Termination Due to Authorized Cause
Article 298 of the Labor Code, as amended, provides causes which are grounds for the termination of employees. It is one of the authorized causes for termination.
Thus:
“Art. 298. Closure of establishment and re- duction of personnel.
The employer may also terminate the employment of any employee due to the installation of labor- saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.”
The employee terminated on any of these grounds did not cause their dismissal. They did not do anything against the employer unlike in just causes found in Article 297. Here, there are no gross and habitual neglect, willful breach of trust, insubordination, etc.
Acquire Mastery of HR/Labor Doctrines, Rules and Principles with Atty. Elvin’s HR Bundle Books at Discounted Rate
The termination in Article 298 is brought by the changing economic or other conditions of the employer’s business. Closure of offices, retrenchment, redundancy and cessation of operations are among the grounds for termination in this provision.
A dismissal for an authorized cause under Article 298 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.
In Article 299, the dismissal due to disease is another authorized cause not attributable to the employee. In a manner of speaking, authorized cause pertains to the two provisions in the Labor Code, i.e., Articles 298 and 299.
When an employee is terminated under Article 298, the employer merely exercises its prerogative to make business decisions. Although it is without prejudice to the right of the employee to question the validity of such removal before the labor court, the employer can exercise his prerogative to promote his business interests.
Yet, the workers must be protected against any abuse that may be committed in the process. The law ensures that there is no circumvention of the rights of the employee. For instance, the employer should not feign losses to justify removal of the employee he does not like.
The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. In spite of overwhelming support granted by the social justice provisions of our Constitution in favor of labor, the fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees, “the right of enterprises to reasonable returns of investment and to expansion and growth.”
To hold otherwise would not only be oppressive and inhuman, but also counter-productive and ultimately subversive of the nation’s thrust towards resurgence in our economy which would ultimately benefit the majority of our people.
Where appropriate and where conditions are in accord with law and jurisprudence, the Court has authorized valid reductions in the work force to forestall business losses, the hemorrhaging of capital, or even to recognize an obvious reduction in the volume of business which has rendered certain employees redundant.
Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin 
Read more on procedural due process discussion by Atty. Elvin:
Read more on procedural due process by Atty. Villanueva:
Twin Requirements of Notice and Hearing