3. Authorized Causes (DO 147, s. 2015)

Industrial Timber v. Ababan, G.R. No. 164518, 2006 (Distinction of Authorized Causes)

If the authorized cause that terminates employment arises from losses, the penalty to the employer who disregarded due process may be lighter than if the authorized cause has no relation to losses.

Change of Ownership

A mere change in the equity composition of a corporation is neither a just nor an authorized cause that would legally permit the dismissal of the corporation's employees en masse. (SME Bank, Inc. v. De Guzman, G.R. No. 184517, 2013)

CLOSURE OR CESSATION OF OPERATION OF THE ESTABLISHMENT OR UNDERTAKINGS

Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of business operations and/or an actual locking-up of the doors of establishment, usually due to financial losses. Closure or cessation of business may be an authorized cause for termination of employment even without financial losses, provided the closure is bona fide and the employer complies with the applicable notice and separation-pay requirements under Labor Code, Art. 298 [283]; closure due to serious business losses has a distinct separation-pay rule. (J.A.T. General Services v. NLRC, G.R. No. 148340, 2004)

Closure of Department

The closure of a department or division of a company constitutes retrenchment by, and not closure of, the company itself. (Waterfront Cebu City Hotel v. Jimenez, G.R. No. 174214, 2012) (Note: There are decisions that consider partial closure as a valid cause.)

Prior Certification From Competent Public Authority

The burden falls upon the employer to establish these requisites, and in the absence of such certification, the dismissal must necessarily be declared illegal.

It is only where there is a prior certification from a competent public authority that the disease afflicting the employee sought to be dismissed is of such nature or at such stage that it cannot be cured within 6 months even with proper medical treatment that the latter could be validly terminated from his job (Crayons Processing, Inc., v. Pula, G.R. No. 167727, 2007)

DUE PROCESS

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 Art. 298 [283] of this Code,

For just-cause dismissal, 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. (Labor Code, Art. 292(b) [277(b)])

For an authorized-cause termination, the employer shall instead give written notice to the employee and DOLE at least 30 days before the intended termination, subject to the applicable cause-specific rules. (Labor Code, Art. 298 [283]; DOLE Department Order No. 147, series of 2015)

Note: Employee may have a counsel but it is not indispensable.