Introduction

In the Philippines, the right to security of tenure is a fundamental labor protection guaranteed under Article XIII, Section 3 of the 1987 Constitution and implemented through the Labor Code of the Philippines. This right ensures that no employee may be dismissed from work except for just or authorized causes and only after observance of due process. Any termination that violates either the substantive or procedural requirements prescribed by law constitutes illegal dismissal.

This article discusses in detail the legal framework governing illegal dismissal without due process, the employee’s remedies, and the damages recoverable under Philippine labor law.

Substantive Due Process: The Need for Just or Authorized Cause

1. Just Causes

Under Article 297 [formerly Article 282] of the Labor Code, an employer may terminate employment only for just causes related to the employee’s conduct, such as:

Serious misconduct or willful disobedience of lawful orders;
Gross and habitual neglect of duties;
Fraud or breach of trust;
Commission of a crime or offense against the employer or his family; and
Other analogous causes.

These causes must be proven with substantial evidence—that is, relevant evidence that a reasonable mind might accept as adequate to support a conclusion.

2. Authorized Causes

Authorized causes under Articles 298–299 [formerly 283–284] pertain to business or health-related reasons, such as:

Installation of labor-saving devices;
Redundancy;
Retrenchment to prevent losses;
Closure or cessation of business; or
Disease of the employee which cannot be cured within six months.

Unlike just causes, these involve management prerogatives but must still comply with notice requirements and payment of separation pay.

Procedural Due Process: The Twin-Notice and Hearing Rule

Even if a valid cause for termination exists, dismissal may still be declared illegal if procedural due process is not observed. The Supreme Court has consistently held that due process requires two written notices and an opportunity to be heard:

First Notice (Notice to Explain) – This informs the employee of the specific acts or omissions constituting the grounds for dismissal and gives the employee the opportunity to respond within a reasonable period.
Hearing or Conference – The employee must be given a genuine opportunity to present their side, either through a written explanation or in a hearing where they can refute the charges and present evidence.
Second Notice (Notice of Termination) – After due evaluation, the employer must inform the employee in writing of the decision to terminate, stating the reasons for dismissal.

Failure to comply with these procedural requirements constitutes dismissal without due process, even if a just or authorized cause exists.

Consequences of Illegal Dismissal

An illegal dismissal arises when the employee is dismissed:

Without a just or authorized cause (violation of substantive due process); or
Without compliance with due process (violation of procedural due process).

1. Reinstatement Without Loss of Seniority Rights

Under Article 294 [formerly Article 279] of the Labor Code, an illegally dismissed employee is entitled to immediate reinstatement to their former position without loss of seniority rights and other privileges. Reinstatement may be actual or payroll reinstatement, depending on circumstances such as strained relations.

2. Full Backwages

The employee is also entitled to full backwages, computed from the time of dismissal up to actual reinstatement. Backwages include basic pay, allowances, and other benefits that the employee would have received had they not been dismissed.

3. Separation Pay in Lieu of Reinstatement

If reinstatement is no longer feasible—due to strained relations, cessation of business, or the position being abolished—the employee is entitled to separation pay in lieu of reinstatement, equivalent to one month’s salary for every year of service, unless a higher rate applies under company policy or collective bargaining agreement.

Nominal Damages for Violation of Procedural Due Process

When dismissal is for a valid cause but due process is not observed, the dismissal remains valid, but the employer is liable for nominal damages.

In Agabon v. NLRC (G.R. No. 158693, November 17, 2004), the Supreme Court awarded ₱30,000 nominal damages for failure to observe procedural due process in a just cause dismissal.
For authorized cause terminations, Jaka Food Processing Corp. v. Pacot (G.R. No. 151378, March 28, 2005) set the nominal damages at ₱50,000.

These amounts serve as a deterrent and reminder to employers of the importance of respecting employees’ right to due process.

Moral and Exemplary Damages

An employee may also recover moral and exemplary damages if the dismissal was effected in bad faith, malice, or fraudulent manner—for example, when the employer fabricates charges or harasses the employee to force resignation.

Moral damages compensate for mental anguish, social humiliation, and similar injuries.
Exemplary damages serve as a corrective example and punishment for oppressive conduct.

These require clear proof of bad faith or ill motive on the part of the employer.

Attorney’s Fees

Under Article 111 of the Labor Code, an employee who is compelled to litigate to recover wages or benefits is entitled to attorney’s fees equivalent to 10% of the total monetary award. This is an exception to the general rule that attorney’s fees are not recoverable as damages unless stipulated or justified by law.

Prescription and Burden of Proof

An action for illegal dismissal must be filed within four (4) years from the time of dismissal, following Article 1146 of the Civil Code. The burden of proof rests on the employer to show that the dismissal was for a valid cause and with observance of due process. Failure to do so results in a presumption that the dismissal was illegal.

Remedies and Jurisdiction

Complaints for illegal dismissal fall within the exclusive jurisdiction of the National Labor Relations Commission (NLRC) and are filed before the Labor Arbiter. The decision may be appealed to the NLRC, and subsequently to the Court of Appeals via Rule 65 petition for certiorari, and ultimately to the Supreme Court.

Conclusion

In the Philippine labor landscape, dismissal without due process violates both the Constitution and the Labor Code. The law strikes a balance between the employer’s right to manage and the employee’s right to security of tenure. Thus, compliance with both substantive and procedural due process is essential in every termination.

An illegally dismissed employee is entitled to reinstatement, full backwages, damages, and attorney’s fees—remedies designed not only to make the worker whole but also to remind employers that fairness and legality are non-negotiable elements in any employment relationship.