Termination Law 2o1s

Definition: "Security of Tenure" is the right of an employee to continue in employment, where

there has been not definite period agreed upon, subject to the condition that no just or
authorized cause supervenes.
We observe Security of Tenure. Other jurisdictions (e.g. USA) follow "Employment at will"
policy.
"Employment at will doctrine" =A common-law rule that an employment contract of indefinite
duration can be terminated by either the employer or the employee at any time for any reason; also

known as terminable at will.

Who is that employee who enjoys

"double security of tenure"?

The tenured professor of a tertiary level educational institution. Montemayor v. Araneta

University Foundation, 77 SCRA 321 (1997). He enjoys the security of tenure under the Labor

Code and a second security of tenure by virtue of academic freedom likewise safeguarded by
the Constitution .
"x x x it was pointed out in Garcia v. The Faculty Admission Committee, 68 SCRA 277 {1975L
that academic freedom "is more often identified with the right of a faculty member to pursue
his studies in his particular specialty and thereafter to make known or publish the result of his
endeavors without fear that retribution would be visited on him in the event that his
conclusions are found distasteful or objectionable to the powers that be, whether in the
political, economic, or academic establishments. x x x Tenure is of the essence of such
freedom. Without tenure that assures a faculty member "against dismissal or professional
penalization on grounds other than professional incompetence or conduct that in the judgment
of his colleagues renders him unfit" for membership in the faculty, the academic right becomes
non-existent." {Ibid ., at 327)
What employee enjoys full security of tenure? The regular employee.
Who is a regular employee? [Art. 294 (280)] One who is engaged to perform activities that are
usual and necessary to the usual trade or business of the employer is a regular employee .
Do other employees enjoy security of tenure? Yes. However, they enjoy "limited" or "qualified"
security of tenure .
Classify employees according to security of tenure.

1. Managerial: D.M. Consunji vs. NLRC, 143 SCRA 204 {1986); MGG Marine Services vs.
NLRC, 259 SCRA 664 {1996) En bane,

2. Regular {Art. 294 {279)

3. Casual {Art. 294 {279)
4. Project: Fegurin vs. NLRC, 120 SCRA 910 {1983)
Failure to report project termination to DOLE: PNCC vs. NLRC, 174 SCRA 191 {1989)
5. Seasonal: Manila Hotel vs. CIR 9 SCRA 184 {1963)
6. Term employment: Brent School vs. Zamora, 181 SCRA 701 {1990)
7.

Re-hired after retirement: UST Faculty Union vs. NLRC, 188 SCRA 400 {1990)

8. Former hotel ees hired on trial basis by new owners: Philippine Village Hotel vs. NLRC,
230 SCRA 423 {1994)
9.

Probationary: Cebu Royal Plant vs. Deputy Minister, 153 SCRA 38 {1987)

"Dismissal" is cessation of an employment due to a just cause, attributable to the employee.

"Termination" is cessation of an employment due to an authorized cause, which is not the fault

of the employee. Dismissal does not merit separation pay; termination carries with it
separation pay.

What three questions need to be raised in order to determine the legality of a termination or
dismissal? The following: {1) Is there just or authorized cause? {2) Has the procedure outlined
by Labor Code been observed prior to the termination/dismissal? {3) Is the penalty
proportionate to the cause?

What may be the causes for termination or dismissal? They are as follows:
Just Cause [Art. 296 {282)]

1. Serious misconduct/
willful disobedience.

2. Gross & habitual

neglect of ees duties

Authorized Cause [Art. 297 {283)]

--retrenchment to prevent loss

--cessation of operation/closing
--installation of labor saving devices
--redundancy

3. Fraud/ willful breach

of trust reposed

4. Commission of crime/
offense against er/
immediate family.

5. Other causes analogous.

2

What are the procedural requisites of a valid termination on the grounds of

redundancy?
" ... it is imperative that the employer must comply with the requirements for a valid
implementation of the company's redundancy program, to wit: (a) the employer must
serve a written notice to the affected employees and the DOLE at least one {1) month
before the intended date of retrenchment; (b) the employer must pay the employees a
separation pay equivalent to at least one month pay or at least one month pay for every
year of serice, whichever is higher; (c) the employer must abolish the redundant
positions in good faith; and (d) the employer must set fair and reasonable criteria in
ascertaining which positions are redundant and may be abolished." Lopez Sugar Corp. v.
Franco, 458 SCRA 515 at 529 {2005) quoted in General Milling Corporation v. Viajar,
689 SCRA 598, at 608 (2013).

What are the procedural requisites of a valid dismissal on the grounds of just cause?

Perez and Doria v. PT&T, et al.,584 SCRA 110 (April 7, 2009), EN BANC, Corona, J.
"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 (Art.
277[b]), on the 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 x x x. 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 (ld., at 120121)."

"x

x 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. X x x
(ld., at 124)."
"In sum, the following are the guiding principles in connection with the hearing
requirement in dismissal cases:

(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 it1 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 (ld. 1 at 127)."
Nota Bene: [It is surprising that the Supreme Court does not quote from a long
line of decisions starting from Rabago v. NLRCJ 200 SCRA 158 (1991); Rase v.
NLRC1 237 SCRA 523 (1994); Libres v. NLRCJ SCRA (1999). Those cases} and many
more thereafter} held that personal confrontation and cross examination cannot
be invoked as a matter of right in procedural due process of employee dismissal
cases. The right to cross-examine belongs to the accused only in criminal
prosecutions by the "people/} by the State. In Manggagawa ng Komunikasyon v.
NLRCJ 206 SCRA109 (1992L the Supreme Court J however} conceded that "actual
adversarial proceedings may be necessary for clarification purposes or when
there is need to propound searching questions to unclear witnesses." That has to
do with the duty of the trier of facts} usually the labor arbiter} to ascertain
whether or not there is 'substantial evidence} supporting a claim.]
Subsequent Applications of the Perez Ruling:

TECHNOL EIGHT PHILIPPINES CORPORATION v. NLRC AND

DENNIS AMULAR, L- 187605, Apri/13, 2010, 2na Div., Brion, J.
[The case refers to 2 rank-and-file employees mauling a supervisor outside the
workplace, and not within working hours]
The labor arbiter ruled that Technol failed to afford Amular procedural due
process, since he was not able to present his side regarding the incident; at the time
he was called to a hearing, he had already filed the illegal dismissal complaint.
The NLRC, on the other hand, held that the memorandum terminating Amular' s
employment was a mere formality, an afterthought designed to evade company

liability since Amular had already filed an illegal dismissal case against
Techno I.
We disagree with these conclusions. The notice of preventive
suspension/notice of discharge served on Amular and Ducay required them to
explain within forty-eight (48) hours why no disciplinary action should be taken
against them for their involvement in the mauling incident. Amular submitted two
written statements: the first received by the company on May 19, 2002 and the
other received on May 20, 2002. On June 8, 2002, Technol management sent
Amular a memorandum informing him of an administrative hearing on June 14,
2002 at 10:00 a.m., regarding the charges against him. At the bottom left hand
comer of the memorandum, the following notation appears: "accept the copy of
notice but refused to receive, he will study first." A day before the administrative
hearing or on June 13, 2002, Amular filed the complaint for illegal
suspension/dismissal and did not appear at the administrative hearing. On July 4,
2002, the company sent Amular a notice of dismissal.
What we see in the records belie Amular's claim of denial of procedural due
process. He chose not to present his side at the administrative hearing. In fact, he
avoided the investigation into the charges against him by filing his illegal dismissal
complaint ahead of the scheduled investigation. Under these facts, he was given
the opportunity to be heard and he cannot now come to us protesting that he was
denied this opportunity. To belabor a point the Court has repeatedly made in
employee dismissal cases, the essence of due process is simply an opportunity to
be heard; it is the denial of this opportunity that constitutes violation of due process
of law.

Updates on "Immediate Reinstatement"

(a) Pioneer Texturizing Corp. v. NLRC, 345 Phil. 1057 (1997) established the
doctrine that an order or award for reinstatement from the Labor Arbiter is selfexcutory, meaning that it does not require a writ of execution, much less a
motion for its issuance. (This is the basis of the current NLRC Rules of Procedure
that leaves the enforcement of the reinstatement order to the employer who is
given the duty to submit a compliance report within 10 days from receipt of the
decision. The Labor Arbiter issues a writ of execution only when the employer
disobeys the above directive or refuses to reinstate the dismissed employee. Rule
IX Section 6 of NLRC Rules)

(c) The cases of Roquero v. Philippine Airlines, {G.R. No. 152329, 401 SCRA 424,
April22, 2003}, International Container Terminal Services, Inc. (JCTSI) v. NLRC,
{G.R. No. 115452, 300 SCRA 335, December 21, 1998} and Kimberly Clark (Phil.),
Inc. v. Facundo, (G.R. No. 144885, July 26, 2006} are authorities for the position
that notwithstanding the reversal by the NLRC of the labor arbiter's order of
reinstatement, the dismissed employee is still entitled to the wages accruing
during the pendency of the appeal.

(d) Genuine v. NLRC,539 SCRA 342 (Dec. 4, 2007) has been explicitly repealed by
Garcia et al., v. PAL, L-164856, Jan . 20, 2009. En Bane, Carpio-Morales, J.
The Garcia ruling is explained better in the latest case involving UIC of Davao City.
College of the Immaculate Conception v. NLRC & Atty. Marius F. Carlos, Ph.D., L167563, March 22, 2010, 3rd Div., Peralta, J., 616 SCRA 299

In Garcia v. Philippine Airlines, Inc., (January 20, 2009, 576 SCRA 479) the
Court made a very enlightening discussion on the aspect of reinstatement
pending appeal:
On this score, the Court's attention is drawn to seemingly divergent
decisions concerning reinstatement pending appeal or, particularly, the option of
payroll reinstatement. On the one hand is the jurisprudential trend as expounded
in a line of cases including Air Philippines Corp. v. Zamora, while on the other is
the recent case of Genuino v. National Labor Relations Commission. At the core of
the seeming divergence is the application of paragraph 3 of Article 223 of the
Labor Code x x x
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the
period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period
and such reinstatement order is reversed with finality, the employee
is not required to reimburse whatever salary he received for he is
6

entitled to such, more so if he actually rendered services during the

period. (Emphasis in the original; italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably
decided by the Labor Arbiter is entitled to receive wages pending
appeal upon reinstatement, which is immediately executory. Unless
there is a restraining order, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement and it is mandatory on the
employer to comply therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed
on appeal upon the finding that the ground for dismissal
is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund
the salaries [he) received while the case was pending
appeal, or it can be deducted from the accrued benefits
that the dismissed employee was entitled to receive
from [his] employer under existing laws, collective
bargaining agreement provisions, and company
practices. However, if the employee was reinstated to
work during the pendency of the appeal, then the
employee is entitled to the compensation received for
actual services rendered without need of refund.
Considering that Genuino was not
reinstated to work or placed on payroll reinstatement,
and her dismissal is based on a just cause, then she is not
entitled to be paid the salaries stated in item no. 3 of the
folio of the September 3, 1994 NLRC Decision.
(Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing
the wages to petitioners since their dismissal was found to be valid,
and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a

dispositive portion where the employee was required to refund the salaries
received on payroll reinstatement. In fact, in a catena of cases, the Court did not
order the refund of salaries garnished or received by payroll-reinstated
employees despite a subsequent reversal of the reinstatement order.
The dearth of authority supporting Genuino is not difficult to
fathom for it would otherwise render inutile the rationale of
reinstatement pending appeal.
xxxx
x x x Then, by and pursuant to the same power
{police power), the State may authorize an immediate
implementation,

pending

appeal,

of

decision

reinstating a dismissed or separated employee since that

saving act is designed to stop, although temporarily
since the appeal may be decided in favor of the
appellant, a continuing threat or danger to the survival
or even the life of the dismissed or separated employee
and his family.

In the same case, the Court went on to discuss the illogical and unjust
effects of the "refund doctrine" erroneously espoused in Genuine:
Even outside the theoretical trappings of the discussion and
into the mundane realities of human experience, the "refund
doctrine" easily demonstrates how a favorable decision by the Labor
Arbiter could harm, more than help, a dismissed employee. The
employee, to make both ends meet, would necessarily have to use
up the salaries received during the pendency of the appeal, only to
end up having to refund the sum in case of a final unfavorable
decision. It is mirage of a stop-gap leading the employee to a risky
cliff of insolvency.
8

Advisably, the sum is better left unspent. It becomes more

logical and practical for the employee to refuse payroll reinstatement
and simply find work elsewhere in the interim, if any is available.
Notably, the option of payroll reinstatement belongs to the
employer, even if the employee is able and raring to return to work.
Prior to Genuino, it is unthinkable for one to refuse payroll
reinstatement. In the face of the grim possibilities, the rise of
concerned employees declining payroll reinstatement is on the
horizon.
Further, the Genuino ruling not only disregards the social
justice principles behind the rule, but also institutes a scheme unduly
favorable to management. Under such scheme, the salaries
dispensed pendente lite merely serve as a bond posted in installment
by the employer. For in the event of a reversal of the Labor Arbiter's
decision ordering reinstatement, the employer gets back the same
amount without having to spend ordinarily for bond premiums. This
circumvents, if not directly contradicts, the proscription that the
"posting of a bond [even a cash bond] by the employer shall not stay
the execution for reinstatement."
In playing down the stray posture in Genuino requiring the
dismissed employee on payroll reinstatement to refund the salaries
in case a final decision upholds the validity of the dismissal, the Court
realigns the proper course of the prevailing doctrine on
reinstatement pending appeal vis-a-vis the effect of a reversal on
appeal.
XXXX

The Court reaffirms the prevailing principle that even if the

order of reinstatement of the Labor Arbiter is reversed on appeal, it
is obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal until
reversal by the higher court. x x x

Thus, the Court resolved the impasse by reaffirming the principle

earlier enunciated in Air Philippines Corporation, that an employee cannot
be compelled to reimburse the salaries and wages he received during the
pendency of his appeal, notwithstanding the reversal by the NLRC of the
LA's order of reinstatement. In this case, there is even more reason to hold
the employee entitled to the salaries he received pending appeal, because
the NLRC did not reverse the LA's order of reinstatement, but merely
declared the correct position to which respondent is to be reinstated, i.e.,
that of full-time professor, and not as Dean.
Petitioner (UIC) alleged that due to the unreasonable demand of the
respondent that he be reinstated as a Dean, instead of a faculty member,
petitioner was constrained to reinstate him in the payroll only. Thus, petitioner
argued that when the respondent imposed uncalled for conditions for his
reinstatement, his claim for reinstatement pending appeal was effectively
nullified. We rule that respondent did not impose any unreasonable condition on
his reinstatement as a Dean, because he was merely demanding that he be
reinstated in the manner set forth by the LA in the writ of execution. Moreover, it
bears stressing that the manner of immediate reinstatement, pending appeal, or
the promptness thereof is immaterial, as illustrated in the following two
scenarios:

Situation No. 1. (As in the cases of Air Philippines Corporation and

International Container Terminal Services, Inc.) The LA ruled in favor of the
dismissed employee and ordered his reinstatement. However, the employer did
not immediately comply with the LA's directive. On appeal, the NLRC reversed the
LA and found that there was no illegal dismissal. In this scenario, We ruled that
the employee is entitled to payment of his salaries and allowances pending
appeal.
Situation No. 2. (As in the present case) The LA ruled in favor of the
dismissed employee and ordered the latter's reinstatement. This time, the
employer complied by reinstating the employee in the payroll. On appeal, the LA's
ruling was reversed, finding that there was no case of illegal dismissal but merely
a temporary sanction, akin to a suspension. Here, We also must rule that the
employee cannot be required to reimburse the salaries he received because if he
was not reinstated in the payroll in the first place, the ruling in situation no. 1 will

10

apply, i.e., the employee is entitled to payment of his salaries and allowances
pending appeal.
Thus, either way we look at it, at the end of the day, the employee gets his
salaries and allowances pending appeal. The only difference lies as to the time
when the employee gets it.
(e) Immediate Reinstatement in Art. 263{g) 11 Return to Work." Latest Cases.

University of Immaculate Conception, Inc. vs. Secretary, 448 SCRA 190

(Jan.14 2005}, l 5 t Div., Azcuna, J. Issue: Can the Secretary of DOLE, upon
assumption of jurisdiction of a labor dispute (Art. 263{g}}, order the employer to
reinstate employees terminated by the employer even if those terminated
employees are not part of the bargaining unit and their termination is covered by
a decision of the voluntary arbitrator, which decision has become final and
executory?
YES, by virtue of the over-arching interest of the state to restore the status quo ante
6e[[um. (the employees concerned were ordered reinstated payroll wise).

PLOT vs. Manggagawa ng Komunikasyon sa Pilipinas, L-162783, July 14,

2005, 463 SCRA 418, 2nd Div., Chico-Nazario, J., The Secretary of Labor assumed
jurisdiction of the dispute (Art.263(g)) and issued a return to work order to all
striking workers "except those who were terminated due to redundancy." The
union struck on 23 Dec. 2002 to protest PLOT's redundancy program. On Dec. 31,
2002, 383 union members (telephone operators) were terminated pursuant to
the redundancy program. Most of the telephone workers had received their
separation benefits, which were in excess of what Art. 283 mandated.
The union filed a Motion for Reconsideration of the Secretary's Return-to-work
Order. The Secretary certified the labor dispute to the NLRC.
Held: Return to work order must cover ALL the striking workers. That includes all
the telephone workers, even those who had received their termination benefits.

11

Other causes:
1.

[Art 284] Disease. Villaruel v. Yeo Han Guan, 650 SCRA 64 (2011}

2.

[287] Retirement. Padillo v. Rural Bank of Nabunturan, L-19938, January 21, 2013; 689
SCRA 53. "Notably, these age and tenure requirements are cumulative and noncompliance with one negates the employee's entitlement to the retirement benefits
under Article 300 of the Labor Code altogether." (Ibid., at 65}

3.

[Sec. 66] Omnibus Election Code. PNOC-EDC v NLRC, 222 SCRA 831 (1993}

4. Conflict of Interest [Manila Broadcasting v. NLRC, 294 SCRA 476], Ymbong v. ABS-CBN,
667 SCRA 682 {2012}
5.

When continuation of employment prohibited by law [Great Pacific Life v. NLRC, 150
SCRA 601 {1987}]

6. Sexual harassment. Villarama v. NLRC, 236 SCRA 280 {1994}

7.

Resignation Phii.Overseas Drilling v. Minister, 146 SCRA 79 {1986}

8.

Permanent disability Alpha Ship Management Corporation, et al., v. Eleosis V. Calo, L192034, January 13, 2014, 2nd Div., del Castillo. How is a seaman's permanent disability
determined, and by whom?

9.

Detention by Military without basis merely suspends employment, not terminates the
same. Magtoto v. NLRC, 140 SCRA 58 (1985}

10. CARL (new case NFL v. NLRC, 317 SCRA 158 {2000}
11. Constructive Dismissal. OSS Security v. NLRC, 325 SCRA 157 {2000}; Dimagan v.
Dacworks United, Inc., et. al., 661 SCRA 438 {2011}.
12. Merger or consolidation. BPI v. BPI Employees Union-Davao Chapter-Federation of
Unions in BPI Unibank, L-154301, October 19, 2011, En Bane, Leonardo-de Castro, J. 659
SCRA 817.
13. Union Officers who knowingly participate in an illegal strike; union members for
committing illegal acts during a strike.

Jackbilt Industries, Inc. v, Jackbilt

Employees Workers Union, 581 SCRA 291 (March 20, 2009}, 1st Div.,
Corona, J.
14. Union officers & members who knowingly participate in a Prohibited Strike (Art. 278 (a}
{264{a}] St. Scholastica's College v. Torres. G.R. No. 100158, 29 June 1992, 210

SCRA 565
15. Expulsion from Union and Union Security Clause violation. Lirag Textiles v. Blanco, 109
SCRA 87.
16. Duncan v. Glaxo-Welcome, 438 SCRA 158 (2004} Validity of Exogamy policy
17. Star Paper v. Simbol487 SCRA 228 {2006} Invalidity of Exogamy policy

12

Part 11--Cases of Causes of Dismissal Not Found in Book VI of the Labor Code.
1.

Section 66 of the Omnibus Election Code: PNOC Energy Dev. Corp. v.

NLRC, 1st Div., Narvassa, C.J., 222 SCRA 231 (May 31, 1993)
ISSUE: whether an employee in a government owned or controlled

corporation without original charter (and therefore not covered by Civil

Service Law) nevertheless falls within the scope of Section 66 of the
Omnibus Election Code.
"Section 66. Candidates holding appointive office or position--- Any person

holding a public appointive office or position including active members of

the Armed Forces of the Philippines, and officers and employees in
government-owned or controlled corporations, shall be considered ipso

facto resigned from his office upon the filing of his certificate of candidacy."
Held: "x x x Section 66 of the Omnibus Election Code applies to officers

and employees in government-owned or controlled corporations, even if

they do not fall under the Civil Service Law but under the Labor Code. In
other words, Section 66 constitutes just cause for termination of
employment in addition to those set forth in the Labor Code, as amended.
{ld., at 845)"
2.

Acceptance of incompatible office: Manila Broadcasting Co. v. NLRC,

2nd

Div., Mendoza, J., 294 SCRA 486 {1998)

The Court approved of the company policy.

"What is involved in this case is an unwritten company policy considering

any employee who files a certificate of candidacy for any elective or local
office as resigned from the company. Although ll(b) of R.A. No. 6646 does
not require mass media commentators and announcers such as private
respondent to resign from their radio or TV stations but only to go on leave
for the duration of the campaign period, we think that the company may

13

nevertheless validly require them to resign as a matter of policy. In this

case, the policy is justified on the following grounds:
"Working for the government and the company at the same time is clearly
disadvantageous and prejudicial to the rights and interest not only of the
company but the public as well. In the event an employee wins in an
election, he cannot fully serve, as he is expected employers, obviously
detrimental to the interest of both the government and the private
employer.
In the event the employee loses in the election, the impartiality and cold
neutrality of an employee as broadcast personality is suspect, thus readily
eroding and adversely affecting the confidence and trust of the listening
public to employer's station." (petition, rolla, p. 18)
These are valid reasons for petitioner. No law has been cited by

private respondent prohibiting a rule such as that in question. Private

respondent cites the Local Government Code, #90(b) of which provides that
"Sanggunian members may practice their profession, engage in any
occupation, or teach in schools except during session hours." This provision,
however, is merely permissive and does not preclude the adoption of a
contrary rule, such as that in question. The company policy is reasonable
and not contrary to law." (ld., at 490-491).
Note: Because there was a doubt as to whether the policy was properly

promulgated and made know to all employees, and because he was found
to be in good faith in filing his certificate of candidacy and not resigning
after doing so, respondent was ordered reinstated with qualified
backwages. (ld., at 295)

3. Union Officers who knowingly participate in an Illegal Strike (Art.

264(a)).
14

Jackbilt Industries, Inc. v, Jackbilt Employees Workers Union, 581

SCRA 291 (March 20, 2009), 1st Div., Corona, J.
Issue: whether or not the filing of a petition with the labor arbiter to declare a
strike illegal is a condition sine qua non for the valid termination of employees
who commit an illegal act in the course of such strike.
[RATIO] "The principle of conclusiveness of judgment, embodied in Section
47(c), Rule 39 of the rules of Court, holds that the parties to a case are bound by
the findings in a previous judgment with respect to matters actually raised and
adjudged therein."
"Article 264(e) of the Labor Code prohibits any person engaged in picketing from
obstructing the free ingress to and egress from the employer's premises. Since
respondent was found in the July 17, 1998 decision of the NLRC to have
prevented the free entry into and exit of vehicles from petitioner's compound,
respondent's officers and employees clearly committed illegal acts in the course
of the March 9, 1998 strike.
The use of unlawful means in the course of a strike renders such strike
illegal. Therefore, pursuant to the principle of conclusiveness of judgment, the
March 9, 1998 strike was ipso facto illegal. The filing of a petition to declare the
strike illegal was thus unnecessary.
Consequently, we uphold the legality of the dismissal of respondent's officers and
employees. Article 264 of the Labor Code further provides that an employer may
terminate employees found to have committed illegal acts in the course of a
strike. Petitioner clearly had the legal right to terminate respondent's officers and
employees (ld., at 299-300)."

4. Employees who knowingly violate the union security clause

stipulated in the CBA (Art. 248 (e))
Historical Note: Pili v. NLRC, 217 SCRA 338 (1993)
Salunga v. CIR, 21 SCRA 216 (1967)
Malayang Samahan v. Ramos, 326 SCRA 428 (2000)

15

General Milling Corp. v. Casio et al., L-149552, March 10, 2010, 1st Div.,
Leonardo-de Castro, J.

In terminating the employment of an employee by enforcing the union security

clause, the employer needs only to determine and prove that: (1) the union
security clause is applicable; (2) the union is requesting for the enforcement of
the union security provision in the CBA; and (3) there is sufficient evidence to
support the decision of the union to expel the employee from the union. These
requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.
There is no question that in the present case, the CBA between GMC and
IBM-Local 31 included a maintenance of membership and closed shop clause as
can be gleaned from Sections 3 and 6 of Article II. IBM-Local 31, by written
request, can ask GMC to terminate the employment of the employee/worker who
failed to maintain its good standing as a union member.
It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM
Regional Director for Visayas and Mindanao, twice requested GMC, in the letters
dated March 10 and 19, 1992, to terminate the employment of Casio, eta/. as a
necessary consequence of their expulsion from the union.
It is the third requisite - that there is sufficient evidence to support the
decision of IBM-Local 31 to expel Casio, eta/.- which appears to be lacking in this
case. X x x
The failure of GMC to make a determination of the sufficiency of evidence
supporting the decision of IBM-Local 31 to expel Casio, et a/. is a direct
consequence of the non-observance by GMC of procedural due process in the
dismissal of employees.
As a defense, GMC contends that as an employer, its only duty was to
ascertain that IBM-Local 31 accorded Casio, et a/. due process; and, it is the
finding of the company that IBM-Local 31 did give Casio, eta/. the opportunity to
answer the charges against them, but they refused to avail themselves of such
opportunity.
This argument is without basis.

16

The Court has stressed time and again that allegations must be proven by
sufficient evidence because mere allegation is definitely not evidence. Once
more, in Great Southern Maritime Services Corporation. v. Acuna, the Court
declared:
Time and again we have ruled that in illegal dismissal cases like the present one,
the onus of proving that the employee was not dismissed or if dismissed, that the
dismissal was not illegal, rests on the employer and failure to discharge the same would
mean that the dismissal is not justified and therefore illegal. Thus, petitioners must not
only rely on the weakness of respondents' evidence but must stand on the merits of
their own defense. A party alleging a critical fact must support his allegation with
substantial evidence for any decision based on unsubstantiated allegation cannot
stand as it will offend due process. x x x. (Emphasis supplied .)

Latest Application of the General Milling Doctrine: PICOP RESOURCES,

INCORPORATED (PRJ) v. TANECA, et. al., L-160828, August 9, 2010, 2nd Div.,
PERALTA,J.

However, in terminating the employment of an employee by enforcing the

union security clause, the employer needs to determine and prove that: (1) the
union security clause is applicable; (2) the union is requesting for the enforcement
of the union security provision in the CBA; and (3) there is sufficient evidence to
support the decision of the union to expel the employee from the union. These
requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.

As to the first requisite, there is no question that the CBA between PRI and
respondents included a union security clause, specifically, a maintenance of
membership as stipulated in Sections 6 of Article II, Union Security and CheckOff. Following the same provision, PRI, upon written request from the Union, can
indeed terminate the employment of the employee who failed to maintain its good
standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2)
occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to
terminate the employment of respondents due to their acts of disloyalty to the
Union.
However, as to the third requisite, we find that there is no sufficient
evidence to support the decision of PRI to terminate the employment of the
respondents.
17
--~-

PRI alleged that respondents were terminated from employment based on

the alleged acts of disloyalty they committed when they signed an authorization
for the Federation of Free Workers (FFW) to file a Petition for Certification
Election among all rank-and-file employees of PRI. It contends that the acts of
respondents are a violation of the Union Security Clause, as provided in their
Collective Bargaining Agreement.
We are unconvinced.
We are in consonance with the Court of Appeals when it held that the
mere signing of the authorization in support of the Petition for Certification
Election of FFW on March 19, 20 and 21, or before the "freedom period/' is not
sufficient ground to terminate the employment of respondents inasmuch as the
petition itself was actually filed during the freedom period. Nothing in the
records would show that respondents failed to maintain their membership in
good standing in the Union. Respondents did not resign or withdraw their
membership from the Union to which they belong. Respondents continued to pay
their union dues and never joined the FFW.
Significantly, petitioner's act of dismissing respondents stemmed from the
latter's act of signing an authorization letter to file a petition for certification
election as they signed it outside the freedom period. However, we are
constrained to believe that an "authorization letter to file a petition for
certification election" is different from an actual "Petition for Certification
Election." Likewise, as per records, it was clear that the actual Petition for
Certification Election of FFW was filed only on May 18, 2000. Thus, it was within
the ambit of the freedom period which commenced from March 21, 2000 until
May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for
certification election outside the 60-day freedom period . This is not the situation
in this case. If at all, the signing of the authorization to file a certification election
was merely preparatory to the filing of the petition for certification election, or an
exercise of respondents' right to self-organization.

Moreover, PRI anchored their decision to terminate respondents' employment

on Article 253 of the Labor Code which states that "it shall be the duty of both
parties to keep the status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the 60-day period and/or until a
18

new agreement is reached by the parties." It claimed that they are still bound by
the Union Security Clause of the CBA even after the expiration of the CBA; hence,
the need to terminate the employment of respondents.
Petitioner's reliance on Article 253 is misplaced.
The provision of Article 256 of the Labor Code is particularly enlightening.
It reads:
Article 256. Representation issue in organized establishments. - In organized
establishments, when a verified petition questioning the majority status of the
incumbent bargaining agent is filed before the Department of Labor and Employment
within the sixty-day period before the expiration of a collective bargaining agreement,
the Med-Arbiter shall automatically order an election by secret ballot when the verified
petition is supported by the written consent of at least twenty-five percent (25%) of all
the employees in the bargaining unit to ascertain the will of the employees in the
appropriate bargaining unit. To have a valid election, at least a majority of all eligible
voters in the unit must have cast their votes. The labor union receiving the majority of
the valid votes cast shall be certified as the exclusive bargaining agent of all the workers
in the unit. When an election which provides for three or more choices results in no
choice receiving a majority of the valid votes cast, a run-off election shall be conducted
between the labor unions receiving the two highest number of votes: Provided, That the
total numbe r of votes for all contending unions is at least fifty per cent (50%) of the
number of votes cast.

At the expiration of the freedom period, the employer shall continue to

recognize the majority status of the incumbent bargaining agent where no petition for
certification election is filed.

Applying the same provision, it can be said that while it is incumbent for
the employer to continue to recognize the majority status of the incumbent
bargaining agent even after the expiration of the freedom period, they could only
do so when no petition for certification election was filed. The reason is, with a
pending petition for certification, any such agreement entered

into by

management with a labor organization is fraught with the risk that such a labor
union may not be chosen thereafter as the collective bargaining representative.
The provision for status quo is conditioned on the fact that no certification
election was filed during the freedom period. Any other view would render
nugatory the clear statutory policy to favor certification election as the means of
ascertaining the true expression of the will of the workers as to which labor
organization would represent them.

19

In the instant case, four {4) petitions were filed as early as May 12, 2000. In
fact, a petition for certification election was already ordered by the Med-Arbiter
of DOLE Caraga Region on August 23, 2000. Therefore, following Article 256, at
the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-SPFL
as the incumbent bargaining agent does not hold true when petitions for
certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic
renewal pertains only to the economic provisions of the CBA, and does not
include representational aspect of the CBA. An existing CBA cannot constitute a
bar to a filing of a petition for certification election. When there is a
representational issue, the status quo provision in so far as the need to await the
creation of a new agreement will not apply. Otherwise, it will create an absurd
situation where the union members will be forced to maintain membership by
virtue of the union security clause existing under the CBA and, thereafter, support
another union when filing a petition for certification election. If we apply it, there
will always be an issue of disloyalty whenever the employees exercise their right
to self-organization. The holding of a certification election is a statutory policy
that should not be circumvented, or compromised.
Time and again, we have ruled that we adhere to the policy of enhancing
the welfare of the workers. Their freedom to choose who should be their
bargaining representative is of paramount importance. The fact that there
already exists a bargaining representative in the unit concerned is of no moment
as long as the petition for certification election was filed within the freedom
period. What is imperative is that by such a petition for certification election the
employees are given the opportunity to make known who shall have the right to
represent them thereafter. Not only some, but all of them should have the right
to do so. What is equally important is that everyone be given a democratic space
in the bargaining unit concerned.
We will emphasize anew that the power to dismiss is a normal prerogative of
the employer. This, however, is not without limitations. The employer is bound to

exercise caution in terminating the services of his employees especially so

when it is made upon the request of a labor union pursuant to the Collective
Bargaining Agreement. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee, because it affects not only
his position but also his means of livelihood. Employers should, therefore,

20

respect and protect the rights of their employees, which include the right to
labor.
An employee who is illegally dismissed is entitled to the twin reliefs of full
backwages and reinstatement. If reinstatement is not viable, separation pay is
awarded to the employee. In awarding separation pay to an illegally dismissed
employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to
one month salary for every year of service. Under Republic Act No. 6715,
employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits, or their monetary equivalent, computed from the
time their actual compensation was withheld from them up to the time of their
actual reinstatement. But if reinstatement is no longer possible, the backwages
shall be computed from the time of their illegal termination up to the finality of the
decision. Moreover, respondents, having been compelled to litigate in order to
seek redress for their illegal dismissal, are entitled to the award of attorney's fees
equivalent to 10% of the total monetary award.

5. Closure of Plantation due to CARP (RA 6657): NFL v. NLRC, 327 SCRA
158 {2000), 2nd Div., De Leon, Jr., J.
"The Patalon Coconut Estate was closed down because a large portion of
the said estate was acquired by the DAR pursuant to the CARP. Hence, the
closure of the Patalon Coconut Estate was not effected voluntarily by
private respondents who even filed a petition to have said estate exempted
from the coverage of RA 6657. Unfortunately, their petition was denied by
the Department of Agrarian Reform. Since the closure was due to the act
of the government to benefit the petitioners, as members of the Patalon
Estate Agrarian Reform Association, by making them agrarian lot
beneficiaries of said estate, the petitioners are not entitled to separation
pay. The termination of their employment was not caused by the private
respondents. The blame, if any, for the termination of petitioners'
employment can even be laid upon the petitioner-employees themselves
inasmuch as they formed themselves into a cooperative, PEARA, ultimately
to take over, as agrarian lot beneficiaries, of private respondents' landed
estate pursuant to RA 6657. The resulting closure of the business

21

establishment, Patalon Coconut Estate, when it was placed under CARP,

occurred through no fault of the private respondents." {ld., at 265-266)
6.

Exogamy Policy: Duncan Assn. of Detailmen-PTGWO v. Glaxo-Welcome,

438 SCRA 343, 2nd Div., Tinga, J., {Sept. 7, 2004)
ISSUE: Whether or not an Exogamy Policy of a pharmaceutical employer

that prohibits its employees from marrying employees of a competitor

company is valid.
Definition of Exogamy: It is a rule requiring selection of a marriage partner

from outside a particular group.

Glaxo-Welcome's Exogamy policy as incorporated in the employment
contract read:

11

10. You agree to disclose to management any existing or

future relationship you may have, either by consanguinity or affinity with

co-employees or employees of competing drug companies. Should it pose
a possible conflict of interest in management discretion, you agree to
resign voluntarily from the Company as a matter of Company policy {ld.,

at 351)"
Ruling:

"The prohibition against personal or marital relationships with employees

of competitor companies upon Glaxo's employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy,
Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures {ld., at

353)."

22

"The Court of Appeals also correctly noted that the assailed company policy
which forms part of respondent's Employee Code of Conduct and of its
contracts with its employees, such as that signed by Tecson, was made
known to him prior to his employment. Tecson, therefore, was aware of
that restriction when he signed his employment contract and when he
entered into a relationship with Bettsy. Since Tecson knowingly and
voluntarily entered into a contract of employment with Glaxo, the
stipulations therein have the force of law between them and, thus, should
be complied with in good faith." He is therefore stopped from questioning
said policy.
"The Court finds no merit in petitioners' contention that Tecson was
constructively dismissed when he was transferred from the Camarines
Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del
Sur sales area, and when he was excluded from attending the company's
seminar on new products which were directly competing with similar
products manufactured by Astra. Constructive dismissal is defines as a
quitting, an involuntary resignation resorted to when continued
employment becomes impossible, unreasonable, or unlikely; when there is
a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the
employee." None of these conditions are present in the instant case (ld., at
355-356)."
In line with the Duncan-Giaxo-Welcome ruling, it is relevant to note that
ten years earlier the Court approved of an employer's Anti-Competition
Clause stipulated in an employee's contract.
In Dai-Chi Electronics Manufacturing Corp. v. Villarama, Jr., 238 SCRA
267(1994) the Anti-Competition Clause read thus:
"That for a period of two (2} years after termination of service from
EMPLOYER, EMPLOYEE shall not in any manner be connected, and/or
23

employed, be a consultant and/or be an informative body directly or

indirectly, with any business firm, entity or undertaking engaged in a
business similar to or in competition with that of the EMPLOYER" (ld., at
268).
"Petitioner claimed that private respondent became an employee of Angel
Sound Philippines Corporation, a corporation engaged in the same line of
business as that of petitioner, within two years from January 30, 1992, the
date of private respondent's resignation from petitioner's employ.
Petitioner further alleged that private respondent is holding the position of
Head of the Material Management Control Department, the same position
he held while in the employ of petitioner (ld., at 269)."
On the strength of Singapore Airlines Limited v. Pano, 122 SCRA 671
(1983), the Court ordered the court a quo to hear and decide the case
ruling that the regular courts, not the labor arbiter, had jurisdiction over
the employer's claim for liquidated damages (P100,000).
7. No-spouse Employment Policy: Star Paper v. Simbol, 487 SCRA 228 (April

12, 2006), 2nd Div., Puno, J.

ISSUE: "WHETHER THE POLICY OF THE EMPLOYER BANNING SPOUSES
FROM WORKING IN THE SAME COMPANY VIOLATES THE RIGHTS OF THE
EMPLOYEE UNDER THE CONSTITUTION AND THE LABOR CODE OR IS A
VALID EXERCISE OF MANAGEMENT PREROGATIVE (ld., at 233)."
The Policy read: "1. New applicants will not be allowed to be hired if in case
he/she has [a] relative, up to [the]3rd degree of relationship, already
employed by the company. ["anti-nepotism employment policy" (p.239)]
2. In case of two of our employees (both singles [sic], one
male and another female) developed a friendly relationship during the
course of their employment and then decided to get married, one of them

24

should resign to preserve the policy stated above (ld. 1 at 234). 11 [labeled by
the Court as "no-spouse employment policy// (p.239)]
"x x x [C]ourts also find the no-spouse employment policy invalid for
failure of the employer to present any evidence of business necessity other
than the general perception that spouses in the same workplace might
adversely affect the business. They hold that the absence of such a bona
fide occupational qualification invalidates a rule denying employment of

the other spouse in the same office. x x x (ld. 1 at 242)

"We note that since the finding of a bona fide occupational qualification
justifies an employer 1 s no-spouse rule 1 the exception is interpreted strictly
and narrowly by these state courts. There must be a compelling business
necessity for which no alternative exists other than the discriminatory
practice. To justify a bona fide occupational qualification/ the employer
must prove two factors: (1) that the employment qualification is

reasonably related to the essential operation of the job involved; and/ (2)
that there is a factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties
of the job (ld .1 at 242-243). 11
XXX

"In the recent case of Duncan Association of Detailman- PTGWO and Pedro
Tecson v. Glaxo Wei/come Philippines/ Inc./ we passed on the validity of the

policy of a pharmaceutical company prohibiting its employees from

marrying employees of any competitor company. We held that Glaxo has a
right to guard its trade secrets, manufacturing formulas, marketing

strategies and other confidential programs and information from

competitors. We considered the prohibition against personal or marital
relationships with employees of competitor companies upon Glaxds
employees reasonable under the circumstances because relationships of
that nature might compromise the interests of Glaxo. In laying down the
25

assailed company policy, we recognized that Glaxo only aims to protect its
interests against the possibility that a competitor company will gain access
to its secrets and procedures.
"The requirement that a company policy must be reasonable under the
circumstances to qualify as a valid exercise of management prerogative was
also at issue in the 1997 case of Philippine Telegraph and Telephone
Company v. NLRC. In said case, the employee was dismissed in violation of
petitioner's policy of disqualifying from work any woman worker who
contracts marriage. We held that the company policy violates the right
against discrimination afforded all women workers under Article 136 of the
Labor Code. x x x (ld., at 243:.244)
"The cases of Duncan and PT & T instruct us that the requirement of
reasonableness must be clearly established to uphold the questioned
employment policy. The employer has the burden to prove the existence of
a reasonable business necessity. The burden was successfully discharged in
Duncan but not in PT & T. We do not find a reasonable business necessity in
the case at bar. x x x (ld., at 244)"

B. Anti-Sexual harassment Act of 1995 (RA 7877): Domingo v. Rayala, 546

SCRA 90 {2008), 3rd Div., Nachura, J.
ISSUE: For sexual harassment to be committed is it essential that there be a
demand, request, or requirement of a sexual favor as a condition for
continued employment or for promotion to a higher position?
NO.

"It is enough that the acts of respondent's (NLRC Chairman Rogelio I.

Rayala) result in creating an intimidating, hostile or offensive environment

for the employee (ld., at 115)"

What, then, did Rayala do which constituted sexual harassment?

26

"(But) it is not necessary that the demand, request or requirement of a

sexual favor be articulated in a categorical oral or written statement. It may
be discerned, with equal certitude, from the acts of the offender. Holding
and squeezing Domingo's shoulders, running his fingers across her neck and
tickling her ear, having inappropriate conversations with her, giving her
money allegedly for school expenses with a promise of future privileges,
and making statements with unmistakable sexual overtones- all these acts
of Rayala resound with deafening clarity the unspoken request for a sexual
favor (ld., at 114)".
The Court then differentiates the case of Aquino v. Acosta, 380 SCRA 1

(2002), En Bane, Sandovai-Gutierrez, J., from that of Rayala.

"While in Aquino, the Court interpreted the acts (of Judge Acosta) as casual
gestures of friendship and camaraderie, done during festive or special
occasions and with other people present, in the instant case, Rayala's acts
of holding and squeezing Domingo's shoulders, running his fingers across
her neck and tickling her ear, and the inappropriate comments, were all
made in the confines of Rayala's office when no other IT)embers of his staff
were around. More importantly, and a circumstance absent in Aquino,
Rayala's acts, as already adverted to above, produced a hostile work
environment for Domingo, as shown by her having reported the matter to
an officemate and, after the last incident, filing for a leave of absence and
requesting transfer to another unit (ld., at 116-117)".
Nota Bene: Rayala's case was decided in division; Acosta's case En Bane.
Why?

27

9. For Schools: Failure of regular faculty members to obtain a minimum

efficiency rating of 85% in two previous school years as required by the
school's teacher manual.

Evelyn Pena, et al. v. NLRC & Naga Parochial School, 258 SCRA 65 (1996),

11

We are satisfied that petitioners' employment was terminated for a just

and legal cause. Their fear that, in the future unachievable standards might
be imposed by the school as a scheme to ease out tenured members of the
faulty is unfounded. The fact is that the evidence in this case does not bear
out petitioners' misgivings. To the contrary, it appears that only the six
petitioners, out of the school's 47 teachers, failed to obtain the grade of

85%, which proves that the rating is neither unattainable nor unrealistic.
(ld., at 69)"
11

1t is the prerogative of the school to set high standards of efficiency for its

teachers since quality education is a mandate of the Constitution (Art. XIV,

Par. 1). As long as the standards fixed are reasonable and not arbitrary,
courts are not at liberty to set them aside. Schools cannot be required to
adopt standards which barely satisfy criteria set for government
recognition. (ld., at 67)"
However, see ST. MARY'S ACADEMY OF DIPOLOG CITY V. PALACIO, ET AL., L164913, 1st Div., del Castillo, J., September 8, 2010.
Department of Education, Culture and Sports (DECS) Memorandum No. 10, S. 1998
required incumbent teachers to register as professional teachers pursuant to Section 27
of Republic Act (RA) No. 7836, otherwise known as the Philippine Teachers
Professionalization Act of 1994. The DECS Memorandum, pursuant to PRC Resolution
No. 600, S. 1997, fixed the deadline for teachers to register on September 19, 2000.
Petitioner, however, claimed that it decided to terminate the services of complaining
teachers as early as March 31, 2000 because it would be prejudicial to the school if their
services will be terminated in the middle of the school year. Issue: whether or not there
was illegal dismissal.
28

11

[However], it is to be noted that the law still allows those who failed the
licensure examination between 1996 and 2000 to continue teaching if they obtain
temporary or special permits as para-teachers. In other words, as the law has provided a
specific timeframe within which respondents could comply, petitioner has no right to
deny them of this privilege accorded to them by law. As correctly pointed out by the
Labor Arbiter and affirmed by the NLRC and the CA, the dismissal from service of
respondents Palacio, Calibod, Laquio, Santander and Montederamos on March 31, 2000
was quite premature.
Petitioner claims that it terminated respondents' employment as early as March
2000 because it would be highly difficult to hire professional teachers in the middle of
the school year as replacements for respondents without compromising the operation
of the school and education of the students. Also, petitioner reasons out that it could
not enter into written contracts with respondents for the period June 2000 to
September 19, 2000 without violating the DECS's policy requiring contracts of yearly
duration for elementary and high school teachers.
Petitioner's contentions are not tenable. First, even if respondents' contracts
stipulate for a period of one year in compliance with DECS's directive, such stipulation
could not be given effect for being violative of the law. Provisions in a contract must be
read in conjunction with statutory and administrative regulations. This finds basis on
the principle 11that an existing law enters into and forms part of a valid contract without
the need for the parties expressly making reference to it." Settled is the rule that
stipulations made upon the convenience of the parties are valid only if they are not
contrary to law. Hence, mere reliance on the policy of DECS requiring yearly contracts
for teachers should not prevent petitioner from retaining the services of respondents
until and unless the law provides for cause for respondents' dismissal.
Petitioner's intention and desire not to put the students' education and school
operation in jeopardy is neither a decisive consideration for respondents' termination
prior to the deadline set by law. Again, by setting a deadline for registration as
professional teachers, the law has allowed incumbent teachers to practice their
teaching profession until September 19, 2000, despite being unregistered and
unlicensed. The prejudice that respondents' retention would cause to the school's
operation is only trivial if not speculative as compared to the consequences of
respondents' unemployment. Because of petitioner's predicament, it should have
adopted measures to protect the interest of its teachers as regular employees. As
correctly observed by theCA, petitioner should have earlier drawn a contingency plan in
29

the event there is need to terminate respondents' services in the middle of the school
year. Incidentally, petitioner did not dispute that it hired and retained other teachers
who do not likewise possess the qualification and eligibility and even allowed them to
teach during the school year 2000-2001. This indicates petitioner's ulterior motive in
hastily dismissing respondents.
Nota Bene: The Supreme Court, however, did not order reinstatement but
approved the payment of separation benefits and qualified "backwages."

"Petitioner questions the amount of separation pay awarded to respondents

contending that assuming respondents were illegally dismissed, they are only entitled to
an amount computed from the time of dismissal up to September 19, 2000 only. After
September 19, 2000, respondents, according to petitioner, are already dismissible for
cause for lack of the necessary license to teach.
This contention deserves no merit. Petitioner cannot possibly presume that
respondents could not timely comply with the requirements of the law. At any rate, we
note that petitioner only assailed the amount of backwages for the first time in its
motion for reconsideration of the Decision of the CA. Thus, the Court cannot entertain
the issue for being belatedly raised. Hence, the award of limited backwages covering
the period from March 31, 2000 to September 30, 2000 as ruled by the Labor Arbiter
and affirmed by both the NLRC and CA is in order.
See also: International School Manila &/or Brian McCauley v. International
School Alliance of Educators (ISAE) et al., L-167286, Feb. 05, 2014, 1st Div., Leonardo-De

Castro, J.
"Contrary to the ruling of the Labor Arbiter, it is not accurate to state that Santos
was dismissed by the School for inefficiency on account of the fact that she was caught
only once without a lesson plan. The documentary evidence submitted by petitioners,
the contents of which we laid down in detail in our statement of facts, pointed to the
numerous instances when Santos failed to observe the prescribed standards of
performance set by the School in several areas of concern, not the least of which was
her lack of adequate planning for her Filipino classes. Said evidence established that the
School administrators informed Santos of her inadequacies as soon as they became
apparent; that they provided constructive criticism of her planning process and teaching
30

performance; and that regular conferences were held between Santos and the
administrators in order to address the latter's concerns. In view of her slow progress,
the School required her to undergo the remediation phase of the evaluation process
through a Professional Growth Plan. Despite the efforts of the School administrators,
Santos failed to show any substantial improvement in her planning process. Having
failed to exit the remediation process successfully, the School was left with no choice
but to terminate her employment."

lO.Merger and Consolidation: BPI v. BPI Employees Union-Davao ChapterFederation of Unions in BPI Unibank, L-154301, October 19, 2011, En Bane,

Leonardo-de Castro, J. 659 SCRA 817.

FACTS: In 2000, Far East Bank (FEB) was absorbed by BPI in a merger. Now BPI

has an existing Union Shop Clause agreement with the BPI Employees Union
whereby it is a pre-condition that new employees must join the union before
they can be regularized otherwise they cannot continue in employment. By
reason of the failure of the FEB employees to join the union, BPI Union
recommended to BPI their dismissal. BPI refused. The issue went to voluntary
arbitration where BPI won but the Court of Appeals reversed the Voluntary
Arbitrator. BPI appealed to the Supreme Court.
ISSUE: Whether or not the Union Shop agreement violated the constitutional

right of security of tenure of the FEB employees absorbed by BPI.

HELD: No. As a general rule, the State protects the workers right to security of

tenure. An employee's services can only be terminated upon just and

authorized causes. In this case, the presence of a Union Shop Clause in the CBA
between BPI and BPI Union must be respected. Failure of an employee to join
the union pursuant to the clause is an authorized cause for BPI not to continue
employing the employee concerned - and BPI must respect that provision of
the CBA. In the hierarchy of labor rights, unionism is favored over security of
tenure . A contrary interpretation of the Union Shop Clause would dilute its
efficacy and put the certified union that is supposedly being protected thereby
at the mercy of management. Nevertheless, the FEB employees are entitled to
the twin notice rule -this is to afford them ample opportunity to whether or
not join the union.
31

11. Probationary Employment: Abbott laboratories, et al., v. Alcaraz, L-192571,

July 23, 2013, 701 SCRA 682, En Bane, Perlas-Bernabe, J.

". . . (t)he employer is made to comply with two (2) requirements when
dealing with a probationary employee: first, the employer must communicate
the regularization standards to the probationary employee; and second, the
employer must make such communication at the time of the probationary
employee's engagement. If the employer fails to comply with either, the
employee is deemed as a regular and not a probationary employee." (ld., at
707)
X X X
"The exception to the foregoing is when the job is self-descriptive in nature,
for instance, in the case of maids, cooks, drivers, or messengers (Robinsons
Galleria v. Ranchez, 640 SCRA 135, at 145 (2011). Also in Aberdeen Court, Inc.
v. Agustin, 456 SCRA 32, at 43 (2005), it has been held that the rule on
notifying a probationary employee of the standards of regularization should
not be used to exculpate an employee who acts in a manner contrary to basic
knowledge and common sense in regard to which there is no need to spell out
a policy or standard to be met. In the same light, an employee's failure to
perform the duties and responsibilities which have been clearly made known
to him constitutes a justifiable basis for a probationary employee's
nonregularization." (ld., at 708)
"Verily, basic knowledge and common sense dictate that the adequate
performance of one's duties is, by and of itself, an inherent and implied
standard for a probationary employee to be regularized; such is a
regularization standard which need not be literally spelled out or mapped into
technical indicators in every case. In this regard, it must be observed that the
assessment of adequate duty performance is in the nature of a management
prerogative which when reasonably exercised---as Abbott did in this case--should be respected. This is especially true of a managerial employee like
Alcaraz who was tasked with the vital responsibility of handling the personnel
and important matters of her department. "(ld., at 710)
Abbott laboratories, et al., v. Alcaraz, L-192571,RESOLUTION, April 22, 2014,
RESOLUTION En Bane, Perlas-Bernabe, J.

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"In the assailed Decision, the Court actually extended the application of the
Agabon [442 SCRA 573 (2004)] and Jaka [454 SCRA 119 (2005)] rulings to
breaches of company procedure (failure to evaluate probationary employee
after 3 months), notwithstanding the employer's compliance with the
statutory requirements under the labor Code."

12. Permanent Disability Alpha ship Management corporation, et al. v. Eleosis

V. Calo,2"d Div., Del Castillio, J., G.R. No. 192034. January 13, 2014. How is a

seaman's permanent disability determined, and by whom?

Thus, x x x it can be said that an employee's (seaman's) disability
becomes permanent and total when so declared by the company-designated
physician, or, in case of absence of such a declaration either of fitness or
permanent total disability, upon the lapse of the 120 or 240-day treatment
period, while the employee's disability continues and he is unable to engage
in gainful employment during such period, and the company-designated
physician fails to arrive at a definite assessment of the employee's fitness or
disability. This is true "regardless of whether the employee loses the use of
any part of his body."46 (Maersk Filipinas Crewing Inc. v. Mesina, G.R. No. 200837, June 5,
2013; Valenzona v. Fair Shipping Corporation, supra note 42 at 652; Quitoriano v. Jebsens
Maritime, Inc., G.R. No. 179868, January 21, 2010, 610 SCRA 529, 536; Crystal Shipping. Inc.
v. Natividad, 510 Phil. 332, 340 (2005)

13.Colegio de San Juan de Letran v. Isidra Dela Rosa-Meris, G.R.

178837, September 1, 2014, Peralta, J. Is the act of altering elementary
students' grades in non-numerical subjects (p.e., writing, etc.) out of
compassion ground for dismissal?

The fact that eight students were made beneficiaries of such

increase does not justify the irregular alteration since the rule is,
the rating of the pupil should be based on his scholastic record,
even if the same is non-tested or qualitative in nature, as in the
cas eat bar. Respondent's prerogative to give her students the grade
that they deserve is not incoherent with having a fair and
reasonable basis therefor.
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To our mind, the acts of the respondent in altering the grades in

the Clean Records even after the same were already reviewed and
approved by the subject coordinators; of effecting the alterations
and erasures without placing her initials thereon; of not informing
the subject coordinators of such
alterations and erasures; of allowing the discrepancies to last
without any effort to reconcile the same to avoid any doubts on
the grading system of petitioner; of refusing to accept the memo
informing her of the aforesaid tampering and snubbing any
explanation relevant thereto, are all acts of transgression of school
rules, regulations and policies. Truly, then, respondent had
committed a misconduct, serious enough to warrant her dismissal
from employment under paragraph (a) of Article 282 of the Labor
Code, as well as Section 94(b), ArticleXVII of the Manual of
Regulations for Private Schools, which provides that the
employment of a teacher may be terminated for negligence in
keeping school or student records, or tampering with or
falsification of the same x x x.

15. Manila Polo Club Employees' Union (MPCEU) FURTUCP v. Manila Polo Club, Inc., L-172846, 3rd Div., Peralta, J.,
702 SCRA 20, July 24, 2013,
Based on the above and cases of similar import, We summarize:
1. Closure or cessation of operations of establishment or
undertaking may either be partial or total.
2. Closure or cessation of operations of establishment or
undertaking may or may not be due to serious business losses
or financial reverses. However, in both instances, proof must
be shown that: (1 )it was done in good faith to advance the
empl9yer' s interest and not for the purpose of defeating or
34

circumventing the rights of employees under the law or a

valid agreement, and (2 )a written notice on the affected
employees and the DOLE is served at least one month before
the intended date of termination of employment.
3. The employer can lawfully close shop even if not due to
serious business losses or financial reverses but separation

pay, which is equivalent to at least one month as provided for

by Article 297 (283) of the Labor Code, as amended, must be
given to all the affected employees.
4. If the closure or cessation of operations of establishment or
undertaking is due to serious business losses or financial
reverses, the employer must prove such allegation in order to
avoid the payment of separation pay. Otherwise, the affected
employees are entitled to separation pay.
5. The burden of proving compliance with all the above-stated
falls upon the employer (Id., at 37-38).
16. History of"Financial Assistance."
1. " ... where a penalty less punitive would suffice, whatever missteps may
be committed by labor ought not to be visited with a consequence so
severe. It is not only because of the law's concern for the workingman.
There is, in addition, his family to consider. Unemployment brings untold
hardships and sorrows on those dependent on the wage-earner . . . . labor
law determinations, to quote from Bultmann, should be not only secundum
rationem but also secundum caritatem." (Justice Enrique Fernando in
Almira v. B.F. Goodrich Philippines, Inc., 58 SCRA 120, at 131 [1974])
With the Fernando ruling, dismissal became a "measure of last resort" And
an employee, though legally dismissed, may still be awarded financial
assistance by labor tribunals.

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2. PLDT v. NLRC & Abuca~ G.R. No. 80609 August 23, 1988, 164 SCRA 671, EN
BANC, Cruz,J.,
We 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 petitioner correctly argues,
have the effect, of rewarding rather than punishing the erring employee for his
offense.[ld., at 682]
3 Immaculate Conception Academy v. Camilon, L-1888035, 1st Div., Villarama, J.,
J., July 02, 2014.
The issue of whether a validly dismissed employee is entitled to separation
pay has been settled in the 2007 case of Toyota Motor Phils. Corp. Workers
Association (TMPCWA) v. NLRC, 537 SCRA 171 (2007) 2"a Div., Velasco, Jr., J.,
where it was further clarified that "in addition to serious misconduct, in
dismissals based on other grounds under Art. 282 (now Art. 296) 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.

2. Solidbank Corporation v. NLRC, L-165951, March 30, 2010, 3'd Div.,

Peralta, J., 617 SCRA 161,

TheCA awarded financial assistance to respondents Rodolfo Bombita eta/.

out of "compassionate justice" despite the fact that petitioner Solid bank
Corporation had already paid the respondents their separation pay in accordance
with Article 283 (now Art. 297) of the Labor Code. Proper?
While theCA should not be faulted for sympathizing with the plight of
respondents as they suddenly lost their means of livelihood, this Court holds that
it is precisely because of the sudden loss of employment- one that is beyond the
control of labor- that the law statutorily grants separation pay and dictates how
the same should be computed. Thus, any business establishment that decides to
cease its operations has the burden of complying with the law. This Court should
refrain from adding more than what the law requires, as the same is within the
realm of the legislature.

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It bears to stress, however, that petitioner may, as it has done, grant on a

voluntary and ex gratia basis, any amount more than what is required by the law,
but to insist that more financial assistance be given is certainly something that
this Court cannot countenance, as the same serves to penalize petitioner, which
has already given more than what the law requires. Moreover, any award of
additional financial assistance to respondents would put them at an advantage
and in a better position than the rest of their co-employees who similarly lost
their employment because of petitioner's decision to cease its operations.

37