Authorized Causes

Authorized Causes
1. Installation of labor saving devices
2. Redundancy
3. Retrenchment to prevent losses
4. Closure or cessation of operations
5. Disease
Grounds Exclusive
• Before amendment by BP 130, the article read: “The
termination of employment of any employee due to
the installation of labor saving devices, redundancy,
retrenchment to prevent losses and other similar
causes shall entitle the employee affected thereby to
separation pay.
Labor Saving Devices/
Redundancy
Santos v. CA (GR 141947; 7/5/01)
• Redundancy exists when the service capability of the work
force is in excess of what is reasonably needed to meet the
demands of the enterprise.
Santos v. CA (GR 141947; 7/5/01)
• A redundant position is one rendered superfluous by a
number of factors, such as –

• overhiring of workers,
• decreased volume of business,
• dropping of a particular product line previously
manufactured by the company or
• phasing out of a service previously undertaken by the
business.
Soriano v. NLRC (GR 165594; 4/23/07)
• It is evident from the foregoing facts that respondent PLDT's
utilization of high technology equipment in its operation
such as computers and digital switches necessarily resulted
in the reduction of the demand for the services of a
Switchman since computers and digital switches can aptly
perform the function of several Switchmen. Indubitably, the
position of Switchman has become redundant.
Soriano v. NLRC (GR 165594; 4/23/07)
• The fact that respondent PLDT hired contractual employees
after implementing its redundancy program does not
necessarily negate the existence of redundancy. As amply
stated by the respondent PLDT, such hiring was intended
solely for winding up operations using the old system.
Santos v. CA (GR 141947; 7/5/01)
• Based on the fact that PEPSI's Metro Manila Sales
Operations were not meeting its sales targets, and on the
fact that new positions were subsequently created, it is
evident that PEPSI wanted to restructure its organization in
order to include more complex positions that would either
absorb or render completely unnecessary the positions it
had previously declared redundant.
Business Judgment Rule
Santos v. CA (GR 141947; 7/5/01)
• The soundness of this business judgment of PEPSI has been
assailed by petitioners, arguing that it is more logical to
implement new procedures in physical distribution, sales quotas,
and other policies aimed at improving the performance of the
division rather than to reduce the number of employees and
create new positions.
• This argument cannot be accepted. While it is true that
management may not, under the guise of invoking its
prerogative, ease out employees and defeat their constitutional
right to security of tenure, the same must be respected if clearly
undertaken in good faith and if no arbitrary or malicious action is
shown.
Santos v. CA (GR 141947; 7/5/01)
• Similarly, in Willshire File Co., Inc. v. NLRC petitioner
company effected some changes in its organization by
abolishing the position of Sales Manager and simply adding
the duties previously discharged by it to the duties of the
General Manager to whom the Sales Manager used to
report.
Santos v. CA (GR 141947; 7/5/01)
• *** we held that the characterization of private
respondent's services as no longer necessary or sustainable,
and therefore properly terminable, was an exercise of
business judgment on the part of petitioner company.

• The wisdom or soundness of such characterization or decision is

not subject to discretionary review on the part of the Labor
Arbiter or of the NLRC so long as no violation of law or arbitrary
and malicious action is indicated.
Ocean East Agency Corp. v. Lopez
(GR 194410; October 14, 2015)
• While it is true that the characterization of an employee's services as
superfluous or no longer necessary and, therefore, properly terminable,
is an exercise of business judgment on the part of the employer, the
exercise of such judgment must not violate the law, and must not be
arbitrary or malicious. 37 An employer cannot simply declare that it has
become over-manned and dismiss its employees without adequate
proof to sustain its claim of redundancy. 38 To dispel any suspicion of
bad faith on the part of the employer, it must present adequate proof of
the redundancy, as well as the criteria in the selection of the employees
affected. The following evidence may be proffered to substantiate
redundancy, to wit: 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.
Ocean East Agency Corp. v. Lopez
(GR 194410; October 14, 2015)
• In this case, petitioners were able to establish through Ocean East's
Quality Procedures Manual that Lopez' position as a Documentation
Officer was redundant because its duties and functions were similar
to those of the Documentation Clerks in its operations department.
Ocean East Agency Corp. v. Lopez
(GR 194410; October 14, 2015)
• However, they failed to prove by substantial evidence their observance of
the fair and reasonable criteria of seniority and efficiency in ascertaining
the redundancy of the position of Documentation Officer, as well as good
faith on their part in abolishing such position.
• Petitioners were unable to justify why it was more efficient to terminate
Lopez rather than its two other Documentation Clerks, Reynolds and Hing.
Also, while Reynolds was supposedly retained for being more senior than
Lopez, petitioners were silent on why they chose to retain Hing who was
hired in 1996, instead of Lopez who was hired about eight (8) years earlier
in 1988.
Evidence
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• the following evidence may be proffered to substantiate
redundancy:

• 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.
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• ACC attempted to establish its streamlining program by
presenting its new table of organization.

• ACC also submitted a certification by its Human Resources

Supervisor *** that the functions and duties of many rank
and file employees, including the positions of Garcia and
Balla as Library Aide and Guidance Assistant, respectively,
are now being performed by the supervisory employees.
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• As they are, they are grossly inadequate and mainly self-
serving.

• More compelling evidence would have been --

• a comparison of the old and new staffing patterns,
• a description of the abolished and newly created positions, and
• proof of the set business targets and failure to attain the same
which necessitated the reorganization or streamlining.
Santos v. CA (GR 141947; 7/5/01)
• The job descriptions submitted by PEPSI are replete with
information and is an adequate basis to compare and
contrast the two (2) positions.
Andrada v. NLRC (GR 173231; 12/28/07)
• According to the CA, Legend proved the existence of
redundancy when it submitted a status review of its project
division where it reported that

• the 78-man personnel exceeded the needs of the

company.

• there was duplication of functions and positions, or an

over supply of employees, especially among architects,
engineers, draftsmen, and interior designers.
Andrada v. NLRC (GR 173231; 12/28/07)
• The pieces of evidence submitted by Legend are mere
allegations and conclusions not supported by other
evidence.

• Legend did not even bother to illustrate or explain in detail

how and why it considered petitioners' positions superfluous
or unnecessary.
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• The lingering doubt as to the existence of redundancy or of ACC's so
called "streamlining program" is highlighted even more by its non-
presentation of the required notice to the Department of Labor and
Employment (DOLE) at least one month before the intended dismissal.

• The notice to the DOLE would have afforded the labor department the
opportunity to look into and verify whether there is truth as to ACC's
claim that a decline in its student population resulted in excess
manpower in the college. Compliance with the required notices would
have also established that ACC pursued its streamlining program in good
faith.
Criteria
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• Granting that ACC was able to substantiate the need for
streamlining its organization, it still failed to implement the
same using fair and reasonable criteria for choosing which
employees to dismiss.
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• Among the accepted criteria in implementing a redundancy
are:
1. less preferred status, e.g., temporary employee;
2. efficiency; and
3. seniority.

• There is no showing that ACC applied any of these criteria in

determining that, among its employees, Garcia and Balla
should be dismissed, thus, making their dismissal arbitrary
and illegal.
Oriental Petroleum & Minerals Corp. v.
Fuentes (GR 151818; 10/14/05)
• *** though petitioner therein was justified in ordering a
retrenchment, its implementation of the scheme without
taking seniority into account rendered the retrenchment
invalid. In that case, petitioner's criteria for retrenchment
included dependability, adaptability, trainability, job
performance, discipline and attitude towards work.
Arabit v. Jardine Pacific Finance, Inc.
(GR 181719; 4/21/14)
• To sum up, based on the guidelines set by the Court in the cases of
Golden Thread and Asian Alcohol, we find that at two levels, Jardine
failed to set the required fair and reasonable criteria in the
termination of the petitioners' employment, leading to the conclusion
that the termination from the service was arbitrary and in bad faith.
Arabit v. Jardine Pacific Finance, Inc.
(GR 181719; 4/21/14)
• The first level, based on Asian Alcohol, is broader as the case
recognized distinctions on a per position basis. At this level, Jardine
failed to explain why among all of the existing positions in its
organization, Jardine chose the petitioners' posts as the ones which
have already become redundant and terminable.
• The second level, derived from Golden Thread, is more specific. Here
the distinction narrows down to the particular employees occupying
the same positions which were already declared to be redundant. At
this level, Jardine's lapse is shown by its failure to explain why among
all of its employees whose positions were determined to be
redundant, the petitioners were the ones selected to be dismissed
from the service.
Just cause irrelevant in proving
existence of redundancy. But
may be used as criteria.
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• To further justify its dismissal of Garcia and Balla, ACC presented
several memoranda to prove that Garcia and Balla had been
remiss in the performance of their duties, as well as perennially
tardy and absent.
• Other than being self-serving, said memoranda are irrelevant to
prove redundancy of the positions held by Garcia and Balla.
Redundancy arises because there is no more need for the
employee's position in relation to the whole business
organization, and not because the employee unsatisfactorily
performed the duties and responsibilities required by his
position.
Dole Phils. Inc. v. NLRC (GR 120009; 9/13/01)
• Private respondents also point to references in petitioner's
studies of the redundancy program to the elimination of
"undesirables," "abusers" and "worst performers" as another
indicia of petitioner's bad faith.

• The Court is not too keen on attaching such a sinister significance

to these allusions, however. It may be argued that the
elimination of the so-called "undesirables" was merely incidental
to the redundancy program or that past transgressions could
have been part of the criteria in determining who among the
redundant employees is to be dismissed.
Subsequent hiring of casuals or
engaging a contractor.
Dole Phils. Inc. v. NLRC (GR 120009; 9/13/01)
• Petitioner does not deny that they hired casual employees
after the implementation of the redundancy program.
• Petitioner explains, however, that it has always hired casuals
to augment the company's manpower requirements in
accordance with the demands of the industry. Petitioner
further asserts that the number of casuals remained
relatively constant after the implementation of the
redundancy program, as shown by the graph appended as
Annex "J" of its supplement to the motion for
reconsideration before the NLRC.
Dole Phils. Inc. v. NLRC (GR 120009; 9/13/01)
• In International Macleod, Inc. vs. Intermediate Appellate
Court, supra, this Court found that the appointment by the
company to the International Heavy Equipment Corporation
as its dealer with the government rendered redundant the
position of Government Relations Officer held by the private
respondent therein..
Serrano v. NLRC (GR 117040; 1/27/2000)
• In De Ocampo v. National Labor Relations Commission, this
Court upheld the termination of employment of three
mechanics in a transportation company and their
replacement by a company rendering maintenance and
repair services.
• The company merely exercised its business judgment or
management prerogative. And in the absence of any proof
that the management abused its discretion or acted in a
malicious or arbitrary manner, the court will not interfere
with the exercise of such prerogative.
Serrano v. NLRC (GR 117040; 1/27/2000)
• In Asian Alcohol Corporation v. National Labor Relations
Commission, the Court likewise upheld the termination of
employment of water pump tenders and their replacement
by independent contractors.
• It ruled that an employer's good faith in implementing a
redundancy program is not necessarily put in doubt by the
availment of the services of an independent contractor to
replace the services of the terminated employees to
promote economy and efficiency.
Serrano v. NLRC (GR 117040; 1/27/2000)
• the "[management of a company] cannot be denied the
faculty of promoting efficiency and attaining economy by a
study of what units are essential for its operation.

• To it belongs the ultimate determination of whether

services should be performed by its personnel or
contracted to outside agencies . . . [While there] should be
mutual consultation, eventually deference is to be paid to
what management decides.
Arabit v. Jardine Pacific Finance, Inc.
(GR 181719; 4/21/14)
• it is illogical for Jardine to terminate the petitioners' employment and
replace them with contractual employees. The replacement
effectively belies Jardine's claim that the petitioners' positions were
abolished due to superfluity. Redundancy could have been justified if
the functions of the petitioners were transferred to other existing
employees of the company.
• To dismiss the petitioners and hire new contractual employees as
replacements necessarily give rise to the sound conclusion that the
petitioners' services have not really become in excess of what
Jardine's business requires. To replace the petitioners who were all
regular employees with contractual ones would amount to a violation
of their right to security of tenure.
Arabit v. Jardine Pacific Finance, Inc.
(GR 181719; 4/21/14)
• it is illogical for Jardine to terminate the petitioners' employment and
replace them with contractual employees. The replacement
effectively belies Jardine's claim that the petitioners' positions were
abolished due to superfluity. Redundancy could have been justified if
the functions of the petitioners were transferred to other existing
employees of the company.
• To dismiss the petitioners and hire new contractual employees as
replacements necessarily give rise to the sound conclusion that the
petitioners' services have not really become in excess of what
Jardine's business requires. To replace the petitioners who were all
regular employees with contractual ones would amount to a violation
of their right to security of tenure.
Arabit v. Jardine Pacific Finance, Inc.
(GR 181719; 4/21/14)
• Jardine never undertook what the employer in Asian Alcohol did.
Jardine was never able to explain in any of its pleadings why the
petitioners' positions were redundant. It never even attempted to
discuss the attendant facts and circumstances that led to the
conclusion that the petitioners' positions had become superfluous
and unnecessary to Jardine's business requirements. Thus, we can
only speculate on what actually happened.
PAL v. Dawal (GR 173921; 2/24/16)
• In General Milling Corporation v. Viajar, 177 we have held that
the act of hiring new employees while firing the old ones
"negat[es] the claim of redundancy."
• When PAL spun off the engineering and maintenance facilities, it
also created a new engineering department called the Technical
Services Department. Moreover, after it fired the affected
employees, PAL offered to rehire the same retrenched personnel
as new employees. The Court of Appeals found that there was
"availability of work in PAL [and this] belie[s] its claim that [PAL]
has become over manned[.]"
Retrenchment
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• Retrenchment, on the other hand, is the termination of
employment effected by management during periods of

• business recession,
• industrial depression,
• seasonal fluctuations,
• lack of work or
• considerable reduction in the volume of the employer's business.
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• Retrenchment, on the other hand, is the termination of
employment effected by management during periods of

• business recession,
• industrial depression,
• seasonal fluctuations,
• lack of work or
• considerable reduction in the volume of the employer's business.
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• To justify retrenchment, the employer must prove serious
business losses.

• Indeed, not all business losses suffered by the employer

would justify retrenchment under Article 283 of the Labor
Code. The "loss" referred to in Article 283 cannot be just any
kind or amount of loss; otherwise, a company could easily
feign excuses to suit its whims and prejudices or to rid itself
of unwanted employees.
Dole Phils. Inc. v. NLRC (GR 120009; 9/13/01)
• Reorganization as a cost-saving device is acknowledged by
jurisprudence.

• An employer is not precluded from adopting a new policy

conducive to a more economical and effective management,
and the law does not require that the employer should be
suffering financial losses before he can terminate the
services of the employee on the ground of redundancy.
Conditions
AMA Computer College v. Garcia
(GR 166703; 4/14/08)
• In a number of cases, the Court has identified the necessary
conditions for the company losses to justify retrenchment:
1. the losses incurred are substantial and not de minimis;
2. the losses are actual or reasonably imminent;
3. the retrenchment is reasonably necessary and is likely to
be effective in preventing the expected losses; and
4. the alleged losses, if already incurred, or the expected
imminent losses sought to be forestalled, are proven by
sufficient and convincing evidence.
Lopez Sugar Corp v. FFW
(GR 75700-01; 8/3-/90)
• In its ordinary connotation, 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 losses anticipated 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
sometime 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 taking property from one
man to give to another. This is simple enough.
Lopez Sugar Corp v. FFW
(GR 75700-01; 8/3-/90)
• At the other end of the spectrum, it seems equally clear that not
every assorted possibility of loss is sufficient legal warrant for
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.
Lopez Sugar Corp v. FFW
(GR 75700-01; 8/3-/90)
• Thus, the difficult question is determination of when, or under what
circumstances, the employer becomes legally privileged to retrench
and reduce the number of his employees.
Andrada v. NLRC (GR 173231; 12/28/07)
• Firstly, the losses expected should be substantial and not
merely de minimis in extent.

• If the loss purportedly sought to be forestalled by

retrenchment is clearly shown to be insubstantial and
inconsequential in character, the bona fide nature of
retrenchment would appear to be seriously in question.
Andrada v. NLRC (GR 173231; 12/28/07)
• Secondly, the substantial loss apprehended must be
reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer.

• There should, in other words, be a certain degree of urgency

for the retrenchment, which is after all a drastic recourse
with serious consequences for the livelihood of the
employees retired or otherwise laid-off.
Andrada v. NLRC (GR 173231; 12/28/07)
• *** it must, thirdly, be reasonably necessary and likely to effectively
prevent the expected losses.

• The employer should have taken other measures prior or parallel to

retrenchment to forestall losses, i.e., cut other costs other than labor
costs.

• the employer's prerogative to bring down labor costs by retrenching

must be exercised essentially as a measure of last resort, after less
drastic means — e.g., reduction of both management and rank-and-file
bonuses and salaries, going on reduced time, improving manufacturing
efficiencies, trimming of marketing and advertising costs, etc. — have
been tried and found wanting.
Andrada v. NLRC (GR 173231; 12/28/07)
• Lastly, but certainly not the least important, alleged losses if
already realized, and the expected imminent losses sought to
be forestalled, must be proved by sufficient and convincing
evidence.

• The reason for requiring this quantum of proof is readily

apparent: any less exacting standard of proof would render
too easy the abuse of this ground for termination of services
of employees.
Andrada v. NLRC (GR 173231; 12/28/07)
• Lastly, but certainly not the least important, alleged losses if
already realized, and the expected imminent losses sought to
be forestalled, must be proved by sufficient and convincing
evidence.

• The reason for requiring this quantum of proof is readily

apparent: any less exacting standard of proof would render
too easy the abuse of this ground for termination of services
of employees.
Beralde v. Lapanday Agri and Devt Corp
(GR 205685; 6/22/15)
• Lapanday's financial condition before and at the time of
petitioners' retrenchment, justified petitioners
retrenchment. The audited financial report presented in
evidence was found to conclusively show that Lapanday has
indeed suffered serious financial losses for the last three
years prior to its retrenchment.
Beralde v. Lapanday Agri and Devt Corp
(GR 205685; 6/22/15)
• An independent auditor confirmed its claim of financial
losses, finding that is suffered a net loss of Php26M in 2006
as compared to its net income of Php14M in 2005.
• This net loss ballooned to Php72M in 2007.
• To be sure, these financial statements cannot be whimsically
assailed as self-serving, as these documents were prepared
and signed by SGV & Co., a firm of reputable independent
external auditors.
Beralde v. Lapanday Agri and Devt Corp
(GR 205685; 6/22/15)
• We cannot ignore the audited financial reports of
independent and reputable external auditors such as Sycip
Gorres Velayo & Co., as no evidence can best attest to a
company's economic status other than its financial
statement.
Oriental Petroleum & Minerals Corp. v.
Fuentes (GR 151818; 10/14/05)
• Petitioner presented its audited financial statements for the years
1992 and 1993 ***
• Current assets: P325M in 1992 to P221M in 1993.

• Current liabilities: P373M in 1992 to P517M in 1993.

• Costs: P262M in 1992 to P456M in 1993.

• Net loss of P107M in 1993; net earnings of P148M in 1992.

Oriental Petroleum & Minerals Corp. v.
Fuentes (GR 151818; 10/14/05)
• while it is true that the Court has ruled that financial
statements audited by independent external auditors
constitute the normal method of proof of the profit and loss
performance of a Company, financial statements, in
themselves, do not suffice to meet the stringent requirement
of the law that the losses must be substantial, continuing
and without any immediate prospect of abating.
Oriental Petroleum & Minerals Corp. v.
Fuentes (GR 151818; 10/14/05)
• Retrenchment being a measure of last resort, petitioner
should have been able to demonstrate that it expected no
abatement of its losses in the coming years.

• Petitioner having failed in this regard, we find that the Court

of Appeals did not err in dismissing as unimpressive and
insufficient petitioner's audited financial statements.
FASAP v. PAL (GR 178083; 10/2/09)
• In the instant case, PAL admitted that since the pilots' strike allegedly
created a situation of extreme urgency, it no longer implemented cost-
cutting measures and proceeded directly to retrench.
• This being so, it clearly did not abide by all the requirements under Article
283 of the Labor Code. At the time it was implemented, the retrenchment
scheme under scrutiny was not triggered directly by any financial difficulty
PAL was experiencing at the time, nor borne of an actual implementation
of its proposed downsizing of aircraft.
• It was brought about by — and resorted to as an immediate reaction to —
a pilots' strike which, in strict point of law and as herein earlier discussed,
may not be considered as a valid reason to retrench, nor may it be used to
excuse PAL for its non-observance of the requirements of the law on
retrenchment under the Labor Code.
Sanoh Fulton Phils., Inc. v. Bernardo
(GR 187214; 8/14/13)
• Sanoh asserts that cancelled orders of wire condensers led to
the phasing out of the Wire Condenser Department which
triggered retrenchment. Sanoh presented the letters of
cancellation given by Matsushita and Sanyo as evidence of
cancelled orders. The evidence presented by Sanoh barely
established the connection between the cancelled orders
and the projected business losses that may be incurred by
Sanoh. Sanoh failed to prove that these cancelled orders
would severely impact on their production of wire
condensers.
Closure
Sanoh Fulton Phils., Inc. v. Bernardo
(GR 187214; 8/14/13)
• the law authorizes termination of employment due to
business closure, regardless of the underlying reasons and
motivations therefor, be it financial losses or not. However,
to put a stamp to its validity, the closure/cessation of
business must be bona fide, i.e., its purpose is to advance
the interest of the employer and not to defeat or circumvent
the rights of employees under the law or a valid agreement.
Me-Shurn Corp. v. Me-Shurn Workers Union
(GR 156292; 1/11/05)
• The cessation of a company's operations shortly after the
organization of a labor union, as well as the resumption of business
barely a month after, gives credence to the employees' claim that the
closure was meant to discourage union membership and to interfere
in union activities.
Cheniver Deco Print Technics Corp. v. NLRC
(GR 122876; 2/17/00)
• There appears no complete dissolution of petitioner's
business undertaking but the relocation of petitioner's plant
to Batangas, in our view, amounts to cessation of petitioner's
business operations in Makati. It must be stressed that the
phrase "closure or cessation of operation of an
establishment or undertaking not due to serious business
losses or reverses" under Article 283 of the Labor Code
includes both the complete cessation of all business
operations and the cessation of only part of a company's
business.
SMC v. Aballa (GR 149011; 6/28/05)
• In the case at bar, a particular department under the SMC
group of companies was closed allegedly due to serious
business reverses. This constitutes retrenchment by, and not
closure of, the enterprise or the company itself as SMC has
not totally ceased operations but is still very much an on-
going and highly viable business concern.
Cheniver Deco Print Technics Corp. v. NLRC
(GR 122876; 2/17/00)
• There is no doubt that petitioner has legitimate reason to relocate its
plant because of the expiration of the lease contract on the premises it
occupied. That is its prerogative. But even though the transfer was due
to a reason beyond its control, petitioner has to accord its employees
some relief in the form of severance pay. Thus, in E. Razon, Inc. vs.
Secretary of Labor and Employment, 6 petitioner therein provides
arrastre services in all piers in South Harbor, Manila, under a
management contract with the Philippine Ports Authority. Before the
expiration of the term of the contract, the PPA cancelled the said
contract resulting in the termination of employment of workers engaged
by petitioner. Obviously, the cancellation was not sought, much less
desired by petitioner. Nevertheless, this Court required petitioner
therein to pay its workers separation pay in view of the cessation of its
arrastre operations.
Cheniver Deco Print Technics Corp. v. NLRC
(GR 122876; 2/17/00)
• Consequently, petitioner herein must pay his employees
their termination pay in the amount corresponding to their
length of service. Since the closure of petitioner's business is
not on account of serious business losses, petitioner shall
give private respondents separation pay equivalent to at
least one (1) month or one-half (1/2) month pay for every
year of service, whichever is higher.
Separation Pay
• Depends on ground

• Basis is basic salary plus regular allowances.

Phil. Tobacco Flue Curing v. NLRC
(GR 127395; 12/10/98)
• the amount of separation pay which respondent members of
the Lubat and Luris groups should receive is one-half (1/2)
their respective average monthly pay during the last season
they worked multiplied by the number of years they actually
rendered service, provided that they worked for at least six
months during a given year.
Disease
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
As substantive requirements, the Labor Code and its IRR 33
require the presence of the following elements:
1. An employee has been found to be suffering from any disease.
2. His continued employment is prohibited by law or prejudicial to
his health, as well as to the health of his co-employees.
3. A competent public health authority certifies that the disease is
of such nature or at such a stage that it cannot be cured within
a period of six months even with proper medical treatment.
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
With respect to the first and second elements, the Court liberally
construed the phrase "prejudicial to his health as well as to the
health of his co-employees" to mean "prejudicial to his health or
to the health of his co-employees".

We did not limit the scope of this phrase to contagious diseases

for the reason that this phrase is preceded by the phrase "any
disease" under Article 284 of the Labor Code
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
Consistent with this construction, we applied this provision in
resolving illegal dismissal cases due to non-contagious diseases
such as stroke, heart attack, osteoarthritis, and eye cataract,
among others.
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
In Baby Bus, Inc. v. Minister of Labor, 34 we upheld the labor
arbitration's finding that Jacinto Mangalino's continued
employment — after he suffered several strokes — would be
prejudicial to his health.
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
In Duterte v. Kingswood Trading Co., Inc., 35 we recognized the
applicability of Article 284 of the Labor Code to heart attacks. In
that case, we held that the employer-company's failure to present
a certification from a public health authority rendered Roque
Duterte's termination due to a heart attack illegal.
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
We also applied this provision in Sy v. Court of Appeals 36 to
determine whether Jaime Sahot was illegally dismissed due to
various ailments such as presleyopia, hypertensive retinopathy,
osteoarthritis, and heart enlargement, among others.
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
In Manly Express, Inc. v. Payong, Jr., 37 we ruled that the
employer-company's non-presentment of a certification from a
public health authority with respect to Romualdo Payong Jr.'s eye
cataract was fatal to its defense.
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
The third element substantiates the contention that the employee
has indeed been suffering from a disease that:
(1) is prejudicial to his health as well as to the health of his co-
employees; and
(2) cannot be cured within a period of six months even with
proper medical treatment.
Without the medical certificate, there can be no authorized cause
for the employee's dismissal. The absence of this element thus
renders the dismissal void and illegal.
Deoferio v. Intel Technology Phils., Inc.
(GR 202996; 6/18/14)
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.