ATENEO DE DAVAO UNIVERSITY

College of Law
Davao City
Notes on Termination (October 8, 2010)
By: A. L. Nazareno
Part I Historical Note.
Timeline of the Supreme Court Pronouncements on the Legal Characterization of Illegal Dismissal/Termination
(a) Prior to 1989, the rule was that a dismissal or termination was illegal if the employee was not given notice. Illegal
dismissal/termination was considered a violation of the Constitutional Right to Due Process.
(b) That rule was reversed by Wenphil v. NLRC, 170 SCRA 69 (1989), which held that where the employer had a
valid reason to dismiss an employee but did not follow the notice or due process requirement, the dismissal may be
upheld but the employer shall be penalized (P1,000 fine) by way of paying an indemnity to the employee. [This ruling
is said to have given rise to the abhorrent practice of dismiss-now, pay- later which was supposed to have
been deterred by the Serrano ruling.]
(c) Serrano v. NLRC, En Banc, Mendoza, J. 323 SCRA 445 (2000), ruling changed the extent of the sanction. It held
that while the violation by the employer of the notice requirement in termination for just or authorized causes was not
a denial of due process which will nullify the termination, the dismissal is ineffectual and the employer must pay full
backwages from the time of termination until it is judicially declared that the dismissal was not for a just or authorized
cause. [This ruling had to be corrected because it had the net effect of rewarding an employee who is at fault with
full backwages that many times run into the hundred thousands of pesos.]
(d)x x x There are three reasons why, on the other hand, violation by the employer of the notice requirement
cannot be considered a denial of due process resulting in the nullity of the employees dismissal or layoff.
The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does
not apply to the exercise of private power, such as the termination of employment under the labor Code. This is plain
from the text of Art. III, 1 of the Constitution, viz.: No person shall be deprived of life, liberty, or property without due
process of law . . . The reason is simple: Only the State has authority to take the life, liberty, or property of the
individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is consistent with what
are considered civilized methods.
The second reason is that notice and hearing are required under the Due Process Clause before the
powers of organized society are brought to bear upon the individual. This is obviously not the case of termination of
employment under Art. 283. Here the employee is not faced with an aspect of the adversarial system. The purpose for
requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any
charge against him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job
and the DOLE an opportunity to determine whether economic causes do exist justifying the termination of his
employment (Id., at 468)
The third reason why the notice requirement under Art. 283 cannot be considered a requirement of the Due
Process Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. This
is also the case in termination of employment for a just cause under Art 282 (i.e., serious misconduct or willful
disobedience by the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or
willful breach of trust of the employer, commission of crime against the employer or the latters immediate family or
duly authorized representatives, or other analogous cases). x x x (Id., at 470)
(e) Agabon v. NLRC, En Banc (8-6), Ynares-Santiago, 442 SCRA 573 (2004) corrected the Serrano ruling but
without returning to the Wenphil doctrine. The court ruled that in cases involving dismissals where there was just
cause but no observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano
doctrine and to follow the Wenphil doctrine. That means that the dismissal was for a just cause but the employer was
made to pay a stiffer penalty than the P1,000 imposed by Wenphil. The employer was made to pay P30,000 each to
the complainants, Agabon spouses.
Four possible situations:
1.
There is just/authorized cause + procedural requirements observed = valid dismissal/termination
2.
No just/authorized cause + procedural requirements observed = Illegal dismissal/termination
3.
No just/authorized cause + no procedural requirements observed = Illegal dismissal/termination
4.
There is just/authorized cause + due process not observed = employer is fined for non-compliance of
procedural requirements. (Id., at 608-609)
(f) JAKA Food Processing Corporation v. Pacot, et al., En Banc (11-3), Garcia, J., 454 SCRA 119 (2005) held that
. . . (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the
notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employers
exercise of his management prerogative (Id., at 125-126). The employer was ordered to pay the complainant
indemnity of P50,000.

(g) 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 (Id., at 120-121).
x
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 employees right to be heard. X x x (Id., 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 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 (Id., at 127).
Nota Bene: [It is surprising that the Supreme Court does not quote from a long line of decisions starting from Rabago
v. NLRC, 200 SCRA 158 (1991); Rase v. NLRC, 237 SCRA 523 (1994; Libres v. NLRC, 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. In Manggagawa ng Komunikasyon v. NLRC, 206
SCRA109 (1992), the Supreme Court , however, conceded that actual adversarial proceedings may be necessary for
clarification purposes or when there is need to propound searching questions to unclear witnesses.]
(h) Nexus between Serrano Ruling and Perez Ruling: Concurring Opinion, Brion, J.
Separately from the requirement of due process when State action is involved, the Constitution also guarantees
security of tenure to labor, which the Labor Code implements by requiring that there be a just or authorized cause
before an employer can terminate the services of a worker. This is the equivalent of and what would have satisfied
substantive due process had a State action been involved. The equivalent of procedural due process is detailed under
Article 277 of the Labor Code, heretofore quoted, which requires notice and ample opportunity to be heard, both of
which are fleshed out in the Implementing Rules of Book VI and in Rule XXIII of Department Order No.9, Series of
1997, of the Department of Labor.
Thus, from the concept of due process being a limitation on state action, the concept has been applied by statute in
implementing the guarantee of security of tenure in the private sector. In Serrano v. NLRC, we had the occasion to
draw the fine distinction between constitutional due process that applies to governmental action, and the due process
requirement imposed by a statute as a limitation on the exercise of private power. Noting the distinctions between
constitutional due process and the statutory duty imposed by the Labor Code, the Court thus decided in
Agabon v. NLRC to treat the effects of failure to comply differently (Id., at 138}
(i) The Latest Application of the Perez Ruling:
TECHNOL EIGHT PHILIPPINES CORPORATION v. NLRC AND DENNIS AMULAR, L- 187605, April 13, 2010, 2nd
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 Amulars employment was a mere
formality, an afterthought designed to evade company liability since Amular had already filed an illegal dismissal case
against Technol.
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 corner 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 Amulars 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.
(j) Underlying realities that have influenced the Court in making this paradigmatic shift.
1. So-called Frictional Unemployment in classical economics has now become Structural Unemployment.
Economists have long admitted that a policy of full employment is impossible to attain. Frictional unemployment is
inevitable simply because the economy is always changing.Example: Movement from earthen pots (colon) to pig-iron
caldrons (caldero) to electric rice cookers to Pyrex specialize cooking and serving ware. The progress from one
product improvement to another always leaves a segment of workers out of work because they are not in possession
of the skill required for the next improved product. But now, labor itself (all of labor) is condemned to accelerated
obsolescence, unless it develops a structural capacity to learn at commensurate speed with developing technology
which now dictates the direction, pace and scope of the economy. Example: what must architects, engineers,
accountants, doctors, lawyers, professors, or even auto or motorcycle mechanics who are in their 50s today, have to
contend with in terms of ICT (Information Communication Technology)? Unemployment now is not just the tolerable
friction of a moving economy. It is built into the economy, part and parcel of it, and at such significant percentage in
proportion to the pace of technological advancement. [See N. Gregory Mankiw, Principles of Economics (Thomas
Learning, Inc. and Harvard University Press: (2001), p. 588]
2. The nature of WORK has changed. Work can now be broken up, assembled, disassembled, phases of which can
be done in different parts of the world. Work now knows no boundaries, no nationality, no ethnic loyalty. Work tends to
go where the workers have the highest productivity, efficiency and quality. That work always moves this way around
the globe is not an exception, but the rule. That work moves is not the result of evil intentions of men or women. For,
to quote Paul Krugman, economics is not a morality play. Its not a happy story in which virtue is rewarded and vice
punished. The market economy is a system for organizing activity --- a pretty good system most of the time, though
not always --- with no special moral significance. The rich dont necessarily deserve their wealth, and the poor
certainly dont deserve their poverty; nonetheless, we accept a system with considerable inequality because systems
without any inequality dont work. Cuba doesnt work; Sweden works pretty well. ( The New York Times, The
Conscience of a Liberal, Economics is not a Morality Play, September 28, 2010)
3. Security of Tenure, has not found a viable home in any post-industrial economic system. Perhaps, because
neither logic nor rationality recommends it. Consider this: If the fundamental fact of filiation does not give rise to
Security of Support for life, demandable against the parents who were responsible for bringing one into this world,
why should the mere transactional fact of an employment contract give rise to Security of Tenure indefinitely. The
more viable, rational ideal should be Security of Employability. Governments should so arrange its educational
system and training programs that their citizens will have multiple skills and career options. Citizens should take it as
their responsibility to develop multiple career possibilities, and to adopt continuous learning as a permanent posture
for life. For Security of Tenure is a dead ideal of a bygone era. And the only viable stance in 21 st century life, if one is
to thrive in it, not to mention survive it, is Security of Employability! [Cf. THE WORLD IS FLAT: A BRIEF HISTORY
OF THE TWENTY-FIRST CENTURY (RELEASE 3.0) BY THOMAS FRIEDMAN (original publication 2005)]
(k) Additional Rulings affirming Paradigmatic Shift--- Ending of Award of Financial Assistance in the
name of Compassionate Justice.
Historical Note: CJ Enrique Fernando initiated what he called compassionate Justice when the capital punishment of
dismissal is visited upon an employee Fernando called this Justice Secundum Caritatem.
Reno Foods, Inc., v. Nagkakaisang Lakas ng Manggagawa (NLM)Katipunan on behalf of its member, Nenita Capor,
L-164016, March 15, 2010, 2nd Div., Del Castillo, J.
There is no legal or equitable justification for awarding financial assistance to an employee who was dismissed for stealing
company property. Social justice and equity are not magical formulas to erase the unjust acts committed by the employee against
his employer. While compassion for the poor is desirable, it is not meant to coddle those who are unworthy of such
consideration.
In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National Labor Relations
Commission(L-158798-99, Oct. 19, 2007, 537 SCRA 171, 219-223) , we ruled that separation pay shall not be granted to all
employees who are dismissed on any of the four grounds provided in Article 282 of the Labor Code. Such ruling was
reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v. Diasnes (L-163607, Jul 14, 2008, 558 SCRA
194, at 207):
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based
on social justice when an employees dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect
of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family
grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most judicious and circumspect
in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be
an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from
sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the
undeserving and those who are unworthy of the liberality of the law.
Capor was acquitted in Criminal Case No. 207-58-MN based on reasonable doubt. In his Decision, the trial judge
entertained doubts regarding the guilt of Capor because of two circumstances: (1) an ensuing labor dispute (though it omitted to
state the parties involved), and (2) the upcoming retirement of Capor. The trial judge made room for the possibility that these
circumstances could have motivated petitioners to plant evidence against Capor so as to avoid paying her retirement benefits.
The trial court did not categorically rule that the acts imputed to Capor did not occur. It did not find petitioners version of the event

as fabricated, baseless, or unreliable. It merely acknowledged that seeds of doubt have been planted in the jurors mind
which, in a criminal case, is enough to acquit an accused based on reasonable doubt. The pertinent portion of the trial
courts Decision reads:
During the cross examination of the accused, she was confronted with a document that must be related to a labor
dispute. x x x The Court noted very clearly from the transcript of stenographic notes that it must have been submitted to the
NLRC. This is indicative of a labor dispute which, although not claimed directly by the accused, could be one of the reasons why
she insinuated that evidence was planted against her in order to deprive her of the substantial benefits she will be receiving when
she retires from the company. Incidentally, this document was never included in the written offer of evidence of the prosecution.
Doubt has, therefore, crept into the mind of the Court concerning the guilt of accused Nenita Capor which in this
jurisdiction is mandated to be resolved in favor of her innocence.
Pertinent to the foregoing doubt being entertained by this Court, the Court of Appeals citing People v. Bacus, G.R. No.
60388, November 21, 1991: the phrase beyond reasonable doubt means not a single iota of doubt remains present in the mind
of a reasonable and unprejudiced man that a person is guilty of a crime. Where doubt exists, even if only a shred, the Court must
and should set the accused free. (People v. Felix, CA-G.R. No. 10871, November 24, 1992)
WHEREFORE, premises considered, judgment is hereby rendered acquitting accused Nenita Capor of the crime
charged against her in this case on the ground of reasonable doubt, with costs de oficio.
SO ORDERED.
In Nicolas v. National Labor Relations Commission, we held that a criminal conviction is not necessary to find just cause
for employment termination. Otherwise stated, an employees acquittal in a criminal case, especially one that is grounded on the
existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty of acts inimical to the employers
interests.
Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial evidence, which
means such relevant evidence as a reasonable mind might accept as adequate to justify a conclusion. The evidence in this
case was reviewed by the appellate court and two labor tribunals endowed with expertise on the matter the Labor Arbiter and
the NLRC. They all found substantial evidence to conclude that Capor had been validly dismissed for dishonesty or serious
misconduct. It is settled that factual findings of quasi-judicial agencies are generally accorded respect and finality so long as these
are supported by substantial evidence. In the instant case, we find no compelling reason to doubt the common findings of the
three reviewing bodies.
Solidbank Corporation v. NLRC, L-165951, March 30, 2010, 3rd Div., Peralta, J.
The CA awarded financial assistance to respondents Rodolfo Bombita et al. out of compassionate justice
despite the fact that petitioner Solidbank Corporation had already paid the respondents their separation pay in
accordance with Article 283 of the Labor Code. Proper?
While the CA 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.
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 petitioners decision to cease its operations.

Part II Other Causes of Termination 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 governmentowned 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. (Id., 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 11(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 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
employers station. (petition, rollo, 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. (Id., 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. (Id., at 295)
3.

Union Officers who knowingly participate in an Illegal Strike (Art. 264(a)).

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 employers 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 petitioners compound, respondents 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 respondents 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 respondents officers and employees (Id., 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)
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,
et al. 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, et al. 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 IBMLocal 31 to expel Casio, et al. 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 al. due process; and, it is the finding of the company that IBM-Local 31 did give Casio, et al. the opportunity
to answer the charges against them, but they refused to avail themselves of such opportunity.
This argument is without basis.
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. Acua, 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 v. TAECA, 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
Check-Off. 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.
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 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 number 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.
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,
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 attorneys fees equivalent to 10% of the total monetary award.

5.
J.

Closure of Plantation due to CARP (RA 6657): NFL v. NLRC, 327 SCRA 158 (2000), 2nd Div., De Leon, Jr.,

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 establishment, Patalon Coconut Estate,
when it was placed under CARP, occurred through no fault of the private respondents. (Id., 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-Welcomes Exogamy policy as incorporated in the employment contract read: 10. You agree to disclose to
management any existing or future relationship you may have, either by consanguinity or affinity with coemployees 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
(Id., at 351)
Ruling:
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos
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 (Id., at 353).
The Court of Appeals also correctly noted that the assailed company policy which forms part of respondents
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 companys 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 (Id., at 355-356).
In line with the Duncan-Glaxo-Welcome ruling, it is relevant to note that ten years earlier the Court approved of an
employers Anti-Competition Clause stipulated in an employees 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 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 (Id., 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 respondents resignation from petitioners 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 (Id., 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 employers 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 (Id., 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]3 rd
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 should resign
to preserve the policy stated above (Id., at 234). [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 (Id., at 242)
We note that since the finding of a bona fide occupational qualification justifies an employers no-spouse rule, 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 (Id., at 242-243).
xxx
In the recent case of Duncan Association of Detailman PTGWO and Pedro Tecson v. Glaxo Wellcome 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 Glaxos employees
reasonable under the circumstances because relationships of that nature might compromise the interests of Glaxo. In
laying down the 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 petitioners 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 (Id., 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 (Id., at 244)
8.
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 respondents (NLRC Chairman Rogelio I. Rayala) result in creating an intimidating,
hostile or offensive environment for the employee (Id., at 115)
What, then, did Rayala do which constituted sexual harassment?
(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
Domingos 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 (Id., at 114).
The Court then differentiates the case of Aquino v. Acosta, 380 SCRA 1 (2002), En Banc, Sandoval-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, Rayalas acts of holding
and squeezing Domingos shoulders, running his fingers across her neck and tickling her ear, and the inappropriate
comments, were all made in the confines of Rayalas office when no other members of his staff were around. More
importantly, and a circumstance absent in Aquino, Rayalas 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 (Id., at 116-117).

Nota Bene: Rayalas case was decided in division; Acostas case En Banc. Why?
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 schools teacher manual.
Evelyn Pena, et al. v. NLRC & Naga Parochial School, 258 SCRA 65 (1996), 2nd Div., Mendoza, J.
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 schools 47 teachers, failed to obtain the grade of 85%, which proves
that the rating is neither unattainable nor unrealistic. (Id., at 69)
It 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 whci barely satisfy criteria set for
government recognition. (Id., at 67)
However, see ST. MARYS ACADEMY OF DIPOLOG CITY V. PALACIO, ET AL., L-164913, 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.
[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 DECSs policy requiring contracts of yearly
duration for elementary and high school teachers.
Petitioners contentions are not tenable. First, even if respondents contracts stipulate for a period of one year in
compliance with DECSs 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 that 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.
Petitioners 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 schools operation is
only trivial if not speculative as compared to the consequences of respondents unemployment. Because of petitioners
predicament, it should have adopted measures to protect the interest of its teachers as regular employees. As correctly observed
by the CA, petitioner should have earlier drawn a contingency plan in 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
petitioners 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.

10

Part III 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 self-excutory, 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)
(b) The cases of Roquero v. Philippine Airlines, (G.R. No. 152329, 401 SCRA 424, April 22, 2003), International
Container Terminal Services, Inc. (ICTSI) 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 arbiters order of reinstatement, the dismissed employee is still
entitled to the wages accruing during the pendency of the appeal.
(c) Genuino v. NLRC,539 SCRA 342 (Dec. 4, 2007) has been explicitly repealed by Garcia et al., v. PAL, L164856, Jan. 20, 2009. En Banc, 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 ., L-167563, March 22, 2010, 3 rd
Div., Peralta, J.
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 Courts 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 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 fallo 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 a 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.

11

In the same case, the Court went on to discuss the illogical and unjust effects of the refund doctrine
erroneously espoused in Genuino:
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.
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 Arbiters 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--vis the effect of a reversal on appeal.
x x x x
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 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) Return to Work. Latest Cases.
University of Immaculate Conception, Inc. vs. Secretary, 448 SCRA 190 (Jan.14 2005), 1 st 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
executor?
YES, by virtue of the over-arching interest of the state to restore the status quo ante bellum. (the employees
concerned were ordered reinstated payroll wise).
PLDT vs. Manggagawa ng Komunikasyon sa Pilipinas, L-162783, July 14, 2005, 463 SCRA 418, 2 nd Div., ChicoNazario, J., The Secretary of Labor assumed jurisdiction of the dispute (Art.263(g)) and issued a return to work order

12

to all striking workers except those who were terminated due to redundancy. The union struck on 23 Dec. 2002 to
protest PLDTs 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 Secretarys 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.

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