.
Blanco, 109 SCRA 87; Malayang Samahan ng Manggagawa sa M.
Greenfield [MSMG-UWP] et al., vs. Hon Cresencio J. Ramos, et al., G.R.
No. 113907, 28 February 2000 [383 Phil. 329,365-366); PICOP vs.
DEQUILLA, ETAL., G.R. No. 172668, December 7, 2011 citing PICOP vs.
TANECA, ET AL., G.R. No. 168828, August 9, 2010, 627 SCRA 56, 66-
67.

See also BPI vs. BPI Employees Union-Davao Chapter, G.R.


No.164301, October 19, 2011 citing General Milling vs. Casio, G.R. No.
149522, March 10, 2010, 615 SCRA 13.

E.b AUTHORIZED CAUSES refers to those instances enumerated


under Article 283, now Art. 298, [Closure of establishment and reduction of
personnel] and Article 284, now Art. 299, [Disease as a ground for termination] of
the Labor Code.

Article 283, now Art. 298, enumerates the following instances, to


wit:

1. Installation of labor-saving devices, such as replacement


of employees by machineries (automation);

2. Redundancy, as when the position of the employee has


been found to be surplusage or unnecessary in the
operation of the enterprise;

3. Retrenchment to prevent losses, i.e., reduction of


personnel affected by management to prevent losses;
Closure or cessation of operation of a business not due to
serious or financial reverses.

Article 284, now Art. 299, provides that an employer may


terminate the services of an employee who is suffering from a disease
not curable within a period of six months despite appropriate medical
treatment and his employment is prejudicial to his health or to the health
of his co-employees.

The following requisites must be complied with before termination


of employment due to disease may be justified:
Page 23 Law on Termination

1. The employee is suffering from a disease;

2. His continued employment is either:


a. prohibited by law; or
b. prejudicial to his health; or
c. prejudicial to the health of his co-employees;

3. There is a certification by a competent public health authority


that the disease is of such nature or at such stage that it cannot
be cured within a period of six (6) months even with proper
medical treatment;

4. Notice of termination based on this ground should have served


to the employee;

5. Separation pay shall be paid to him in the amount equivalent to


at least one (1) month salary or to one-half (1/2) month salary
for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.
(Section 8, Rule I, Book VI, Rules Implementing the Labor Code)

Notes:

1. The companys own physician or the so-called company doctor, engaged


by the employer as his employee or hired on a retainer fee basis, to whom
sick workers are referred to for consultation or treatment, is not the
competent public health authority referred to in the law. (Cebu Royal Plant
[San Miguel Corporation] vs. Hon. Deputy Minister of Labor, et al., G.R. No.
58639, August 12, 1987, 153 SCRA 38).

2. The termination of employment due to PTB sickness was declared not


justified in the absence of medical certificate issued by a competent public
health authority that the disease is of such nature or at such stage that it
cannot be cured within a period of six (6) months even with proper
treatment. (General Textile, Inc., et al., vs. NLRC, et al., G.R. No. 112969, 4
April 1995).

F. TYPES OF TERMINATION.

F.1 TERMINATION WITHOUT JUST CAUSE


EVEN IF WITH DUE PROCESS
Page 24 Law on Termination

Employees who are illegally dismissed or dismissed without valid


or just or authorized cause are entitled to reinstatement without loss of
seniority rights and other privileges and to their full backwages, inclusive
of allowances and other benefits or their monetary equivalent, computed
form the time compensation was withheld up to the time of their actual
reinstatement. (Osmalik Bustamante vs. NLRC and Evergreen Farms, G.R.
111651, 28 November 1996, 265 SCRA 061; Aurelio vs. NLRC, 221 SCRA 432).

Mercury Drug rule (Mercury Drug Co., Inc. vs. CIR, 56 SCRA 694) which
limited the award of backwages of illegally dismissed workers to three
(3) years without deductions and qualifications has been abandoned by
the Bustamante Ruling.

F.2 TERMINATION WITHOUT JUST CAUSE


AND WITHOUT DUE PROCESS.

Where the dismissal of an employee is not for just and valid cause
and he was not informed of the charges beforehand nor was he given
the opportunity to refute them, such dismissal is illegal. The employee is
entitled to reinstatement plus backwages. If reinstatement is no longer
feasible, separation pay is warranted (Artemio Labor et al., vs. NLRC, et al.,
G.R. No. 110388, 14 September 1995; JBG and Associates vs. NLRC et al., G.R.
No. 109390, 7 March 1996).

F.3 TERMINATION FOR FALSE OR NON-EXISTENT


CAUSE.

Termination without cause and termination for false or


non-existent cause are two different things.

In termination without cause, it is the intention of the employer


to dismiss his employee for cause whatsoever.

In termination for false or non-existent cause, the employer


does not intent to dismiss the employee but for a specific cause which
turns out to be false or non-existent. Example is when the employee is
detained by the military for alleged subversive act which later was
dismissed for lack of evidence. (Magtoto vs. NLRC, et al., G.R. No. 62370, 18
Page 25 Law on Termination

November 1985; Pepito vs. Secretary of Labor, et al., 96 SCRA 454); and when two
employees were arrested and detained pursuant to a Presidential
Commitment Order (PCO), and criminally charged but later release for
failure to prove the charges against them. Consequently, their dismissal
for false or non-existent cause was declared illegal, and hence,
reinstatement is in order. (Pedroso, et al., vs. Hon. Ricardo, et al., G.R. No. 70361,
30 January 1985).

Notes:

1. Circumstances that bar reinstatement:

a) Abandonment of right or laches. - An employee entitled to


reinstatement may waive such right by his failure to report for
work when he had the opportunity to do so. Thus, one who has
left for overseas without availing of the same is deemed to have
abandoned or effectively waived his right to reinstatement. The
employee should have availed of it within the four (4) years
prescription period for reinstatement. (East Asiatic, Co., vs. CIR ,
40 SCRA 521).

b) Physical incapacity of employee. - If during the pendency


of a case for reinstatement the illegally dismissed employee
became physically incapacitated, reinstatement will not prosper.
The Supreme Court ruled that in fairness to the
employer, he should not be compelled to reinstate an employee
who is no longer physically fit for work (Mercury Drug Co., Inc. vs.
CIR, 56 SCRA 694; Solis vs. NLRC, 75 SCAD 629, G.R. No. 116 175,
28 October 1996). If reinstatement is no longer feasible, the
proper remedy under the circumstances is to pay the employee
a separation pay.

c) Employee accepts retirement pay. Retirement pay has the


characteristics of separation pay. Thus, an employee who
accepts his retirement pay loses his right to reinstatement.
(Dencias Kitchenette Workers Union, et al. vs. Dencia Kitchenette, et al.,
Case No. 1665-ULP, 25 February 1950; Escareal vs. NLRC, G.R. No.
99359, 2 September 1992; Mai Phil. Inc. vs NLRC, 151 SCRA 196).

d) When employment relationship becomes so strained.


When the employer can no longer trust the employee and vice
versa, or there were respective imputations of bad faith to each
Page 26 Law on Termination

other, and that all hopes of reconciliation are nil after


reinstatement, it would be more beneficial to accord employee
backwages and separation pay. (Kunting vs. NLRC, 46 SCAD 95,
G.R. No.101427, 8 November 1993; Hilario vs. NLRC, 67 SCAD 432,
G.R. No. 119583, 29 January 1996).

e) Closure or cessation of business operation. - An employer,


who, because of business reverses, has ceased operation
cannot be compelled to reinstate an employee. (Pizza Inn vs
NLRC, G. R. No. 74531, 28 June 1988). Also, reinstatement could
not be enforced if the employer has ceased operations because
of an act of the State. (Sta. Cecilia Sawmills vs. CIR, 11 SCRA 46;
Herald Delivery Carrier vs. Herald Publications, 55 SCRA 723)

f) Transfer of business to an innocent buyer or transferee. -


Reinstatement could not be enforced to an innocent transferee.
Unless expressly assumed, labor contracts being in personam,
should not affect a transferee acting good faith. Since
reinstatement cannot be availed, the transferee in mala fide is
required to pay dismissed employee a (reasonable) months
wages to tide them over while looking for suitable employment.
(Fernando vs. Angat Labor Union, 5 SCRA 248).

The principle enunciated in the above case applies only


when the transferee is an entirely new corporation with a
different or distinct personality from the integrating firms and not
where the transferee was found to be merely an alter ego of the
different merging firms. (Filipinas Port Services, Inc., vs. NLRC, G.R. No.
972177, 16 August 1991).

g) Economic reverses. - Reinstatement is not feasible in order


to give employment to a greater number of persons that what is
reasonably demanded by the actual requirements of the
business. (Columbian vs. TALE, 6 SCRA 425).

h) Abolition of position. If the position previously occupied by


the employee no longer exists at the time of reinstatement and
no substantially equivalent position is available, reinstatement
should not be ordered because that would in effect compel the
employer to do the impossible. (Arrastre Security vs. Sec. Ople, 127
SCRA 580; Philippine Engineering vs. CIR, 42 SCRA 89; Dangan vs
NLRC, 127 SCRA 706; Industrial Timber corp. vs. NLRC, 68 SCAD 379,
G.R. No. 112069, 14 February 1996).
Page 27 Law on Termination

i) Prescription. - Since there was injury to the right of workers


in an illegal dismissal, the cause of action prescribes in four (4)
years. Therefore, it follows that an action for reinstatement also
prescribes in four (4) years pursuant to Article 1146 of the New
Civil Code. (Callantes vs. Carnation, 145 SCRA 268).

j) Conviction of a crime. An employees conviction for theft is


a supervening cause that rendered unjust and inequitable the
NLRC decision mandating reinstatement with backwages.
(Sampaguita Garments Corp. vs. NLRC, 52 SCAD 354, G.R. No.
102406, 16 June 1994).

k) Not conducive to industrial harmony. An illegally dismissed


managerial employee on probationary status cannot be
reinstated for it would not be conducive to industrial harmony.
(Lopez vs. NLRC, 67 SCAD 48, G.R. No. 102874, 22 January 1996).

2. EXCEPTIONS to the general rule where separation pay is


granted in lieu of reinstatement, to wit:

(1) that reinstatement can no longer be effected in view of the


long passage of time (22 years of litigation) or because of the
nature of the situation;

(2) that it would be inimical to the employers interest;

(3) that reinstatement may no longer be feasible, and that it will


not serve the prudent purpose as when supervening facts
have transpired which make execution unjust and inequitable
(such as abolition of position and no substantially equivalent position) ;

(5) that that it would served the best interests of the parties
involved;

(6) that the company would be prejudiced by the workers


continued employment; and

(7) that there is a resultant strained relations or irretrievable


estrangement between the employer and the employee,
where the employee concerned occupies a position of trust
Page 28 Law on Termination

and confidence, and it is likely that if reinstated, an


atmosphere of antipathy and antagonism may be generated
as to adversely affect the efficiency and productivity of the
employee (Manipon, Jr., vs. NLRC, 57 SCAD 707, G.R. No. 105338,
24 December 1994).

F.4 TERMINATION WITH JUST CAUSE BUT


WITHOUT DUE PROCESS (no notice and hearing)

The Supreme Court in the landmark case of Ruben Serrano vs.


NLRC and Isetann Department Store, G.R. No. 117040, 27 January
2000, held that dismissal of an employee for a valid or just cause but
without notice, is ineffectual, the employer is liable for payment of
backwages from the time the employee was terminated until the Court
finds that the dismissal is for a just or authorized cause.

The previous Wenphil Doctrine (Wenphil Corporation vs. NLRC, 170


SCRA 069 [1989]), wherein an employer who failed to observe due
process is merely required to pay indemnity ranging from the amount of
P1,000.00 to P10,000.00, has been modified or abandoned.

However, in AGABON vs. NLRC,24 the Supreme Court en banc held that
when the dismissal is effected for any of the just causes under Article 282 of the
Labor Code, the failure to observe procedural requirements DOES NOT
INVALIDATE nor NULLIFY the dismissal of an employee. The dismissal is
AFFIRMED as VALID because there is just or valid cause. However, the procedural
infirmity is then remedied by ordering the employer to pay the employee NOMINAL
DAMAGES.

Thus, consistent with the AGABON Doctrine, complainant is entitled to the


amount of P30,000.00 as NOMINAL DAMAGES for respondents failure to comply
with the statutory due process requirements. 25

F.5. TERMINATION WITHOUT AUTHORIZED CAUSE


(Same pronouncement as in # F.1 and # F.2)

F.6 TERMINATION WITH AUTHORIZED CAUSE BUT


24
G.R. No. 158693, November 17, 2004, 442 SCRA 573 cited in Caingat v. NLRC, G.R. No. 154308,
March 10, 2005, 453 SCRA 142.
25
ALAY SA KAPATID INTERNATIONAL FOUNDATION, INC. (AKAP) vs ROMULO
DOMINGUEZ, G.R. No. 164198, June 15, 2007.
Page 29 Law on Termination

WITHOUT DUE PROCESS (without 30-day prior written


notice)

The termination is not void but only ineffectual and the employee is
entitled to separation pay plus backwages. (see Ruben Serrano vs. NLRC
and Isetann Department Store, G.R. No. 117040, 27 January 2000) .

However, Serrano Doctrine has been abandoned/modified by


JAKA FOOD PROCESSING CORPORATION vs. DARWIN PACOT, ET.
AL.,26 where the Supreme Court en banc expounded that when the
dismissal is effected for any of the authorized causes under Article 283
of the Labor Code, the failure to observe procedural requirements
(service of written notice to the affected workers and the DOLE) does
not invalidate nor nullify the dismissal of an employee. The dismissal is
AFFIRMED as VALID because there is authorized cause. However, the
procedural infirmity is then remedied by ordering the employer to pay the
employee the amount of P50,000.00 representing NOMINAL DAMAGES
for non-compliance with statutory due process.

Thus, under with the JAKA Doctrine, the employer is oblige to pay
each of the complainants the amount of P50,000.00 as nominal
damages for failure to comply with the statutory due process
requirements.

Ultimately, however, the amount of damages to be awarded the


employee is addressed to the sound discretion of the Court, taking into
account the relevant circumstances. 27

Under the facts and circumstances attendant to the case, this


Court finds the amount of P20,000 in nominal damages sufficient to
vindicate each petitioners right to due process. 28

In Sangwoo Phils., Inc. v. Sangwoo Phils. Inc. Employees Union


Olalia, and Sangwoo Phils. Inc. Employees Union Olalia v. Sangwoo
Phils., Inc. (G.R. Nos. 17315 and 173229, 9 Dec. 2013), the Supreme
Court reduced P50,000 nominal damages to P10,000.00 considering the
EMPLOYERS GOOD FAITH in the cessation/closure of business due to
serious business losses and due to CIRCUMSTANCES beyond the
26
G.R. No. 151378, March 28, 2005.
27
Galaxie Steel Workers Union vs. NLRC, et al., G.R. No. 165757, October 17, 2006, 504 SCRA 652.
28
Supra.
Page 30 Law on Termination

employers control. Case law holds that in instances where payment of


such damages becomes IMPOSSIBLE, UNJUST, or TOO
BURDENSOME, modification becomes necessary in order to
HARMONIZE with the PREVAILING CIRCUMSTANCES.

The award of indemnity is in addition to the payment of separation


pay amounting to at least one-half (1/2) month pay for every year of
service, or one (1) month pay, whichever is higher.

Note: Separation pay may not be awarded in case of serious


business losses as enunciated in the case of REAHS CORPORATION vs.
NLRC,29 therein the Supreme Court made the following pronouncement:

The rule, therefore, is that in all cases of business closure or cessation


of operation or undertaking of the employer, the affected employee is
entitled to separation pay. This is consistent with the State policy of treating
labor as a primary social economic force, affording full protection to its rights
as well as its welfare. The exception is when the closure of business or
cessation of operation is due to serious business losses or financial
reverses; duly proved, in which case, the right of affected employees
to separation pay is lost for obvious reasons. x x x. In other words,
Article 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to serious business losses. To
require an employer to be generous when it is no longer in a
position to do so, in our view, would be unduly oppressive, unjust,
and unfair to the employer. Ours is a system of laws, and the law in
protecting the rights of the working man, authorizes neither the oppression
nor the self-destruction of the employer. x x x. (Emphasis supplied)

Moreover, in the recent case of EASTRIDGE GOLF CLUB, INC. vs.


EASTRIDGE GOLF CLUB, INC. LABOR UNION-SUPER,30 the Supreme Court
held that:

If the closure of business due to serious business losses or


financial reverses is shown to be in good faith, the resultant dismissal of
the employees shall be upheld, with no separation benefits due them. If the
closure of business is not due to serious business losses or financial reverses but it is
shown to be in good faith, the resultant dismissal of the employees will still be upheld
but the latter shall be entitled to separation pay at the rate of month pay for every
year of service or one month pay, whichever is higher.

29
271 SCRA, 247,254 [1997] cited in Cama v. Jonis Food Services, Inc. G.R. No. 153021, March
10, 2004.
30
G.R. No. 166760, August 22, 2008.
Page 31 Law on Termination

F.7 TERMINATION WITH AUTHORIZED CAUSE AND


WITH DUE PROCESS (with 30-day written notice)

Authorized cause dismissal is a form of terminating employer-


employee relationship with a liability on the part of the employer to pay
separation pay as mandated by law. Hence, the dismissal is valid.

The law grants the employer the right and prerogative to terminate
his employees even without the fault of the latter, if, in his judgment, he
feels that reduction of personnel or closure of his business
establishment is the most prudent thing to do. This authority extended
by law proceeds from the recognition of the dominical and proprietary
rights of the employer to freely manage his business in accordance with
his judgment. The principle in this jurisdiction is, the protection extended
by the Constitution and the law to labor does not mean the oppression
or self-destruction of capital. The grounds cited in Articles 283 and 284
are technically called the authorized causes for termination of
employment. They are:

1. Installation of labor savings device;


2. Redundancy;
3. Retrenchment;
4. Closure or cessation of business not due to business losses;
5. Incurable disease (Art. 284, Labor Code).

For termination due to authorized cause to be valid, the


employer must comply with the following requirements, to wit:

1. Service of written notice to the employee and the nearest


DOLE Office at least thirty (30) days before the effectivity of the
termination, specifying the ground or grounds for the
termination; and

2. Payment of separation pay equivalent of one (1) month pay or


one-half (1/2) month pay for every year of service, a fraction of
at least six (6) months being considered as one (1) year.
Page 32 Law on Termination

a. Separation Pay equivalent to one-half (1/2) month pay


for every year of service if the separation from service is due
to any of the following causes:

1. Retrenchment to prevent losses, i.e., reduction of


personnel affected by management to prevent losses;

2. Closure or cessation of business operation not due to


serious losses or financial reverses [If the closure is due to
serious business losses, the employer is not liable to pay
separation pay (Statement Investment House, Inc. vs. CA, et al.,
G.R. No. 89767, 14 February 1992; Victor Mendoza vs. NLRC,
G.R. No. 11079, 27 September 1993; Mindanao Terminal and
Brokerage Service, Inc., vs. Hon. Min. of Labor and Employment,
G.R. No. 75374, 14 November 1994]; and

3. When the employee is suffering from a disease not


curable within a period of six (6) months and his
continued employment is prejudicial to his health or to the
health of his co-employees.

b. Separation Pay equivalent to one (1) month pay for


every year of service if the separation from service is due to
any of the following causes:

1. Installation of labor-saving device, such as replacement


of employee by machines (automation); and

2. Redundancy, as when the position of the employee has


been found to be surplusage or unnecessary in the
operation of the enterprise.

NOTE. Separation pay and nominal damage are not warranted in


a situation where the severance of employment relationship between the
parties came about INVOLUNTARILY, such as, closure or cessation
business operations or undertaking resulting from the implementation of
the Comprehensive Agrarian Reform Law (CARL), and such
dismissal/termination of employment was effected without the
employer's compliance with the statutory due process requirement or
Page 33 Law on Termination

the written notice of termination required under Article 283 of the Labor
Code.

In the case of NATIONAL FEDERATION OF LABOR vs. NLRC,31 the


Supreme Court had the opportunity to resolve a correlative question.
Therein, the Supreme Court declared that -

It is clear that Article 283 of the Labor Code applies in cases of


closures of establishment and reduction of personnel. The peculiar
circumstances in the case at bar, however, involves neither the closure
of an establishment nor a reduction of personnel as contemplated
under the aforesaid Article. x x x . Hence, Article 283 of the Labor
Code is not applicable to the case bench.

Even assuming, arguendo, that the situation in this case were a


closure of the business establishment called the Patalon Coconut
Estate of private respondents, still the petitioners/employees are
not entitled to separation pay. The closure contemplated under
Article 283 of the Labor Code is a unilateral and voluntary act on
the part of the employer to close the business establishment x x
x.

In other words, Article 283 of the Labor Code does not


contemplate a situation where the closure of the burliness
establishment is forced upon the employer. The closure of
business operations contemplated under Article 283 refers to a
voluntary act or decision on the part of the employer, not one
forced upon it, as in this case, by an act of the Law or State x x x.
(Underscoring ours)

The ruling in the above-cited was reiterated in the latest case of


MANABAN vs. SARPHIL CORP.,32 where the Supreme Court said:

Anent the legality of the Labor Arbiters award of separation


pay in favor of petitioners, respondent NLRC correctly ruled that the
termination of employer-employee relationship as a result of the
implementation of the Comprehensive Agrarian Reform Law
does not make out a case for illegal dismissal or termination due
to authorized cause under Article 283 of the Labor Code as to
warrant the payment of separation pay. The closure of business
operations contemplated under Article 283 refers to a voluntary
act or decision on the part of the employer, not one forced upon
31
G. R. No. 127718, March 2, 2000.
32
G. R. No. 150915, April 11, 2005.
Page 34 Law on Termination

it, as in this case, by an act of the Law or State x x x. Thus, We


quote with approval the following disquisitions of public respondent
which We have found to be substantiated by the evidence, viz:

x x x The resulting severance of employment relation


between the parties does not make out a case of illegal
dismissal nor of termination due to cessation of
business operation or undertaking under Article 283 of
the Labor Code warranting payment of separation pay,
primarily because dismissal presupposes a unilateral act by
the employer in terminating the employment of its workers.
The resulting severance of employment relationship
between the parties came about INVOLUNTARILY. If the
landowners ceased their operation, it was not because they
wanted to. Rather, it was something forced upon them by an
act of law or the State. It would be the height of injustice and
inequity if the workers who benefited from the takeover of the
lands and becoming new owners in the process would still be
allowed to exact payment from their former employer-
landowner in the form of separation pay benefit.

(Emphasis supplied)

At this point, I would like to stress the overarching principle


involved in those cases which is apropos in the instant case is the lack
of voluntariness on the part of the employers in terminating
complainants' employment. Whether respondent cooperative closes its
business entirely or partially or merely reduces personnel, the fact is that
it is compelled to do so by the operation and implementation of R.A.
6657, thus, Article 283 of the Labor Code is not applicable.

Accordingly, it is wise to hold that the written notice of termination


to the employees concerned and the Department of Labor and
Employment (DOLE) at least 30 days before the intended date thereof,
is no longer necessary in case the severance of employment
relationship between the parties came about INVOLUNTARILY.

In addition, it is our view that Jaka Doctrine33 finds no application


in the instant case because the closure or cessation of business
operations of the employer was involuntary and the dismissal process
was not initiated by the employers exercise of its management
prerogative. It was compelled to do so by the operation of RA 6657. The
33
G.R. No. 151378, March 28, 2005.
Page 35 Law on Termination

closure or cessation of business operations resulting to the termination


of complainants' employment was not caused by the
employer/respondent but was due to the act of the government.

To reiterate, it would be the height of injustice and inequity if the


employer would still be sanctioned by way of nominal damages in the
amount of P50,000.00 for non-compliance with the 30-day notice
despite the fact that the closure or cessation of the business operations
was involuntary but rather it was compelled by law or RA 6657.

F.8 TERMINATION BY EMPLOYEE (Article 285, now Art.


300)

An employee may terminate without just cause, employment


relationship by serving a written notice upon the employer at least one
(1) month in advance. Failure to serve notice will make him liable for
damages. The notice requirement can be dispensed with if the
employment is terminated for a just cause, such as:

1. Serious insult by the employer or his representative on the


honor and person of the employee;

2. Inhuman and unbearable treatment accorded the employee


by the employer;

3. Commission of a crime or offense by the employer or his


representative against the person of the employee or any of the
immediate member of his family;

4. Filing of a certificate of candidacy in an election RA 9006


(Fair Election Act, enacted on February 12, 2001) amending RA
6646, (Ernesto Ynbong vs. ABS-CBN Broadcasting Corp, et al,
G.R. No. 184885, March 7, 2012); Manila Broadcasting Company
v. NLRC,34 and

5. Other causes analogous to any of the foregoing.

34
G.R. No. 121975, August 20, 1998, 294 SCRA 486.
Page 36 Law on Termination

1. Serious insult is to treat with insolence, indignity, or contempt


by word or action, to affront wantonly. It implies malice, or denotes ill will
or an intent to injure or to offend, or to wound the feelings of another.

Examples: 1. An act of the employer in broadcasting to some employees that


employee a is the concubine of a high ranking government official
constitutes serious insult.

2. A Chief Engineer after a leave of absence was transferred to a lower


position (plant mechanic) constitutes serious insult. His quitting the
job in order to preserve his honor and dignity, amounts to
constructive dismissal.

2. Inhuman and unbearable treatment - the term treatment


as used in the law does not refer to physical violence. Any conduct
which will affect the mind and body or where continuance of it involves
the life or health of the employee. The conduct should be marked with
cruelty, unfeeling, indicating an absence of that kindness and
tenderness that belongs to a human being, or it produces reasonable
apprehension of physical violence, causes mental distress and sorrow.

Examples: 1. Employees were not provided with gas masks although the nature of
their work deals with smoke-producing chemicals. This amounts to
inhuman treatment.

2. No comfort room was provided by the employer compelling the


employees to go outside employers business premises to heed the
call of nature constitutes unbearable treatment.

3. Commission of a crime or offense the employers act of


slapping the employee plus the threat of scratching her face with pair of
scissors constitutes an offense which would justify employees severing
employer-employee relationship. Her quitting of job will thus constitute
constructive dismissal.

Sexual harassment, now specifically punished under Republic Act


No. 7877 (Anti-Sexual Harassment Act of 1995), is an example of a crime or
offense which may be committed by an employer against his employee
(Villarama vs. NLRC, 55 SCAD 180 Golden Donuts, G.R. No. 106341, 2 September
1994).

Notes:
Page 37 Law on Termination

VOLUNTARILY RESIGNED, NOT CONSTRUCTIVELY DISMISSED (Central


Azucarera de Bais, Inc. v. Siason, GR No. 215555, 29 July 2015).

Taking into consideration Siasons long tenure at CABI, as well as her close
relationship with Chan, the latter sent her the October 3, 2011 letter asking her to resign
rather than to force his hand which should be construed as Chan telling Siason to resign
or face administrative investigation. On October 4, 2011, Atty. Ner-Tiangco sent Siason
another letter, essentially confirming if the latter was going to resign or, if she is subjecting
herself to an administrative investigation. Ultimately, Siason chose to tender her resignation
to save herself from the trouble of besmirching her employment record.

The foregoing facts belie Siasons argument that petitioners constructively


dismissed her. These circumstances show that she was given the option to
voluntarily resign from CABI, instead of dealing with an investigation which
might result in her dismissal. Verily, Chans decision to give Siason a graceful
exit rather than to file an action for redress is perfectly within the discretion of the
former, as it is not uncommon that an employee is permitted to resign to avoid the
humiliation and embarrassment of being terminated for just cause after the exposure
of her malfeasance. It is settled that there is nothing reprehensible or illegal
when the employer grants the employee a chance to resign and save face
rather than smear the latters employment record, as in this case.

In sum, petitioners did not constructively dismiss Siason; but rather, the latter
voluntarily resigned from her job in order to avoid a full-blown administrative trial
regarding her misdeeds which could potentially result in her termination for just
cause. While it may be said that she did not tender her resignation wholeheartedly,
circumstances of her own making did not give her any other option but to voluntarily
do so. Therefore, in view of her voluntary resignation from CABI, she is not entitled
to any separation pay in the absence of any agreement with petitioners providing for
such.

OPTION TO RESIGN OR FACE INVESTIGATION/DISMISSAL

When the employer asked the employee to submit his resignation letter or, if
not, to submit his written explanation or face investigation, the employee
immediately filed a complaint for illegal dismissal, thereby preempting an
investigation by the employer on the matter.

It must be stated that the employer did not violate any law when it gave the
employee the option to resign because there is nothing illegal with the practice of
allowing an employee to resign to resign instead of being separated for just cause,
so as not to smear his employment record. (Belaunzaran v. NLRC, G.R. No.
120038, 23 December1996).

In fact, the respondent even went out of his way to suggest to complainant to
resign voluntarily, or else face the adverse consequences of not being extended
regular employment on account of unsatisfactory performance/face administrative
Page 38 Law on Termination

investigation for the charges hurled against him. However, complainant rejected the
suggestion and opted to file his complaint with the NLRC. A decision of employer
to afford the employee a graceful exit is perfectly within its discretion. (Cathay
Pacific Airways, Limited v. Marin, g.R. No. 148931, 12 September 2006,
citing Willin Hahn Enterprises v. Magtuyop, G.R. No. 160348, 17 December
2004).

The disciplinary actions taken by the employer against the employee are but
mere exercise of management prerogative to regulate all aspects of employer-
employee relationship and to instill discipline among its employees, as a measure of
self-protection or an act of self-preservation to maintain teamwork and synergy in the
organization.

Besides, the mere fact that the choice is between comparatively unpleasant
alternatives for example, resignation or facing disciplinary action does not of
itself establish that resignation was induced by duress, coercion, and was, therefore,
involuntary. This is so even where the only alternative to resignation is possible
termination for cause, unless the employer actually lacked good cause to believe
that grounds for termination existed. The employer merely exercised its
management prerogative when it instituted disciplinary actions. It is not duress to
threaten to do what one has the legal right to do or to threaten to take any measure
authorized by law and the circumstances of the case. (63C Am Jur 2d, Public
Officers and Employees, 158).

4. Another form of a lawful dismissal initiated by the employee


himself is upon filing of a certificate of candidacy.

The filing of certificate of candidacy of an employee of a GOCC


constitutes a lawful cause for terminating employment relationship.
Thus, Section 66 of the Omnibus Election Code declares employees of
GOCC as ipso facto resigned from office upon the filing of their
certificate of candidacy. (PNO-EDC vs. NLRC, 43 SCAD 1028, G.R. No. 100947, 31
May 1993).

RA 9006 (Fair Election Act, enacted on February 12, 2001)


See also
amending RA 6646, (Ernesto Ynbong vs. ABS-CBN Broadcasting Corp,
et al, G.R. No. 184885, March 7, 2012); Manila Broadcasting Company
v. NLRC,35

The employee is not entitled to separation pay and this type of


resignation is exempted from the notice requirement of the law.

35
G.R. No. 121975, August 20, 1998, 294 SCRA 486.
Page 39 Law on Termination

5. Analogous causes the following constitute analogous


causes, such as, (a) undue delay in the payment of employees salaries
or wages; (b) violation of employment terms and conditions of
employment; and unsanitary or unhygienic working conditions.

Notes:

1. Forced resignation (constructive dismissal)

When the employee was compelled to resign because continued


employment become impossible, unreasonable or unlikely, his quitting
the job amounts to constructive discharge or illegal dismissal. (Phil.
Japan Active Carbon Corp. vs. NLRC, G.R. No. 83239 8 March 1989; Press Co.
vs NLRC, 118 F. and 488).

2. The following acts constitute constructive discharge:

(a) Where the security guards made attempts to secure


loans on their security bond deposits with the company,
indicating that they desperately needed money to meet
their respective families needs, but the company
insisted that they must first turn in their resignations
before their loans be released, under the premises, the
security guards were merely forced by circumstances to
submit their resignation, and could not be deemed to
have voluntarily resigned from their jobs, but rather were
illegally dismissed. (Peoples Security, Inc. vs. NLRC, 44
SCAD 528, G.R. No. 96451, 8 September 1993).

(b) Where the employee resigned because he has been


compelled by a reasonable and well-grounded fear of
imminent and grave evil upon his person or property, or
upon the person or property of his spouse, descendants
or ascendants. (Callanta vs. NLRC, 44 SCAD 143, G.R. No.
105083, 20 August 1993).

(c) Where an employee was forced to resign instead of


approving her application for an indefinite leave of
absence due to illness. (Reyes vs. NLRC, G.R. No. 78997, 31
August 1989).
Page 40 Law on Termination

(d) When the floating status of the employee lasts for more
than six (6) months. (Agro Commercial Security Services
Agency, Inc. vs. NLRC, G.R. Nos. 82823-24, 31 July 1989).

(e) When off-detailing ran up to more than six months, the


company may be considered to have constructively
dismissed her (complainant) from work, that is, as of
August 16, 2002.36 Thus, her purported resignation on
October 15, 2002, could not have been legally possible.
Elisa Malig-on vs. Equitable General Services, Inc., G.R. No.
185269, June 29, 2010.

(f) When the bona fide suspension of the operation of a


business or undertaking exceeds six (6) months. (Intl.
Hardware, Inc. vs. NLRC, G.R. No. 80770, 10 August 1989).

(g) When the employee was transferred to a position for


which he is not qualified. (Foz, NLRC Reports I, 16-19).

(h) When the employer refuses to accept returning


employee after exhausting his leave of absence. (Ibid).

(i) When the employee was indefinitely suspended. (Ibid).

(j) When the employee was indefinitely laid-off or remain


without work or assignment for a period exceeding six
(6) months, then he is deemed constructively dismissed.
Valdez vs. NLRC, 349 Phil. 760, 765-766 (1998); De Guzman v.
NLRC, G.R. No. 167701, December 12, 2007, 540 SCRA 21, 32.

(k) Laid-off is akin to retrenchment (Art. 283, Labor Code).


Mindanao Terminal and Brokerage Service, Inc. et al vs.
Nagkahiusang Mamumuo sa MINTERBRO-SPFL and Manuel
Abellana, et al., G.R. No. 174300, December 5, 2012 citing
Sebuguero vs. NLRC, G.R. No. 115394, September 27, 1995, 248
SCRA 532.

(l) Where the employer refuses to accept back an


employee on the ground that his position was already
filled-up and there was a low volume of work. (ibid).

36
Veterans Security Agency, Inc. v. Gonzalvo, Jr., G.R. No. 159293, December 16, 2005, 478 SCRA 298,
308.
Page 41 Law on Termination

(m) Where after the termination of the inventory, laid-off


employee was not allowed to continue in his
employment. (Sta. Mesa Slipways and Engineering Co., Inc. vs.
CIR, G.R. No. L-4521, 18 August 1952).

Constructive dismissal occurs when there is cessation of work because


continued employment is rendered impossible, unreasonable, or unlikely as when there
is demotion in rank or diminution in pay or when a clear discrimination, insensibility, or
disdain by an employer becomes unbearable to the employee leaving the latter with no
other option but to quit.37 In Dimagan v. Dacworks United, Incorporated,38 it was
explained:

The test of constructive dismissal is whether a reasonable person in the


employees position would have felt compelled to give up his position
under the circumstances. It is an act amounting to dismissal but is made
to appear as if it were not. Constructive dismissal is therefore a dismissal
in disguise. The law recognizes and resolves this situation in favor of
employees in order to protect their rights and interests from the coercive
acts of the employer.

Constructive dismissals exist when the employee involuntary resigns due to


harsh, hostile, and unfavorable conditions set by the employer. 39

Moreover, the Supreme Court emphasized in The Orchard Golf and Country
Club v. Amelia R. Francisco 40 that constructive dismissal occurs not when the
employee ceases to report for work, but when the unwarranted acts of the employer
are committed to the end that the employees continued employment shall become so
intolerable:

Constructive dismissal occurs not when an employee ceases to report


for work, but when the unwarranted acts of the employer are
committed to the end that the employees continued employment
shall become so intolerable. In these difficult times, an employee may
be left no choice but to continue with his employment despite abuses
committed against him by the employer, and even during the pendency of
a labor dispute between them. This should not be taken against the
employee. Instead, we must share the burden of his plight, even aware of
the precept that necessitous men are not free men.
37
Raul Cosare v. Broadcom Asia, Inc and Dante Arevalo, G.R. No. 201298, 5 February 2014, citing The
University of the Immaculate concepcion v. NLRC, G.R. No. 181146, 26 January 2011, citing in turn La
Rosa v. Ambassador Hotel, G.R. No. 177059, 13 March 2009.
38
G.R. No. 191053, 28 November 2011, 661 SCRA 438.
39
Gilles v. Court of Appeals, G.R. No. 149273, 5 June 2009, 588 SCRA 298, 316.
40
G.R. No. 178125, 18 March 2013.
Page 42 Law on Termination

SUMMARY: TYPES OF TERMINATION EFFECT REMEDY OR


LIABILITIES

1. TERMINATION WITHOUT JUST CAUSE Dismissal is - Full back wages;


EVEN IF WITH DUE PROCESS illegal - Reinstatement; or
- Separation pay (if
reinstatement is not
feasible or possible)
(see Bustamante vs. NLRC, 265 SCRA 061)

2. TERMINATION WITHOUT JUST CAUSE - same - - same -


AND WITHOUT DUE PROCESS

3. TERMINATION FOR FALSE OR - same - - same -


NON-EXISTENT CAUSE (see Asian Terminal, Inc., et al vs. NLRC,
Dominador Saludares & Romeo Labrague,
G.R. 158458, December 19, 2007 citing
Magtoto vs. NLRC, G.R. No. L-63370,
November 18, 1985, 140 SCRA 58;
- Pedroso vs. Castro, 225 Phil. 210 (1986);
- Standard Electric Mfg. Corp. vs. Standard
Electric Ees Union- NAFLU-KMU, G.R. No.
166111, August 25, 2005, 468 SCRA 316.

4. TERMINATION WITH JUST CAUSE Dismissal is - Back wages from


BUT WITHOUT DUE PROCESS ineffectual the time of dismissal
(no notice and hearing) until the Court finds
that the dismissal
was for a just cause.
(Ruben Serrano vs. NLRC and Isetann Dept. Store
G.R. No. 117040, 27 January 2000)
See Agabon Doctrine P30,000.00 as Nominal Damages.

5. TERMINATION WITHOUT - same as - same as


AUTHORIZED CAUSE in # 1 - in # 1

6. TERMINATION WITH AUTHORIZED Dismissal is - Back wages from


CAUSE BUT WITHOUT DUE PROCESS ineffectual the time of dismissal
(without 30-day notice) until the Court finds
that the dismissal was
Page 43 Law on Termination

for authorized cause;


- Separation Pay
(Ruben Serrano vs. NLRC and Isetann Dept. Store
G.R. No. 117040, 27 January 2000)
See Jaka Doctrine - P50,000.00 as Nominal Damages plus
separation pay in case termination is not
due to serious business losses.

7. TERMINATION WITH AUTHORIZED Termination is - Separation pay


CAUSE AND WITH DUE PROCESS valid / legal
(with 30-day notice)

8. TERMINATION BY EMPLOYEE:
- WITHOUT JUST CAUSE Termination - Employee liable for
is valid damages

- WITH JUST CAUSE - same - - Not liable-damages


**employee not entitled to separation pay, except
If constructively dismissed Termination is - same as # 1 -
deemed illegal

G. SUSPENSION OF EFFECTS OF TERMINATION.

One of the extraordinary powers granted to the Secretary of Labor


and Employment is his power to suspend the effects of termination
effected by an employer, even pending resolution of the legality or
illegality of such termination in an appropriate proceeding.

The power was introduced into the Labor Code under Article
277[b] with the amendatory provisions of Section 13, BP 130.
Subsequently, the grant of such power was further affirmed by the
amendatory provisions of Section 33, RA 6715.

The invocation of such power may be made upon a prima facie


finding by the appropriate official of the DOLE before whom the dispute
is pending that:

a) the termination may cause serious labor dispute; or

b) the termination is in implementation of a mass lay-off. (Article


277 [b], Labor Code, as amended by Section 33, RA 6715; Section 9,
Rule XIV, Book V, Rule Implementing the Labor Code).
Page 44 Law on Termination

Consequently, even if a case questioning the validity of the


termination is not yet filed before the Arbitration Branch of the NLRC or
even during its pendency, in case one has already been filed, the
Secretary of Labor and Employment may still suspend the effects of
termination if any or both grounds exist to justify the suspension.

An order of reinstatement pending resolution of the case may be


issued by the Secretary of Labor and Employment. (No. 12, Briefing Paper
on RA 6715).

**DISTINCTION BETWEEN POWER TO SUSPEND AND POWER TO


ASSUME OR CERTIFY LABOR DISPUTE:

POWER TO SUSPEND POWER TO ASSUME / CERTIFY


TERMINATION LABOR DISPUTE

1. Granted under Article 277[b]; Exercised under Article 263[g];


(now Art. 292 [b]) (now Art. 278 [g])

2. Involves issue of termination Applicable to all labor disputes,


of employment which may irrespective of the grounds therefor
cause a serious labor causing or likely to cause a strikes
dispute or is in implementa- or lockouts in industries indispen-
tion of a mass lay-off; sable to the national interest;

3. Serious labor dispute as Labor dispute will cause or likely to


contemplated does not to cause a strike or lockout;
involve a strike or lockout;

4. Exercised in cases of termi- May only be exercised in industries


nation of employment where indispensable to national interest;
the lawful grounds exist,
irrespective of the nature of
the business of the employer;

5. Remedy is reinstatement Automatic return to work of the


pending resolution of the strikers or locked out employees
case. and the enjoining of the strike or
lockout, pending the resolution of
the issues raised in the notice of
Page 45 Law on Termination

strike or notice of lockout.

H. DISMISSAL, TOO HARSH A PENALTY; VALID DISMISSAL,


LIMITED BACKWAGES OR NO BACKWAGES DUE TO
EMPLOYERS GOOD FAITH.

Serious misconduct or willful breach of trust was not proved in this case. Absent
any proof showing that the act or acts imputed to him were wrongful per se or done
with moral perverseness that would justify his dismissal on the ground of serious
misconduct or willful breach of trust, this Office must sustain a conclusion that
complainant was illegally dismissed.41

To the mind of this Office, dismissal should only be a last resort, a penalty to be
meted only after all the relevant circumstances have been appreciated and evaluated
with the goal of ensuring that the ground for dismissal was serious and grave
malfeasance to justify the deprivation of a means of livelihood. This requirement of
progressive discipline is in keeping with the ennobling spirit of our Constitution and laws
to lean over backwards in favor of the working class and with the mandate that every
doubt must be resolved in their favor.42 The exercise of the management prerogative to
discipline should be done humanely and considerately, and that the sanction imposed
is commensurate to the offense involved and to the degree of the infraction. The
discipline exacted by the employer should further consider the employees length of
service, the prejudice cause to the employers business and the number of infractions
during his employment, among the relevant considerations.

Complainant might not be entirely blameless as he admitted that it was improper


for him to travel to San Francisco, Agusan Del Sur to meet a relative and used the
company fleet card for refueling to proceed back to Surigao del Sur on that same day
with his main work objective achieved. His act could have been a mere lapse or error of
judgment on his part or, at most, a careless or thoughtless act, but it did not evince
moral perversity or wrongful per se or demonstrated his willful intent to cause so grave a
wrong against Globe so as to bring it within the ambit of serious misconduct or willful
breach of trust that would merit the imposition of the ultimate penalty of dismissal.

Nonetheless, under these circumstances, Globe could have opted to impose


upon complainant a penalty of suspension with severe warning. This could have been
41
Bluer Than Blue Joint Ventures Company v. Esteban, G.R. No. 192582, 7 April 2014, citing Lima
Land, Inc. Cuevas, G.R. No. 169523, 16 June 2010, 621 SCRA 36, 50.
42
Nathaniel N. Dongon v. Rapid Movers and Forwarders Co., Inc. and/or Nicanor E. Jao, Jr., G.R.
No. 163431, 28 April 2013, citing Hongkong and Shanghai Banking Corp. v. NLRC, G.R. No. 116542,
30 July 1996, 260 SCRA 49, 56.
Page 46 Law on Termination

an equitable punishment since the gravity or magnitude of the acts or offense imputed to
him was not duly established, instead of the drastic and supreme penalty of dismissal
which is reserved only for the most serious offenses which the respondents failed to
prove with substantial evidence in this case. Other forms of disciplinary action could also
have been taken to impart on him and other employees that such act or acts will not be
tolerated under the companys core values and high ethical standards. There was no
warning or admonition for complainants misconduct, only outright dismissal for an act or
omission which did not constitute serious misconduct or willful breach of trust and which
could have been punished appropriately with a severe reprimand or suspension.

It should be emphasized at this point that the burden of proving the legality of an
employees dismissal lies with the employer.43 The burden of proof rests on the employer
to establish that the dismissal is for a cause prescribed by law in view of the security of
tenure that employees enjoy under the Constitution and the Labor Code. The employers
evidence must clearly and convincingly show the facts on which the employees
dismissal may be fairly made to rest. It must be adequately proven by substantial
evidence. Substantial evidence is such relevant evidence which a reasonable mind
might accept as adequate to support a conclusion, even if other equally reasonable
minds might opine otherwise.44 It is not the burden of the employee to prove his
innocence but the law 45 reposed that burden on the part of the employer. The law looks
tenderly on laborers. The employers case succeeds or fails on the strength of its
evidence and not on the weakness of that adduced by the employee, 46 in keeping with
the principle that the scales of justice should be tilted in favor of the latter in case of
doubt in the evidence presented by them. 47 Respondents fail to discharge this burden, as
shown by the records and as discussed earlier.

The free will of management to conduct its own business affairs to achieve its
purpose cannot be denied.48 The only condition is that the exercise of management
prerogatives should not be done in bad faith 49 or with abuse of discretion. 50 Truly, while
the employer has the inherent right to discipline, including that of dismissing its

43
Abel v. Philex Mining Corp. 594 SCRA 683, 692, 31 July 2009.
44
Vertudes v. Buenaflor, 478 SCRA 200, 230, 16 December 2005.
45
Article 277 (b) of the Labor Code, as amended.
46
PLDT v. Tiamson, 511 Phil. 384, 394 (2005).
47
Triple Eight Integrated Services, Inc. v. NLRC, 359 Phil. 955, 964 (1998).
48
Hongkong and Shanghai Banking Corp. Employees Union v. NLRC, 281 SCRA 509, 6 Nov. 1997;
Almodiel v. NLRC, 223 SCRA 341, 14 June 1993; San Miguel Brewery Sales Force Union (PTGWO) v.
Ople, 170 SCRA 25, 8 Feb. 1989.
49
Aparente, Sr. v. NLRC, 331 SCRA 82, 27 April 2000; Caltex Refinery Employees Association (CREA)
v. NLRC, 316 Phil. 335 (1995); Maya Farms Employees Organization v. NLRC, 293 SCRA 508.
50
Pantranco North Express, Inc. v. NLRC, 314 SCRA 740, 21 Sept. 1999; Palomares v. NLRC, 277
SCRA 439, 449; Union Carbide Labor Union v. Union Carbide Phils., Inc., 215 SCRA 554.
Page 47 Law on Termination

employees, this prerogative is subject to the regulation by the State in the exercise of its
police power.51

In this regard, it is a hornbook doctrine that infractions committed by an employee


should merit only the corresponding penalty demanded by the circumstances. The
penalty must be commensurate with the act, conduct or omission imputed to the
employee and must be imposed in connection with the disciplinary authority of the
employer.52 Thus, where a penalty less punitive would suffice, whatever missteps may
be committed by labor ought not to be visited with a consequence so severe. 53 The
magnitude of the infraction committed by an employee must be weighed and equated
with the penalty prescribed and must be commensurate thereto, in view of the gravity
of the penalty of dismissal or termination from the service. The employer should bear in
mind that in termination dispute, what is at stake is not simply the employees job or
position but his very livelihood and perhaps the life and subsistence of his family.54

Fairness requires that dismissal, being the ultimate penalty that can be
meted out to an employee, must have a clear basis and the employee must be charged
and given ample opportunity to answer the charge and be heard on the matter. Since the
facts on the magnitude or gravity of the infraction imputed to complainant were never
clearly established by respondents, there is no basis at all to say that complainant
could be dismissed for serious misconduct or loss of trust and confidence. Any
ambiguity in the ground for the termination of an employee should be interpreted
against the employer, who ordained such ground in the first place. 55

Basic in our jurisprudence is the principle that when there is no showing of any
clear, valid and legal cause for the termination of employment, the law considers the
matter a case of illegal dismissal. 56 Article 4 of the Labor Code expresses the basic
principle that all doubts in the interpretation and implementation of the Labor Code
should be interpreted in favor of the workingman. This principle has been extended to
cover doubts in the evidence presented by the employer and the employee. 57 The
Supreme Court have held that if the evidence presented by the employer and the
employee are in equipoise, the scales of justice must be tilted in favor of the latter. 58
51
Manila Trading and Supply Co. v. Zulueta, 69 Phils. 485 (1940).
52
Caltex Refinery Employees Association (CREA) v. NLRC, supra note 62, at 343.
53
Nelson Zagala, et al. v. Mikado Phils. Corp., G.R. No. 160863, 27 September 2006.
54
PLDT v. Berbano, Jr., G.R. No. 165199, 27 September 2006.
55
Pascua v. NLRC (Third Division), G.R. No. 123518, 13 March 1998, 287 SCRA 554, 571, citing
Pantranco North Express, Inc. v. NLRC, G.R. No. 114333, 24 January 1996, 252 SCRA 237, 243-244.
56
Vinta Maritime Co., Inc. v. NLRC, 348 Phil. 714, 23 January 1998.
57
Penaflor v. Outdoor Clothing Manufacturing Corp., 21 January 2010, G.R. 177114, citing Fujitsu
Computer Products Corp. of the Philippines v. CA, 494 Phil. 697, 728 (2005).
58
Mobile Protective & Detective Agency v. Ompad, 9 May 2005, 458 SCRA 308, 323, citing Asuncion
v. NLRC, 31 July 2001, 362 SCRA 56, 68.
Page 48 Law on Termination

Where the evidence may be reasonably interpreted in two divergent ways, one
prejudicial and the other favorable to the employees, the balance must be tilted in their
favor consistent with the principle of social justice. 59 Accordingly, on this ground alone,
complainants claim of illegal dismissal can also be sustained.

Generally, an illegally dismissed employee is entitled to either


reinstatement, if viable, or separation pay if reinstatement is no longer viable,
and backwages.60

In certain cases, however, the Supreme Court declared the employees dismissal
was too severe a penalty and ordered reinstatement, but awarded only limited
backwages in recognition of the employers good faith.61

Moreover, there were also instances where the Supreme Court only required the
employer to reinstate the dismissed employee without any award for backwages
considering the fact that (1) the dismissal of the employee would be too harsh a penalty;
and (2) the employer was in good faith in terminating the employee. 62 For instance, in the
case of Cruz v. Minister of Labor and Employment,63 the Highest Court ruled as
follows:

The Court is convinced that petitioners guilt was substantially


established. Nevertheless, we agree with respondent Ministers order of
reinstating petitioner without backwages instead of dismissal which may be
too drastic. Denial of backwages would sufficiently penalize her for her
infractions. The bank officials acted in good faith. They should be exempt
from the burden of paying backwages. The good faith of the employer, when
clear under the circumstances, may preclude or diminish recovery of
backwages. Only employees discriminately dismissed are entitled to backpay.
X x x. (Emphasis and underscoring supplied)

Likewise, in the case of Itogon-Suyoc Mines, Inc. v. NLRC,64 the Court


pronounced that [t]he ends of social and compassionate justice would therefore

59
HFS Phils., Inc. v. Pilar, G.R. No. 168716, 16 April 2009, 585 SCRA 315, 328.
60
Macasero v. Southern Industrial Gases Phils., 30 January 2009, 577 SCRA 500, 507, citing Mt. Carmel
College v. Resuena, 10 October 2007, 535 SCRA 518, 541.
61
San Miguel Corp. v. Javate, Jr., G.R. No. 158693, 27 January 1992, 442 SCRA 573; Dolores v. NLRC,
G.R. No. 87673, 24 January 1992, 205 SCRA 348; and Victory Liner, Inc. v. Pablo Race, G.R. No.
164820.
62
Pepsi-Cola Products Phils., Inc. v. Anecito Molon, et al., G.R. No. 175002, 18 February 2013, citations
omitted.
63
17 January 1983, 120 SCRA 15, 20.
64
30 September 1982, 117 SCRA 523, 529.
Page 49 Law on Termination

be served if private respondent is reinstated but without backwages in view of


petitioners good faith.

The exception to the rule on backwages, as held in Pepsi-Cola Products,


Inc. v. Molon, et al. on 18 February 2013,65 citing the foregoing previous rulings,
was again recently reiterated in Integrated Microelectronics, Inc. v. Adonis
Pionilla 66 on 28 August 2013 in denying the petitioners motion for reconsideration.

In the present case, this Office finds that: (a) the penalty of dismissal was too
harsh a penalty against complainant for the wrong imputed against him considering that
his act was not morally perverse or wrongful per se since he had acted in good faith in
claiming reimbursement of per diem for expenses incurred on 9 May 2014; and (b)
Globe was in obvious good faith when it dismissed complainant as his act of claiming
reimbursement of per diem for expenses incurred on 9 May 2014 was honestly
perceived to be a claim to which he was not entitled and an affront to its core values and
high ethical work standards under its Code of Conduct.

Consequently, the presence of these concurring circumstances and the factual


similarity or analogy of the foregoing cited cases (exception to the rule on
backwages) to complainants situation deem it appropriate for this Office to render the
same disposition in the instant case, with the qualification that the penalty of suspension
would have sufficed to the infraction he had committed and that such suspension should
only be up to the date of this Decision.

However, the circumstances obtaining in this case do not warrant the


reinstatement of complainant because of the realities of the situation between the
parties as shown by the parties evident indifference and lack of interest to continue their
employment relationship exhibited during the mandatory conference. Complainant had
opted for payment of separation pay in lieu of reinstatement while Globe had already
demonstrated that it has already lost its trust and confidence in him as TSH which is a
position of trust and responsibility. This is a clear indication of strained relations already
existing between the parties and that his reinstatement would only exacerbate the
tension and strained relations which, in the first place, had given rise to this controversy.
It is more likely that, if reinstated, an atmosphere of antipathy and antagonism would be
generated as to adversely affect his efficiency and productivity on the job.

For these reasons, reinstatement would no longer be in the best interest of the
contending parties. A more equitable disposition would be an award of separation pay
65
G.R. No. 175002, 18 February 2013, 691 SCRA 113.
66
G.R. No. 200222, 28 August 2013.
Page 50 Law on Termination

equivalent to one (1) month pay for every year of service until the actual date of
payment of his separation pay,67 or finality of this Decision.68

H. VALID DISMISSAL, BUT MAY BE AWARDED SEPARATION PAY OR


FINANCIAL ASSISTANCE AS A MEASURE OF EQUITY OR COMPASSIONATE
SOCIAL JUSTICE, TAKING THE RELAVANT CONSIDERATIONS OF THE
CASE , i.e., the ground for dismissal is not reflective of the moral character of the
employee, length of service, no derogatory record or unblemished record except for the
case, exemplary service. (Nissan Motors Phils., Inc. v. Angelo, G.R. No.
164181, 14 Sept. 2011, citations omitted; see also PLDT v. NLRC, G.R. No. L-
80609, 23 August 1988)

J. TWIN RELIEFS TO AN ILLEGALLY DISMISSED EMPLOYEE

An illegally dismissed employee is entitled to two (2) reliefs, which are


cumulative: (1) reinstatement or, if reinstatement is no longer viable, payment of
separation pay equivalent to one month pay for every year of service; and (2) full
backwages.

COMPONENTS & COMPUTATION OF BACKWAGES & SEPARATION PAY


(Solidbank Corp. v. CA, et al., G.R. Nos. 166581, 167187, 7 Dec. 2015)

Separation pay and backwages must include the GROSS MONTHLY


SALARY of the dismissed employee, INCLUSIVE of ALL the allowances and
benefits or their monetary equivalent, subject to evidentiary proof.

It has been settled that if reinstatement is not possible, an illegally dismissed


employee is entitled to separation pay and backwages, computed using his GROSS
MONTHLY PAY, INCLUSIVE OF ALLOWANCES AND OTHER BENEFITS OR
THEIR MONETARY EQUIVALENT. Such amounts, however, must be duly proved
before it may be granted.

On the other hand, BACKWAGES are computed from the time of dismissal
until the FINALITY of the decision ORDERING separation pay, and not merely
until promulgation of the Courts decision.
BACKWAGES (Philippine Spring Water Resources, Inc. v. CA & Mahilum, G.R. No.
205278, 11 June 2014)

BACKWAGES are granted on grounds of EQUITY to workers for EARNINGS


LOST due to their ILLEGAL DISMISSAL from work. They are REPARATION for the
illegal dismissal of an employee based on EARNINGS which the employee would
67
Imelda Damasco v. NLRC, et al., 27 November 2009, 606 SCRA 81, 98.
68
Daniel P. Javellana, Jr. v. Albino Belen/Albino Belen v. Javellana Farms, Inc., et al., G.R. No.
181913/G.R. No. 182158, 5 March 2010; Petron Corp. v. NLRC, 505 SCRA 596, 616, 27 Oct. 2006.
Page 51 Law on Termination

have obtained, either by virtue of a LAWFUL DECREE or ORDER, as in the case of


WAGE INCREASE under a WAGE ORDER, or by RIGHTFUL EXPECTATION, as in
the case of ones salary or wage. The outstanding feature of backwages is thus the
DEGREE OF ASSUREDNESS to an employee that he would have had them as
EARNINGS had he not been illegally terminated from his employment.

As a general rule, backwages are granted to indemnify a dismissed


employee for his LOSS OF EARNINGS during the whole period that he is out of
his job. Considering that an illegally dismissed employee is not DEEMED to have
left his employment, he is entitled to ALL the rights and privileges that accrue
to him from the employment. (Escario v. NLRC (Third Division), G.R. No.
160302, 27 Sept. 2010, 631 SCRA 261, citation omitted) . The grant of
backwages to him is in furtherance and effectuation of the PUBLIC OBJECTIVES of
the Labor Code, and is in the NATURE of a COMMAND to the employer to make a
PUBLIC REPARATION for his illegal dismissal of the employees in violation of the
Labor code. (Id. At 273 citing Imperial Textile Mills, Inc. v. NLRC, G.R. No.
101527, 19 Jan. 1993, 217 SCRA 247).

6% INTEREST FROM DATE OF ILLEGAL DISMISSAL UNTIL THE FINALITY


OF DECISION AND, THEREAFTER, 12% (UP TO 30 June 2013) or 6% (effective 1
July 2013) until full paid. (Roy D. Pasos v. PNCC, G.R. No. 192394, 3 July
2013).

In line with current jurisprudence, the award of backwages shall earn legal
interest at the rate of six percent (6%) per annum FROM THE DATE OF
COMPLAINANTS DISMISSAL UNTIL THE FINALITY OF THIS DECISION. (Torres
v. Rural Bank of San Juan, Inc., G.R. No. 184520, 13 March 2013) . Thereafter,
it shall earn 12% legal interest (up to 30 June 2013) or 6% legal interest (effective 1
July 2013) until fully paid in accordance with prevailing jurisprudence.

xxx

K. CERTIFICATE OF EMPLOYMENT.

A terminated employee regardless of the cause of termination is


entitled for a certificate of employment. Section 6, Rule XXIII of the
Omnibus Rules Implementing the Labor Code, as amended, provides:

Section 6. Certificate of employment. A dismissed or


terminated employee shall be entitled to receive, or request, a
certificate of employment from the employer specifying the
dates of his employment and termination of his employment
Page 52 Law on Termination

and the type of work on which he is employed. (DO # 10, s.


1997)

Prepared and condensed by:

Atty. Exequiel M. Dayot III


Executive Labor Arbiter

With additional inputs and some


editing by Labor Arbiter Rammex C.
Tiglao
References:

- Supreme Court Decisions, http://sc,judiciary.gov.ph


- Azucena, Labor Code, Vol. II, 1996 Ed.
- Poquiz, Labor Relations Law, 1999 Ed.
- Chan, Law on Labor Relations and Termination, 1996 Ed.
- Cagaanan, Labor Laws Compendium, 2005 Ed.