Just Cause Procedure

1. Summary

⦁ Just cause procedure refers to the steps or process of implementing due process in relation to termination of employment.

⦁ There are 3 steps in a just cause procedure.

⦁ If there is no just cause procedure, the dismissal is valid but the employer may be held liable for nominal damages.

2. Concept

Just cause procedure refers to the steps or process of implementing due process in relation to termination of employment.

3. Procedure

The following are the steps:

Step 1: Issuance of 1^st Written Notice

Step 2: Observance of Ample Opportunity to Explain

Step 3: Issuance of 2^nd Written Notice

a. Step 1: Issuance of 1^st Written Notice

The employer is required to issue a 1^st Written Notice to the employee.

It should contain the following:

1) The specific causes or grounds for termination as provided for under the Labor Code, as amended, employment contract, and company policies, if any.

2) Detailed narration of facts and circumstances that will serve as basis for the charge against the employee. A general description of the charge will not suffice.

3) A directive that the employee is given opportunity to submit a written explanation within a reasonable period, which should be at least (5) calendar days. (Section 5.1[a], DOLE Department Order No. 147, Series of 2015, henceforth “DO-147”)

The 1^st Written Notice, otherwise known as the Notice to Explain, may also contain a directive for the employee to appear at a scheduled formal administrative hearing, at the discretion of the employer or when necessary as provided for by law. (See discussions below.)

“Reasonable period” should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employee an opportunity to study the accusation, consult or be represented by a lawyer or union officer, gather data and evidence, and decide on the defenses against the complaint. (Paragraph 2, Section 5.1[a], DO-147)

1) Proof of service

The NTE is required to be served, and not necessarily received.

Consequently, it is required that the service of the NTE should be proven. The evidence is referred to as proof of service. Without this evidence, the NTE might be considered as self-serving – i.e. it was fabricated or only printed and signed by the employer after and once there is already an illegal dismissal case.

The following are the recognized options for proof of service:

1) Signed receiving copy from the employee;

2) Affidavit of Personal Service;

3) Return Card from the Registered Mail with the Philippine Post Office;

4) Return of the Sealed Envelope with Postman’s Annotations; or

5) Certification from the Philippine Post Office.

For the signed receiving copy, the employer should ensure that the name, signature, and date of signing by the employee is reflected on the NTE.

In case the employee refuses to sign a receiving copy, the employer may serve the NTE by leaving a copy in front of the employee. Thereafter, the one who served the notice to the employee will prepare and sign an Affidavit of Service, which will then be notarized, to serve as the proof of service. Do note that this is an affidavit and thus the contents thereof should be truthful and correct to avoid perjury.

Mansion Printing Center v. Bitara, G.R. No. 168120, 25 January 2012

⦁ [The employee – a Driver – claimed that he was not validly served with the Termination Notice.]

⦁ “In Bughaw v. Treasure Island Industrial Corporation, this Court, in verifying the veracity of the allegation that [the employee] refused to receive the Notice of Termination, essentially looked for the following: (1) affidavit of service stating the reason for failure to serve the notice upon the recipient; and (2) a notation to that effect, which shall be written on the notice itself. Thus:

xxx Bare and vague allegations as to the manner of service and the circumstances surrounding the same would not suffice. A mere copy of the notice of termination allegedly sent by [the employer] to [the employee], without proof of receipt, or in the very least, actual service thereof upon [the employer], does not constitute substantial evidence. It was unilaterally prepared by [the employer] and, thus, evidently self-serving and insufficient to convince even an unreasonable mind.

⦁ [In this case, the employer], “on the other hand, did both. First, he indicated in the notices the notation that [the employee] “refused to sign” together with the corresponding dates of service. Second, he executed an Affidavit dated 29 July 2000 stating that: (1) he is the General Manager of the company; (2) he personally served each notice upon [the employee], when [the employee] went to the office/factory on 17 March 2000 and 21 March 2000, respectively; and (3) on both occasions, after reading the contents of the memoranda, [the employee] refused to acknowledge receipt thereof. We are, thus, convinced that the notices have been validly served. (Emphasis supplied.)”

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In the cases of signed receiving copy and affidavit of service, they presuppose that the notice was personally served in front of and in the presence of the employee. If the employee is absent or not around, these modes of service cannot be resorted to by the employer.

The next option of the employer is to send the NTE to the employee’s last known address via Registered Mail with Return Card at the Philippine Post Office. Once the envelope containing the NTE is served on the employee or whoever may have received it, the postman/mailman will have the return card signed as proof that the service was made. Then, the return card will be delivered to the employer. The return card will serve as the proof of service.

In some cases, the sealed envelope with the NTE is returned back to the sender (the employer) with annotations like: return to sender, moved out, cannot be located, and similar thereto. If this happens, jurisprudence states that the NTE is deemed served. After all, it is the employee’s responsibility to provide for the correct address or inform the employer for any change of his address. Thus, what is sufficient is that the notice be sent to the last known address.

It does happen that the notice has been served; however, the return card was not removed from the envelope or sometimes gets lost. As a last measure, the employer may write a request letter to ask for a Certification from the Philippine Post Office to confirm that the notice was served to the employee.

b. Step 2: Observance of Ample Opportunity to Explain

The ample opportunity to explain is satisfied by either giving the employee the chance to defend himself/herself via:

1) A written explanation; or,

2) A formal administrative hearing.

“Ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him/her and submit evidence in support of his/her defense, whether in a hearing, conference or some other fair, just and reasonable way. 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. (Paragraph 2, Section 5.1[b], DO-147)

Whether a written explanation or a formal administrative hearing will be required, it should be at least five (5) calendar days from receipt of the 1^st written notice in order for the employee to study the accusations, consult or be represented by a lawyer or union officer, gather data and evidence, and decide on the defenses against the charges/complaint.

As a general rule, a formal administrative hearing is optional or at the discretion of the employer. By way of exceptions, the employer is required to conduct a formal administrative hearing when requested in writing by the employee, substantial evidentiary disputes exist, or a company rule or practice requires it, or when similar circumstances justify it.

The employee waives his/her right for an opportunity to explain if he/she does not submit a written explanation or does not attend the scheduled formal administrative hearing.

Perez v. Philippine Telegraph and Telephone Company, supra.

⦁ [The Supreme Court provided for the following guiding principle in line with hearing requirement for due process:]

⦁ “(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.

The 1^st principle allows various means by which the employee may be given ample opportunity to be heard. As stated therein, it can be in “a hearing, conference, or some other fair, just and reasonable way.” The last part includes a written explanation from the employee.

Perez v. Philippine Telegraph and Telephone Company, supra.

⦁ “There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires:

ART. 277. Miscellaneous provisions. — x x x

(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. (Emphasis supplied)

⦁ “The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him:

Section 2. Security of Tenure. — x x x

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (Emphasis supplied)

⦁ “Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of an employee? Can the apparent conflict between the law and its IRR be reconciled?”

⦁ “At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the administrative regulations implementing it. The authority to promulgate implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute. As such, it cannot amend the law either by abridging or expanding its scope.”

⦁ “Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given “ample opportunity to be heard and to defend himself.” Thus, the opportunity to be heard afforded by law to the employee is qualified by the word “ample” which ordinarily means “considerably more than adequate or sufficient.” In this regard, the phrase “ample opportunity to be heard” can be reasonably interpreted as extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b).”

⦁ “… The “ample opportunity to be heard” standard is neither synonymous nor similar to a formal hearing. To confine the employee’s right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The “very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.”

⦁ “An employee’s right to be heard in termination cases under Article 277(b) as A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy ‘To be heard’ does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase “ample opportunity to be heard” may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal “trial-type” hearing, although preferred, is not absolutely necessary to satisfy the employee’s right to be heard.”

•••

As such, the ample opportunity to be heard may be given to the employee via a formal administrative hearing or a written explanation. The key to remember is that that the employer is only required to give the employee an opportunity to explain. Once that chance is given, the employer has complied with the requirement – even if the employee fails/refuses to attend the schedule for the formal administrative hearing or submit a written explanation.

By failing/refusing to attend the formal administrative hearing or to submit a written explanation, the employee waives his right to be heard. Thereafter, the employer may proceed with the next step to complete the procedural due process.

c. Step 3: Issuance of 2^nd Written Notice

The employer shall issue a 2^nd Written Notice to the employee after evaluating all available pieces of evidence and the explanation of the employee, if any.

The results may either be that the employee is innocent or guilty.

If the employee is innocent, the 2^nd written notice will indicate so. This is often referred to as a Notice of Results.

If the employee is guilty, the 2^nd written notice shall state that all circumstances involving the charge against him/her have been considered and grounds have been established to justify the imposition of a penalty. This is often referred to as a Termination Notice. (Paragraph 2, Section 5.1[c], DO-147)

The penalty may either one of the following: verbal reprimand, written warning, suspension, dismissal.

1) Proof of Service

Similar to the NTE, the NOR is required to be served, and not necessarily received.

There should be proof of service of the NOT via any of the recognized modes of service listed in the earlier section under the discussions on NTE. For emphasis, without the proof of service, there is no evidence to show that the NOR was served to the employee.

5. Penalty commensurate to offense

It is a general principle in labor law that: the penalty must be commensurate to the offense.

If the offense/violation is severe, the penalty of dismissal may be warranted. This may apply even to a first-time offense/violation.

For lighter forms of offenses/violations, the penalty should be less than dismissal, such as a verbal warning, written reprimand, or suspension.

In case of a labor complaint, it is the employer who is required to justify the penalty in view of the offense/violation.

6. Documentation and proof of service

All notices mentioned herein should be properly documented on how it was served.

The notices should be served personally, whenever practicable. This act of service may be proven through a receiving copy or an affidavit of service, in case the employee unjustifiably refuses to sign a receiving copy.

If personal service is not available such as the employee being absent, the notice may be sent to his last known address through mail. This act of service may be proven through the official receipt of the mailing or an affidavit of service on the mailing.

7. Consequence for non-compliance of procedure

“Failure to comply strictly with the requirements-of procedural due process for dismissing an employee will not render such dismissal ineffectual if it is based on a just or an authorized cause. The employer, however, must be held liable for nominal damages for non-compliance with the requirements of procedural due process.” (Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016)

Nominal damages are awarded to the employee in recognition of his/her right to procedural due process which was violated by the employer.

8. No separation pay, exception

GENERAL RULE: Employees whose employment has been terminated for just causes are not entitled to separation pay.

EXCEPTION: Labor courts may award separation pay as a matter of social justice.

a. Labor Courts: Social Justice

In Labor Cases, separation pay may also be required from the employer to be paid to the employees – by way of exception. The following case provides for an explanation:

TMPCWA v. TOYOTA MOTOR PHILIPPINES CORPORATION, G.R. Nos. 158798-99, 19 October 2007

⦁ The general rule is that when just causes for terminating the services of an employee under Art. [297] of the Labor Code exist, the employee is not entitled to separation pay. The apparent reason behind the forfeiture of the right to termination pay is that lawbreakers should not benefit from their illegal acts. The dismissed employee, however, is entitled to whatever rights, benefits and privileges [s/he] may have under the applicable individual or collective bargaining agreement with the employer or voluntary employer policy or practice or under the Labor Code and other existing laws. This means that the employee, despite the dismissal for a valid cause, retains the right to receive from the employer benefits provided by law, like accrued service incentive leaves. With respect to benefits granted by the CBA provisions and voluntary management policy or practice, the entitlement of the dismissed employees to the benefits depends on the stipulations of the CBA or the company rules and policies.

⦁ As in any rule, there are exceptions. One exception where separation pay is given even though an employee is validly dismissed is when the court finds justification in applying the principle of social justice well entrenched in the 1987 Constitution. In Phil. Long Distance Telephone Co. (PLDT) v. NLRC, the Court elucidated why social justice can validate the grant of separation pay, thus:

The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause.

⦁ In the same case, the Court laid down the rule that severance compensation shall be allowed only when the cause of the dismissal is other than serious misconduct or that which reflects adversely on the employee’s moral character. The Court succinctly discussed the propriety of the grant of separation pay in this wise:

We [the Supreme Court] hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.

A contrary rule would, as [the employer] correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character.

⦁ Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based on social justices erious misconduct (which is the first ground for dismissal under Art. [297]) or acts that reflect on the moral character of the employee. What is unclear is whether the ruling likewise precludes the grant of separation pay when the employee is validly terminated from work on grounds laid down in Art. [297] of the Labor Code other than serious misconduct.

⦁ A recall of recent cases decided bearing on the issue reveals that when the termination is legally justified on any of the grounds under Art. [297], separation pay was not allowed. In Ha Yuan Restaurant v. NLRC, we deleted the award of separation pay to an employee who, while unprovoked, hit her co-workers face, causing injuries, which then resulted in a series of fights and scuffles between them. We viewed her act as serious misconduct which did not warrant the award of separation pay. In House of Sara Lee v. Rey, this Court deleted the award of separation pay to a branch supervisor who regularly, without authorization, extended the payment deadlines of the company’s sales agents. Since the cause for the supervisor’s dismissal involved her integrity (which can be considered as breach of trust), she was not worthy of compassion as to deserve separation pay based on her length of service. In Gustilo v. Wyeth Phils., Inc., this Court found no exceptional circumstance to warrant the grant of financial assistance to an employee who repeatedly violated the company’s disciplinary rules and regulations and whose employment was thus terminated for gross and habitual neglect of his duties. In the doctrinal case of San Miguel v. Lao, this Court reversed and set aside the ruling of the CA granting retirement benefits or separation pay to an employee who was dismissed for willful breach of trust and confidence by causing the delivery of raw materials, which are needed for its glass production plant, to its competitor. While a review of the case reports does not reveal a case involving a termination by reason of the commission of a crime against the employer or his/her family which dealt with the issue of separation pay, it would be adding insult to injury if the employer would still be compelled to shell out money to the offender after the harm done.

⦁ In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal recognized under Art. [297] of the Labor Code were serious or grave in nature and attended by willful or wrongful intent or they reflected adversely on the moral character of the employees. We therefore find that in addition to serious misconduct, in dismissals based on other grounds under Art. [297] like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family, separation pay should not be conceded to the dismissed employee.

⦁ In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may opt to grant separation pay anchored on social justice in consideration of the length of service of the employee, the amount involved, whether the act is the first offense, the performance of the employee and the like, using the guideposts enunciated in PLDT on the propriety of the award of separation pay.

The above rule carved out an exception to the general rule that there is no separation pay due to employees dismissed for just causes.

b. Computation of separation pay

The separation pay is computed at 1 month pay or ½ month pay per year of service, whichever is higher. A fraction of 6 months shall be considered as 1 year of service for purposes of computing separation pay. (Bank of Lubao, Inc. v. Manabat, G.R. No. 188722, 01 February 2012)