IV. B.

2 Authorized Causes
Article 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.
Edge Apparel v. NLRC, G.R. No. 121314, February
12, 1998
Doctrine: (there is only one doctrine here)
Retrenchment, in contrast to redundancy, is an
economic ground to reduce the number of
employees. In order to be justified, the termination of
employment by reason of retrenchment must be due
to business losses or reverses which are serious,
actual and real. XXX The payment of separation pay
would be due when a dismissal is on account of an
authorized cause. The amount of separation pay
depends on the ground for the termination of
employment. A dismissal due to the installation of
labor saving devices, redundancy (Article 283) or
disease (Article 284), entitles the worker to a
separation pay equivalent to "one (1) month pay or
at least one (1) month pay for every year of service,
whichever is higher." When the termination of
employment is due to retrenchment to prevent
losses, or to closure or cessation of operations of
establishment or undertaking not due to serious
business losses or financial reverses, the separation
pay is only an equivalent of "one (1) month pay or at
least one-half (1/2) month pay for every year of
service, whichever is higher." In the above instances,
a fraction of at least six (6) months is considered as
one (1) whole year.
In this case, the Labor Arbiter and the NLRC both
concluded that there had been a valid ground for the
retrenchment of private respondents. The documents
presented in evidence were found to "conclusively
show that (petitioner) suffered serious financial
losses." The general standards or elements needed
for the retrenchment to be valid i.e., that the
losses expected are substantial and not merely de
minimis in extent; that the expected losses are
reasonably imminent such as can be perceived
objectively and in good faith by the employer; that
the retrenchment is reasonably necessary and likely
to effectively prevent the expected losses; and that
the imminent losses sought to be forestalled are

substantiated were adequately shown in the

present case. The findings of the Labor Arbiter and
the NLRC would negate any impression that
petitioner was guilty of bad faith or misdoing in its
retrenchment policy.
XXX
The NLRC, unfortunately, went further by holding that
the dismissal of private respondents could likewise
be considered to have been occasioned by
redundancy since it was only private respondents'
line of work which was phased out by petitioner. (so
no additional payment of separation pay)
The Court agrees with the Solicitor General that here
the NLRC has gravely abused its discretion. The law
acknowledges the right of every business entity to
reduce its work force if such measure is made
necessary or compelled by economic factors that
would otherwise endanger its stability or existence.
In exercising its right to retrench employees, the firm
may choose to close all, or a part of, its business to
avoid further losses or mitigate expenses
Magnolia Dairy v. NLRC, G.R. No. 114952, January
29, 1996
DOCTRINE:
The law authorizes an employer, like the herein
petitioner, to terminate the employment of any
employee due to the installation of labor saving
devices. The installation of these devices is a
management prerogative, and the courts will not
interfere with its exercise in the absence of abuse of
discretion, arbitrariness, or maliciousness on the part
of management, as in this case. Nonetheless, this did
not excuse petitioner from complying with the
required written notice to the employee and to the
Department of Labor and Employment (DOLE) at
least one month before the intended date of
termination. This procedure enables an employee to
contest the reality or good faith character of the
asserted ground for the termination of his services
before the DOLE.
Arabit v. Jardine Pacific, G.R. No. 181719, April 21,
2014
PRINCIPLE:
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
over hiring of workers, decreased volume of
business, or dropping of a particular product line or
service
activity
previously
manufactured
or
undertaken by the enterprise.
Retrenchment is the termination of employment
initiated by the employer through no fault of the
employees 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 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.
Manila Polo Club Employees v. Manila Polo Club,
G.R. No. 172846, July 24, 2013
Doctrine:
Unlike retrenchment, closure or cessation of
business, as an authorized cause of termination of
employment, need not depend for validity on
evidence of actual or imminent reversal of the
employer's fortune.
Closure or cessation of business is a
management prerogative. - The closure of the F &
B Department was due to legitimate business
considerations, a resolution which the Court has no
business interfering with. We have already resolved
that the characterization of the employee's service as
no longer necessary or sustainable, and therefore,
properly terminable, is an exercise of business
judgment on the part of the employer; the
determination of the continuing necessity of a
particular officer or position in a business corporation
is a management prerogative, and the courts will not
interfere with the exercise
of such so long as no abuse of discretion or arbitrary
or malicious action on the part of the employer is
shown.
o (RATIONALE: For any bona fide reason, an employer
can lawfully close shop anytime. Just as no law forces
anyone to go into business, no law can compel
anybody to continue the same. It would be stretching
the intent and spirit of the law if a court interferes
with management's prerogative to close or cease its
business operations just because the business is not
suffering from any loss or because of the desire to
provide the workers continued employment.)
Summary of the law of closure or cessation
of business operations as an authorized cause
for termination of employment:
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.

Article
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 coemployees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to onehalf (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.
Book VI, Sec. 8, Implementing Rules
SECTION 8. Disease as a ground for dismissal.
Where the employee suffers from a disease and his
continued employment is prohibited by law or
prejudicial to his health or to the health of his coemployees, the employer shall not terminate his
employment unless there is a certification by
competent public health authority that the disease is
of such nature of at such a stage that it cannot be
cured within a period of six (6) months even with
proper medical treatment. If the disease or ailment
can be cured within the period, the employee shall
not terminate the employee but shall ask the
employee to take a leave of absence. The employer
shall reinstate such employee to his former position
immediately upon the restoration of his normal
health.
Deoferio v. Intel Technology, G.R. No. 202996, June
18, 2014
In the current case, we agree with the CA that Dr.
Lee's psychiatric report substantially proves that
Deoferio was suffering from schizophrenia, that his
disease was not curable within a period of six months
even with proper medical treatment, and that his
continued employment would be prejudicial to his
mental
health.
This
conclusion
is
further
substantiated by the unusual and bizarre acts that
Deoferio committed while at Intel's
employ.
The
twin-notice
requirement
applies
to
terminations under Article 284 of the Labor
Code. The Labor Code and its IRR are silent on the
procedural due process required in terminations due
to disease. Despite the seeming gap in the law,
Section 2, Rule 1, Book VI of the IRR expressly states
that the employee should be afforded procedural due
process in all cases of dismissals.
In Sy v. Court of Appeals and Manly Express, Inc. v.
Payong, Jr. , promulgated in 2003 and 2005,
respectively, the Court finally pronounced the rule
that the employer must furnish the employee two
written notices in terminations due to disease,
namely:
(1) the notice to apprise the employee of the ground
for which his dismissal is sought; and
(2) the notice informing the employee of his
dismissal, to be issued after the employee has been
given reasonable opportunity to answer and to be
heard on his defense.
These rulings reinforce the State policy of protecting
the workers from being terminated without cause
and without affording them the opportunity to
explain their side of the controversy.

IV.B.3.a,b
3. Due Process
a. Twin-notice requirement pg 413 Chan
b. Hearing; meaning of opportunity to be
heard
King of Kings Transport v. Mamac, G.R. No. 166208,
June 29, 2007
DOCTRINE:
The following should be considered in terminating
the services of employees:
(1) The first written notice to be served on the
employees should contain the specific causes or
grounds for termination against them, and a directive
that the employees are given the opportunity to
submit their written explanation within a reasonable
period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that
management must accord to the employees to
enable them to prepare adequately for their defense.
This should be construed as a period of at least five
(5) calendar days from receipt of the notice to give
the employees an opportunity to study the
accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint.
Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses,
the notice should contain a detailed narration of the
facts and circumstances that will serve as basis for
the charge against the employees. A general
description of the charge will not suffice. Lastly, the
notice should specifically mention which company
rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the
employees.
(2) After serving the first notice, the employers
should schedule and conduct a hearing or
conference wherein the employees will be
given the opportunity to:
(1) explain and clarify their defenses to the
charge against them;
(2) present evidence in support of their
defenses; and
(3) rebut the evidence presented against them
by the management. During the hearing or
conference, the employees are given the
chance to defend themselves personally, with
the assistance of a representative or counsel
of their choice. Moreover, this conference or
hearing could be used by the parties as an
opportunity to come to an amicable
settlement.
(3) After determining that termination of employment
is justified, the employers shall serve the employees
a written notice of termination indicating that:
(1) all circumstances involving the charge against the
employees have been considered; and (2) grounds
have been established to justify the severance of
their employment.
Unilever Phils. V. Rivera, G.R. No. 201701, June 3,
2013

In all cases of termination of employment, the

following standards of due process shall be
substantially observed.
I. For termination of employment based on just
causes as defined in Article 282 of the Code:
(a) A written notice served on the employee
specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity
within which to explain his side;
(b) A hearing or conference during which the
employee concerned, with the assistance of counsel
if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut
the evidence presented against him; and
(c) A written notice of termination served on the
employee indicating that upon due consideration of
all the circumstance, grounds have been established
to justify his termination.
Perez v. Philippine Telegraph, G.R. No. 152048, April
7, 2009
Doctrine:
The guiding principles in connection with the
hearing requirement in dismissal cases:
(a) "ample opportunity to be heard" means any
meaningful opportunity (verbal or written) given to
the employee to answer the charges against him and
submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and
reasonable way.
(b) 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.
(c) the "ample opportunity to be heard" standard in
the Labor Code prevails over the "hearing or
conference" requirement in the implementing rules
and regulations.
Esguerra v. Valle Verde, G.R. No. 173012, June 13,
2012
Doctrines:
On the Procedural aspect of Esguerra dismissal The law does not require that an intention to
terminate one employment should be included in the
first notice. It is enough that employees are properly
apprised of the charges brought against them so they
can properly prepare their defenses; it is only during
the second notice that the intention to terminate one
employment should be explicitly stated.
On the Substantive aspect of Esguerra dismissal 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.
See Abbott v. Alcaraz, G.R. No. 192571, July 23,
2013
See Deoferio v. Intel Technology, G.R. No. 202996,
June 18, 2014
See Agabon v. NLRC, G.R. No. 158693, November
17, 2004

Jaka Food v. Pacot, G.R. No. 151378, March 28, 2005

Doctrine:
if the dismissal is based on a just cause under
Article 282 but the employer failed to comply with
the notice requirement, the sanction to be imposed
upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable
to the employee; and
if the dismissal is based on an authorized cause
under Article 283 but the employer failed to comply
with the notice requirement, the sanction should be
stiffer because the dismissal process was initiated by
the employers exercise of his management
prerogative.
IV. C. Reliefs for Illegal Dismissal pg 420 Chan
Article 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)
1. Reinstatement
a. Pending appeal
Article 223. Appeal. Decisions, awards, or orders of
the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties
within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:
If there is prima facie evidence of abuse of discretion
on the part of the Labor Arbiter;
If the decision, order or award was secured through
fraud or coercion, including graft and corruption;
If made purely on questions of law; and
If serious errors in the findings of facts are raised
which would cause grave or irreparable damage or
injury to the appellant.
In case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the
Commission in the amount equivalent to the
monetary award in the judgment appealed from.
In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is
concerned, shall immediately be executory,
even pending appeal. The employee shall either
be admitted back to work under the same
terms and conditions prevailing prior to his
dismissal or separation or, at the option of the

employer, merely reinstated in the payroll. The

posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.
To discourage frivolous or dilatory appeals, the
Commission or the Labor Arbiter shall impose
reasonable penalty, including fines or censures, upon
the erring parties.
In all cases, the appellant shall furnish a copy of the
memorandum of appeal to the other party who shall
file an answer not later than ten (10) calendar days
from receipt thereof.
The Commission shall decide all cases within twenty
(20) calendar days from receipt of the answer of the
appellee. The decision of the Commission shall be
final and executory after ten (10) calendar days from
receipt thereof by the parties.
Any law enforcement agency may be deputized by
the Secretary of Labor and Employment or the
Commission in the enforcement of decisions, awards
or orders.
Art 263 (g) When, in his opinion, there exists a labor
dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest,
the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify
the same to the Commission for compulsory
arbitration. Such assumption or certification shall
have the effect of automatically enjoining the
intended or impending strike or lockout as specified
in the assumption or certification order. If one has
already taken place at the time of assumption or
certification, all striking or locked out employees shall
immediately return-to-work and the employer shall
immediately resume operations and readmit all
workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary
of Labor and Employment or the Commission may
seek the assistance of law enforcement agencies to
ensure compliance with this provision as well as with
such orders as he may issue to enforce the same.
Art. 277 (b) Subject to the constitutional right of
workers to security of tenure and their right to be
protected against dismissal except for a just and
authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code,
the employer shall furnish the worker whose
employment is sought to be terminated a written
notice containing a statement of the causes for
termination and shall afford the latter ample
opportunity to be heard and to defend himself with
the assistance of his representative if he so desires in
accordance with company rules and regulations
promulgated pursuant to guidelines set by the
Department of Labor and Employment. 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. The burden of proving that the
termination was for a valid or authorized cause shall
rest on the employer. The Secretary of the
Department of Labor and Employment may suspend

the effects of the termination pending resolution of

the dispute in the event of a prima facie finding by
the appropriate official of the Department of Labor
and Employment before whom such dispute is
pending that the termination may cause a serious
labor dispute or is in implementation of a mass layoff.
Article 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.
Article 286. When employment not deemed
terminated. The
bona-fide
suspension
of
the
operation of a business or undertaking for a period
not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not
terminate employment. In all such cases, the
employer shall reinstate the employee to his former
position without loss of seniority rights if he indicates

his desire to resume his work not later than one (1)
month from the resumption of operations of his
employer or from his relief from the military or civic
duty.
Mt. Carmel College v. Resuena, G.R. No. 173076,
October 10, 2007
Art. 223 of the Labor Code provides that
reinstatement is immediately executory even
pending appeal only when the Labor Arbiter himself
ordered the reinstatement. In this case, the original
Decision of Labor Arbiter Drilon did not order
reinstatement. Reinstatement in this case was
actually ordered by the NLRC, affirmed by the
Court of Appeals. The order of Labor Arbiter Pura
on31 January 2005 directing reinstatement was
issued after the Court of Appeals Decision dated 17
March 2004 which affirmed the NLRCs order of
reinstatement.
Thus,
Art.
223
finds
no
application in the instant case
b. Separation Pay in lieu of
Reinstatement
2. Backwages
a. Computation
b. Limited Backwages