A Critical Analysis of the Law and
Doctrines on Dismissal of Employees
Atty. VICENTE LEOGARDO, JR.
Director General, ECOP
Nov. 12, 2015
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Dismissal of Employees and Termination of
Employment Distinguished
1. Dismissal of employees refers to the unilateral action
of the employer to terminate the employment of the
employee for cause in accordance with law (Articles
282, 283 and 284)
It is an exercise of management prerogative
2. Termination of employment is a broader term which
includes not only dismissal for cause but all other
causes based on contract (project, seasonal, casual,
fixed period), resignation, retirement, death and
termination by the employee
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Fundamental Principles on Dismissal of Employees
Our Constitution, statutes and jurisprudence uniformly
guarantee to every employee or worker tenurial security.
What this means is that an employer shall not dismiss an
employee except for just or authorized cause and only after
due process is observed. Thus, for an employee’s dismissal
to be valid, the employer must meet these basic
requirements of: (1) just or authorized cause (which
constitutes the substantive aspect of a valid dismissal); and
(2) observance of due process (the procedural aspect).
(Baguio Central University vs. Ignacio Gallente, G. R. No. 188267,
Dec. 2, 2013).
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Fundamental Principles . . . cont’d.
1. The Constitution referred to by the Supreme Court is
the 1978 Constitution, Sec. 3, Art. XIII thereof, which
prescribes that workers are entitled to security of
tenure.
2. On the other hand the statutes particularly refer to Art.
279 as well as the other provisions in Title I, Book VI
of the Labor Code, Termination of Employment,:
ART. 279. Security of Tenure. – In cases of regular employment, the
employer shall not terminate the services of an employee except for a
just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
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Fundamental Principles . . . cont’d.
3. While the Labor Code (1974) antedated the 1978
Constitution, the right to security of tenure was also
assured in the 1973 Constitution (Sec. 9, Article II)
4. In other words, security of tenure has been a
constitutional right since 1973
5. The jurisprudence referred to in the “Fundamental
Principles on Dismissal of Employees” is the
prevailing doctrine on dismissal established in the en
banc decision of the Supreme Court in Agabon and
Agabon vs. NLRC, et al., (G. R. No. 158693, Nov. 17,
2004)
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The Prevailing Doctrine on Dismissal
1. The doctrine lays down two basic requirements for
dismissal:
a) A valid cause, which constitutes the substantive
aspect (legality of dismissal), and
b) The observance of due process (manner of dismissal), which constitutes the procedural aspect.
2. Due process as a manner of dismissal refers to
statutory due process under the Labor Code
3. Before 2004 observance of constitutional due process
was required for a valid dismissal:
“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.” (Sec. 1, Article III, Bill of
Rights)
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The Prevailing Doctrine on Dismissal (cont’d)
3. The failure of the employer to observe due process in
the dismissal of a worker no longer renders the
dismissal invalid.
4. But for such failure, the employer must pay an
indemnity to the worker
5. If the dismissal is based on a just cause under Art.
282 the sanction to be imposed should be tempered
because the dismissal process was initiated by an act
imputable to the employee
6. If the dismissal is based on an authorized cause
under Art. 283, the sanction should be stiffer because
the dismissal process was initiated by the exercise of
management prerogative (Jaka Food Processing Corp. vs.
Pacot, G.R. No. 151378, March 28, 2005, 454 SCRA 119)
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The Prevailing Doctrine on Dismissal (cont’d)
7. The nominal damages awarded to the employee for a
dismissal based on a just cause but without the notice
requirement was fixed at P30,000.00 (Agabon and
Agabon vs NLRC, et al., G.R. No. 158693, Nov. 17, 2004, 442
SCRA 573)
8. If the dismissal was based on an authorized cause
without the required notice, the amount fixed was
P50,000.00 (Celebes Japan Foods Corporation, G.R. No.
175855, Oct. 2, 2009, citing Jaka Food Processing Corp.
supra)
3/2/2011
ECOP-VRL
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The Law and Doctrine on Termination: Ante the
Labor Code
1. The law governing termination previous to the Labor
Code was the Termination Pay Law (R. A. No. 1052 as
amended) which in effect provided:
a) For employment without a definite period, the employer
may terminate the employment any time for just cause;
or without just cause, by serving written notice to the
employee at least 1 month in advance or 1/2 month for
every year of service of the employee, whichever is l
longer
b) The employee who was not served such notice in case of
termination without just cause shall be entitled to
compensation from the date of termination in an amount
equivalent to his wages corresponding to the required
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period of notice.
The Law and Doctrine on Termination:
Ante the Labor Code (cont’d)
2. The Termination Pay Law was significant, because in
its application, the Supreme Court established the
following precedent on the dismissal of employees:
a) Failure to give advance notice to the employee was
deemed as an infringement of his constitutional right to
due process of law and equal protection of the laws (Art.
IV, Sec. 1(1), 1973 Constitution):
b) Since the right of an employee to his labor is in itself a
property, his summary and arbitrary dismissal amounted
to deprivation of his property without due process.“
(Batangas Laguna Tayabas Bus Co. vs. Court of Appeals (G.R.
No. L-38482 June 18, 1976)
3. Thus, the dismissal without advance notice was illegal
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The Law and Doctrine on Dismissal Up to 1989
(cont’d)
4. This precedential doctrine prevailed even after the
effectivity of the Labor until year 1989
5. The impact of this doctrine whose application was
carried over under of Labor Code had graver
consequences for employers
6. Under Art. 279, in case of regular employment, a
worker dismissed without just cause is deemed
illegal and the worker shall be reinstated with full
back wages and benefits
7. The doctrine extended the illegality of dismissal even
if there was valid cause but the employer failed to
observe due process in dismissing the miscreant
worker
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1989: Doctrine on Dismissal Reexamined
1. In 1989, the Supreme Court in an en banc decision
held that the policy that dismissal of an employee was
illegal if effected without due process even if there
was valid cause, should be reexamined (Wenphil Corp.
vs. NLRC & Mallare, (en banc, G.R. No. 80587, Feb. 08, 1989).
2. It ruled that If just cause was established, It was
arbitrary and unfair to the employer to order
reinstatement with back wages
3. It would demoralize the rank and file if the undeserving if not undesirable remained in the service
4. But infraction of the due process requirement subjects
the employer to sanction in the form of an indemnity
award to the employee
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1989: Doctrine on Dismissal Reexamined (cont’d)
5. Award of indemnity depends upon the facts of each
case and the gravity of the omission committed by
the employer.
7. Up to 2004 , the fines imposed for violations of the
notice requirement had varied from case to case from
P1,000.00, P2,000.00, P5,000.00 to P10,000.00.
8. Nevertheless the Court maintained the doctrine that
failure to give an employee the benefit of a hearing
before he was dismissed constituted an infringement
of his constitutional right to due process of law.
9. The foregoing doctrine became known as the Wenphil
or Belated Due Process Rule.
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2000: Wenphil Modified and Reversed
1. In 2000, the Supreme Court in an en banc decision
reversed its previous ruling that violation of the notice
requirement by the employer before it dismissed an
employee was a denial of constitutional due process
(Ruben Serrano vs. NLRC & Isetann Department Store, en
banc (G. R. No. 117040, 27 Jan 2000):
a) The due process clause of the Constitution is a limitation
on governmental powers. It does not apply to the
exercise of private power, such as the termination of
employment by the employer under the Labor Code
b) "The reason is simple: Only the State has authority to
take the life, liberty, or property of the individual.”
3. The remedy is to order payment of full back wages to
the employee from the time of his dismissal until final
judgment that the dismissal was for a just cause. 14
2000: Doctrines Modified and Reversed (cont’d)
4. But, otherwise, his dismissal must be upheld and he
should not be reinstated. This is because his
dismissal is ineffectual.
5. For the same reason, if an employee is laid off for any
of the causes in Arts. 283-284, but the employer did
not give him and the DOLE a 30-day written notice of
termination in advance, then the termination of his
employment should be considered ineffectual
6. However, the termination of his employment should
not be considered void but he should simply be paid
separation pay as provided in Art. 283 in addition to
back wages.
7. The employer must be sanctioned for failure to
observe the requirements of due process (Sebuguero v.
NLRC, 248 SCRA)
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Implications of Serrano doctrine on Dismissal
Without Notice
1. Imposes fiction of continued employer-employee
relationship even after the employer had dismissed
the employee
2. Grants the following benefits to dismissed worker
until date of finality of decision:
a) Back wages for employees dismissed for just
cause
b) Back wages plus separation pay for employees
dismissed for authorized causes
c) Back wages plus separation pay for employees
dismissed on account of closures due to serious
business losses or financial reverses
3. If award is reversed on appeal, what happens to
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benefits already received by the employee?
2004: Serrano Doctrine Abandoned
1. In 2004, the Supreme Court in an en banc decision
abandoned the Serrano doctrine and reinstated the
Wenphil doctrine but imposed stiffer sanctions on the
employer in the form of nominal damages (Agabon, et
al. vs. NLRC, et al. (G.R. No. 158693, Nov. 17, 2004)
2. Thus, an employee found legally dismissed, is
entitled to nominal damages of P50,000.00 if his
dismissal lacked proper notice in violation of his right
to statutory due process
3. The Serrano ruling did not consider the full meaning
of Art. 279: that termination is illegal only if it is not for
any of the just or authorized causes provided by law,
and that payment of back wages and other benefits,
including reinstatement is justified only if the
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employee was unjustly dismissed.
2004: Serrano Doctrine Abandoned (cont’d)
4. Abagon differentiated statutory due process from
constitutional due process:
a) Due process under the Labor Code has 2 aspects:
1) substantive, i.e., the valid and authorized causes of
employment termination
2) procedural, i.e., the manner of dismissal, whose
requirements are found in the Implementing Rules of
the Labor Code, Book VI, Rule I, Sec. 2, as amended
by D. O. Nos. 9 and 10
5. Thus, statutory due process under the Labor Code
and Implementing Rules protects employees from
being unjustly terminated without just cause after
notice and hearing
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2004: Serrano Doctrine Abandoned (cont’d)
6. On the other hand, constitutional due process protects
the individual from the government and assures him
of his rights in criminal, civil or administrative
proceedings
7. From the foregoing doctrine the Supreme Court
summarized four possible situations that may be
derived in the dismissal of employees:
a) The dismissal is for a just cause under Art. 282 of the
Labor Code, for an authorized cause under Art. 283, or
for health reasons under Art. 284, and due process was
observed;
b)) The dismissal is without just or authorized cause but due
process was observed;
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2004: Serrano Doctrine Abandoned (cont’d)
c) The dismissal is without just or authorized cause and
there was no due process; and
d) The dismissal is for just or authorized cause but due
process was not observed.
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Implications of the Four Situations
1. In the 1st situation (just or authorized cause, with due
process) the dismissal is undoubtedly valid and the
employer will not suffer any liability.
2. In the 2nd and 3rd situations where the dismissals are
illegal, Art. 279 mandates that the employee is entitled
to reinstatement without loss of seniority rights and
other privileges and full back wages, inclusive of
allowances, and other benefits or their monetary
equivalent computed from the time the compensation
was not paid up to the time of actual reinstatement.
3. In the 4th situation (just or authorized cause but due
process was not observed), the dismissal should be
upheld.
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Implications of the Four Situations (cont’d)
4. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the
employer should be held liable for non-compliance
with the procedural requirements of due process.
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Epilogue
1. Summing up, due process under the Labor Code, like
Constitutional due process, has two aspects:
a) substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code; and
b) procedural, i.e., the manner of dismissal.
2. Procedural due process requirements for dismissal
are found in the Implementing Rules of the Labor
Code, as amended Department Order No. 147-15,
Series of 2015
3. Breaches of these due process requirements violate
the Labor Code. Therefore statutory due process
should be differentiated from failure to comply with
constitutional due process.
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Epilogue (cont’d)
4. The constitutional policy to provide full protection to
labor is not meant to be a sword to oppress
employers.
5. The employer should not be compelled to continue
employing a person who is admittedly guilty of
misfeasance or malfeasance and whose continued
employment is patently inimical to the employer.
6. The law protecting the rights of the worker authorizes
neither oppression nor self-destruction of the
employer.
7. An employee who is clearly guilty of conduct violative
of Article 282 should not be protected by the Social
Justice Clause of the Constitution.
8. Social justice, as the term suggests, should be used
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only to correct an injustice.
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