812 SUPREME COURT REPORTS ANNOTATED

Illegal Dismissal

ANNOTATION

ILLEGAL DISMISSAL
By *
ALICIA GONZALEZ-DECANO

________________

One of the issues raised in the Durban Apartments case is:

„Was there Illegal Dismissal?‰
In this particular case, the Supreme Court ruled:

„x x x Wherefore, the dismissal of respondent for just cause is

DECLARED Valid. x x x‰

In order to comprehend more exhaustively the case at bar,

a definition of Illegal Dismissal is in order.
In the case of MERALCO vs. National Labor Relations
Commission and Manuel H. De los Santos (G.R. No.
153180, September 2, 2005, 469 SCRA 353) the Supreme
Court held:

„x x x When there is no showing of a clear and legal cause for

termination of employment the law considers the „case a matter of
illegal dismissal. Time and again we have said that for an
employeeÊs dismissal to be valid, two essential requisites must be
met: (a) the dismissal must be for a valid cause; and (b) employee
must be afforded due process. There being no valid cause proved by
petitioner for the dismissal of private respondent, the dismissal
should be deemed illegal. Hence, the first requirement is lacking. x
x x‰

The Law

Article 282 of the Labor Code provides:

_______________

* Ret. Judge, Law Professor, and Professional Lecturer, UST Graduate

School and Consultant (Law and Political Science Cluster).

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Illegal Dismissal

„An employee may terminate an employment for any of the

following causes:

(a) Serious misconduct or willful disobedience by the employee

of the lawful orders of his employer or representative in
connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed
in him by employer or duly authorized representative;
protection against acts inimical to its interest, accompany
has the right to dismiss its erring employees. An employer
cannot be compelled to continue in employment an
employee guilty of acts inimical to its interest, justifying
loss of confidence in him. The law does not impose unjust
situations on either labor or management. We therefore find
justification in the termination of private respondent Cesar
E. LadislaÊs employment by petitioner Mercury Drug
Corporation.‰

The Highest Tribunal further opined:

„x x x Under Article 282 (c) of the Labor Code, an employer must

terminate an employment for fraud or willful breach by the
employee of the trust reposed in him by his employer or his duly
authorized representative. Loss of confidence is established as a
valid ground for the dismissal of an employee. The law does not
require proof beyond reasonable doubt of the employeeÊs misconduct
to invoke such a justification. It is sufficient that there is some basis
for the loss of trust or that the employer has reasonable grounds to
believe that the employee is responsible for the misconduct and his
participation therein renders him unworthy of the trust and
confidence demanded of his position.‰

It was also held further that:

„x x x The eventual conviction of the employee who is prosecuted for

his misconduct is not indispensable to warrant his dismissal by his
employer. More specifically, an employee who has been exonerated
from a criminal charge of theft of gasoline on the basis of
technicality may still be dismissed from employment if the
employer has ample reason to mistrust him. His acquittal from the
criminal charge does not negate the existence of a ground for loss of
trust and confidence, with more reason should conviction for such
criminal charge fortify said mistrust. x x x

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814 SUPREME COURT REPORTS ANNOTATED

Illegal Dismissal

In Makati Haberdashery Inc., et al. vs. NLRC, et al. (G.R.

Nos. 83380-81, November 15, 1989, 179 SCRA 448), the
Supreme Court highlighted:

„x x x Assuming that such acts do not constitute abandonment of

their jobs as insisted by private respondents, their blatant
disregard of their employers memorandum is undoubtedly an open
defiance to the lawful orders of the latter, a justifiable ground for
termination of employment by the employer expressly provided for
in Article 283 (a) of the Labor Code as well as a clear indication of
guilt for the commission of acts to the interests of the employer. x x
x‰

The Supreme Court added:

The right to dismiss or otherwise impose disciplinary sanctions

upon an employer for just and valid cause, pertains in the first
place to the employer, as well as the authority to determine the (d)
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 and (e) Other causes analogous
to the foregoing.

The Right to Dismiss

The law in protecting the rights of the laborer, authorizes

neither oppression nor self-destruction of the employer.
While the Constitution is committed to the policy of social
justice and the protection of the working class, it should not
be supposed that every labor dispute will be automatically
decided in favor of labor. Management also has its own
rights, which, as such, are entitled to respect and
enforcement, in the interest of simple fair play. Out of its
concern for those with less privilege in life, the Supreme
Court has inclined more often than not toward the worker
and upheld his cause in his conflicts with the employer.
Such favoritism, however, has not blinded the Court to the
rule that justice is in every case for the deserving, to be
dispensed in the light of the established facts and
applicable law and doctrine. (Sosito v. Aguinaldo
Development Corporation, 156 SCRA 392, 396 [1987] cited
in the case of Mercury Drug Corporation vs. NLRC, G.R.
No. 75662, September 15, 1989, 177 SCRA 580)

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Illegal Dismissal

No employer may rationally be expected to continue in

employment a person whose lack of morals, respect and
loyalty to his employer, regard for his employerÊs rules and
appreciation of the dignity and responsibility of his office,
has so plainly and completely been bared. (Makati
Haberdashery, Inc., et al. vs. NLRC, et al., G.R. Nos. 83380-
81, November 15, 1989, 179 SCRA 448, cited by C.A.
Azucena, The Labor Code with Comments and Cases,
Volume II, Mandaluyong City and San Pablo City, 1999, p.
576.)
The rights of the company to dismiss its employees is a
measure of self-protection (Reyes vs. Minister of Labor, G.R.
No. 48705, February 9, 1989, 170 SCRA 134, cited by
Azucena, supra.) Relevant Cases.

1. In the case of Manila Electric Co. (Meralco) vs.

NLRC and Manuel De los Santos, supra, the
Supreme Court articulated among others:

„x x x In dismissal cases, the employer carries the burden of proving

that the dismissal is in order. Article 277 (b) of the Labor Code
states in no uncertain terms: ... The burden of proving that the
termination was for a valid cause or authorized cause shall rest on
the employer...

2. In Mercury Drug Corporation vs. NLRC, et al. (G.R.

 No. 75662, September 15, 1989, 177 SCRA 580),
supra, the Supreme Court mandated among others:

„x x x Dismissal of a dishonest employee is to the best interest not

only of management but also of labor. As a measure of self existence
of said cause in accordance with the norms of due process. x x x‰

3. Agabon, et al. vs. NLRC, Riviera, et al., G.R. No.

158693, November 17, 2004, 442 SCRA 573,
distinguishes two kinds of dismissal:

Dismissal based on just causes and Dismissal based on authorized

causes. The Supreme Court decreed:
„x x x Dismissals based on just causes contemplate acts or
omission attributable to the employee while dismissal based on au-

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Illegal Dismissal

thorized causes involve grounds under the Labor Code which

allow the employer to terminate employees. A termination for an
authorized cause requires payment of separation pay. When the
termination of employment is declared illegal, reinstatement and
full back-wages are mandated under Article 279. If reinstatement is
no longer possible where the dismissal was injust, separation pay
may be granted. x x x‰

The Highest Tribunal continued:

„x x x Procedurally, (1) if the dismissal is based on a just cause

under Article 282, the employer must give the employees two
written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment;
A notice specifying the grounds for which dismissal is sought a
hearing or an opportunity to be heard and after hearing or
opportunity to be heard, a notice of the decision to dismiss; and (2)
if the dismissal is based on authorized causes under Articles 283
and 284, the employer must give the employee and the Department
of Labor and Employment written notice 30 days prior to the
effectively of his separation.‰

From the foregoing rules, four possible situations may be

derived: (1) the dismissal is for a just cause under Article
282 of the Labor Code, for an authorized cause under
Article 283, or for health reasons under Article 284, and
due process was observed; (2) the dismissal is without just
cause or authorized cause but due process was observed; (3)
the dismissal is without just or authorized cause and there
was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed. In the
first situation, the dismissal is undoubtedly valid and the
employer will not suffer any liability. In the second and
third situations where the dismissals are illegal, Article
279 mandated that the employee is entitled to
reinstatement without loss of seniority rights and other
privileges and full backwages, inclusive of allowances, and
other benefits on their monetary equivalent computed from
the time the computation was not paid up to the time of
actual reinstatement. In the fourth situation, the dismissal
should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the
employer should be held

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Illegal Dismissal

liable for noncompliance with the procedural requirements

of due process. x x x‰

4. Grandspan Development Corporation vs. Bernardo

et al., G.R. No. 141464, September 21, 2005, 470
SCRA 461, illustrates among others, the procedure
on illegal dismissals.

Said the Supreme Court:

„x x x The law requires that an employee sought to be dismissed

must be served two written notices before termination of his
employment. The first notice is to apprise the employee of the
particular acts or omissions by reason of which his dismissal has
been decided upon; and the second notice is to inform the employee
of the employerÊs decision to dismiss him. Failure to comply with
the requirement of two notices makes the dismissal illegal. The
procedure is mandatory. Non-observance therefore renders the
dismissal of an employee illegal and void. Records show that
respondents were not served by petitioner with notice, verbal or
written, informing them of the particular acts for which their
dismissal is sought. Neither were they required to give their side
regarding the alleged serious misconduct imputed against them. We
thus sustain the Court of Appeals ruling that respondents were
deprived of both their substantive and procedural rights to due
process and, therefore, the termination of their employment is
illegal. x x x‰

5. Land and Housing Development Corporation and

ABV Rock Group vs. Esquil, G.R. No. 152012
September 30, 2005, 471 SCRA 488, elucidates
among others the doctrine on Illegal Dismissal:

Observed the Supreme Court:

„x x x An employee cannot be dismissed except for cause, as

provided by law, and only after due notice and hearing. Employees
who are dismissed without cause have the right to be reinstated
without loss of seniority rights and other privileges, and to be paid
full back wages, inclusive of allowances and other benefits, plus
proven damages. x x x‰

6. Electro System Industries Corporation vs. NLRC, et

al. (G.R. No. 165828, Ocober 5, 2005, 472 SCRA
199), reiterates the rulings in No. 3 (Agabon case,
supra) and No. 4 (Grandspan case, supra)

For purposes of emphasis. The law is again explicitly

discussed:

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Illegal Dismissal

„x x x In dismissing an employee, the employer has the burden of

proving that the former worker has been served two notices: (1) one
to apprise him of the particular acts or omission for which his
dismissal is sought, and (2) the other to inform him of his
employeeÊs decision to dismiss him. In Tan vs. NLRC, it was held
that the first notice must state that dismissal is sought for the act
or omission charged against the employee, otherwise the notice
cannot be considered sufficient compliance with the rules. (299
SCRA 169, 185) Also in Maquiling v. Philippine Tuberculosis
Society, Inc., it was stressed that the first notice must inform
outright the employee that an investigation will be conducted on
 the charges particularized therein, which, if proven, will result to
his dismissal. Such notice must not only contain a plain statement
of the charges of malfeasance or misfeasance but must categorically
state the effect on his employment if the charges are proven to the
true. (G.R. No. 143384, February 4, 2005, 450 SCRA, 477.)‰

The rationale for this rule was explained by the Court as

follows:

„x x x This notice will afford the employee an opportunity to avail of

all defenses and exhaust all remedies to refute the allegations
hurled against him for what is at stake is his very life and limb, his
employment, Otherwise, the employee may just disregard the notice
as a warning without any disastrous consequence to be anticipated.
Absent such statement, the first notice falls short of the
requirement of due process. OneÊs work is everything, thus, it is not
too exacting to impose this strict requirement on the part of the
employer before the dismissal process be validly effected. This is in
consonance with the rule that all doubts in the implementation and
interpretation of the provisions of the Labor Code, including its
implementing rules and regulations, shall be resolved in favor of
labor. x x x‰

In the instant case, the first notice issued by the petitioner

fell short of the requirement of the law because it merely
referred to the section of the company rule allegedly
violated by private respondent. The notices failed to specify
the penalty for the charges which is dismissal, and to
indicate the precise act or omission which constituted the
ground for which dismissal is sought.

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