G.R. No.

173151
Under the Labor Code, the requirements for the lawful dismissal of an employee are twofold, the substantive and the procedural aspects. Not only must the dismissal be for a
just[21] or authorized cause,[22] the rudimentary requirements of due process - notice
and hearing[23] must, likewise, be observed before an employee may be dismissed.
Without the concurrence of the two, the termination would, in the eyes of the law, be
illegal,[24] for employment is a property right of which one cannot be deprived of
without due process.[25]
Hence, the two (2) facets of a valid termination of employment are: (a) the legality of the
act of dismissal, i.e., the dismissal must be under any of the just causes provided under
Article 282 of the Labor Code; and (b) the legality of the manner of dismissal, which
means that there must be observance of the requirements of due process, otherwise
known as the two-notice rule.[26]
Article 282 of the Labor Code enumerates the just causes for terminating the services of
an employee:
ART. 282. Termination by employer. - An employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
his duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer
or any immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
G.R. No. 202996
Concomitant to the employers right to freely select and engage an employee is the
employers right to discharge the employee for just and/or authorized causes. To validly
effect terminations of employment, the discharge must be for a valid cause in the manner
required by law. The purpose of these two-pronged qualifications is to protect the
working class from the employers arbitrary and unreasonable exercise of its right to
dismiss. Thus, in termination cases, the law places the burden of proof upon the employer
to show by substantial evidence that the termination was for a lawful cause and in the
manner required by law.
In concrete terms, these qualifications embody the due process requirement in labor cases
- substantive and procedural due process. Substantive due process means that the
termination must be based on just and/or authorized causes of dismissal. On the other
hand, procedural due process requires the employer to effect the dismissal in a manner
specified in the Labor Code and its IRR.32
Termination of Employment
1. What is the right to security of tenure?
The right to security of tenure means that a regular employee shall remain employed
unless his or her services are terminated for just or authorized cause and after observance
of procedural due process.
2. May an employer dismiss an employee? What are the grounds?

Yes. An employer may dismiss an employee on the following just causes:

a) serious misconduct;
b) b) willful disobedience;
c) c) gross and habitual neglect of duty;
d) d) fraud or breach of trust;
e) e) commission of a crime or offense against the employer, his family or
representative;f) other similar causes.
3. Are there other grounds for terminating an employment? What are they?
4. Yes. The other grounds are authorized causes:
a) installation of labor-saving devices;
b) redundancy;
c) retrenchment to prevent losses;
d) closure and cessation of business; and
e) disease / illness.
4. Before terminating the services of an employee, what procedure should the employer
observe?
An employer shall observe procedural due process before terminating ones employment.
5. What are the components of procedural due process?
A. In a termination for just cause, due process involves the two-notice rule:
a) A notice of intent to dismiss specifying the ground for termination, and giving said
employee reasonable opportunity within which to explain his or her side;
b) A hearing or conference where the employee is given opportunity to respond to the
charge, present evidence or rebut the evidence presented against him or her;
c) A notice of dismissal indicating that upon due consideration of all the circumstances,
grounds have been established to justify termination.
B. In a termination for an authorized cause, due process means a written notice of
dismissal to the employee specifying the grounds at least 30 days before the date of
termination. A copy of the notice shall also be furnished the Regional Office of the
Department of Labor and Employment (DOLE) where the employer is located.
6. What is the sanction if the employer failed to observe procedural due process in cases
of legal and authorized termination?
In cases of termination for just causes, the employee is entitled to payment of indemnity
or nominal damages in a sum of not more than 30,000 pesos (Agabon vs. NLRC, 442
SCRA 573); in case of termination for authorized causes, 50,000 pesos (Jaka Food
Processing vs. Darwin Pacot, 454 SCRA 119).
7. May an employee question the legality of his or her dismissal?
Yes. The legality of a dismissal may be questioned before the Labor Arbiter of a Regional
Arbitration Branch of the National Labor Relations Commission (NLRC), through a
complaint for illegal dismissal. In establishments with a collective bargaining agreement
(CBA), the dismissal may be questioned through the grievance machinery established
under the CBA. If the complaint is not resolved at this level, it may be submitted to
voluntary arbitration.
8. In cases of illegal dismissal, who has the duty of proving that the dismissal is valid?
The employer.
9. Suppose the employer denies dismissing the employee, who has the duty to prove that
the dismissal is without valid cause?

The employee must elaborate, support or substantiate his or her complaint that he or she
was dismissed without valid cause (Ledesma, Jr. vs. NLRC, 537 SCRA 358, October 19,
2007).
10. On what grounds may an employee question his or her dismissal?
An employee may question his or her dismissal based on substantive or procedural
grounds.
The substantive aspect pertains to the absence of a just or authorized cause supporting the
dismissal.
The procedural aspect refers to the failure of the employer to give the employee the
opportunity to explain his or her side.
11. What are the rights afforded to an unjustly dismissed employee?
An employee who is dismissed without just cause is entitled to any or all of the
following:
a) reinstatement without loss of seniority rights;
b) in lieu of reinstatement, an employee may be given separation pay of one month pay
for every year of service (Golden Ace Builders, et. al vs. Jose Talde, May 5, 2010, GR
No. 187200);
c) full backwages, inclusive of allowances and other benefits or their monetary equivalent
from the time compensation was withheld up to the time of reinstatement;
d) damages if the dismissal was done in bad faith (Aurora Land Project Corp. vs NLRC,
266 SCRA 48).
12. What is reinstatement?
Reinstatement means restoration of the employee to the position from which he or she
has been unjustly removed.
Reinstatement without loss of seniority rights means that the employee, upon
reinstatement, should be treated in matter involving seniority and continuity of
employment as though he or she had not been dismissed from work.
When a Labor Arbiter rules for an illegal dismissal, reinstatement is immediately
executory even pending appeal by the employer (Article 223 of the Labor Code, as
amended).
13. In what forms may reinstatement pending appeal be effected?
14. Reinstatement pending appeal may be actual or by payroll, at the option of the
employer.
15. 14. What is meant by full backwages?
Full backwages refer to all compensations, including allowances and other benefits with
monetary equivalent that should have been earned by the employee but was not collected
by him or her because of unjust dismissal. It includes all the amounts he or she could
have earned starting from the date of dismissal up to the time of reinstatement.
15. What is separation pay?
In termination for authorized causes, separation pay is the amount given to an employee
terminated due to installation of labor-saving devices, redundancy, retrenchment, closure
or cessation of business or incurable disease.
Separation pay may also be granted to an illegally dismissed employee in lieu of
reinstatement.

16. How much is the separation pay?

In cases of installation of labor-saving devices or redundancy, the employee is entitled to
receive the equivalent of one month pay or one month for every year of service,
whichever is higher.
In cases of retrenchment, closure or cessation of business or incurable disease, the
employee is entitled to receive the equivalent of one month pay or one-half month pay for
every year of service, whichever is higher.
In case of separation pay in lieu of reinstatement, the employee is entitled to receive the
equivalent of one month pay for every year of service.
17. Is proof of financial losses necessary to justify retrenchment?
Yes. Proof of actual or imminent financial losses that are substantive in character must be
proven by the employer to justify retrenchment (Lopez Sugar Central vs. NLRC, 189
SCRA 179).
18. Are there other conditions before an employee may be dismissed on the ground of
redundancy?
Yes. It must be shown that there is:
a) Good faith in abolishing redundant position; and
b) Fair and reasonable criteria in selecting employees to be dismissed, such as but not
limited to less preferred status (e.g. temporary employee), efficiency and seniority (Asian
Alcohol Corp. vs. NLRC, 305 SCRA 416);
c) A one-month prior notice is given to the employee and DOLE Regional Office as
prescribed by law.
19. May the services of an employee be terminated due to disease?
Yes. The employer may terminate employment on ground of disease only upon the
issuance of 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 months even
with proper medical treatment.
20. What is constructive dismissal?
Constructive dismissal refers to an involuntary resignation resorted to when continued
employment becomes impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to an employee or an unwarranted transfer or demotion of
a employee, or other unjustified action prejudicial to the employee. The employer has to
prove that such managerial actions do not constitute constructive dismissal (Blue Dairy
Corp. vs. NLRC, 314 SCRA 401)
21. May an employee be placed on floating status?
Yes, provided it is permitted under circumstances for a period of not more than six (6)
months. Beyond this period, floating status becomes constructive dismissal which entitles
the employee to separation pay (Phil. Industrial Security Agency Corp. vs. Virgilio
Dapiton and NLRC, 320 SCRA 124)
22. When an employee resigned voluntarily, is he or she entitled to separation pay?
No. An employee is not entitled to separation pay when he or she resigns voluntarily,
unless it is a company practice or provided in the CBA (Hanford Philippines Inc. vs.
Shirley Joseph, 454 SCRA 786, March 31, 2005).

23. Are quitclaims valid?

Yes, provided that these are voluntarily signed and the consideration is reasonable and is
not against the law or public policy. (More Maritime Agencies vs. NLRC, 307 SCRA
189)
Quitclaims entered into by union officers and some members do not bind those who did
not sign it (Lianas Supermarket vs. NLRC, 257 SCRA 186).
Dismissal of worker; DUE PROCESS required - G.R. No. 175558
G.R. No. 175558
" x x x.
For a workers dismissal to be considered valid, it must comply with both procedural and
substantive due process. The legality of the manner of dismissal constitutes procedural
due process, while the legality of the act of dismissal constitutes substantive due
process.56
Procedural due process in dismissal cases consists of the twin requirements of notice and
hearing. The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first notice apprises the employee of
the particular acts or omissions for which his dismissal is sought; and (2) the second
notice informs the employee of the employers decision to dismiss him. Before the
issuance of the second notice, the requirement of a hearing must be complied with by
giving the worker an opportunity to be heard. It is not necessary that an actual hearing be
conducted.57
Substantive due process, on the other hand, requires that dismissal by the employer be
made under a just or authorized cause under Articles 282 to 284 of the Labor Code.
In this case, there was no written notice furnished to De Gracia, et al. regarding the cause
of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local
manning agency, claiming that De Gracia, et al. were repatriated because the latter
voluntarily pre-terminated their contracts. This telex was given credibility and weight by
the Labor Arbiter and NLRC in deciding that there was pre-termination of the
employment contract akin to resignation and no illegal dismissal. However, as correctly
ruled by the CA, the telex message is a biased and self-serving document that does not
satisfy the requirement of substantial evidence. If, indeed, De Gracia, et al. voluntarily
pre-terminated their contracts, then De Gracia, et al. should have submitted their written
resignations.
Article 285 of the Labor Code recognizes termination by the employee of the
employment contract by serving written notice on the employer at least one (1) month in
advance. Given that provision, the law contemplates the requirement of a written notice
of resignation. In the absence of a written resignation, it is safe to presume that the
employer terminated the seafarers. In addition, the telex message relied upon by the
Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22 January 1999,
giving doubt to the veracity and authenticity of the document. In 22 January 1998, De
Gracia, et al. were not even employed yet by the foreign principal. For these reasons, the
dismissal of De Gracia, et al. was illegal.
x x x."
DUE PROCESS IN TERMINATION AND DISCIPLINARY ACTIONS; MINIMUM
PERIOD FOR REPLY TO SHOW-CAUSE NOTICE
Practitioners in the field of labor or Human Resources (HR), as well as managers and

executive officers of companies, are aware that an employee may only be dismissed for
cause. Disciplinary actions, including dismissal from work, must comply with both
substantive and procedural due process. Substantive due process requires a valid cause
for the dismissal. For procedural due process, outlined below, an interesting question is
this: is there a minimum period that must be given to the employee to answer the showcause notice?
We recently received a query as to how many days should be given to the employee to
answer the show-cause notice. We find this query interesting because there is no
provision in the Labor Code, or its Implementing Rules and Regulations, which spells out
a specific period. Whats more interesting, however, is that the Supreme Court has
construed this period to mean five (5) days from receipt of the show cause notice. The
procedural requirements, as summarized by the Supreme Court, are:
(A) 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.
(B) 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 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.
(C) 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.