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a"" . Republic of the Philippines

DEPARTMENT OF LABOR AND
EMPLOYMENT
lntramuros,
Manila

DEPARTMENT ORDER NO. J!i.l- u:

Series of
2015

AMENDING THE IMPLEMENTING RULES AND REGULATIONS

OF BOOK VI OF THE LABOR CODE OF THE PHILIPPINES, AS
AMENDED

SECTION 1. Pursuant to Article 5 of the Labor Code of the

Philippines, as amended, on the rule-making power of the Secretary of
Labor and Employment, the following Rules governing the application
of the just and authorized causes of termination of employment under
Articles 297-299 of the Labor Code, as amended, are hereby issued as
follows:

RULE 1-
A
APPLICATION OF JUST AND AUTHORIZED CAUSES OF
TERMINATION

Section 1. Guiding Principles. The workers' right to security

of tenure is guaranteed under the Philippine Constitution and other
laws and regulations. No employee shall be terminated from work except
for just or authorized cause and upon observance of due process.

Section 2. Coverage. This Rules shall apply to all parties

of work arrangements where employer-employee relationship exists. It
shall also apply to all parties of legitimate contracting/subcontracting
arraogements with existing employer- employee relationships.

Section 3. Employer-Employee Relationship. To ascertain

the existence of an employer-employee relationship, the four-fold test
shall apply, to wit: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power
to control the employee's conduct, or the so-called "control test." The
so-called "control test" is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-
employee relationship. Under the control test, an employer-employee
relationship exists where the person for whom the services are performed
reserves the right to control not only the end achieved, but also the
manner and means used to achieve that end. 1
 Section 4. Definition of Terms. The following terms as used in
this Rules, shall mean:

(a) "Authorized Causes" refer to those instances enumerated

under Articles
298 [Closure of Establishment and Reduction of Personnel] and 299
[Disease as a
Ground for Termination] of the Labor Code, as amended. These are
causes brought

1 David vs. Macasio, G.R. No. 1954661, July 2, 2014.

by the necessity and exigencies of business, changing economic
conditions and illness of the employee. 2

(b) "Just Causes" refer to those instances enumerated under

Article 297 [Termination by Employer] of the Labor Code, as amended.
These are causes directly
attributable to the fault or negligence of the employee. 3

(c) "Closure or Cessation of Business" refers to the complete or

partial cessation of the operations and/or shut-down of the establishment
of the employer. 4

(d) "Commission of a Crime or Offense" refers to an

offense by the employee against the person of his/her employer or any
member of his/her family or his/her duly authorized representative.5

(e) "Contractor" refers to any person or entity, including

cooperative, engaged in a legitimate contracting or subcontracting
arrangement providing either services, skilled workers, temforary
workers, or a combination of services to a principal under a Service
Agreement.

(f) "Contractor's Employee" refers to one employed by a contractor

to perform or complete a job, work, or service pursuant to a Service
Agreement with a principal.

It shall also refer to regular employees of the contractor whose

functions are not dependent on the performance or completion of a
specific job, work or service within a definite period of time, i.e.
administrative staff.

(g) "Employee" refers to any person in the employ of an

employer. It shall include any individual whose work has ceased as a result
of or in connection with any current labor dispute or because of any unfair
labor practice.7

(h) "Employer" refers to any person acting in the interest of

an employer, directly or indirectly. 8 It shall include corporation,
partnership, sole proprietorship and cooperative.

(i) "Fraud" refers to any act, omission, or concealment which

involves a breach of legal duty, trust or confidence justly reposed, and is
injurious to another. 9

2 Exigency of the business of the employer (Lopez v. Irvin

Construction Corp., G.R. No. 207253, August
20, 2014), changing economic conditions (Cajucom v. TPI
Philippines Cement Corp., G.R. No. 149090, February 11, 2005)
and illness of the employee (Reyes v. RP Guardians Security
Agency Inc., G.R. No.
193756, April 10, 2013).
3 www.laborlaw.usc-law.org
4 Espina v. Court of Appeals, G.R. No. 164582, March 28, 2007.
5 JISSCOR Independent Union v. Hon. Torres, 221 SCRA 699.
'Section 3(d) DOLE Department Order 18-A, Series of 2011.
7 Article 219 1212] (fl of the Labor Code of the Philippines, as
amended.
8 Article 219 [212] (e) of the Labor Code of the Philippines, as
amended.
9 Phil. Education Co. v. Union of the Phil. Education Employees, G.R.
No. L-13778, 29 April 1960; Lepanto
Consolidated Mining v. CA, G.R. No. L-15171, April 29, 1961.
2
 U) "Gross Neglect" refers to the absence of that diligence that
an ordinary prudent man would use in his/her own affairs.'?

(k) "Habitual Neglect" refers to repeated failure to perform one's

duties over a period of time, depending upon the circumstances. 11

(I) "Insubordination" refers to the refusal to obey some order,

which a superior is entitled to give and have obeyed. It is a willful or
intentional disregard of the lawful and reasonable instructions of the
employer. 12

(m) "Installation of Labor-saving Devices" refers to the

reduction of the number of workers in any workplace made necessary
by the introduction of labor- saving machinery or devices. 13

(n) "Loss of Confidence" refers to a condition arising from fraud

or willful breach of trust by employee of the trust reposed in him/her
by his/her employer or his/her duly authorized representative. There are
two (2) classes of positions of trust. The first class consists of managerial
employees, or those vested with the power to lay down management
policies; and the second class consists of cashiers, auditors, property
custodians or those who, in the normal and routine exercise of
their
functions, regularly handle significant amounts of money or property. 14

(o) "Misconduct" refers to the transgression of some established

and definite rule of action, a forbidden act, a dereliction of duty, willful
in character and implies wrongful intent and not mere error in
judgment. 15

(p) "Principal" refers to any employer, whether a person or

entity including government agencies and government owned and
controlled corporation, who/which puts out or farms out a job, service or
work to a contractor.

(q) "Redundancy" refers to the condition when the services of

an employee are in excess of what is reasonably demanded by the
actual requirements of the enterprise or- superfluous. 16

(r) "Retrenchment" refers to the economic ground for dismissing

employees and is resorted to primarily to avoid or minimize business
losses. 17

Section 5. Due Process of Termination of Employment. In

all cases of termination of employment, the standards of due process
laid down in Article 299 (b)

10 Reyes vs. Maxim's Tea House, G.R. 140853, February 27, 2003.
11 JGB Associates, Inc. v. NLRC, G.R. No. 10939, March 7, 1996.
12 Civil Service Commission v. Arandia, G.R. No. 199549, April 7,
2014.
13 Philippine Sheet Metal Workers' Union v. CIR, 83 Phil 433.
14
Esguerra v. Valle Verde Country Club, Inc. and Ernesto Villaluna,
G.R. No. 173012, June 13, 2012.
15 Oepartment of Labor Manual, Section 4343.01
16 Wiltshire File Co., Inc. v. NLRC, G.R. No. 82249, February 7,
1991.
17 Atlantic Gulf and Pacific Company of Manila, Inc. [AG & P], v.
NLRC, G.R. No. 127516, May 28, 1999.
3
of the Labor Code, as amended, and settled jurisprudence on the
matter, must be observed as follows:

5.1 Termination of Employment Based on Just Causes. As

defined in Article
297 of the Labor Code, as amended, the requirement of two written
notices served on the employee shall observe the following:

(a) The first written notice should contain:

1 . The specific causes or grounds for termination as provided

for under Article 297 of the Labor Code, as amended, and
company policies, if any;
2. Detailed narration of the facts and circumstances that
will serve as
basis for the charge against the employee. A general
description of the charge will not suffice; and
3. A directive that the employee is given opportunity to
submit a written
explanation within a reasonable
period.

"Reasonable period" should be construed as a period of at

least five (5) calendar days from receipt of the notice to
give the employee an opportunity to study the accusation,
consult or be represented by a lawyer or union officer,
gather data and evidence, and decide on the defenses
against the complaint. 18

(b) After serving the first notice, the employer should afford
the employee ample opportunity to be heard and to defend
himself/herself with the assistance of his/her representative if he/she so
desires, as provided in Article 299 (b) of the Labor Code, as amended.

"Ample opportunity to be heard" means any meaningful opportunity

(verbal or written) given to the employee to answer the charges against
him/her and submit evidence in support of his/her defense, whether in
a hearing, conference or some other fair, just and reasonable way. 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 it. 19

(c) After determining that termination of employment is

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

The foregoing notices shall be served personally to the employee

or to the employee's last known address.

18 Unilever v. Rivera G.R. No. 201701, June 3, 2013; Section 12,

DOLE Oepartment Order 18-A.
19 Perez v. PTIC, G.R. No. 152048, April 7, 2009; Section 12, DOLE
Department Order 18-A.
4
 5.2 Standards on Just Causes. An employer may terminate an
employee for any of the following grounds:

(a) Serious Misconduct. - To be a valid ground for termination,

the following must be presentr"

1 . There must be misconduct;

2. The misconduct must be of such grave and aggravated
character;
3. It must relate to the performance of the employee's duties;
and
4. There must be showing that the employee becomes unfit
to continue working for the employer.

(b) Willful Disobedience or Insubordination. - To be a

valid ground for termination, the following must be present: 21

1 . There must be disobedience or insubordination;

2. The disobedience or insubordination must be willful or
intentional characterized by a wrongful and perverse
attitude;
3. The order violated must be reasonable, lawful, and made
known to
the employee; and
4. The order must pertain to the duties which he has been
engaged to discharge.

(c) Gross and Habitual Neglect of Duties. - To be a

valid ground for termination, the following must be present: 22

1 . There must be neglect of duty; and

2. The negligence must be both gross and habitual in
character.

(d) Fraud or Willful Breach of Trust - To be a valid ground

for termination, the following must be present:23

10 Fighting within company premises (Technol Eight Philippines

Corporation v. NLRC and Denis Amular, G.R. No. 187605, April 13,
2010), uttering obscene, insulting or offensive words against a
superior (Autobus Workers Union, et al. v. NLRC, et. al., G.R. No.
117453, July 1, 1998), fabrication of time records (Manuel C.
Felix v. Enertech Systems Industries, Inc. G.R. No. 142007, March
28, 2001), and using employer's property equipment and personnel
in the personal business of the employee (Zenco
Sales, Inc. v. NLRC, G.R. No. 111110,
August 2, 1994).
21 Refusal to transfer (Sentinel Security Agency, Inc. v. NLRC, G.R. No.
1222468, September 3, 1998) and refusal to report to new work
assignment (Westin Philippine Plaza Hotel v. NLRC, G.R. No. 121621,
May
3,
1999)
.
22 Habitual tardiness, absenteeism and abandonment (Labor et. al. v.
NLRC, G.R. No. 110388, September
14,
1995).
23 Head supervisor initiating and leading a boycott (Top Form
Mfg. Co., Inc. v. NLRC, G.R. 65706, December 11, 1992), habitual
absence of managerial employee (GT Printers v. NLRC, G.R. No.
100749, April 24, 1992), failure of cashier to account for the
shortage of company funds (San Miguel Corp. v. NLRC, G.R. No.
88268), June 2, 1992), complicity in the attempt to cover up pilferage
of the company's toll collections (CDCP Tollways Operation Employees
and Workers Union v. NLRC, G.R. Nos. 7618-19, July 3, 1992), stealing
company property (Zamboanga Water District v. Bartolome, 140 SCRA
432), and using double or fictitious requisition slips in order to
withdraw company materials (PLOT v. NLRC, 129
SCRA
163).
5
 1 . There must be an act, omission, or concealment;
2. The act, omission or concealment involves a breach of
legal duty, trust, or confidence justly reposed;
3. It must be committed against the employer or his/her
representative;
and
4. It must be in connection with the employees' work.

(e) Loss of Confidence - To be a valid ground for termination,

the following must be present:24

1 . There must be an act, omission or concealment;

2. The act, omission or concealment justifies the loss of
trust and confidence of the employer to the employee;
3. The employee concerned must be holding a position of
trust and confidence;
4. The loss of trust and confidence should not be simulated;
5. It should not be used as a subterfuge for causes which are
improper, illegal, or unjustified; and
6. It must be genuine and not a mere afterthought to
justify an earlier
action taken in bad faith.

(f) Commission of a Crime or Offense - To be a valid

ground for termination, the following must be present: 25

1 . There must be an act or omission punishable/prohibited

by law; and
2. The act or omission was committed by the employee
against the person of employer, any immediate member
of his/her family, or his/her duly authorized representative.

(g) Analogous Causes - To be valid ground for termination,

the following must be present:

1 . There must be act or omission similar to those specified

just causes;
and
2. The act or omission must be voluntary and/or willful on the
part of the employees.

No act or omission shall be considered as analogous cause unless

expressly specified in the company rules and regulations or policies.

5.3 Termination of Employment Based on Authorized

Causes. As defined in Articles 298 and 299 of the Labor Code, as
amended, the requirements 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
24 China City Restaurant Corp. v. NLRC, 217 SCRA 443; Midas
Touch v. NLRC, G.R. No. 111639, July 29,
1996).
25 Illegally diverting employer's products, violation of
company rules and regulations, drunkenness, gross inefficiency
(M.F. Violago Oiler Tank Trucks v. NLRC, 117 SCRA 544 [19821).
6
Employment (DOLE) at least thirty days (30) before the effectivity of
the termination, specifying the ground or grounds for termination.

5.4 Standards on Authorized Causes. An employer may

terminate an employee for any of the following grounds:

(a) Installation of Labor-saving Devices. - To be a

valid ground for termination, the following must be present:26

1 . There must be introduction of machinery, equipment

or other devices;
2. The introduction must be done in good faith;
3. The purpose for such introduction must be valid such as
to save on cost, enhance efficiency and other justifiable
economic reasons;
4. There is no other option available to the employer
than the introduction of machinery, equipment or device
and the consequent termination of employment of those
affected thereby; and
5. There must be fair and reasonable criteria in selecting
employees to
be terminated.

(b) Redundancy. - To be a valid ground for termination, the

following must be present:27

1 . There must be superfluous positions or services of

employees;
2. The positions or services are in excess of what is
reasonably demanded by the actual requirements of the
enterprise to operate in an economical and efficient
manner;
3. There must be good faith in abolishing redundant
positions;
4. There must be fair and reasonable criteria in selecting the
employees to be terminated; 28 and
5. There must be an adequate proof of redundancy such
as but not limited to the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created
positions, job description and the
approval by the management of the restructuring.29

(c) Retrenchment or Downsizing. - To be a valid ground for

termination, the following must be present.'?

1 . The retrenchment must be reasonably necessary and

likely to prevent business losses;
"Automation (Philippine Sheet Metal Workers' Union v. CIR, 83
Phil 433).
27 Reorganization (Dole Philippines Inc. et al. v. NLRC et. al.) and
duplication of work (Wiltshire File Co., Inc. v. NLRC, supra).
28 Asian Alcohol Corporation v. NLRC, G.R. No. 131108, March 25,
1999.
29 General Milling Corporation v. Violeta L. Viajar, G.R. No.
181738.
30 Abolition of departments or positions in a company (San
Miguel Corporation v. NLRC, G.R. No. 99266, March 2, 1999).
7
 2. The losses, if already incurred, are not merely de rrururrus,
but substantial, serious, actual and real, or if only
expected, are reasonably imminent;
3. The expected or actual losses must be proved by sufficient
and convincing evidence; 31
4. The retrenchment must be in good faith for the
advancement of its interest and not to defeat or
circumvent the employees' right to security of tenure; and
5. There must be fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained
among the employees, such as status: efficiency,
seniority, physical fitness, age, and financial hardship
for certain workers.

(d) Closure or Cessation of Operation. - To be a

valid ground for termination, the following must be present:32

1 . There must be a decision to close or cease operation

of the enterprise by the management;
2. The decision was made in good faith; and
3. There is no other option available to the employer except
to close or cease operations.

(e) Disease. - To be a valid ground for termination, the

present following must be
:

1 . The employee must be suffering from any disease;

2. The continued employment of the employee is prohibited
by law or prejudicial to his/her health as well as to the
health of his/her co- employees; and
3. There must be certification by a competent public health
authority that the disease is incurable within a period of
six (6) months even with proper medical treatment.

In cases of installation of labor-saving devices; redundancy and

retrenchment, the "Last-In, First-Out Rule"33 shall apply except when an
employee volunteers to be separated from employment.

5.5 Payment of Separation Pay. Separation pay shall be paid by

the employer to an employee terminated due to installation of labor-
saving devices, redundancy, retrenchment, closure or cessation of
operations not due to serious business losses or financial reverses, and
disease.

31 Balasabas v. NLRC, G.R. No. 85286, August 24, 1992; Central

Azucarerra dela Carlota v. NLRC, G.R. No.
100092, December
29, 1995.
32 Relocation of business (Cheniver Deco Print Technics Corporation
v. NLRC, [G.R. No. 122876, February
17, 2000!, sale in good faith (Lucena Oil factory Inc. v. NLRC, G.R -.
No. 7840, November 17, 1986; Second
Division, Minute
Resolution).
" When there are two employees occupying the same position
in the company affected by the retrenchment program, the
last one employed will necessarily be the first to go (Maya
Farms Employees Organization v. NLRC, G.R. No. 106256, December
28, 1994).
 An employee terminated due to installation of labor-saving devices
or redundancy shall be paid by the employer a separation pay equivalent
to at least one (1) month pay or at least one (1) month pay for every
year of service, whichever is higher, a fraction of six (6) months service
is considered as one ( 1 ) whole year.
An employee terminated due to retrenchment shall be paid by the
employer a separation pay equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher,
a fraction of six (6) months service is considered as one (1) whole year.
An employee terminated due to closure or cessation of business
operation not due to serious business losses shall be paid by the
employer a separation pay equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher,
a fraction of six (6) months service is considered as one (1) whole year.
Where closure is due to serious business losses or financial reverses, no
separation pay is required.

An employee terminated due to disease shall be paid by the

employer a separation pay equivalent to at least one (1) month salary
or one-half (1/2) month salary for every year of service, whichever is
higher, a fraction of six (6) months service is considered as one ( 1 ) whole
year.
An employee whose employment is terminated by reason of just
causes is not entitled to separation pay except as expressly provided for
in the company policy or Collective Bargaining Agreement (CBA).
--------,Section-6-.-0ther-eauses-of-T-erminatiorr.-ln-
addition-to-s·ectiun-4�h·e employer may also terminate an employee
based on reasonable and lawful grounds specified under its company
policies.

An employee found positive for use of dangerous drugs shall be

dealt with administratively which shall be a ground for suspension or
termination. 34

An employee shall not be terminated from work based on actual,

perceived or suspected HIV status.35

An employee shall not be terminated on basis of actual, perceived

or suspected
Hepatitis B status. 36

An employee who has or had Tuberculosis shall not be

discriminated against. He/she shall be entitled to work for as long as
they are certified by the company's accredited health provider as
medically fit and shall be restored to work as soon as his/her illness is
controlled. 37

34 DOLE Department Order No. 53, Series of 2003 in relation to

the IRR of R.A. 9165.
35 DOLE Department Order No. 102, Series of 2010.
36 DOLE Department Advisory No. 5, Series of 2010 Part Ill Cl.
par. c.
37 DOLE Department Order No. 75, Series of 2005.
9
•
 Sexual harassment 38 is considered a serious misconduct. It is
reprehensible enough but more so when inflicted by those with moral
ascendancy over their victim.

Section 7. Causes of Termination Under the Collective

Bargaining Agreement (CBA). An employee may also be terminated
based on the grounds provided for under the CBA.

Section 8. Mandatory Conciliation-Mediation on Termination

Disputes. All disputes arising out of termination of employment shall
be subject to mandatory conciliation-mediation pursuant to Republic Act
No. 10396 and its Implementing Rules and Regulations.

Request for assistance involving issues arising out of

termination of employment based on just or authorized cause shall be
lodged before the Single Entry Assistance Desk Officers (SEADOs) at the
Regional/Provincial/Filed Offices of DOLE or its attached agencies in
the region pursuant to the Implementing Rules and Regulations of
Republic Act No. 10396.

In case of settlement, the Desk Officer shall reduce the agreement

into writing, have the parties understand the contents therefor, sign the
same in his/her presence, and attest the document to be the true and
voluntary act of the parties.

For organized establishment. all disputes shall undergo grievance

machinery under the CBA. In case of failure to reach an agreement,
the parties may refer the same to conciliation-mediation under the
Single Entry Approach (SEnA) or agree to submit it for voluntary
arbitration in accordance with Articles 274 and 275 of the Labor Code, as
amended.

Section 9. Settlement Agreement. Any settlement agreement

reached by the parties l:iefore the Desk Officer shall be final and binding.

In case of failure to reach an agreement during the conciliation-

mediation period, the request shall be referred to compulsory
arbitration, or if both parties so agree, to voluntary arbitration.

Section 10. Condition Precedent to Compulsory Arbitration.

No Labor Arbiter shall take cognizance of the complaint for illegal
dismissal unless there is a referral from the Desk Officer pursuant to the
Implementing Rules and Regulations of Republic Act No. 10396.

Section 1 1 . Non-compliance with Settlement Agreement;

Execution. In case of non-compliance by the employer or employee,
the terms of the settlement agreement may be enforced by requesting
the Desk Officer to refer the same to the proper Regional Arbitration
Branch (RAB) of the National Labor Relations Commission (NLRC) for
enforcement of the agreement pursuant to Rule V. Section 1 (i) of the
2005
Revised NLRC Rules, as amended. The same shall be docketed by
the RAB as arbitration case for enforcement of the settlement
agreement. The employee or

aa Fondling the hands, "massaging the shoulder and caressing the

nape (Libres v. NLRC, National Steel
Corp., et. al., G.R. No. 123737, May 28, 1999).
10
.
•

employer may also disregard the settlement agreement and file an

appropriate case before the appropriate forum.

SECTION 2. Repealing Clause. Section 2(4), Section 7, Section

8, Section 9, Section 10 and Section 1 1 of Rule I, Book VI of the
Implementing Rules and Regulations of the Labor Code of the Philippines,
as amended, are hereby repealed. All other rules and regulations issued
by the Secretary of Labor and Employment inconsistent with the
provision of this Rules are hereby superseded.

SECTION 3. Separability Clause. If any provision or portion of

this Rules is declared void or unconstitutional, the remaining portions or
provisions hereof shall continue to be valid and effective.

SECTION 4. Effectivity. This Order shall be effective fifteen

(15) days after completion of its publication in at least two (2) newspapers
of general circulation.

Manila, Philippines, O'!- September 2015.

ROSALIND'�l�A;l�IS-
BALDOZ
Secretar
y
Labor of
Dep1. &
Employment
crnce of the
Secretary
1111111 IIUI
1111111111111111111111111111111111
Ill
01
97
75
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