PART XIV

POST-EMPLOYMENT
A. TERMINATION OF EMPLOYMENT BY EMPLOYER

1. Management Prerogative—Right to Discipline [To dismiss, impose a lighter penalty, or

condone an offense] in relation to the Right to Reasonable Return on Investment—Reasonable
Exercise Tempered with Compassion and Understanding; Waiver of Such Rights & Limitations

- Post-Employment Restrictions
The employer may insist on an agreement with the employee, for certain restrictions to take
effect after the termination of the employer-employee relationship. The following stipulations in
an employment contract are illustrative of the prohibitions normally agreed upon by the
employer and the employee:
1. Non-Compete Clause;
2. Confidentiality and Non-Disclosure Clause; 3. Non-Solicitation Clause;
4. Non-Recruitment or Anti-Piracy Clause; and
5. Inventions Assignment Clause (Intellectual Property Clause) (Chan, Bar Reviewer on Labor
Law, 2019, p. 822)
2. Substantive and Procedural Due Process Requirements In Termination Cases (Const., Art. III,
S1; Labor Code, 292(b) [277], 294 [279], 296 [281], 297 [282], 298 [283] & 299 [284]; DO 147-
15)

Maula v. Ximex Delivery Express, Inc., G.R. No. 207838, January 25, 2017

- Termination of Employment (Procedural and Substantive Due Process)

Dismissal from employment have two facets: first, the legality of the act of
dismissal, which constitutes substantive due process; and, second, the
legality of the manner of dismissal, which constitutes procedural due process.
The burden of proof rests upon the employer to show that the disciplinary
action was made for lawful cause or that the termination of employment was
valid. In administrative and quasi-judicial proceedings, the quantum of
evidence required is substantial evidence or such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion. Thus,
unsubstantiated suspicions, accusations, and conclusions of the employer do
not provide legal justification for dismissing the employee. When in doubt,
the case should be resolved in favor of labor pursuant to the social justice
policy of our labor laws and the 1987 Constitution.
B. SUBSTANTIVE DUE PROCESS – JUST CAUSES (Labor Code, Art. 297 [282])
1. Serious misconduct (Labor Code, Art. 297(a) [282])
1.1. Requisites
To constitute a valid cause for dismissal under the Labor Code:
1. The employee's conduct must be serious — of such grave and aggravated character and not merely
trivial or unimportant.
2. The misconduct must be related to the performance of the employee's duties showing him to be unfit to
continue working for the employer.
3. The act or conduct must have been performed with wrongful intent. (Colegio San Agustin-Bacolod v.
Montaño, G.R. No. 212333, March 28, 2022, Per J. Hernando)

1.2. Examples
§Sexual intercourse in the work premises
§Committing libel against immediate superior
§Physical violence between and among employees, regardless of whether such
violence occurred during working hours and within company premises, provided that
the confrontation be “rooted on workplace dynamics” or connected with the
performance of the employees’ duties
§Uttering obscene, insulting, or offensive words against a superior
§Fabrication of time records
§Using employer’s property, equipment and personnel in the personal business of the
employee
§ Sexual harassment
§ Gambling during officer hours (
§ Sleeping while on duty
§ Contracting work in competition with the business of one’s employer

2. Willful disobedience or insubordination (Labor Code, Art. 297(a) [282])

2.1. Requisites/Not Every Case Deserves Dismissal
- For willful disobedience to be a valid cause for dismissal, these two elements must concur:
1. the employee's assailed conduct must have been willful or intentional, the willfulness being
characterized by "a wrongful and perverse attitude"; and
2. the order violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge. (Systems and Plan Integrator and
Development Corp. v. Ballesteros, G.R. No. 217119, April 25, 2022, per J. Hernando)
2.2. Examples
§ Violation of company’s safety instructions
§ Failure to answer notice to explain
§ Unjustified refusal to render overtime
§ Refusal to report to new work

3. Gross and habitual neglect of duties (Labor Code, Art. 297(b) [282])
3.1. Requisites
- Habitual Neglect of Duties
The degree of skill, care, diligence and attention imposed by the implied possession of competency,
knowledge, skillfulness, etc., of the employee is that of ordinary and reasonable skill, care and diligence.
He cannot be discharged on the ground of incompetency, negligence, etc., MERELY BECAUSE he fails
to employ the highest degree of skillfulness and care known in the trade, UNLESS • the contract of
employment expressly stipulates for such degree of skill and care; • the employee represents that he
possesses such. (St. Luke’s Medical Center, Inc. and Kuan vs. Notario. G.R. No. 152166, October 20, 2010)
- Gross Negligence
Gross negligence has been defined as the want or absence of even slight care
or diligence as to amount to a reckless disregard of the safety of the person
or property. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them. Put differently, gross negligence is
characterized by want of even slight care, acting or omitting to act in a
situation where there is a duty to act, not inadvertently, but willfully and
intentionally with a conscious indifference to consequences insofar as other
persons may be affected. (Systems and Plan Integrator and Development Corp. v.
Ballesteros, G.R. No. 217119, April 25, 2022, J. Hernando)
3.2. Examples
§Failure of employee to report to his superiors the problems he encountered with the
side-seal machine he was assigned to operate
§Excessive absences and
§Slothful work attitude, and dismal performance that led to missed shipments, delayed
deliveries, and lost clientele
§Failure of employee to turn over his functions to someone capable of performing the
vital tasks which he could not effectively perform or undertake because of his heart
ailment or condition

3.3. Poor Performance – a just cause if it amounts to gross and habitual neglect of duties
§ Universal Staffing Services, Inc. v. NLRC, G.R. No. 177576, July 21, 2008
-
Besides, even assuming that Morales' performance was unsatisfactory, USSI
failed to demonstrate that her alleged poor performance amounted to gross and
habitual neglect of duty, which would justify her dismissal.

The principle echoed and reechoed in jurisprudence is that the onus of proving
that the employee was dismissed for a just cause rests on the employer,[14] and
the latter's failure to discharge that burden would result in a finding that the
dismissal is unjustified.[15]

3.4. Gross inefficiency – analogous to gross and habitual neglect of duties

- Inefficiency as a just cause for termination
A showing that a worker was inefficient in his/her work and negligent in his/her duties
may constitute a just cause for termination under Article 282(b) of the Labor Code, i.e.
gross and habitual neglect by the employee of his duties.
To show that dismissal resulting from inefficiency in work is valid, it must be shown that:
(a) the employer has set standards of conduct and workmanship against which the
employee will be judged;
(b) the standards of conduct and workmanship must have been communicated to the
employee; and
(c) the communication was made at a reasonable time prior to the employee’s
performance assessment.
This is similar to the law and jurisprudence on probationary employees, which allow
termination of the employee only when there is “just cause or when [the probationary
employee] fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his [or her]
engagement.” However, we do not see why the application of that ruling should be
limited to probationary employment.

3.5. Abandonment – a form of or akin to neglect of duty

Requisites
- Abandonment of employment is "the deliberate and unjustified refusal of an employee to
resume his employment." This requires:
1. the employee's failure to report for work or absence without valid or justifiable reason,
and
2. a clear intention to sever the employeremployee relationship. It is recognized that
abandonment is incompatible with the filing of a case for constructive dismissal. (ABSCBN
Corp. v. Magno, G.R. No. 203876, March 29, 2022)
Examples
§ Failure of employee to report for work after she was ordered to explain the anomalous
truck-rental service she arranged and to liquidate company funds in her possession,
and then she filed the complaint to pre-empt further investigation on her dishonest and
fraudulent acts that led to her dismissal
§ Employee transferred to new assignment but did not report for work

Filing of complaint for illegal dismissal may negate abandonment, but it does not
disprove abandonment
§ Torreda v. Investment and Capital Corporation of the Philippines, G.R. No. 229881,
September 5, 2018
- It is a settled doctrine that the filing of a complaint for illegal dismissal
is inconsistent with abandonment of employment. An employee who
takes steps to protest his dismissal cannot logically be said to have
abandoned his work. The filing of such complaint is proof enough of his
desire to return to work, thus, negating any suggestion of
abandonment.[32]

Failure to comply with the two-notice rule indicates that the defense of abandonment
was a mere afterthought

4. Fraud (Labor Code, Art. 297(c) [282]; DO 147-15, S4[i])

- (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
4.1. Examples
§ Employee reimbursing his family’s personal travel expenses out of company funds
§ Falsification of time cards constitutes serious misconduct and dishonesty or fraud

5. Willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative/Loss of confidence
5.1. Requisites
Loss of trust and confidence may be a just case for termination of employment only upon proof that:
1. the dismissed employee occupied a position of trust and confidence; and
2. the dismissed employee committed "an act justifying the loss of trust and confidence”. (Systems and
Plan Integrator and Development Corp. v. Ballesteros, G.R. No. 217119, April 25, 2022, Per J. Hernando)
5.2. Guidelines
§ Villanueva, Jr. v. NLRC, G.R. No. 176893, June 13, 2012
- As a safeguard against employers who indiscriminately use “loss of trust and confidence” to
justify arbitrary dismissal of employees, the Court, in addition to the above elements, came up
with the following guidelines for the application of the doctrine:
(1) loss of confidence should not be simulated;
(2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified;
(3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
(4) it must be genuine, not a mere afterthought, to justify an earlier action taken in bad faith.[21]

5.4. Rules to determine whether loss of trust and confidence may validly be used as a
justification in termination cases
§ Bravo v. Urios College (now Father Saturnino Urios University), G.R. No. 198066, June
7, 2017, quoting Caoile v. NLRC, 359 Phil. 399 (1998)
- Different rules apply in determining whether loss of trust and confidence may
validly be used as a justification in termination cases. Managerial employees are
treated differently than fiduciary rank-and-file employees. [109] In Caoile v. National
Labor Relations Commission:[110]

[W]ith respect to rank-and-file personnel, loss of trust and confidence as ground

for valid dismissal requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and accusations by the
employer will not be sufficient. But, as regards a managerial employee, mere
existence of a basis for believing that such employee has breached the trust of
his employer would suffice for his dismissal. Hence, in the case of managerial
employees, proof beyond reasonable doubt is not required, it being sufficient
that there is some basis for such loss of confidence, such as when the employer
 has reasonable ground to believe that the employee concerned is responsible for
the purported misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded by his position.

5.5. Examples
§Mailing coordinator entrusted with property, instrumental in the transacting group who
used fake receipts, and failed to notice them
§Employees making it seem that they worked with greater speed and efficiency than
they actually did, resulting in clear discrepancy between the time goals purportedly
accomplished and the regular time goals, as recorded; and the act of misleading the
company which shows the employees’ inability to continue working for it, and which
gave them undue advantages in terms of their reputation in the company and thus their
treatment by peer and superior alike
§Comptroller’s act in assigning to himself a higher salary rate without proper
authorization
§Cost control supervisor failure to remit cash sales proceeds
§District manager, who was employed to handle pharmaceutical products for distribution
to medical practitioners and sale to drug outlets, placed on company property a political
“thank you” note with the intention of distributing them to his father’s supporters, without any
permission from the company
§Habitual absence of managerial employee
§Head supervisor initiating and leading a boycott

6. 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 (Labor Code, Art. 297(d)
[282])
6.1. Requisites (DO 147-15, S5.2[f])
- (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.

7. Other analogous causes (Labor Code, Art. 297(e) [282])

7.1. Requisites (DO 147-15, S5.2[g])
(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.

7.2. Examples
§ Gross inefficiency is analogous to gross and habitual neglect of duty
§ Employee’s attitude problem is analogous to loss of trust and confidence
§ Unreasonable behavior and unpleasant deportment in dealing with the people the
employee closely works with in the course of employment is analogous to the other
“just causes” under the Labor Code

7.3. Not analogous unless expressly specified in the company rules and regulations or
policies (DO 147-15, S5.2[g])
 - No act or omission shall be considered as analogous cause unless expressly
specified in the company rules and regulations or policies.
-

C. SUBSTANTIVE DUE PROCESS – AUTHORIZED CAUSES (Labor Code, Arts. 298 [283] &
299 [284])

1. Installation of labor-saving devises (Labor Code, Arts. 298 [283])

1.1. Requisites (DO 147-15, S5.4[a])
- 1. There must be introduction of machinery, equipment or other devices;
2. Such introduction must be done in good faith;
3. The purpose for such introduction must be valid (e.g., to save on cost; enhance efficiency; 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; 5. There must be fair
and reasonable criteria in selecting employees to be terminated. (DOLE Order No. 147-15)

1.2. Effect – position becoming redundant

2. Redundancy (Labor Code, Arts. 298 [283])

- Redundancy exists when the service of an employee is in excess of what is
reasonably demanded by the actual requirements of the business. (Ilaw at
Buklod ng Manggagawa sa General Milling Corp. v. General Milling Corp., G.R. No.
216787 , February 15, 2022) Redundancy means an excess position. It is not the
way to remove an unwanted occupant. If the functions of the position are still
needed but the position-holder needs to be removed, the cause of the
removal should be valid and the proper procedure should be observed.
(Manggawa ng Komunikasyon sa Pilipinas vs. PLDT, Inc., G.R. No. 190389, April 19,
2017)

2.1. Requisites
- Elements:
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;
5. There must be 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. (DOLE Order No. 147- 15)
2.2. Fair and reasonable criteria in ascertaining what positions are to be declared
redundant
§ Yulo v. Concentrix Daksh Services Philippines, Inc., G.R. No. 235873, January 21,
2019
- the Court explained that fair and reasonable criteria may include but are not
limited to the following: "
(a) less preferred status (e.g., temporary employee);
(b) efficiency; and
(c) seniority.
The presence of these criteria used by the employer shows good faith on its
part and is evidence that the implementation of redundancy was
painstakingly done by the employer in order to properly justify the
termination from the service of its employees

2.3. Creation of new positions or the hiring of additional employees is inconsistent with the
termination on the ground of redundancy
§ Aguilera v. Coca-Cola Femsa Philippines, Inc., G.R. No. 238941, September 29, 2021
- On this score, Abbott Laboratories (Philippines), Inc. v. Torralba56 ordained that an
employer's subsequent creation of new positions or the hiring of additional
employees is inconsistent with the termination on the ground of redundancy; it
exhibits the employer's intent to circumvent the employee's right to security of
tenure.In Abbott, the company merged its PediaSure Division and Medical Nutrition
Division pursuant to a study which recommended the restructuring of the sales force
of its Specialty Nutrition Group. The Medical Nutrition Division allegedly generates a
larger share in the Philippine market, as compared to the PediaSure Division, and for
this reason Abbott retained the structure of the former division. As a result, Almazar,
Navarre and Torralba's respective positions as National Sales Manager and Regional
Sales Managers under the PediaSure Division were declared redundant.
-

2.4. Abolished position may be contracted out

2.5. “Last-In, First-Out (LIFO) Rule” when applicable (DO No. 147-15, S5.4 [last
paragraph])
- Last One Hired is the First One Fired" This rule applies only to cases of labor-saving devices,
redundancy and retrenchment.

2.6. LIFO, which has no basis in law, does not exclude other relevant factors in determining
cost efficient measures and in choosing the employees who will be retained or
separated
- - Exceptions: 1. When an employee volunteers to be separated from employment (Maya
Farms Employees Organization vs. NLRC, G.R. No. 106256, December 28, 1994) 2. Determination of
the Employees to be Retrenched Is in Accord with the CBA. (Mendros, Jr. v. Mitsubishi Motors
Phils. Corp., G.R. No. 169780, February 16, 2009)

2.7. Nature of work and experience must be considered despite LIFO

§ Maya Farms Employees Organization v. NLRC, G.R. No. 106256, December 28, 1994
- The nature of work of each assistant superintendent as well as experience were taken into
account by management. Such criteria was not shown to be whimsical nor carpricious

2.8. The law did not require junior employees to be dismissed first
§ Tierra International Construction Corporation v. NLRC, G.R. No. 88912, July 3, 1992
- Neither does the law nor the stipulations of the employment contract here involved require that
junior employees should first be terminated. 14 In redundancy, what is looked into is the position
itself, the nature of the services performed by the employee and the necessity of such position.
As held in Wiltshire File Co., Inc. vs. NLRC: 15 The determination of the continuing necessity of a
particular officer or position in a business corporation is management's prerogative, and the
courts will not interfere with the exercise of such so long as no abuse of discretion or merely
arbitrary or malicious action on the part of management is shown.

2.9. Failure to consider seniority renders the retrenchment invalid

§ Emcor Incorporated v. Sienes, G.R. No. 152101, September 8, 2009, cited in La
Consolacion College of Manila v. Pascua, G.R. No. 214744, March 14, 2018
- La Consolacion's disregard of respondent's seniority and preferred status relative to a part-time
employee indicates its resort to an unfair and unreasonable criterion for retrenchment. Indeed, it
may have made mathematical sense to dismiss the highest paid employee first. However,
appraising the propriety of retrenchment is not merely a matter of enabling an employer to
augment financial prospects. It is as much a matter of giving employees their just due. Employees
who have earned their keep by demonstrating exemplary performance and securing roles in their
respective organizations cannot be summarily disregarded by nakedly pecuniary considerations.
The Labor Code's permissiveness towards retrenchments aims to strike a balance between
legitimate management prerogatives and the demands of social justice.

3. Retrenchment (Labor Code, Arts. 298 [283])

- Reduction of personnel usually due to financial returns so as to cut down on costs of operations in terms
of salaries and wages to prevent bankruptcy of the company. (

3.1. Requisites
§ Waterfront Cebu City Hotel v. Jimenez, G.R. No. 174214, June 13, 2012
- Retrenchment is subject to faithful compliance with the substantative and procedural
requirements laid down by law and jurisprudence. For a valid retrenchment, the
19

following elements must be present:

- (1) That retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual
and real, or if only expected, are reasonably imminent as perceived objectively and in
good faith by the employer;
- (2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment;
- (3) That the employer pays the retrenched employees separation pay equivalent to
one (1) month pay or at least ½ month pay for every year of service, whichever is
higher;
- (4) That the employer exercises its prerogative to retrench employees in good faith for
the advancement of its interest and not to defeat or circumvent the employees’ right
to security of tenure; and
- (5) That the employer used 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.
-

3.2. Meaning of “to prevent losses” in Article 298 of the Labor Code
§ Revidad v. NLRC, G.R. No. 111105, June 27, 1995
- the phrase "to prevent losses" means that retrenchment or termination of the services of
some employees is authorized to be undertaken by the employer sometime before the
anticipated losses are actually sustained or realized. It is not, in other words, the intention of
the lawmaker to compel the employer to stay his hand and keep all his employees until after
losses shall have in fact materialized. If such an intent were expressly written into the law,
that law may well be vulnerable to constitutional attack as unduly taking property from one
man to be given to another.
- At the other end of the spectrum, it seems equally clear that not every asserted possibility of
loss is sufficient legal warrant for the reduction of personnel. In the nature of things, the
 possibility of incurring losses is constantly present, in greater or lesser degree, in the
carrying on of business operations, since some, indeed many, of the factors which impact
upon the profitability or viability of such operations may be substantially outside the control of
the employer.
-

3.3. Independently audited financial statements higher evidentiary value to prove serious
business losses

3.4. Presentation of audited financial statements not the only means to establish serious
business losses

3.5. Mere allegations of a global economic crisis insufficient to prove serious business
losses

3.6. Judicial notice may be taken of the financial losses

3.7. Redundancy differs from retrenchment

§ Sebuguero v. NLRC, G.R. No. 115394, September 27, 1995
- Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of
factors, such as overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise. 10

- Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the
termination of employment initiated by the employer through no fault of the employee's and
without prejudice to the latter, resorted to by management during periods of business
recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack
of orders, shortage of materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of automation. Simply put, it is 11

an act of the employer of dismissing employees because of losses in the operation of a

business, lack of work, and considerable reduction on the volume of his business, a right
consistently recognized and affirmed by this Court. 12

4. Closure or cessation of business (Labor Code, Arts. 298 [283])

- ART. 298. [283] Closure of Establishment and Reduction of Personnel. – The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be 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 at least six (6) months shall be
considered one (1) whole year.

4.1. Requisites
§ Unera v. Shin Heung Electrodigital, Inc., G.R. No. 228328, March 11, 2020, citing DO
147-15, S5.4(d)
- Meanwhile, closure or cessation of business is the complete or partial cessation of the
operations and/or shut-down of the establishment of the employer. It is carried out to
[29]
either stave off the financial ruin or promote the business interest of the employer. To
be a valid ground for termination, the following must be present:

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.[30]

4.2. Closure or cessation of operation may either be due to serious business losses or
financial reverses or any other underlying reason or motivation

4.3. Guidelines
§ Manila Polo Club Employees’ Union (MPCEU) FUR-TUCP v. Manila Polo Club, Inc.,
G.R. No. 172846, July 24, 2013
1. - Closure or cessation of operations of establishment or undertaking may
either be partial or total.
2. Closure or cessation of operations of establishment or undertaking may or
may not be due to serious business losses or financial reverses. However, in
both instances, proof must be shown that: (1) it was done in good faith to
advance the employer's interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid agreement;
and (2) a written notice on the affected employees and the DOLE is served at
least one month before the intended date of termination of employment.
3. The employer can lawfully close shop even if not due to serious business
losses or financial reverses but separation pay, which is equivalent to at
least one month pay as provided for by Article 283 of the Labor Code, as
amended, must be given to all the affected employees.
4. If the closure or cessation of operations of establishment or undertaking is
due to serious business losses or financial reverses, the employer must
prove such allegation in order to avoid the payment of separation pay.
Otherwise, the affected employees are entitled to separation pay.
5. The burden of proving compliance with all the above-stated falls upon the
employer.
4.4. Retrenchment differs from closure of a business or undertaking

5. Disease as a valid ground for termination (Labor Code, Arts. 299 [284])
ART. 299. [284] Disease as Ground for Termination. – An employer may terminate the services of an employee who
has been found to be suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as one (1) whole year.

5.1. Requisites (DO 147-15, S5.4[e])

- e) Disease. To be a valid ground for termination, the following must be present:

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 Rul [33] shall apply except when an employee volunteers to be separated from
employment.

5.2. The phrase “prejudicial to his health as well as to the health of his co-employees”
construed
§ Deoferio v. Intel Technology Philippines, Inc., G.R. No. 202996, June 18, 2014
- the Court liberally construed the phrase aprejudicial to his health as well as to the health of his
co-employeesa to mean aprejudicial to his health or to the health of his co-employees.a We did
not limit the scope of this phrase to contagious diseases for the reason that this phrase is
preceded by the phrase aany diseasea under Article 284 of the Labor Code5.3. Absence of
certification from a competent public health authority renders the dismissal
void and illegal

D. OTHER LAWFUL CAUSES OF TERMINATION

1. Grounds under company policies (DO No. 147-15, S6)
- Section 6. Other Causes of Termination. In addition to Section 4, the 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]

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.
-
2. Grounds under the CBA (DO 147-15, S7)
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.

3. Probationary employee’s failure to qualify as regular employee (Labor Code, Art. 296 [281]
- ART. 296. [281] Probationary Employment. – Probationary employment shall not exceed six (6) months from the date
the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he
fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.

4. Union officer who knowingly participating in an illegal strike, and union member who knowingly
participated in the commission of illegal acts during a strike (Labor Code, Art. 279(a) [264])
a) No labor organization or employer shall declare a strike or lockout without first having bargained collectively in
accordance with Title VII of this Book or without first having filed the notice required in the preceding Article or
without the necessary strike or lockout vote first having been obtained and reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after
certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout.
Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost
his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient
ground for termination of his employment, even if a replacement had been hired by the employer during such lawful
strike.

5. Defiance of assumption or certification order from the DOLE Secretary

§ Manila Hotel Employees Association v. Manila Hotel Corporation, 517 SCRA 349
(2007)
§ Philcom Employees Union v. Philippine Global Communications, 495 SCRA 214
(2006)
6. Defiance of NLRC’s return-to-work order implementing the DOLE Secretary’s certification order
§ Sarmiento v. Tuico, 162 SCRA 676 (1988)
7. Totality of Infractions Principle
§ Merin v. NLRC, G.R. No. 171790, October 17, 2008
7.1. Principle presupposes employee as guilty of new violation
§ Villanueva v. Ganco Resort and Recreation, Inc., G.R. No. 227175, January 8, 2020
7.2. Previous acts must be established in accordance with the requirements of procedural
due process, and employee must have been penalized
§ Maula v. Ximex Delivery Express, Inc., G.R. No. 207838, January 25, 2017
E. PROCEDURAL DUE PROCESS
1. Dismissal due to just causes (Labor Code, Art. 292(b) [277]; DO 147-15, S5.1.)
1.1. Twin Notice and Hearing
§ Bicol Isarog Transport System, Inc. v. Relucio, G.R. No. 234725, September 16,
2020
§ King of Kings Transport, Inc. v. Mamac, G.R. No. 166208, June 29, 2007
§ Perez v. Philippine Telegraph and Telephone Company, G.R. No. 152048, April 7,
2009
§ Central Azucarera de Bais v. Heirs of Zuelo Apostol, G.R. No. 215314, March 14,
2018
§ Aluag v. BIR Multi-Purpose Cooperative, G.R. No. 228449, December 6, 2017
2. Dismissal due to authorized causes (Labor Code, Arts. 292(b) [277], 298 [283] & 299 [284];
DO 147-15, 5.3)
2.1. Notices
§ Marc II Marketing, Inc. v. Joson, G.R. No. 171993, December 12, 2011
§ Deoferio v. Intel Technology Philippines, Inc., G.R. No. 202996, June 18, 2014