Philippine Labor Laws Authorized Causes for Dismissal of Employee Employee Discipline and Termination The two most commonly used grounds for termination of employee are the Authorized Causes under Article 283 and 284 of the Labor Code, and the Just Causes under Article 282. Below are the authorized causes for termination of employment. As maybe broadly defined, authorized causes for dismissal of employee refer to those lawful grounds for termination which in general do not arise from fault or negligence of the employee. “Authorized causes” are distinguished from “just causes” under Article 282 in that the latter are always based on acts attributable to the employee’s own fault or negligence.

1. AUTHORIZED
CAUSES OF
TERMINATION
Russel R. Romero

2. TERMINATION OF EMPLOYMENT
Authorized Causes for dismissal of
employee refer to those lawful
grounds for termination which in
general do not arise from fault or
negligence of the employee.
Just Causes are always based on
acts attributable to the employee’s
own fault or negligence.

3. TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
Article 297. Closure of Establishment and
Reduction of Personnel.
1. Installation of labor-saving devices
2. Redundancy
3. Retrenchment
4. Closing or cessation of operation

4. TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
1. Installation of labor-saving devices – Contemplates
the installation of machinery to effect economy and
efficiency in the method of production.
2. Redundancy – Exist where the
services of an employee are in
excess of what is reasonably
demanded by the actual
requirements of the enterprise.

5. TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
3. Retrenchment to prevent losses – Is an economic
ground to reduce the number of employees. Reduction
of personnel for the purpose of cutting down on costs of
operations in terms of salaries and wages.
4. Closure or cessation of operation – the closure of
business is a ground for the termination of the services
of an employee unless the closing is for the purpose of
circumventing pertinent provisions of labor code.

6. TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
5. Disease – 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
health of his co-employees.

7. TERMINATION OF EMPLOYMENT
Authorized Causes of Termination
Serving a written notice on the workers and
the Ministry of Labor and Employment at
least one (1) month before the intended
date thereof.

8. TERMINATION OF EMPLOYMENT
SEPARATION PAY
Installation of labor-saving device and redundancy
The affected worker shall be entitled to a
separation pay equivalent to at least his one
(1) month pay or at least (1) month pay for
every year of service

9. TERMINATION OF EMPLOYMENT
SEPARATION PAY
Retrenchment to prevent losses and in cases of
closures or cessation of operations.
The affected worker shall be entitled to a
separation pay shall be equivalent to one (1)
month pay or at least (1/2) month pay for every
year of service. A fraction of (6) months shall be
considered as (1) whole year.

10. CASES
General Milling Corporation vs. Viajar
January 30, 2013 - Redundancy
Redundancy still valid basis for terminating employee but
company needs to show “adequate proof” to establish good
faith.
• The supreme court held that Viajar’s termination was
illegal.
• Supreme court prove that redundancy was not enough
to show that termination was warranted.
• GMC did not exert efforts to present tangible proof
that it was experiencing business slow down.

11. CASES
General Milling Corporation vs. Viajar
January 30, 2013 - Redundancy
• GMC failed to present evidence which could readily
show that the company’s declaration of redundant
positions was justified.
• Viajar presented evidence that GMC had been hiring
new employees while it was firing the old ones.
Negating the claim of redundancy.

12. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
PETITIONER
• Caparoso alleged that he was hired on November 8,
1998.
• Quindipan hired on intermittent basis since 1997 and
continuously working on August 1998.
• They were both dismissed from the service on October
8,1999.

13. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
RESPONDENT
• They were both hired on May 11, 1999 for three months
and then on a month to month basis.
• They terminated the said employees as a result of the
expiration of their contracts of employment on October
8, 1999

14. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
LABOR ARBITER
• The Labor Arbiter ruled that petitioners are regular
employees in the decision dated June 15, 2000.
• Declaring complainants to have been illegally
dismissed from employment.
• Respondents are hereby ordered to immediately
reinstate to their positions.

15. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
COURT OF APPEALS
• The Court of Appeals held that respondent’s manpower
requirement varies from month to month depending on
the demand from their clients for their products.
• Respondents employed petitioners for the purpose of
addressing a temporary manpower shortage.

16. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
The petition raises these issues:
1. Whether petitioners are regular employees of
respondents; and
2. Whether respondents are guilty of illegal dismissal.

17. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
Petitioners are not regular employees
Even if an employee is engaged to perform activities that
are necessary and desirable in the usual trade or
business of the employer. It does not preclude the fixing
of employment for a definite period.

18. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
Petitioners are not regular employees
1. The fixed period of employment was knowingly and
voluntarily agreed upon by the parties. That there was
no indication of force, duress or improper pressure
exerted on petitioners when they signed the contracts.
2. There was also no proof that respondents where
regularly engaged in hiring workers for work for a
minimum period of five months to prevent the
regularization of their employers.

19. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
Petitioners are not regular employees
3. Hence, they are employed for a total of five months.
Their employment did not even exceed six months to
entitle them to become regular employees.
4. The pay slip submitted by petitioners to prove their
prior employment are handwritten and indicates only
the date and amount of pay. They do not indicate the
name of the employer.

20. CASES
Composite Enterprises vs. Emilio M. Aparoso &
Joeve Quindipan – Retrenchment
Petitioners were not illegally dismissed from
employment
1. Petitioners terms of employment are governed by their
fixed term contracts and had expired. They were not
illegally dismissed from employment.
2. Petitioners employment did not exceed six months.

21. CASES
Zuellig Freight and Cargo Systems vs. NLRC
and San Miguel – Closure of Establishment
Facts
• Ronaldo San Miguel had been a checker / custom
representative of Zeta Brokerage Corp.
• On January 1994 he and other employees were
informed that Zeta would cease operations, and that
all affected employees including him would be
separated.
• Zeta informed him through a letter, of his termination
effective March 31, 1994.

22. CASES
Zuellig Freight and Cargo Systems vs. NLRC
and San Miguel – Closure of Establishment
Facts
• He allegedly accepted his separation pay subject to
the standing offer to be hired to his former position by
petitioner. On April 15, 1994, he was summarily
terminated.
• San Miguel filed a complaint for unfair labor practice,
illegal dismissal, non payment of salaries and moral
damages against Zeta.
• Zeta contended that the dismissal is for a just cause,
cessation of business operations.

23. CASES
Zuellig Freight and Cargo Systems vs. NLRC
and San Miguel – Closure of Establishment
Issue
Whether the dismissal due to alleged closure of business
operations is valid.

24. CASES
Zuellig Freight and Cargo Systems vs. NLRC
and San Miguel – Closure of Establishment
Ruling
No. The cessation of business operations by Zeta was not
a bona fide closure to be regarded as a valid ground for
termination of employment of San Miguel.
The amendments in the articles of incorporation of Zeta
to change the corporate name to Zuellig Freight and
Cargo Systems did not produce its dissolution as a
corporation.

25. CASES
Zuellig Freight and Cargo Systems vs. NLRC
and San Miguel – Closure of Establishment
Ruling
Thus, Zuellig is bound to respect and honor Zeta’s
obligation especially with the employees’ security of
tenure.

26. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Facts
• Eleazar Padillo was employed by the bank as its SA
Bookkeeper.
• Bank took out retirement/insurance plans for all its
employees in anticipation of its possible closure.
• Bank procured an insurance life plan in favor of Padillo
for a benefit amount to P100,000 which was set to
mature on July 11, 2009.
• On October 14, 2004, respondent Mark Oropeza the
President of the Bank, bought majority of stocks and
took over its management

27. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Facts
• During the Latter part of 2007 Padillo suffered mild
stroke due to hypertension that impaired his ability to
work.
• Padillo wrote a letter addressed to Oropeza expressing
his intention to avail of an early retirement package,
but his request remain unheeded.
• October 3, 2007, Padillo was separated from
employment due to his poor and failing health. Not
having received his claimed retirement benefits.

28. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Facts
• Padillo filed a complaint with the LA a complaint for the
recovery of unpaid retirement benefits. He asserted
that the bank had adopted a policy of granting its aging
employees early retirement packages.
• LA dismissed Padillo’s complaint but directed the bank
directed to pay him the amount P100,000 as financial
assistance.
• Padillo was disqualified to receive any benefits
because he was 55 years old when he resigned.

29. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Facts
• Padillo filed a complaint with the LA a complaint for the
recovery of unpaid retirement benefits. He asserted
that the bank had adopted a policy of granting its aging
employees early retirement packages.
• LA dismissed Padillo’s complaint but directed the bank
directed to pay him the amount P100,000 as financial
assistance.
• Padillo was disqualified to receive any benefits
because he was 55 years old when he resigned.

30. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Facts
• Padillo elevated the matter to NLRC which reversed
and set aside the LA’s ruling.
• The NLRC applied the Labor Code provision on
termination on the ground of disease, particularly
Article 297 – holding that while Padillo did resign he
did so only because of his poor health condition.
• It pronounced that separation pay on the ground of
disease should not be given to Padillo because he was
the one who initiated the severance of his
employment.

31. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Issue
Petitioner is entitled to
1. Separation pay
2. Retirement Benefits
Ruling
The labor code provision on termination on the ground
of disease does not apply in this case. Considering
that it was the petitioner and not the bank who severed
the employment the employment relations.

32. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Ruling
The clear import of Padillo’s letter and the fact that he
stopped working before the foregoing date and never
reported for work even thereafter show that it was
Padillo who voluntarily retired and that he was not
terminated by the Bank.
It is the employee who severs his employment ties, it
necessarily follows that petitioner’s claim for
separation pay must be denied.

33. CASES
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.
and Mark S. Oropeza – Disease and Retirement
Ruling
What remains applicable, however, is the Labor Code
provision on retirement [Article 300]. Simply stated, in the
absence of any applicable agreement, an employee must (1)
retire when he is at least sixty (60) years of age and (2) serve
at least (5) years in the company to entitle him/her to a
retirement benefit of at least one-half (1/2) month salary for
every year of service, with a fraction of at least six (6) months
being considered as one whole year. Notably, these age and
tenure requirements are cumulative and non-compliance with
one negates the employee's entitlement to the retirement
benefits.

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