 ILLEGAL DISMISSAL

ILLEGAL TERMINATION/ DISMISSAL – Complainants were illegally

terminated from their employment by the Respondent-appellee.
under the Labor Code, only the absence of a just cause for the termination of employment can
make the dismissal of an employee illegal. This is clear from Art. 279 which provides:
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.

Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and, therefore, the employee
should be reinstated and paid backwages. To contend, as Justices Puno and Panganiban do, that even if the termination is for a just
or authorized cause the employee concerned should be reinstated and paid backwages would be to amend Art. 279 by adding
another ground for considering a dismissal illegal.

SEC. 2, RULE I, BOOK VI, IMPLEMENTING RULES

Section 2. Security of tenure. -
(a) In cases of regular employment, the employer shall not terminate the services of an
employee except for just or authorized causes as provided
by law, and subject to the requirements of due process.
(b) The foregoing shall also apply in cases of probationary employment: Provided, however, that
in such cases, termination of employment due to
failure of the employee to qualify in accordance with the standards of the employer made
known to the former at the time of engagement
may also be a ground for termination of employment.
(c) In cases of employment covered by contracting or subcontracting arrangements, no employee shall be
dismissed prior to the expiration of the
contract between the principal and contractor or subcontractor as defined in Rule VIII-A,
Book III of these Rules, unless the dismissal is for just or authorized cause, or is brought
about by the completion of the phase of the contract for which the employee was
engaged but, in any case, subject to the requirements of due process or prior notice.
(d) In all cases of termination of employment, the following standards of due process
shall be substantially observed:For termination of
employment based on just cases as defined in Article 282 of the Labor Code:
(e) 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.
(f) 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.
(g) 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.
For termination of employment as defined in Article 283 of the Labor Code, the requirement of
due process shall be deemed complied with upon service of a written notice to the employee and
the appropriate Regional Office of the Department of Labor and Employment at least thirty days
before effectivity of the termination, specifying the ground or grounds for termination.

Dismissals based on just causes contemplate acts or omissions attributable to the

employee while dismissals based on authorized
 causes involve grounds - business or health - allowing the employer to terminate. A
termination for an authorized cause requires
payment of separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated
under art. 279 of the Labor Code. If reinstatement is no longer possible where the
dismissal was unjust, separation pay may be
granted.
Procedurally, (1) if the dismissal is based on a just cause under art. 282 of the Labor
Code, the employer must give the employee two written notices and a hearing or
opportunity to be heard before terminating the employment, that is, a notice
specifying the grounds for which dismissal is sought and, after hearing or opportunity
to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under arts. 283 and 284 of the Labor Code, the employer must give
the employee and the Department of Labour and Employment written notices 30 days
prior to the effectivity of the separation.

 ILLEGAL SUSPENSION

Preventive suspension may be defined as the temporary removal of an employee

charged for violation of company rules from his
present status or position. Preventive suspension is usually imposed against subject
employee while the company is conducting an
investigation for his alleged violation in order to prevent him from causing further
harm or damage to the company or his co-
employees.

Preventive suspension is not a disciplinary measure, and should not be confused with suspension
imposed as a penalty.

LEGAL BASIS
The right of employer to impose preventive suspension is not found in the Labor Code itself.

The oft-cited legal basis for imposition of preventive suspension is Section 8 and Section
9 of Rule XXIII, Book V, of the Omnibus Rules Implementing the Labor Code, as
amended by Department Order No. 9, Series of 1997, which read as follows:

Section 8. Preventive suspension. - The employer may place the worker concerned
under preventive suspension only if his continued employment poses a serious and
imminent threat to the life or property of the employer or of his co-workers.

Section 9. Period of suspension. - No preventive suspension shall last longer than

thirty (30) days. The employer shall thereafter reinstate
the worker in his former or in a substantially equivalent position or the employer
may extend the period of suspension provided that
during the period of extension, he pays the wages and other benefits due to the
worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.

Interestingly, the above-quoted provisions are no longer reproduced in the present

Omnibus Rules, as amended by Department Order No. 40, Series of 2003, which
supersedes Department Order 9-97.

It is opined, however, that the removal of said provisions from the omnibus rules
did not diminish the right of the employer to impose preventive suspension,
considering that the justification for upholding the right is necessity itself, i.e.,
 when continued employment poses threats to the life of the employer or his co-
worker.

 NON-PAYMENT OF 13TH MONTH PAY

not paid their wages and 13th months pay from work actually rendered.
They are entitled to any wages under the basic principle of “a fair day's
wage for a fair day's work.”

 NON-PAYMENT OF SIL

service incentive leave claimed by the Complainant-Appellants were

also overlooked by the labor Arbiter Padrid as a monetary claim where
every employee is entitled to under the labor code. The monetary claim
has not yet prescribed, since the prescriptive period for monetary
claims is THREE (3) years from the time the employee is entitled to
receive such.

 NON-PAYMENT OF HOLIDAY PAY

 DUE PROCESS

Agabon vs. NLRC, G.R. No. 158693, November 17, 2004

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a
system of rights based on moral principles so deeply imbedded in the traditions and feelings
of our people as to be deemed fundamental to a civilized society as conceived by our entire
history. Due process is that which comports with the deepest notions of what is fair and right and
just. It is a constitutional restraint on the legislative as well as on the executive and judicial powers
of the government provided by the Bill of Rights.
Due process under the Labor Code, like Constitutional due process, has two aspects: substantive,
i.e, the valid and authorized causes of employment
termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due
process requirements for dismissal are found in the
Implementing Rules of PD 442, as amended, otherwise known as the Labor Code of the
Philippines in Book VI, Rule I, Sec. 2, as amended by

statutory due process found in the Labor Code and Implementing Rules protects employees from
being unjustly terminated without just cause after notice and hearing.

Serrano vs. NLRC, G.R. No. 117040, January 27, 2000

Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and
hearing is not to comply with Due Process Clause of the
Constitution. The time for notice and hearing is at the trial stage. Then that is the time we speak
of notice and hearing as the essence of procedural
due process. Thus, compliance by the employer with the notice requirement before he
dismisses an employee does not foreclose the right of the
latter to question the legality of his dismissal. As Art. 277(b) provides, "Any decision taken by the
employer shall be without prejudice to the right of
the worker to contest the validity or legality of his dismissal by filing a complaint with the
regional branch of the National Labor Relations
Commission."
 Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is
to overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of
1882 which gave either party to the employer-employee relationship the right to terminate their
relationship by giving notice to the other one month in advance. In lieu of notice, an employee
could be laid off by paying him a mesada equivalent to his salary for one month. This provision
was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June
12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the
mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of
advance notice or the payment of compensation at the rate of one-half month for every year of
service.
The Termination Pay Law was held not to be a substantive law but a regulatory measure, the
purpose of which was to give the employer the opportunity to find a replacement or substitute,
and the employee the equal opportunity to look for another job or source of employment. Where
the termination of employment was for a just cause, no notice was required to be given to the
employee. It was only on September 4, 1981 that notice was required to be given even where
the dismissal or termination of an employee was for cause. This was made in the rules issued
by the then Minister of Labor and Employment to implement B.P. Blg. 130 which amended
the Labor Code. And it was still much later when the notice requirement was embodied in
the law with the amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989. It cannot be that
the former regime denied due process to the employee. Otherwise, there should now likewise
be a rule that, in case an employee leaves his job without cause and without prior notice to his
employer, his act should be void instead of simply making him liable for damages.

Statutory due process - is presently known right

to prior notice and hearing

PROCEDURAL REQUIREMENT FOR JUST CAUSES

Sec. 2, Rule I, Book VI of the Implementing Rules:
(1) Notice to explain
(2) Ground relied upon
(3) Facts which constitute the ground
(4) Giving the employee a reasonable opportunity to prepare and explain his side
(5) Intention of the employer to dismiss
(6) Notice of conference or investigation
(7) Notice of decision

 Purpose of the first notice: In notice to explain you have to give him an opportunity to respond
to the charges, by responding to
the charges he can decide to respond or deny, or admit it or not respond at all.
 First notice requires ample opportunity to be heard. Reasonable opportunity under the
omnibus rules means every kind of
assistance that management may provide. This period should constitute at least 5
calendar days so that employee may study the situation, gather evidence and
prepare intelligently his defense. 5 days, this is not provided in the Labor Code
but in one case (Genuino vs. NLRC, GR No. 142732-33, December 4, 2007)
 What is important is that the employee is given opportunity to be heard. No prohibition of
extension of the 5 year period.
 What is important is there is a substantial compliance with the 5 day period to explain, it’s not
something that is needed to be
strictly complied.

 TWIN NOTICE RULE

 PRIOR NOTICE AND HEARING RULE
Before an EE is terminated, he must be given notice about the termination and should
be given an ample opportunity to be heard. Ideally, this should be done by personally
handing a copy of the notice to the employee concerned. However, if this is not
possible, the notices may be served on the employee’s last known address either
by ordinary or registered mail (from legal viewpoint, registered mail is preferred).

 DAMAGES
In this case for the purpose of argument, the payment of the nominal
damages for violation of the statutory due process or the violation of
the notice requirement need not be reduced. The company acted in
bad faith

 If dismissal is done in bad faith- under the civil code, employee is entitled to damages

NO JC; INVALID= illegal 1. reinstatement

NO PN dismissal 2. full backwages and other benefits
4. damages

DISCUSSION ON WITH JC BUT WITHOUT PN:

Agabon et al., G.R.No. 158693, November 17, 2004
In this case, the Supreme Court revisited Serrano and re-examined the lack of
statutory basis in the Labor Code for declaring as
"ineffectual or defective" a dismissal of an employee for a valid or authorized cause
but without complying with the employee's
statutory right to due process. Following the 1989 vintage case of Wenphil (170 SCRA
69 [1989]), the present rule now as laid down
in Agabon et al. is to hold the dismissal as valid (no longer defective or ineffectual) but
with the qualification, that the employer
will have to pay the "validly" dismissed employee the sum of P30,000 as nominal
damages for non-observance by the employer of
the employee's right to due process. In the mind of the High Court, P30,000 was
considered as a “stiffer" sanction than the P1,000
which it originally awarded in Wenphil. Being a landmark decision by the Supreme
Court en banc, Agabon et al., is now the leading
authority used by many human resource practitioners and management lawyers,
citing it with distinction to overturn previous
decisions of the High Court based on Serrano (Caingat vs. NLRC, G.R. No. 154308,
March 10, 2005; Chua vs. NLRC, G.R. No. 146780,
March 11, 2005; Glaxo Wellcome Phils., vs. Nagkaisang Empleyado ng Wellcome,
G.R. No. 149349, March 11, 2005).

 ATTORNEY’S FEES
 BACKWAGES

EFFECT OR CONSEQUENCE OF AN INVALID

DISMISSAL
 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. (As
amended by Section 34, Republic Act No. 6715, March 21,
1989).

RELIEFS AVAILABLE TO UNJUSTLY DISMISSED

EMPLOYEE
(1) Backwages
(2) Reinstatement
(3) Separation Pay
(4) Damages (Moral and Exemplary when warranted)

BACKWAGES
Backwages - salary, or compensation, benefits, or their monetary equivalent from
the time it was withheld from the employee without deduction on employee’s
earnings elsewhere during the time of his illegal dismissal until his reinstatement

The salary that the employee would have earned had he no been illegally
dismissed. It is computed from the date of the illegal dismissal up to the date of the
illegal dismissal up to the date of the employee’s actual reinstatement.

The basic figure to be used in the computation of backwages due to the employee
should include not just the basic salary, but also the regular allowances that he had
been receiving such as the emergency living allowance and 13 th month pay mandated
by the law (Paramount Vinyl Product vs. NLRC)

Facilities should not be included in the computation of backwages for the reason that
such are given free, to be used only for official tour of duty and not for personal use.

Equitabl vs. Sadac

Inclusive Of Allowances and Benefits; Excludes Salary Increases Because: Volatile
and Dependent On Numerous Valuables; Mere Expectancy; No Degree Of
Assuredness
Court does NOT see that a salary increase can be interpreted as either an allowance or a
benefit- salary increases are not akin to allowances or benefits and cannot be confused with
either an unqualified award of backwages means that the employee is paid at the wage rate at
the time of his dismissal . the base figure to be used in the computation of backwages is pegged
at the wage rate at the time of the employee’s dismissal

 SEPARATION PAY IN LIEU OF REINSTATEMENT

Separation pay, in lieu of reinstatement, shall include the amount equivalent at least to one (1) month salary or to
one (1) month salary for every year of service, whichever is higher, a fraction of at least six (6) months being
considered as one (1) whole year including regular allowances.

REINSTATEMENT OR SEPARATION PAY IN CASE REINSTATEMENT

IS NO LONGER FEASIBLE
General Rule: Restoration of the employee to his previous position or to a
substantially equivalent position without loss of seniority rights and other privileges.
  When one is entitled to reinstatement and position does not exist
anymore, EE may be reinstated to a substantially
equivalent position. If no substantial equivalent position is available, or the
establishment closed, EE may be entitled to
separation pay. (Sec. 4. Book VI or IRR)
 Separation pay is at least 1 month or 1 month for every year of service whichever is
higher

Exceptions (Instances when reinstatement is no longer available which entitles EE to separation

pay):
(1) Strained relations - must be so compelling and so serious in character that the continued
employment of the EE is so obnoxious
to the person/ business of the ER and that the continuation of such
employment has become inconsistent with peace and tranquility which is an
ideal atmosphere in every workplace.
Bank of Lubao vs. Manabat
Doctrine of Strained Relations
Under the law and prevailing jurisprudence, an illegally dismissed employee is
entitled to reinstatement as a matter of right. However, if
reinstatement would only exacerbate the tension and strained relations between
the parties, or where the relationship between the
employer and the employee has been unduly strained by reason of their
irreconcilable differences, particularly where the illegally
dismissed employee held a managerial or key position in the company, it would be
more prudent to order payment of separation pay
instead of reinstatement
In such cases, it should be proved that the employee concerned occupies a
position where he enjoys the trust and confidence of his employer; and that 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
concerned, the refusal of the respondent to be re-admitted to work is in itself
indicative of the existence of strained relations between him and the petitioner

(2) when reinstatement has become impossible because of a supervening event

Example: abolition in good faith the position the worker once occupied, absence of
equivalent position

(3) Closure of the establishment

(4) If the employee is already beyond retirement age (65 years old)
(5) where an employee elects a separation pay
Escario et al., vs NLRC et al., GR No. 160302, September 27, 2010
Grounds Of Grant Of Separation Pay Instead Of Reinstatement
The absence from an order of reinstatement of an alternative relief should the
employer or a supervening event not within the control of the employee prevent
reinstatement negates the very purpose of the order
However, separation pay is made an alternative relief in lieu of reinstatement in certain
circumstances, like:
(a) when reinstatement can no longer be effected in view of the passage of a
long period of time or because of the realities of the
situation;
(b) reinstatement is inimical to the employer’s interest;
(c) reinstatement is no longer feasible;
(d) reinstatement does not serve the best interests of the parties involved;
(e) the employer is prejudiced by the workers’ continued employment;
(f) facts that make execution unjust or inequitable have supervened; or
 (g) strained relations between the employer and employee

SEPARATION PAY will be given 30 days after the service of notice of the
termination. This is so because it is only then that they are considered separated from
service
 Installation of Labor saving devices and redundancy - 1 month pay or at least 1
month pay for every year of service whichever
is higher
 Retrenchment to prevent losses/ Closure not due to serious business losses or
financial reverses- equivalent to 1 month pay
or at least (1/2) one half month pay for every year of service whichever is higher
 Closure due to serious business losses- no separation pay is given

Motorola Phils et al., Ambrocio, et al., GR No. 173279, March 20 2009

Separation Pay Vs. Termination Pay

Employees terminated due to redundancy.

Separation pay has been defined as the amount that an employee receives at the time of his
severance and is designed to provide the employee with the wherewithal during the period he is
looking for another employment, and is recoverable only in the following instances enumerated:
(1) Under Articles 283 of labor code (authorized cause)
(2) Under Art. 284 of the Labor Code, as amended
(3) Illegal dismissal cases when reinstatement is no longer possible.
Retirement pay, on the other hand, presupposes that the employee entitled to it has reached the
compulsory retirement age or has rendered the required number of years as provided
It is admitted that respondents were terminated pursuant to a redundancy, and not due to
retirement program, hence, they were entitled to a separation pay of one month salary per year
of service

DISMISSAL FOR FALSE OR NON-EXISTENT CAUSE

Dismissal of an employee on no grounds or on
fabricated cause. NOT the same as termination
for a just cause.

There was this time during Marcos where an employee was not able to report to work because he was
detained by the Marcos soldiers. So his employer terminated him for abandonment of work which is
analogous to gross and habitual neglect of duty, but there was no gross and neglect of duty because he
was behind bars there was no intent to sever his employment. The dismissal was found to be illegal but
due to a false or inexistent cause, so what is the significance of that? On the matter of reinstatement
and payment of back wages which he is entitled.

Asian Terminal vs NLRC, GR No. 158458, December 19, 2007, citing Standard Electirc Mfg. vs Standard
Electric Employees Union, GR No. 166111, August 25, 2011
NOT Abandonment; Illegal Dismissal; Termination For A False Or Non-Existent Cause
Respondent herein was prevented from reporting for work by reason of his detention. That his detention turned out
to be without basis, as the criminal charge upon which said detention was ordered was later dismissed for lack of
evidence, made the absences he incurred as a consequence thereof not only involuntary but also excusable. Employee
is entitled to backwages