Procedure to Terminate

Employment
Labor Law II
 General Rule
• King of Kings Transport vs. Mamac
• Due process under the Labor Code involves two aspects: first,
substantive––the valid and authorized causes of termination of
employment under the Labor Code; and second, procedural––the
manner of dismissal.
• The requisites for termination of employment based on just causes:
• (a) A written notice served on the employee specifying the ground
or grounds for termination, and giving said employee reasonable
opportunity within which to explain his side.
• (b) A hearing or conference during which the employee concerned,
with the assistance of counsel if he so desires is given opportunity
to respond to the charge, present his evidence, or rebut the
evidence presented against him.
• (c) A written notice of termination served on the employee,
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
 Exception
• Prior to Wenphil Corp v. NLRC- in 1989, the
termination of an employee, even for just cause but
without following the requisite procedure, renders
such dismissal illegal, and therefore null and void.
• In the Wenphil doctrine , this was reversed; the said
rule was unjust to employers. Instead, the dismissal
was held to be still valid but the employer was
sanctioned by way of the payment of indemnity.
• The present ruling of the Court held that the dismissal
of the employee is merely ineffectual, not void. The
dismissal was upheld but it is ineffectual. The sanction
provided was the payment of backwages from the
time of dismissal up to the decision of the court
finding just or authorized cause.
 Administrative Hearing/investigation
not required:
• Perez vs. PT&T
• “To be heard” does not mean verbal
argumentation alone inasmuch as one may be
heard just as effectively through written
explanations, submissions or pleadings.
Therefore, while the phrase “ample opportunity
to be heard” may in fact include an actual
hearing, it is not limited to a formal hearing only.
The existence of an actual, formal “trial-type”
hearing, although preferred, is not absolutely
necessary to satisfy the employee’s right to be
heard.
 Right to counsel
• Lopez vs. Alturas Group
• 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.
 Burden of Proof
• Medenilla vs. Phil. Veterans Bank
• In cases of illegal dismissal, the burden is on the
employer to prove that there was a valid ground
for dismissal. Mere allegation of reduction of
costs without any proof to substantiate the
same cannot be given credence by the Court. As
the respondents failed to rebut petitioners
evidence, the irresistible conclusion is that the
dismissal in question was illegal.
Normal Consequences of Dismissal
• Unilever vs. Ruby Rivera
• Just Cause + Due Process= No Separation Pay
• As a general rule, an employee who has been
dismissed for any of the just causes enumerated
under Article 28215of the Labor Code is not
entitled to a separation pay.
• In exceptional cases, however, the Court has
granted separation pay to a legally dismissed
employee as an act of "social justice" or on
"equitable grounds." In both instances, it is
required that the dismissal (1) was not for
serious misconduct; and (2) did not reflect on
the moral character of the employee.
 Illegality of Dismissal
• Nacar vs. Gallery Frames
• Reinstatement + full backwages, or separation
pay, in lieu of reinstatement
• For backwages, it will be computed from the
date of illegal dismissal until the date of the
decision of the Labor Arbiter. But if the
employer appeals, then the end date shall be
extended until the day when the appellate
court’s decision shall become final.
 Moral and Exemplary Damages
• Permex Inc. vs. NLRC
• Moral damages are recoverable only where the
dismissal of the employee was tainted by bad
faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner
contrary to morals, good customs, or public
policy. Exemplary damages may be awarded only
if the dismissal was done in a wanton,
oppressive, or malevolent manner. None of
these circumstances exist in the present case.
 Attorney’s fees
• Malvar vs. Kraft Food Phils.
• The attorney may, in the discretion of the
court, intervene in the case to protect his
rights. For the payment of his compensation
the attorney shall have a lien upon all
judgments for the payment of money, and
executions issued in pursuance of such
judgment, rendered in the case wherein his
services had been retained by the client.
 Liability of corporate officers
• Dy-Dumalasa vs. Fernandez
• Absent a clear and convincing showing of the
bad faith in effecting the closure of HELIOS
that can be individually attributed to
petitioner as an officer thereof, and without
the pronouncement in the Decision that she is
being held solidarily liable, petitioner is only
jointly liable.
 Illegality in manner of dismissal
- Dismissal without due Process
• Carag vs. NLRC, 520 SCRA 28
• For a wrongdoing to make a director personally
liable for debts of the corporation, the
wrongdoing approved or assented to by the
director must be a patently unlawful act. Mere
failure to comply with the notice requirement of
labor laws on company closure or dismissal of
employees does not amount to a patently
unlawful act. Patently unlawful acts are
those declared unlawful by law which imposes
penalties for commission of such unlawful
acts. There must be a law declaring the act
unlawful and penalizing the act.
 Illegality in manner of dismissal
- Dismissal without due Process
• Jaka Food Processing v. Pacot
• If dismissal is for authorized cause BUT without
due process
• If the dismissal is based on an authorized cause
but the employer fails to comply with the notice
requirement, the sanction should be stiffer
because the dismissal process was initiated by
the employer’s exercise of his management
prerogative. Thus, dismissal was upheld but
ordered JAKA to pay each of the respondents the
amount of PhP 50,000.00 representing nominal
damages for non-compliance with due process.
 Reliefs under the Labor Code
• Aguilar vs. Burger Machine Holdings
• On reinstatement and strained relations
• Under the doctrine of strained relations, the
payment of separation pay has been
considered an acceptable alternative to
reinstatement when the latter option is no
longer desirable or viable.
 Reliefs under the Labor Code
• Lim vs. NLRC
• Payment of separation pay not inconsistent with payment of
backwages
• Separation pay is paid when reinstatement is not possible; while
backwages are paid for the compensation which otherwise the
employee should have earned had he not been illegally dismissed.
• Separation pay is computed on the basis of employee’s length of
service; while backwages are based on the actual period when he
was unlawfully prevented from working
• Separation pay is paid where a wherewithal during the period that
an employee is looking for another employment; while backwages
are paid for the loss of earnings during the period between illegal
dismissal and reinstatement.
• Separation pay is oriented towards the immediate future; while
backwages involve the restoration of the past income lost.
• Separation pay cannot be paid in lieu of backwages.
 Reliefs under the Labor Code
• Bustamante vs. NLRC
• ON BACKWAGES - Mercury drug rule
overturned by RA 6715
• In illegally dismissed employee is entitled
to his full backwages from the time his
compensation was withheld from him (which ,
as a rule, is from the time of his illegal
dismissal) up to the time of his actual
reinstatement.