Normal Hours of Work

The normal hours of work under the Labor Code is 8 hours in one work day. Work day is understood to mean one 24-hour
cycle which starts from the time the employee is engaged to work and ends on the same time the following day. For
example, if the employee is engaged to work from 8:00am to 5:00pm, his work day is the 24-hour cycle that starts from
8:00am and ends at 8:00am of the following day.
The employer is free to adopt what time in a day the work shall start as long as the total number of hours worked will not
exceed 8 hours. If the number of hours worked exceed 8 hours, the employee must be paid overtime pay for the excess.
How to compute overtime pay?
Hours worked definition
Hours worked refers to all compensable period of work. Hours work includes:
1. All the time during which an employee is required to be on duty or to be at a prescribed workplace; and
2. All the time during which an employee is suffered or permitted to work.
Meal periods
The employer must give his employees not less than 60 minutes or one hour time-off for their meals. This period in
noncompensable, which means that it is not to be included in the computation of hours worked. For example, if an
employees work is from 8:00am to 5:00 with one hour meal break from 12:00nn to 1:00pm, the total compensable hours
of the employee is 8 hours, i.e., from 8:00am 12:00nn and 1:00pm 5:pm. The period from 12:00nn to 1:00pm is
noncompensable.
Shortened meal periods
Under exceptional circumstances, the employer may give the employee a meal period of not less than 20 minutes,
provided that such shorter meal period is credited as compensable hours worked of the employee.
Shortened meal period may be allowed under the following cases:
1. Where the work is non-manual work in nature or does not involve strenuous physical exertion;
2. Where the establishment regularly operates not less than 16 hours a day;
3. In case of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or
installations to avoid serious loss; and
4. Where the work is necessary to prevent serious loss of perishable goods.
Rest periods
The employer may give their employees rest periods or coffee breaks during working hours in order to beef them up or to
make them more productive. Unlike meal periods, rest periods running from 5 to 20 minutes is compensable as hours
worked. Rest period running for more that 20 minutes may or may not be compensable depending on the situation. See
letter (b) under Principles in determining hours worked.
The giving of rest period, however, is not required under the Labor Code, and is largely a management prerogative.
Principles in determining hours worked
The following general principles may be used to determine whether the time spent by an employee is considered hours
worked or not:
1. All hours are hours worked which the employee is required to give his employer, regardless of whether or not such hours
are spent in productive labor or involve physical or mental exertion.
2. An employee need not leave the premises of the work place in order that his rest period shall not be counted, it being
enough that he stops working, may rest completely and may leave his work place, to go elsewhere, whether within or
outside the premises of his work place.
3. If the work performed was necessary, or it benefited the employer, or the employee could not abandon his work at the
end of his normal working hours because he had no replacement, all time spent for such work shall be considered as
hours worked, if the work was with the knowledge of his employer or immediate supervisor.
4. The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be
considered working time either if the imminence of the resumption of work requires the employees presence at the place
of work or if the interval is too brief to be utilized effectively and gainfully in the employees own interest.
Waiting time
 Waiting time spent by an employee shall be considered as working time if waiting is an integral part of his work or the
employee is required or engaged by the employer to wait.
On call duty
An employee who is required to remain on call in the employers premises or so close thereto that he cannot use the time
effectively and gainfully for his own purpose shall be considered as working while on call. The employee must be required
to leave a word where he may be reached. An employee who is not required to leave word at his home or with company
officials where he may be reached is not working while on call.
Lectures, meetings, training programs
Attendance at lectures, meetings, training programs, and other similar activities shall not be counted as working time if all
of the following conditions are met:
1. Attendance is outside of the employees regular working hours;
2. Attendance is in fact voluntary; and
3. The employee does not perform any productive work during such attendance.
References
1. Chapter 1, Title I, Book Three, Labor Code of the Philippines (Article 82 to 85)
2. Rule I, Book Three, Omnibus Rules Implementing the Labor Code.

Separation pay may be computed based on the terms provided in the employment contract, company policy, or collective
bargaining agreement. Company practice may likewise be used as basis for computation, if such practice has been
established for years and has already ripened into a demandable right.
In the absence of contract or agreement, or when the existing agreement or policy provides for a lower benefit, separation
pay shall be computed based on the provision of the Labor Code.
The amount of separation pay under the Labor Code depends on the following factors:
1. The employees last salary;
2. The employees length of service;
3. The reason for employees separation from service.
Employees last salary
The employees last salary refers to the salary rate of the employee at the time of his termination from service. It
determines the based to be used in the computation of separation pay.
When there is a reduction of the employees salary prior to his termination, e.g., the employee has been demoted resulting
to a reduction of salary, such reduced salary rate, which is his last salary shall be the basis of the computation. But, if the
reduction of salary was made to circumvent the provision of the Labor Code, that is, to avoid payment of higher
separation pay, the salary rate before the reduction shall be used in the computation of separation pay.
For employees receiving salary below the minimum wage, the separation pay shall be computed based on the minimum
wage in effect at the time of separation from service. In addition, the employee affected is also entitled to payment of
salary differential equivalent to the difference between the employees actual salary and applicable minimum wage.
Employees length of service
Employees length of service refers to the duration of time that the employee has been under the employ of the same
employer or company. It is computed beginning from the time of his engagement up to the date of his termination. A
fraction of at least 6 months shall be considered as one whole year.
However, only the employees last continuous years of service should be considered in the computation (See Carandang
vs. Dulay; Also Sta. Catalina College vs. NLRC; Phil. Tobacco Flue-Curing vs. NLRC.)
The reason for the employees separation from service
The reason for the employees separation from service is an important factor in the computation of separation pay. The
amount of separation pay may vary depending on the specific ground relied upon for the termination.
An employee terminated based on installation of labor-saving devices or redundancy is entitled to at least one-month
salary or to at least one-month salary for every year of service, whichever is higher. (See Article 283, Labor Code)
 For termination based on retrenchment to prevent losses and closure of business, the employee affected is entitled to at
least one month salary or 1/2 month salary for every year of service, whichever is higher. (Ibid.)
An employee terminated for health reasons (disease) under Article 284 should be paid separation pay equivalent to at
least one-month salary or to at least one-month salary for every year of service, whichever is higher.
In case of illegal termination, separation pay in lieu of reinstatement has been consistently computed at one month salary
for every year of service.
At least one month or 1/2 month for every year of service?
The phrase at least one month salary or 1/2 month salary for every year of service, whichever is higher, can be quite
confusing. See these comments: Comment 1, Comment 2. The phrase though is not really complicated. It simply means
that the employee is entitled whichever is higher of the employees:
1. one month salary; or
2. 1/2 month salary for every year of service.
Example: If the retrenched employees salary is P8,000, and he has been working for 3 years, he is entitled to separation
pay equivalent to whichever is higher of his:
1. one month salary = P8,000; or
2. 1/2 month salary for every year of service = (1/2) x P8,000 x 3 years = P12,000.
In the above example, the employee is entitled to P12,000, the higher amount.
Following the same rule, if the length of service is only one year, his separation would be whichever is higher of the
following:
1. one month salary = P8,000; or
2. 1/2 month salary for every year of service = (1/2) x P8,000 x 1 year = P4,000.
Here, separation pay is P8,000 or one month salary, the higher amount. Actually, we will arrive at the same result even if
the length of service is only 10 months or 7 1/2 months, etc., as long as it is 6 months or more. This is because a fraction
of at least 6-months is considered as 1 whole year.
Now, what if the employee has served for less than 6 months, how much separation pay will he get? Lets see.
1. one month salary = P8,000; or
2. 1/2 month salary for every year of service = (1/2) x P8,000 x 0 year = 0.
So, its still P8,000 or one month salary.
Minimum Separation Pay
Take a quick look at the examples given above. You will notice that the minimum separation pay that may be given to an
employee is one month salary. This is actually consistent with the phrase at least one month salary, which simply means
that the separation must not be less than the employees one month salary.

Requirements of Procedural Due Processs.

For valid termination based on authorized causes such as installation of labor-saving devices, redundancy, retrenchment
to prevent losses, and closure or cessation of operation, the employer must serve written notice to the individual
employee concerned and to the appropriate Regional Office of DOLE at least 30 days before the effectivity of the
termination.
Also, the employer must observe the following requirements as part of the process of termination:
1. Good faith in the termination of employee, i.e., the implementation of the company program resulting to termination of
employees must be for a valid cause and not merely a tool to circumvent the law on employees security of tenure;
2. The employer must adopt a fair and reasonable criteria in the selection of employee to be dismissed; and,
3. The employee must be paid separation pay not less than the amount fixed by law.

Criteria in Selection of Employee to be Dismissed.

In the selection of the employee to be dismissed, the employer must adopt of a fair and reasonable criteria which must be
applied in good faith, such as:
1. Less preferred status of employee;
2. Efficiency rating; and
3. Seniority.
Payment of Separation Pay.
In termination of employment due to authorized causes, the employer is required to give separation pay to the employee
concerned. The amount of separation pay depends on the specified cause of termination.
1. In case of termination due to the installation of labor-saving devices or redundancy at least one month pay or to at least
one month pay for every year of service, whichever is higher.
2. In case of (a) retrenchment to prevent losses and (b) closures not due to serious financial reverses one month pay or at
least one-half month pay for every year of service, whichever is higher.
3. No separation pay for closure due to serious business losses.
4. No separation pay is required when the closure of business is due to serious business losses or financial reverses. (North
Davao Mining, 1996.)
5. When closure of the business establishment is forced upon the employer and ultimately for the benefit of the employees.
The closure contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the part of the employer
to close the business establishment. (National Federation of Labor vs. NLRC, 2000.)
Effects of Termination.
1. If the termination is for authorized cause and the employee is given 30-day prior notice, the dismissal is valid.
2. If the termination is for authorized cause but the employee was not given 30-day prior notice, the dismissal is valid but the
employer may be ordered to pay nominal damages to dismissed employee. In Jaka Food Processing vs. Pacot, 2005, the
amount of nominal damages is P50,000.00.
3. If the dismissal is not for a valid authorized cause, the dismissal is illegal, whether or not there is 30-day prior notice.
Consequently the employee shall be entitled to reinstatement and backwages, and damages if warranted.

Procedural Due Process.

For termination of employment based on just causes, procedural due process requires that the employee be given the
benefit of the so-called twin-notice and hearing, as follows:
1. First notice: Notice to Explain (NTE) or order to show cause. A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side.
2. Hearing or formal investigation. A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him.
3. Second notice: Notice of decision. A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination. (See Art. 277[b] and Sec 2,
Rule I, Book VI, IRR)

Service of Notices.
In case of termination, the employee must be personally served with notices (notice to show cause and notice of
termination). Ideally, this should be done by personally handing a copy of the notice to the employee concerned.
However, if this is not possible, the notices may be served on the employees last known address either by ordinary or
registered mail (from legal viewpoint, registered mail is preferred).
The mere posting of the notice on the bulletin board is not sufficient compliance. (Shoppers Gain Supermart, 1996)
If the employee refused to receive notice, the employer must serve the same by registered mail at his last known address.
(See Nueva Ecija Electric Coop case, 2005)

Opportunity to Respond.
The very purpose of requiring the employer to observe proper termination process is to give the employee ample
opportunity to respond to the charges against him or to defend himself. What the law require is ample opportunity.
Ample opportunity means every kind of assistance that management must accord the employee to enable him to prepare
adequately for his defense including legal representation.
Requirements for First Notice (NTE).
 The first notice informing the employee of the charges against him should set out clearly what he is being held liable for. It
should neither be pro-forma nor vague. This is consistent with the requirement that the employee should be afforded
ample opportunity to be heard and not mere opportunity.
Moreover, the dismissal, if necessary, must be based on the same grounds cited in the NTE. If the dismissal is based on
grounds other than those specified in the notice, he is deemed to have been deprived of due process. (Glaxo Wellcome vs.
NEW-DFA, 2005.)
Effect of Refusal of Employee to Participate in Investigation.
By the refusal of employee to participate in the investigation, he is deemed to have waived his right to defend himself.
(Leonardo vs. NLRC, 2000.)

Effects or Consequences of Termination.

1. If dismissal is for just cause and with prior notice and hearing, the dismissal is valid.
2. If the dismissal is for just cause but without prior notice and hearing, the dismissal is valid but the employer may be
required to pay nominal damages to the dismissed employee.
3. If there is no just cause for dismissal, whether or not there is prior notice and hearing, the dismissal is illegal. The
employee is entitled to reinstatement, backwages and damages.

Cases
1. The employee refused to participate in the investigation being conducted by the personnel management. The Court ruled
that by refusing to participate, he cannot claim that he was denied due process. (Leonardo vs. NLRC, 2000.)
2. The employment contract contains stipulation that the employment may be terminated by either party after one month
notice or one month salary in lieu of notice. The stipulation was held to be illegal. The requirement of prior notice and
opportunity to be heard cannot be substituted by mere payment of salary. (PNB vs. Cabansag, 2005.)

Constructive Dismissal concept

Constructive dismissal is an employers act amounting to dismissal but made to appear as if it were not a dismissal in
disguise. In most cases of constructive dismissal, the employee is allowed to continue to work, but is simply reassigned, or
demoted, or his pay diminished without a valid reason to do so.
Constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefit and
privileges. There may be constructive dismissal if an act of clear discrimination, insensibility or disdain by an employer
becomes so unbearable on the part or the employee that it could foreclose any choice by him except to forego his
continued employment. (See Hyatt Taxi Services case, G.R. No. 143204, June 26, 2001.)

Constructive Dismissal and Involuntary Resignation

Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment
becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to an employee.
In Globe Telecom, Inc. v. Florendo-Flores, it was held that where an employee ceases to work due to a demotion of rank or
a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering it
impossible for such employee to continue working for her employer. Hence, her severance from the company was not of
her own making and therefore amounted to an illegal termination of employment. (Cited in Francisco vs. NLRC, G.R. No.
170087, August 21, 2006.)
Cases
1. Diminution of pay. A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. (Francisco vs.
NLRC)
2. Transfer of employee not amounting to constructive dismissal. Transfer of an employee from one area of operation to
another is a management prerogative and is not constitutive of constructive dismissal, when the transfer is based on
sound business judgment, unattended by a demotion in rank or a diminution of pay or bad faith. (Tan vs. NLRC, G.R. No.
128290, November 24, 1998.)
3. Transfer of employee amounting to constructive dismissal. A transfer amounts to constructive dismissal when the transfer
is unreasonable, unlikely, inconvenient, impossible, or prejudicial to the employee. (Phil. Industrial Security Agency Corp.
vs. Aguinaldo, G.R. No. 149974, June 15, 2005.)
 In general, an illegally dismissed employee is entitled to one or more of the following reliefs:
1. Reinstatement;
2. Payment of Backwages;
3. Separation Pay;
4. Payment of Damages; and
5. Award of Attorneys Fees.
Right to Reinstatement.
An employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other
privileges. (Article 279, Labor Code.)
Reinstatement Meaning.
Reinstatement is a relief granted to an illegally dismissed employee which restores him to the position from which he was
removed, that is, to his status quo ante dismissal. Reinstatement should be without loss of seniority rights and other
privileges.

Remedy when Reinstatement is no Longer Possible.

As a necessary consequence of the finding of illegal dismissal, the illegally dismissed employee becomes entitled to
reinstatement as a matter or right. The employer must reinstate him to the position he was holding prior to his dismissal.
Ideally, this should be the case.
However, in some instances, although the dismissal of the employee is determined to be illegal, reinstatement may no
longer possible for a number of reasons. In such case, separation pay in lieu of reinstatement may be awarded.
Following are some of the instances where payment of separation pay is allowed in lieu of reinstatement:
1. When the relationship between the employer and the employee had become strained as to preclude a harmonious
working relationship;
2. When reinstatement becomes a legal impossibility;
3. When the employee no longer wish to be reinstated;
4. When prudence and fair play so dictates; and
5. When reinstatement is not practicable due to loss of confidence.
Doctrine of Strained Relations Concept.
Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other, the payment releases the employer
from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. (Coca-Cola Bottlers
Phils. vs. De Leon, G.R. No. 156893, June 21, 2005.)
Nevertheless, the principle of strained relations should not be used so indiscriminately as to bar the reinstatement of
illegally dismissed workers, especially when they themselves have not indicated any aversion to returning to work, as in
this case. It is only normal to expect a certain degree of antipathy and hostility to arise from a litigation between parties,
but not in every instance does such an atmosphere of antagonism exist as to adversely affect the efficiency and
productivity of the employee concerned. (Ibid.)
The doctrine of strained relations may be invoked only against employees whose positions demand trust and confidence,
or whose differences with their employer are of such nature or degree as to preclude reinstatement.
In Maranaw Hotels vs. NLRC, G.R. No. 123880, February 23, 1999, the Court refused to apply the doctrine of strained
relations on the ground that the position of a room boy is not such a sensitive position that demands complete trust and
confidence.
Right to Backwages.
An employee who is unjustly dismissed from work shall be entitled to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.
Backwages Meaning.
Backwages is the restitution of earnings unduly withheld from the employee because of illegal termination. It partakes the
nature of a penalty the employer has to pay for illegally dismissing an employee.

Computation of Backwages.
Inclusive period. Full backwages is to be computed from the time compensation was withheld from the employee up to the
time of his actual reinstatement.
Base figure. The based figure to be used in the computation shall include not just the basic salary, but also regular
allowances and other benefits or their monetary equivalent, i.e., transportation, emergency living allowance, 13th-month
pay, etc.
Wage rate. The computation of backwages may be based either on the current wage rate or the wage rate at the time of
the dismissal. If current wage rate is awarded, it must be expressly stated in the decision. If not expressly stated (award is
unqualified), the wage rate at the time of the dismissal should be used. (Paramount Vinyl vs. NLRC, G.R. No. 81200,
October 17, 1990.)

Methods of Computing Backwages.

Deduction of earnings elsewhere rule. Under this rule, the award of backwages to an employee could be reduced by
subtracting the wages actually earned by him from employment during the period of his separation, or the wages which
he could have earned had he been diligent enough to find a job. The employer would be allowed to adduce evidence on
these matters. This rule was abandoned in Mercury drug case primarily because the deduction of evidence was found to
only delay execution process.
Mercury Drug rule. To remedy the delay brought about by the first rule, and to speed up execution process, the Supreme
Court in Mercury Drug case, 1974, adopted the policy of granting to employee backwages for a maximum period of three
years without qualification and deduction.
Method used under RA 6715. With the passage of RA 6715, both the rules above were abandoned. The rule now is that the
employees are entitled to full backwages without deduction or qualification.

Illegal Dismissal without Backwages.

As a general rule, an employee who is dismissed due to the unlawful act of the employer or to the latters bad faith is
entitled to backwages as a matter of right, backwages being a direct and necessary consequence of finding of illegal
dismissal.
However, there are instances where despite illegal dismissal, the illegally dismissed employee is not entitled to backwages.
This happens in cases where good faith is evident on the part of the employer in dismissing the employee, i.e., there is just
cause to dismiss employee, but the dismissal is found by the court to be too harsh a penalty.

Effect of Failure to Claim Backwages.

The award of backwages resulting from illegal dismissal of employee is a substantive right. Thus, it has been held that the
employee does not forfeit his right to claim backwages even if he failed to claim for the same in his complaint.
Separation Pay.
As stated above, separation pay is the relief awarded to employee when reinstatement is no longer feasible or practicable,
or when reinstatement is no longer desirable or will not serve the best interest of the parties.
Amount of Separation Pay: Formula.
The amount of separation pay in lieu of reinstatement is not fixed by the Labor Code. But the trend in recent cases is to
compute the same using the formula one month pay, or one month pay per year of service. (This formula was used in
the 2005 case P. J. Lhuillier vs. NLRC.)
In other older cases, the court used one half month pay per year of service.
Cases
1. Separation pay and backwages are distinct and separate from each other. A Labor Arbiter cannot order that the separation
pay be deducted from the backwages. (Solis vs. NLRC, G.R. No. 116175, October 28, 1996.)
2. The NLRC reverses the decision of the Labor Arbiter and ordered the employees reinstatement, but failed to award
backwages. On appeal filed by the employer, the Court of Appeals (CA) awarded backwages although the employee did
not appeal the decision. The Supreme Court ruled that the award made by the CA is proper. Backwages is a mere
consequence of finding of illegal dismissal. (St. Michaels Institute vs. Santos, G.R. No. 145280, December 4, 2001.)
3. Backwages was not granted to the employee because the employer was in good faith when it dismissed the employee
who received P7,000.00 from an applicant for illegal installation of power line. (Meralco vs. NLRC, G.R. No. 78763, July
12,1989.)

Premium Pay Meaning

Premium pay refers to the additional compensation required by law to be paid to employees for work performed on non-
working days, such as rest days and special days.
No Work, No Pay Rule
During rest and special days, the principle of no work, no pay applies. Workers who were not required or permitted to
work on those days are not by law entitled to any compensation.
This is consistent with the definition above that premium pay is to be paid for work performed.
Performance of work is necessary for entitlement to premium pay.
Premium Pay For Rest Days
As a general rule, where an employee is made or permitted to work on his scheduled rest day, whether it is a regular day
or a holiday, he shall be paid an additional compensation of at least 30% of his regular wage for that day. The rule is
different for work performed on a rest day which is also a special day, in which case, 50% of the regulary daily rate is
added, instead of 30% of the daily rate for special day.
In sum, the premium pay rates for rest days are as follows:
1. For work performed on rest days, an additional 30% of the daily rate or a total of 130%;
2. For work performed on a rest day which is also a special day, an additional of 50% of the daily rate or a total of 150%; and
3. For work performed on a regular holiday which is also the employees rest day, an additional 30% of the regular holiday
rate of 200% or a total of 260%.

Computation
For work performed on rest day, using P250.00 as Basic pay, the rate may be determined as follows:
Rate on Rest day = Basic pay + Premium pay
Where,
Premium pay = 30% of Basic pay
= 30% of P250.00
= 0.3 x P250.00
= P75.00

Thus,
Rate on Rest day = Basic pay + Premium pay
= P250.00 + P75.00
= P325.00

For work performed on a regular holiday which is also the employees rest day, the rate may be determined as follows:
Rate = Daily rate on holiday + Premium pay
Where,
Premium pay = 30% of Daily rate on holiday, and
Daily rate on holiday = 200% of Basic pay = P500.00
 Thus,
Premium pay = 0.3 x Daily rate on holiday
= 0.3 x P500.00
= P150.00

Thus, the rate on rest day falling on a holiday is:

Rate = Daily rate on holiday + Premium pay
= P500.00 + P150.00
= P650.00
Or,
Rate = 260% of Basic pay
= 2.6 x P250.00
= P650.00

Premium pay for Special Days

There are two national special days observed in the Philippines:
1. All Saints Day (November 1); and
2. The last day of the year (December 31).
Work performed on special days merits additional compensation of not less than 30% on top of the basic pay or a total of
130%.

Computation
Using P250.00 as daily rate (Basic pay), the Rate on special day may be determined as follows:
Rate on special day = Basic pay + Premium
Where,
Premium = 30% of Basic pay
= 30% of P250.00
= P75.00

Thus,
Rate on special day = Basic pay + Premium
= P250.00 + P75.00
= P325.00
Or,
Rate on special day = 130% of Basic pay
= Basic pay x 1.3
= P250.00 x 1.3
= P325.00

Premium Pay For Special Day falling on Rest Day.

If the special day falls on employees scheduled rest day, he is entitled to at least 50% over and above the basic pay or a
total of 150%.

Computation
Rate for work on special days which is also the employees rest day entitles him to an additional 50% of the daily rate
(Basic pay).
Rate = Basic pay + Premium pay
Where,
Premium pay = 50% of Basic pay
= P250.00 x 0.5
= P125.00
Thus,
Rate = Basic pay + Premium pay
= P250.00 + P125.00
= P375.00
Or,
Rate = 150% of Basic pay
= Basic pay x 1.5
= P250.00 x 1.5
= P375.00

If no regular workdays and no scheduled regular rest days

Where the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be
scheduled, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on
Sundays and holidays.
Premium Pay and Holiday Pay Comparison
Using the definition of premium pay above, holiday pay is not a premium pay because it does not require performance of
work by the employee. In case of holiday pay, the employee is entitled payment even if he does not work. The same
cannot be said of premium pay.
Thus, unlike in premium pay, the principle no work, no pay does not similarly apply to holiday pay.
OVERTIME PAY

Basis.
All employees required to work beyond eight hours in one workday is entitled to overtime pay. The basis of overtime pay
is found in Article 87 of the Labor Code.
Article 87. Overtime work. Work may be performed beyond eight hours a day provided that the employee is paid for the
overtime work an additional compensation equivalent to his regular wage plus at least twenty-five percent thereof. Work
performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate for
the first eight hours on a holiday or rest day plus at least 30 percent thereof.
Terminology.

Overtime Pay.
Overtime pay is the additional compensation payable to employee for services or work rendered beyond the normal eight
hours of work. It is computed by multiplying the overtime rate with the number of hours in excess of the regular eight
hours of work.

Overtime Work.
Any work performed beyond the normal 8 hours of work in one workday is considered as overtime work.

Workday.
A workday is the consecutive 24-hour period which commences from the time the employee starts to work and ends at
the same time the following day. To illustrate, if the employee regularly works from 8AM to 4PM, his regular workday is
the 24-hour period from 8AM to 8AM of the following day. Workdays do not necessarily corresponds to calendar days.
Overtime Pay Rates.
Overtime pay rates depend upon the day the work is performed, whether it is ordinary working day, special day, holiday or
rest day.
For ordinary working day, an additional compensation equivalent to his regular hourly rate plus at least 25% thereof.
For holiday, special day and rest day, an additional compensation equivalent to the rate for the first eight hours on a
holiday or rest day plus at least 30% thereof.
Computation of Overtime Pay
Assuming that the mininum wage rate is P250, how much is the overtime rate per hour?
On ordinary day
On an ordinary day, the overtime rate per hour is determined as follows:
First, compute the hourly rate of the employee:
Regular hourly rate = Minumum wage rate 8 hours
= P250 8 hours
= P31.25 per hour

Now to determine overtime rate per hour:

Overtime rate = Regular hourly rate + 25% of Regular hourly rate
Overtime rate = P31.25 + (25% of P31.25)
= P31.25 x 1.25
= P39.06 per hour

On rest day and special day

Compute the hour rate of the employee on a rest day or special day:
Hourly rate = 130% of Regular hourly rate
= P31.25 x 1.30
= P40.625 per hour
(Note: The hourly rate on rest day and special day is 130% of the regular rate.)

To determine overtime rate per hour:

Overtime rate = Hourly rate on rest day + 30% Hourly rate on rest day
= P40.625 + (30% of P40.625)
= P40.625 x 1.30
= P52.81 per hour

On rest day which falls on a special day

Compute the hourly rate of the employee on a rest day which falls on a special day:
Hourly rate = 150% of Regular hourly rate
= P31.25 x 1.50
= P46.875 per hour

To determine overtime rate per hour:

Overtime rate = Hourly rate + 30% of Hourly rate
= P46.875 + (30% of P46.875)
= P46.875 x 1.30
= P60.94 per hour

On a regular holiday
Compute the hourly rate on regular holiday:
Hourly rate = 200% of Regular hourly rate
= P31.25 x 2
= P62.5 per hour

To determine overtime rate per hour:

Overtime rate = Hourly rate + 30% of Hourly rate
= P62.50 + (30% of P62.50)
= P62.50 x 1.30
= P81.25 per hour
 On a rest day which falls on a regular holiday
Compute the hourly rate:
Hourly rate = 260% of Regular hourly rate
= P31.25 x 2.60
= P81.25 per hour

To determine overtime rate per hour:

Overtime rate = Hourly rate + 30% of Hourly rate
= P81.25 + (30% of P81.25)
= P81.25 x 1.30
= P105.625 per hour

Work need not be Continuous.

Work performed by the employee need not be continuous as long as it falls within the same work day. For example, an
employee who works in two shifts, one from 8AM to 12AM (four hours), and another from 4PM to 8PM of the same work
day (another four hours), suffers a total of 8 hours of work. If he is required to work for another hour within the same work
day (from 8AM to 8AM of the following day), then such work is subject to overtime pay.
Undertime cannot be Offset by Overtime.
Some employers has the practice of offsetting undertime and overtime. For example, if an employee work for only 7 hours
on any given day (one hour undertime), he will be required to make up for his undertime by requiring him to render
additional one hour work on another day. This practice is prohibited under Article 87 of the Labor Code, viz:
Article 87. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime work on
any other day. x x x
The rationale for provision is quite obvious. Offsetting undertime against overtime is improper because the employee
would be deprived of the additional compensation for the overtime work he has rendered. Note that undertime is covered
only by the regular hourly rate whereas overtime is subject to additional overtime rate. If the two are to be offset, the
employee loses overtime pay to which he is entitled.
Emergency Overtime Work.
As a general rule, employees may not be compelled to work in excess of eight hours or to render overtime work on any
given day against his will.
The exception to this rule is found in Artile 89 of the Labor Code. Under the said article, employees may be compelled to
perform overtime work in any of the following cases:
1. When the country is at war or under any national or local emergency;
2. When overtime work is necessary to prevent loss of life or property, or in case of imminent danger to public safety;
3. When there is urgent work to be performed on machines, etc., in order to avoid serious loss or damage to the employer;
4. When the work is necessary to prevent loss or damage to perishable goods;
5. When the completion or continuation of work is necessary to prevent serious obstruction or prejudice to the business; or
6. When overtime work is necessary to avail of favorable weather or environmental conditions.
Managerial Employees not Entitled to Overtime Pay.
Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods shall not
apply to managerial employees. This includes overtime pay for overtime work. Thus managerial employees are not entitled
to overtime pay for services rendered in excess of eight hours a day.
Cases
1. Supervisory employees are considered as officers or members of the managerial staff, and hence are not entitled to
overtime, rest day and holiday pay. (Natl Sugar Refineries Corp. vs. NLRC, G.R. No. 101761. March 24, 1993)
13TH MONTH PAY

Presidential Decree No. 851 (otherwise known as Thirteenth Month Pay Law), as amended by Memorandum Order No. 28,
requires all employers to pay their employees a 13th month pay not later than December 24 of every year.
Historical Backdrop.
 Originally, when PD 851, issued by Pres. Marcos, took effect on December 16, 1975, only employees receiving a basic
salary of not more than P1,000 a month were entitled to 13th pay.
On August 13, 1986, Pres. Aquino, through Memorandum Order No. 28, removed the salary ceiling of P1,000. With the
removal of the salary ceiling, all rank and file employees become entitled to a 13th month pay regardless of the amount of
their monthly basic salary (unless their employers are exempted from the application of PD 851).
Employees Covered by 13th Month Pay Law.
All rank-and-file employees, regardless of their designation or employment status, and irrespective of the method by
which their wages are paid, who have worked at least one month during the calendar year are entitled to 13th month pay.
Rank and File Employees Meaning.
As stated above, only rank-and-file employees are entitled to 13th month pay. Managerial employees are excluded from
the coverage of the law.
The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial
employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such managerial
actions.
All employees not falling within this definition are considered rank-and-file employees.
Amount of 13th Month Pay.
The 13th month pay shall be in the amount not less than 1/12 of the total basic salary earned by the employee within the
calendar year.

Computation
Only basic salary is included in the computation of 13th month pay. Allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick
leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances, shall be excluded from
the computation.
However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month
pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of
the employees.
Time of Payment of 13th Month Pay.
The required 13th month pay shall be paid not later than December 24 of each year. An employer, however, may give to
his employees one half of the required 13th month pay before the opening of the regular school year and the other half
on before the 24th of December of every year. The frequency of payment of this monetary benefit may be the subject of
agreement between the employer and the recognized/collective bargaining agent of the employees.
Employees excluded from coverage of 13th month pay law.
1. Managerial employees;
2. Those covered under the civil service law;
3. Those already receiving 13th month pay or its equivalent. Christmas bonus, mid-year bonus, cash bonuses and other
payments amounting to not less than 1/12 of the basic salary are treated as equivalent of 13th month pay;
4. Household helpers and persons in the personal service of another; and
5. Those paid on purely commission, boundary, or task basis, and those who are paid fixed amount for performing specific
work except those paid on a piece-rate basis.
13th Month Pay of Certain Types of Employees

Employees paid on commission basis.

Employees paid on a purely commission basis are not entitled to 13th month pay. They are expressly excluded from the
coverage of PD 851. However, employees paid on partly commission basis, i.e., those guaranteed with a fixed wage aside
from the commission, are entitled to 13th month pay.
Computation. In the computation of the basic salary of employees paid partly on commission basis, we must distinguish
between the two types of commission:
1. Commission as an incentives or encouragement to ensure productivity, i.e., productivity bonus; and
2. Commission as a direct remuneration for service rendered.
Commission that take the form of an incentives or encouragement to ensure productivity, e.g., productivity bonus, does
not form part of the basic salary. As such, it may be excluded from the computation of 13th month pay. Only the fixed or
guaranteed wage is required to be included in the computation (see Boie Takeka case, 1993.)
Basic salary = Fixed wage (commission is excluded)

On the other hand, commission that takes the form of a direct remuneration for services rendered should be included in
the computation of the basic salary. That is, it should be added to the guaranteed wage of the employee in computing his
basic salary (see Philippine Duplicators v. NLRC, 1993.)
Basic salary = Fixed wage + Commission

13th Month Pay of Employees with Multiple Employers.

Employees with multiple employers are entitled to 13th month pay from all their private employers.
Thus, if an employee works in two or more private firms, he is entitled to the pay from both or all of them. If he is a
government employee, but works part time in a private enterprise, he is entitled to 13th month pay from the private
enterprise.

13th Month Pay of Private School Teachers.

Private school teachers are entitled to 13th month pay regardless of the numbers of months they work in a year, provided
it is at least one month.

Payment of 13th Month Pay to Resigned or Separated Employees.

Employees who resigned or were separated during the calendar year shall be entitled to 13th month pay in proportion to
the length of time he worked during the year, provided it is at least one month.
The payment may be demanded by the employee upon the cessation of employment.

Example
1. Assuming an employee earning a basic salary of P12,000.00 per month had worked for at least 9 months at the time of his
separation, how much is his 13th month pay? Answer: P9,000.00.
Computation: (P12,000.00 x 9 months) 12 = P9,000.00

Cases
1. For 2 to 3 years, Sevilla Trading, allegedly by mistake, added the night premium, maternity leave pay, etc., in the
computation 13th month pay. The court ruled that the inclusion may no longer be withdrawn if it has already ripened into
a company practice. Nota bene: There is no specific rule as to how many years are necessary to constitute company
practice. (Sevilla Trading v. AVA Tomas, GR No. 152456.)
2. Employees paid according to boundary system are not entitled to 13th mo pay. Boundary system is where the
employees do not receive fixed wages, but retain only those sums in excess of the boundary or fee they pay to the
owners or operators of their vehicles. They are akin to employees paid on purely commission basis. (R&E Transport v.
Latag, G.R. No. 155214.)
3. Drivers who are paid on commission basis, but with guaranteed minimum wage in case their commission be less than their
basic minimum, are entitled to 13th month pay. (PACIWU v. NLRC, GR No 107994.)
References
1. Presidential Decree No. 851, effective December 16, 1975.
2. Revised Rules and Regulations Implementing Presidential Decree No. 851

NON DIMINUTION OF BENEFIT

Concept
The principle of non-diminution of benefits states that: any benefit and supplement being enjoyed by employees cannot
be reduced, diminished, discontinued or eliminated by the employer. [1]
 This principle is founded on the Constitutional mandate to protect the rights of workers and promote their welfare, and
to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all
doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be
rendered in favor of labor.[2]
Benefit and supplement definition
Employee benefits are compensations given to employees in addition to regular salaries or wages. [3] Some benefits are
legally required, e.g., social security benefits, medicare, retirement benefits, maternity benefits, service incentive leave, etc.
Other benefits are offered by the employer as an incentive to attract and retain employees as well as increase employee
morale and improve job performance. [4]
Supplements include those benefits or privileges granted to an employee for the convenience of the employer, e.g., board
and lodging within the company premises.
Common application
In employment setting, the principle of non-diminution of benefits finds application when a change initiated by the
employer to existing company policies, specially matters concerning employee benefits, results in reduction, diminution or
withdrawal of some or all of the the benefits already enjoyed by the employees. For example, if the employees of a certain
company is traditionally granted 14th month pay, and the employer subsequently withdrew such benefit, or reduced its
amount, the reduction or withdrawal is objectionable on the ground that it would result to diminution of benefits.
Requirements
The application of the principle presupposes that a company practice, policy and tradition favorable to the employees has
been clearly established; and that the payments made by the company pursuant to it have ripened into benefits enjoyed
by them.[5]
To ripen into benefits, the following requisites must concur:
1. It should have been practiced over a long period of time; and
2. It must be shown to have been consistent and deliberate.[6]
With regard to the length of time the company practice should have been exercised to constitute voluntary employer
practice which cannot be unilaterally withdrawn by the employer, the Court has not laid down any rule requiring a specific
minimum number of years.[7]
1. In the case of Davao Fruits Corporation vs Associated Labor Unions (G.R. No. 85073, August 24, 1993), the company
practice lasted for six years.
2. In Davao Integrated Port Stevedoring Services vs. Abarquez (G.R. No. 102132, March 19, 1993), the employer, for three
years and nine months, approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of
its Intermittent workers.
3. In Tiangco vs Leogardo, Jr. (G.R. No. L-57636, May 16, 1983), the employer carried on the practice of giving a fixed
monthly emergency allowance from November 1976 to February 1980, or three years and four months.
4. In the case of Sevilla Trading Company vs Semana, ibid., the employer kept the practice of including non-basic benefits
such as paid leaves for unused sick leave and vacation in the computation of their 13th-month pay for at least two (2)
years.
In all these cases, the grant of benefits has been held to have ripened into company practice or policy which cannot be
peremptorily withdrawn.
Footnote
1. Arco Metal Products vs. Salvador Uy, G.R. No. 170734, May 14,
2008, http://sc.judiciary.gov.ph/jurisprudence/2008/may2008/170734.htm.
2. Ibid.
3. benefit: Definition, Synonyms from Answers.com, http://www.answers.com/topic/benefit.
4. See Ibid.
5. See MERALCO vs Quisumbing, G.R. No. 127598, January 27,
1999, http://sc.judiciary.gov.ph/jurisprudence/1999/jan99/127598.htm.
6. See Sevilla Trading Co vs Semana, G.R. No. 152456, April 28,
2004, http://sc.judiciary.gov.ph/jurisprudence/2004/apr2004/152456.htm.
7. See Ibid.
Bibliography
1. Arco Metal Products vs. Salvador Uy, G.R. No. 170734, May 14, 2008,
http://sc.judiciary.gov.ph/jurisprudence/2008/may2008/170734.htm.
2. benefit: Definition, Synonyms from Answers.com, http://www.answers.com/topic/benefit.
3. MERALCO vs Quisumbing, G.R. No. 127598, January 27, 1999,
http://sc.judiciary.gov.ph/jurisprudence/1999/jan99/127598.htm.
4. Sevilla Trading Co vs Semana, G.R. No. 152456, April 28, 2004,
http://sc.judiciary.gov.ph/jurisprudence/2004/apr2004/152456.htm.

What are authorized causes of termination?

Authorized causes are valid causes that usually derives from business decisions to ensure
the sustainability of the company or to improve the economic conditions of the company
which comes in precedence over the continued employment of the employees. In
terminating based on an authorized cause, the employer shall bear the burden of
proof to justify the dismissal was for a lawful cause and in a manner required by law. The
termination shall not be done in bad faith or to deprive the employees of any privilege or
benefit.

What are the authorized causes for termination?

The authorized causes can be found in Article 298 (previously article 283) and Article 299
(previously article 284) of the Labor Code of the Philippines. They are:

Installation of labor-saving devices;

Redundancy;
Retrenchment to prevent losses;
Closure or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of the Labor Code; or
Disease / illness.

What are the requirements in terminating an employee due

to authorized causes?
The employer must establish and comply with the following as part of the requirements in
terminating an employee for authorized causes:
 Good faith in the termination of employee, i.e., the implementation of the company
program resulting in termination of employees must be for a valid cause and not
merely a tool to circumvent the law on employees security of tenure;
The employer must adopt fair and reasonable criteria in the selection of
employee to be dismissed; and,
The employee must be paid separation pay not less than the amount fixed by law.

In the selection of the employee to be dismissed, the employer must adopt of fair and
reasonable criteria which must be applied in good faith such as the less preferred status of
employee, efficiency rating and seniority unless the employee voluntarily asks to be
separated.

What is the difference between just cause and authorized

cause?
In contrast to just causes, termination for an authorized cause is due to the business needs
and in general does not arise from an employees fault or negligence and thus, an employee
terminated on grounds of authorized causes shall be entitled to separation pay.

On the other hand, a termination due to a just cause is directly attributable to the fault or
negligence of the employee. As such, when an employee is terminated due to a just cause,
the employee is not entitled to separation pay unless provided for under the collective
bargaining agreement, employment contract or the company policy.

What are the consequences of a termination due to an

authorized cause?
Valid Due
Authorized Process Consequences
Cause Followed

Yes Yes Valid dismissal, no other consequences

Valid dismissal but may be liable for payment of indemnity or nominal

Yes No
damages
 Invalid dismissal. The employee may be entitled to one or more of the
following:

Reinstatement without loss of seniority rights;

In lieu of reinstatement, an employee may be given
No Regardless
separation pay of one month pay for every year of service;
Full backwages, inclusive of allowances and other benefits or
their monetary equivalent from the time compensation was
withheld up to the time of reinstatement;
Damages if the dismissal was done in bad faith.

BOOK THREE
CONDITIONS OF EMPLOYMENT
Title I
WORKING CONDITIONS AND REST PERIODS
Chapter I
HOURS OF WORK
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and undertakings whether for profit or not,
but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which
they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in the field cannot be determined
with reasonable certainty.

Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and
clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five
(5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work
for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional compensation of at least
thirty percent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall
include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.

Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is required to be on duty or to
be at a prescribed workplace; and (b) all time during which an employee is suffered or permitted to work.

Rest periods of short duration during working hours shall be counted as hours worked.

Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every
employer to give his employees not less than sixty (60) minutes time-off for their regular meals.

Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten percent (10%)
of his regular wage for each hour of work performed between ten oclock in the evening and six oclock in the morning.
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the
overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%)
thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation
equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.

Art. 88. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime work on
any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the
employer from paying the additional compensation required in this Chapter.

Art. 89. Emergency overtime work. Any employee may be required by the employer to perform overtime work in any of
the following cases:

When the country is at war or when any other national or local emergency has been declared by the National Assembly
or the Chief Executive;

When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or
impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other
disaster or calamity;

When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or
damage to the employer or some other cause of similar nature;

When the work is necessary to prevent loss or damage to perishable goods; and

Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious
obstruction or prejudice to the business or operations of the employer.

Any employee required to render overtime work under this Article shall be paid the additional compensation required in
this Chapter.

Art. 90. Computation of additional compensation. For purposes of computing overtime and other additional
remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without
deduction on account of facilities provided by the employer.

Chapter II
WEEKLY REST PERIODS

Art. 91. Right to weekly rest day.

It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest
period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal work days.

The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining
agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the
employer shall respect the preference of employees as to their weekly rest day when such preference is based on
religious grounds.

Art. 92. When employer may require work on a rest day. The employer may require his employees to work on any day:
In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or
other disaster or calamity to prevent loss of life and property, or imminent danger to public safety;

In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the
employer would otherwise suffer;

I There is probationary employment when the employee upon his engagement is made to undergo a trial period during
which the employer determines his fitness to qualify for regular employment based on reasonable standards made
known to him at the time of engagement.[21]

A probationary employee, like a regular employee, enjoys security of tenure.[22] However, in cases of
probationary employment, aside from just or authorized causes of termination, an additional ground is provided under
Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular
employee in accordance with reasonable standards made known by the employer to the employee at the time of the
engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for
any of the following: (1) a just or (2) an authorized cause; and (3) when he fails to qualify as a regular employee in
accordance with reasonable standards prescribed by the employer.[23]

Article 277(b) of the Labor Code mandates that subject to the constitutional right of workers to security of tenure
and their right to be protected against dismissal, except for just and authorized cause and without prejudice to the
requirement of notice under Article 283 of the same Code, the employer shall furnish the worker, whose employment is
sought to be terminated, a written notice containing a statement of the causes of termination, and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance of a representative if he so desires, in
accordance with company rules and regulations pursuant to the guidelines set by the Department of Labor and
Employment.

In the instant case, based on the facts on record, petitioners failed to accord respondent substantive and
procedural due process. The haphazard manner in the investigation of the missing cash, which was left to the
determination of the police authorities and the Prosecutors Office, left respondent with no choice but to cry
foul. Administrative investigation was not conducted by petitioner Supermarket. On the same day that the missing
money was reported by respondent to her immediate superior, the company already pre-judged her guilt without
proper investigation, and instantly reported her to the police as the suspected thief, which resulted in her languishing in
jail for two weeks.

As correctly pointed out by the NLRC, the due process requirements under the Labor Code are mandatory and may
not be supplanted by police investigation or court proceedings. The criminal aspect of the case is considered
independent of the administrative aspect. Thus, employers should not rely solely on the findings of the Prosecutors
Office. They are mandated to conduct their own separate investigation, and to accord the employee every opportunity
to defend himself. Furthermore, respondent was not represented by counsel when she was strip-searched inside the
company premises or during the police investigation, and in the preliminary investigation before the Prosecutors Office.

Respondent was constructively dismissed by petitioner Supermarket effective October 30, 1997. It was
unreasonable for petitioners to charge her with abandonment for not reporting for work upon her release in jail. It
would be the height of callousness to expect her to return to work after suffering in jail for two weeks. Work had been
rendered unreasonable, unlikely, and definitely impossible, considering the treatment that was accorded respondent by
petitioners.

As to respondents monetary claims, Article 279 of the Labor Code provides that an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, to full
backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement. However, due to the strained relations
of the parties, the payment of separation pay has been considered an acceptable alternative to reinstatement, when the
latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could
be a highly oppressive work environment. On the other, the payment releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust.[24]

Thus, as an illegally or constructively dismissed employee, respondent is entitled to: (1) either reinstatement, if
viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and
distinct from each other and are awarded conjunctively.[25]

In this case, since respondent was a probationary employee at the time she was constructively dismissed by petitioners,
she is entitled to separation pay and backwages. Reinstatement of respondent is no longer viable considering the
circumstances.

However, the backwages that should be awarded to respondent shall be reckoned from the time of her
constructive dismissal until the date of the termination of her employment, i.e., from October 30, 1997 to March 14,
1998. The computation should not cover the entire period from the time her compensation was withheld up to the time
of her actual reinstatement. This is because respondent was a probationary employee, and the lapse of her probationary
employment without her appointment as a regular employee of petitioner Supermarket effectively severed the
employer-employee relationship between the parties.

In all cases involving employees engaged on probationary basis, the employer shall make known to its employees
the standards under which they will qualify as regular employees at the time of their engagement. Where no standards
are made known to an employee at the time, he shall be deemed a regular employee,[26] unless the job is self-
descriptive, like maid, cook, driver, or messenger. However, the constitutional policy of providing full protection to
labor is not intended to oppress or destroy management.[27] Naturally, petitioner Supermarket cannot be expected to
retain respondent as a regular employee considering that she lost P20,299.00 while acting as a cashier during the
probationary period. The rules on probationary employment should not be used to exculpate a probationary 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.[28]

Habitual absenteeism and tardiness constitute gross and habitual neglect of duty. Repeated acts of absences without
leave and frequent tardiness reflect indifferent attitude to and lack of motivation in his work. (Valiao vs. CA, G.R. No.
146621, July 30, 2004.)

Gross Negligence Meaning.

Gross negligence is a just cause for termination of employment by employer under Article 282 of the Labor Code of the
Philippines.
Gross negligence has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire
absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.
Negligence must be Habitual.
In order to constitute a just cause for the employees dismissal, the neglect of duties must not only be gross but also
habitual. Habitual neglect implies repeated failure to perform ones duties for a period of time, depending upon the
circumstances.
A single isolated acts of negligence do not constitute a just cause for the dismissal of the employee.
However, in a number of cases, the SC upheld the validity of dismissal on the ground of gross negligence even if the act
complained of was not habitual. Thus, a bank employee was found grossly negligent when she delivered newly approved
credit cards to a person she had not even seen before and she did not even ask for receipts, thereby enabling fictitious
persons to use these cards, causing P740,000.00 loss to the bank. (SeeCitibank vs. Gatchalian, G.R. No. 111222, January 18,
1995.)

Every employee enjoys a security of tenure. A probationary employee may not be terminated
during the period of such probationary employment, unless there is a just or authorized cause
for such termination. In the same manner, a contractual employee may not be terminated
within the period stipulated in the contract, save in cases where there are valid and legal
grounds. Insofar as regular employees are concerned, their employment services may not be
terminated except for just or authorized cause (Article 279, Presidential Decree No. 442 or
more commonly known as the Labor Code of the Philippines, as amended).

Presidential Decree No. 851 (otherwise known as Thirteenth Month Pay Law), as amended by Memorandum Order No. 28,
requires all employers to pay their employees a 13th month pay not later than December 24 of every year.
Historical Backdrop.
Originally, when PD 851, issued by Pres. Marcos, took effect on December 16, 1975, only employees receiving a basic
salary of not more than P1,000 a month were entitled to 13th pay.
On August 13, 1986, Pres. Aquino, through Memorandum Order No. 28, removed the salary ceiling of P1,000. With the
removal of the salary ceiling, all rank and file employees become entitled to a 13th month pay regardless of the amount of
their monthly basic salary (unless their employers are exempted from the application of PD 851).
Employees Covered by 13th Month Pay Law.
All rank-and-file employees, regardless of their designation or employment status, and irrespective of the method by
which their wages are paid, who have worked at least one month during the calendar year are entitled to 13th month pay.
Rank and File Employees Meaning.
As stated above, only rank-and-file employees are entitled to 13th month pay. Managerial employees are excluded from
the coverage of the law.
The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a managerial
employee is one who is vested with powers of prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall discharge, assign or discipline employees, or to effectively recommend such managerial
actions.
All employees not falling within this definition are considered rank-and-file employees.
Amount of 13th Month Pay.
 The 13th month pay shall be in the amount not less than 1/12 of the total basic salary earned by the employee within the
calendar year.

Computation
Only basic salary is included in the computation of 13th month pay. Allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick
leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances, shall be excluded from
the computation.
However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month
pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of
the employees.
Time of Payment of 13th Month Pay.
The required 13th month pay shall be paid not later than December 24 of each year. An employer, however, may give to
his employees one half of the required 13th month pay before the opening of the regular school year and the other half
on before the 24th of December of every year. The frequency of payment of this monetary benefit may be the subject of
agreement between the employer and the recognized/collective bargaining agent of the employees.
Employees excluded from coverage of 13th month pay law.
1. Managerial employees;
2. Those covered under the civil service law;
3. Those already receiving 13th month pay or its equivalent. Christmas bonus, mid-year bonus, cash bonuses and other
payments amounting to not less than 1/12 of the basic salary are treated as equivalent of 13th month pay;
4. Household helpers and persons in the personal service of another; and
5. Those paid on purely commission, boundary, or task basis, and those who are paid fixed amount for performing specific
work except those paid on a piece-rate basis.
13th Month Pay of Certain Types of Employees

Employees paid on commission basis.

Employees paid on a purely commission basis are not entitled to 13th month pay. They are expressly excluded from the
coverage of PD 851. However, employees paid on partly commission basis, i.e., those guaranteed with a fixed wage aside
from the commission, are entitled to 13th month pay.
Computation. In the computation of the basic salary of employees paid partly on commission basis, we must distinguish
between the two types of commission:
1. Commission as an incentives or encouragement to ensure productivity, i.e., productivity bonus; and
2. Commission as a direct remuneration for service rendered.
Commission that take the form of an incentives or encouragement to ensure productivity, e.g., productivity bonus, does
not form part of the basic salary. As such, it may be excluded from the computation of 13th month pay. Only the fixed or
guaranteed wage is required to be included in the computation (see Boie Takeka case, 1993.)
Basic salary = Fixed wage (commission is excluded)

On the other hand, commission that takes the form of a direct remuneration for services rendered should be included in
the computation of the basic salary. That is, it should be added to the guaranteed wage of the employee in computing his
basic salary (see Philippine Duplicators v. NLRC, 1993.)
Basic salary = Fixed wage + Commission

13th Month Pay of Employees with Multiple Employers.

Employees with multiple employers are entitled to 13th month pay from all their private employers.
Thus, if an employee works in two or more private firms, he is entitled to the pay from both or all of them. If he is a
government employee, but works part time in a private enterprise, he is entitled to 13th month pay from the private
enterprise.
 13th Month Pay of Private School Teachers.
Private school teachers are entitled to 13th month pay regardless of the numbers of months they work in a year, provided
it is at least one month.

Payment of 13th Month Pay to Resigned or Separated Employees.

Employees who resigned or were separated during the calendar year shall be entitled to 13th month pay in proportion to
the length of time he worked during the year, provided it is at least one month.
The payment may be demanded by the employee upon the cessation of employment.

Example
1. Assuming an employee earning a basic salary of P12,000.00 per month had worked for at least 9 months at the time of his
separation, how much is his 13th month pay? Answer: P9,000.00.
Computation: (P12,000.00 x 9 months) 12 = P9,000.00

Cases
1. For 2 to 3 years, Sevilla Trading, allegedly by mistake, added the night premium, maternity leave pay, etc., in the
computation 13th month pay. The court ruled that the inclusion may no longer be withdrawn if it has already ripened into
a company practice. Nota bene: There is no specific rule as to how many years are necessary to constitute company
practice. (Sevilla Trading v. AVA Tomas, GR No. 152456.)
2. Employees paid according to boundary system are not entitled to 13th mo pay. Boundary system is where the
employees do not receive fixed wages, but retain only those sums in excess of the boundary or fee they pay to the
owners or operators of their vehicles. They are akin to employees paid on purely commission basis. (R&E Transport v.
Latag, G.R. No. 155214.)
3. Drivers who are paid on commission basis, but with guaranteed minimum wage in case their commission be less than their
basic minimum, are entitled to 13th month pay. (PACIWU v. NLRC, GR No 107994.)

BOOK THREE
CONDITIONS OF EMPLOYMENT
Title I
WORKING CONDITIONS AND REST PERIODS
Chapter I
HOURS OF WORK
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and undertakings whether for profit or not,
but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which
they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business
or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed
capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time
for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in
which case, they shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for work on the
sixth day. For purposes of this Article, "health personnel" shall include resident physicians, nurses, nutritionists, dietitians, pharmacists,
social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic
personnel.
Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a
prescribed workplace; and (b) all time during which an employee is suffered or permitted to work.
Rest periods of short duration during working hours shall be counted as hours worked.
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give
his employees not less than sixty (60) minutes time-off for their regular meals.
Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten percent (10%) of his regular
wage for each hour of work performed between ten oclock in the evening and six oclock in the morning.
 Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the employee is paid for the overtime work,
an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%) thereof. Work performed beyond
eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday
or rest day plus at least thirty percent (30%) thereof.
Art. 88. Undertime not offset by overtime. Undertime work on any particular day shall not be offset by overtime work on any other day.
Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the
additional compensation required in this Chapter.
Art. 89. Emergency overtime work. Any employee may be required by the employer to perform overtime work in any of the following
cases:
1. When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive;

2. When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency
in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity;

3. When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer or
some other cause of similar nature;

4. When the work is necessary to prevent loss or damage to perishable goods; and

5. Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the
business or operations of the employer.
Any employee required to render overtime work under this Article shall be paid the additional compensation required in this Chapter.
Art. 90. Computation of additional compensation. For purposes of computing overtime and other additional remuneration as required by
this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by
the employer.
Chapter II
WEEKLY REST PERIODS
Art. 91. Right to weekly rest day.
1. It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty-
four (24) consecutive hours after every six (6) consecutive normal work days.

2. The employer shall determine and schedule the weekly rest day of his employees subject to collective bargaining agreement and to such rules
and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to
their weekly rest day when such preference is based on religious grounds.
Art. 92. When employer may require work on a rest day. The employer may require his employees to work on any day:
1. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity
to prevent loss of life and property, or imminent danger to public safety;

2. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the employer would otherwise
suffer;

3. In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other
measures;

4. To prevent loss or damage to perishable goods;

5. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer;
and

6. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment.
Art. 93. Compensation for rest day, Sunday or holiday work.
1. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of at least thirty percent
(30%) of his regular wage. An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his
established rest day.
2. When the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid
an additional compensation of at least thirty percent (30%) of his regular wage for work performed on Sundays and holidays.
3. Work performed on any special holiday shall be paid an additional compensation of at least thirty percent (30%) of the regular wage of the
employee. Where such holiday work falls on the employees scheduled rest day, he shall be entitled to an additional compensation of at least
fifty per cent (50%) of his regular wage.
4. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that
prescribed under this Article, the employer shall pay such higher rate.
Chapter III
HOLIDAYS, SERVICE INCENTIVE LEAVES AND SERVICE CHARGES
Art. 94. Right to holiday pay.
1. Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less
than ten (10) workers;
2. The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular
rate; and

3. As used in this Article, "holiday" includes: New Years Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a
general election.
Art. 95. Right to service incentive leave.
1. Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

2. This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least
five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this
benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment.

3. The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action.
Art. 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of
eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be
equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered
integrated in their wages.
Title II
WAGES
Chapter I
PRELIMINARY MATTERS
Art. 97. Definitions. As used in this Title:
1. "Person" means an individual, partnership, association, corporation, business trust, legal representatives, or any organized group of persons.

2. "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the
government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as
non-profit private institutions, or organizations.

3. "Employee" includes any individual employed by an employer.

4. "Agriculture" includes farming in all its branches and, among other things, includes cultivation and tillage of soil, dairying, the production,
cultivation, growing and harvesting of any agricultural and horticultural commodities, the raising of livestock or poultry, and any practices
performed by a farmer on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or
processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products.

5. "Employ" includes to suffer or permit to work.

6. "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other
facilities customarily furnished by the employer to the employee. "Fair and reasonable value" shall not include any profit to the employer, or to
any person affiliated with the employer.
Art. 98. Application of Title. This Title shall not apply to farm tenancy or leasehold, domestic service and persons working in their
respective homes in needle work or in any cottage industry duly registered in accordance with law.
Chapter II
MINIMUM WAGE RATES
Art. 99. Regional minimum wages. The minimum wage rates for agricultural and non-agricultural employees and workers in each and
every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. (As amended by
Section 3, Republic Act No. 6727, June 9, 1989).
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way
diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.
Art. 101. Payment by results.
1. The Secretary of Labor and Employment shall regulate the payment of wages by results, including pakyao, piecework, and other non-time work,
in order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or in consultation with
representatives of workers and employers organizations.
Chapter III
PAYMENT OF WAGES
Art. 102. Forms of payment. No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons,
tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of
this Code, or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of
Labor and Employment or as stipulated in a collective bargaining agreement.
Art. 103. Time of payment. Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen
(16) days. If on account of force majeure or circumstances beyond the employers control, payment of wages on or within the time
herein provided cannot be made, the employer shall pay the wages immediately after such force majeure or circumstances have
ceased. No employer shall make payment with less frequency than once a month.
 The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the
following conditions, in the absence of a collective bargaining agreement or arbitration award:
1. That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work completed;

2. That final settlement is made upon completion of the work.

Art. 104. Place of payment. Payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such
regulations as the Secretary of Labor and Employment may prescribe under conditions to ensure greater protection of wages.
Art. 105. Direct payment of wages. Wages shall be paid directly to the workers to whom they are due, except:
1. In cases of force majeure rendering such payment impossible or under other special circumstances to be determined by the Secretary of Labor
and Employment in appropriate regulations, in which case, the worker may be paid through another person under written authority given by the
worker for the purpose; or

2. Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the heirs of the latter without the
necessity of intestate proceedings. The claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased
and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his
behalf by his natural guardian or next-of-kin. The affidavit shall be presented to the employer who shall make payment through the Secretary of
Labor and Employment or his representative. The representative of the Secretary of Labor and Employment shall act as referee in dividing the
amount paid among the heirs. The payment of wages under this Article shall absolve the employer of any further liability with respect to the
amount paid.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the
formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions
of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the
contract, in the same manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the
rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this
Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if
the latter were directly employed by him.
Art. 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work,
task, job or project.
Art. 108. Posting of bond. An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the
cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or
subcontractor, as the case may be, fail to pay the same.
Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be
held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the
extent of their civil liability under this Chapter, they shall be considered as direct employers.
Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of an employers business, his workers shall
enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such
unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid. (As amended
by Section 1, Republic Act No. 6715, March 21, 1989)
Art. 111. Attorneys fees.
1. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages
recovered.
2. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorneys fees
which exceed ten percent of the amount of wages recovered.
Chapter IV
PROHIBITIONS REGARDING WAGES
Art. 112. Non-interference in disposal of wages. No employer shall limit or otherwise interfere with the freedom of any employee to
dispose of his wages. He shall not in any manner force, compel, or oblige his employees to purchase merchandise, commodities or
other property from any other person, or otherwise make use of any store or services of such employer or any other person.
Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his
employees, except:
1. In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance;

2. For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and

3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.
 Art. 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for
the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is
engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or
is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations.
Art. 115. Limitations. No deduction from the deposits of an employee for the actual amount of the loss or damage shall be made unless
the employee has been heard thereon, and his responsibility has been clearly shown.
Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount
from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means
whatsoever without the workers consent.
Art. 117. Deduction to ensure employment. It shall be unlawful to make any deduction from the wages of any employee for the benefit of
the employer or his representative or intermediary as consideration of a promise of employment or retention in employment.
Art. 118. Retaliatory measures. It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits, discharge or in
any manner discriminate against any employee who has filed any complaint or instituted any proceeding under this Title or has testified
or is about to testify in such proceedings.
Art. 119. False reporting. It shall be unlawful for any person to make any statement, report, or record filed or kept pursuant to the
provisions of this Code knowing such statement, report or record to be false in any material respect.
Chapter V
WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION
Art. 120. Creation of National Wages and Productivity Commission. There is hereby created a National Wages and Productivity
Commission, hereinafter referred to as the Commission, which shall be attached to the Department of Labor and Employment (DOLE)
for policy and program coordination. (As amended by Republic Act No. 6727, June 9, 1989).
Art. 121. Powers and functions of the Commission. The Commission shall have the following powers and functions:
1. To act as the national consultative and advisory body to the President of the Philippines and Congress on matters relating to wages, incomes and
productivity;

2. To formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels;

3. To prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial, or
industry levels;

4. To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with
prescribed guidelines and national development plans;

5. To undertake studies, researches and surveys necessary for the attainment of its functions and objectives, and to collect and compile data and
periodically disseminate information on wages and productivity and other related information, including, but not limited to, employment, cost-
of-living, labor costs, investments and returns;

6. To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national
development plans;

7. To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards;

8. To call, from time to time, a national tripartite conference of representatives of government, workers and employers for the consideration of
measures to promote wage rationalization and productivity; and

9. To exercise such powers and functions as may be necessary to implement this Act.
The Commission shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the Director-General of the
National Economic and Development Authority (NEDA) as ex-officio vice-chairman, and two (2) members each from workers and
employers sectors who shall be appointed by the President of the Philippines upon recommendation of the Secretary of Labor and
Employment to be made on the basis of the list of nominees submitted by the workers and employers sectors, respectively, and who
shall serve for a term of five (5) years. The Executive Director of the Commission shall also be a member of the Commission.
The Commission shall be assisted by a Secretariat to be headed by an Executive Director and two (2) Deputy Directors, who shall be
appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment.
The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a Department Assistant Secretary,
while the Deputy Directors shall have the same rank, salary, benefits and other emoluments as that of a Bureau Director. The members
of the Commission representing labor and management shall have the same rank, emoluments, allowances and other benefits as those
prescribed by law for labor and management representatives in the Employees Compensation Commission. (As amended by Republic
Act No. 6727, June 9, 1989)
Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. There is hereby created Regional Tripartite Wages and
Productivity Boards, hereinafter referred to as Regional Boards, in all regions, including autonomous regions as may be established by
law. The Commission shall determine the offices/headquarters of the respective Regional Boards.
The Regional Boards shall have the following powers and functions in their respective territorial jurisdictions:
1. To develop plans, programs and projects relative to wages, incomes and productivity improvement for their respective regions;
2. To determine and fix minimum wage rates applicable in their regions, provinces or industries therein and to issue the corresponding wage
orders, subject to guidelines issued by the Commission;
3. To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and programs, and to collect and
compile data on wages, incomes, productivity and other related information and periodically disseminate the same;
4. To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of this Code;
5. To receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any Wage Order; and
6. To exercise such other powers and functions as may be necessary to carry out their mandate under this Code.
Implementation of the plans, programs, and projects of the Regional Boards referred to in the second paragraph, letter (a) of this
Article, shall be through the respective regional offices of the Department of Labor and Employment within their territorial jurisdiction;
Provided, however, That the Regional Boards shall have technical supervision over the regional office of the Department of Labor and
Employment with respect to the implementation of said plans, programs and projects.
Each Regional Board shall be composed of the Regional Director of the Department of Labor and Employment as chairman, the
Regional Directors of the National Economic and Development Authority and the Department of Trade and Industry as vice-chairmen
and two (2) members each from workers and employers sectors who shall be appointed by the President of the Philippines, upon the
recommendation of the Secretary of Labor and Employment, to be made on the basis of the list of nominees submitted by the workers
and employers sectors, respectively, and who shall serve for a term of five (5) years.
Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended by Republic Act No. 6727, June 9,
1989)
Art. 123. Wage Order. Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts;
and based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. Any
such Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general
circulation in the region.
In the performance of its wage-determining functions, the Regional Board shall conduct public hearings/consultations, giving notices to
employees and employers groups, provincial, city and municipal officials and other interested parties.
Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the Commission within ten (10)
calendar days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within sixty (60)
calendar days from the filing thereof.
The filing of the appeal does not stay the order unless the person appealing such order shall file with the Commission, an undertaking
with a surety or sureties satisfactory to the Commission for the payment to the employees affected by the order of the corresponding
increase, in the event such order is affirmed. (As amended by Republic Act No. 6727, June 9, 1989)
Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be established by the Regional Board shall be as
nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and
general well-being of the employees within the framework of the national economic and social development program. In the
determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following:
1. The demand for living wages;

2. Wage adjustment vis--vis the consumer price index;

3. The cost of living and changes or increases therein;

4. The needs of workers and their families;

5. The need to induce industries to invest in the countryside;

6. Improvements in standards of living;

7. The prevailing wage levels;

8. Fair return of the capital invested and capacity to pay of employers;

9. Effects on employment generation and family income; and

10. The equitable distribution of income and wealth along the imperatives of economic and social development.
The wages prescribed in accordance with the provisions of this Title shall be the standard prevailing minimum wages in every region.
These wages shall include wages varying with industries, provinces or localities if in the judgment of the Regional Board, conditions
make such local differentiation proper and necessary to effectuate the purpose of this Title.
Any person, company, corporation, partnership or any other entity engaged in business shall file and register annually with the
appropriate Regional Board, Commission and the National Statistics Office, an itemized listing of their labor component, specifying the
names of their workers and employees below the managerial level, including learners, apprentices and disabled/handicapped workers
who were hired under the terms prescribed in the employment contracts, and their corresponding salaries and wages.
Where the application of any prescribed wage increase by virtue of a law or wage order issued by any Regional Board results in
distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any
dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement
and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be
decided by the voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct
such distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains
unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20)
calendar days from the time said dispute is submitted for compulsory arbitration.
 The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage
rates pursuant to the provisions of law or wage order.
As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as
to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation.
All workers paid by result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive not less than the
prescribed wage rates per eight (8) hours of work a day, or a proportion thereof for working less than eight (8) hours.
All recognized learnership and apprenticeship agreements shall be considered automatically modified insofar as their wage clauses are
concerned to reflect the prescribed wage rates. (As amended by Republic Act No. 6727, June 9, 1989)
Art. 125. Freedom to bargain. No wage order shall be construed to prevent workers in particular firms or enterprises or industries from
bargaining for higher wages with their respective employers. (As amended by Republic Act No. 6727, June 9, 1989)
Art. 126. Prohibition against injunction. No preliminary or permanent injunction or temporary restraining order may be issued by any
court, tribunal or other entity against any proceedings before the Commission or the Regional Boards. (As amended by Republic Act No.
6727, June 9, 1989)
Art. 127. Non-diminution of benefits. No wage order issued by any regional board shall provide for wage rates lower than the statutory
minimum wage rates prescribed by Congress. (As amended by Republic Act No. 6727, June 9, 1989)
Chapter VI
ADMINISTRATION AND ENFORCEMENT
Art. 128. Visitorial and enforcement power.
1. The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall have access to
employers records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to
question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the
enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.

2. Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee
still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to
give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.
(As amended by Republic Act No. 7730, June 2, 1994).

An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the
latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary
award in the order appealed from. (As amended by Republic Act No. 7730, June 2, 1994)

3. The Secretary of Labor and Employment may likewise order stoppage of work or suspension of operations of any unit or department of an
establishment when non-compliance with the law or implementing rules and regulations poses grave and imminent danger to the health and
safety of workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine whether an order for the stoppage of
work or suspension of operations shall be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the
employees concerned their salaries or wages during the period of such stoppage of work or suspension of operation.

4. It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor and
Employment or his duly authorized representatives issued pursuant to the authority granted under this Article, and no inferior court or entity
shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement
orders issued in accordance with this Article.

5. Any government employee found guilty of violation of, or abuse of authority, under this Article shall, after appropriate administrative
investigation, be subject to summary dismissal from the service.

6. The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep and maintain such employment records as
may be necessary in aid of his visitorial and enforcement powers under this Code.
Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the Regional Director of the
Department of Labor and Employment or any of the duly authorized hearing officers of the Department is empowered, through
summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or person employed in domestic or household service or househelper under
this Code, arising from employer-employee relations: Provided, That such complaint does not include a claim for reinstatement:
Provided further, That the aggregate money claims of each employee or househelper does not exceed Five thousand pesos
(P5,000.00). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar days from the date
of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this Article shall be held in a
special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the Regional Director directly to
the employee or househelper concerned. Any such sum not paid to the employee or househelper because he cannot be located after
diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor
and Employment to be used exclusively for the amelioration and benefit of workers.
Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be appealed on the same grounds
provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National
 Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from the submission of the last pleading
required or allowed under its rules.
The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of unpaid wages and other
monetary claims and benefits, including legal interest, found owing to any employee or househelper under this Code. (As amended by
Section 2, Republic Act No. 6715, March 21, 1989)
Title III
WORKING CONDITIONS FOR
SPECIAL GROUPS OF EMPLOYEES
Chapter I
EMPLOYMENT OF WOMEN
Art. 130. Nightwork prohibition. No woman, regardless of age, shall be employed or permitted or suffered to work, with or without
compensation:
1. In any industrial undertaking or branch thereof between ten oclock at night and six oclock in the morning of the following day; or

2. In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between midnight and six oclock in the morning of
the following day; or

3. In any agricultural undertaking at nighttime unless she is given a period of rest of not less than nine (9) consecutive hours.
Art. 131. Exceptions. The prohibitions prescribed by the preceding Article shall not apply in any of the following cases:
1. In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disasters or
calamity, to prevent loss of life or property, or in cases of force majeure or imminent danger to public safety;

2. In case of urgent work to be performed on machineries, equipment or installation, to avoid serious loss which the employer would otherwise
suffer;

3. Where the work is necessary to prevent serious loss of perishable goods;

4. Where the woman employee holds a responsible position of managerial or technical nature, or where the woman employee has been engaged to
provide health and welfare services;

5. Where the nature of the work requires the manual skill and dexterity of women workers and the same cannot be performed with equal efficiency
by male workers;

6. Where the women employees are immediate members of the family operating the establishment or undertaking; and

7. Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate regulations.
Art. 132. Facilities for women. The Secretary of Labor and Employment shall establish standards that will ensure the safety and health
of women employees. In appropriate cases, he shall, by regulations, require any employer to:
1. Provide seats proper for women and permit them to use such seats when they are free from work and during working hours, provided they can
perform their duties in this position without detriment to efficiency;

2. To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women;

3. To establish a nursery in a workplace for the benefit of the women employees therein; and

4. To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight
attendants and the like.
Art. 133. Maternity leave benefits.
1. Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of at least six (6) months for the last twelve
(12) months, maternity leave of at least two (2) weeks prior to the expected date of delivery and another four (4) weeks after normal delivery or
abortion with full pay based on her regular or average weekly wages. The employer may require from any woman employee applying for
maternity leave the production of a medical certificate stating that delivery will probably take place within two weeks.

2. The maternity leave shall be extended without pay on account of illness medically certified to arise out of the pregnancy, delivery, abortion or
miscarriage, which renders the woman unfit for work, unless she has earned unused leave credits from which such extended leave may be
charged.

3. The maternity leave provided in this Article shall be paid by the employer only for the first four (4) deliveries by a woman employee after the
effectivity of this Code.
Art. 134. Family planning services; incentives for family planning.
1. Establishments which are required by law to maintain a clinic or infirmary shall provide free family planning services to their employees which
shall include, but not be limited to, the application or use of contraceptive pills and intrauterine devices.

2. In coordination with other agencies of the government engaged in the promotion of family planning, the Department of Labor and Employment
shall develop and prescribe incentive bonus schemes to encourage family planning among female workers in any establishment or enterprise.
Art. 135. Discrimination prohibited. It shall be unlawful for any employer to discriminate against any woman employee with respect to
terms and conditions of employment solely on account of her sex.
The following are acts of discrimination:
1. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employees as against a
male employee, for work of equal value; and

2. Favoring a male employee over a female employee with respect to promotion, training opportunities, study and scholarship grants solely on
account of their sexes.
Criminal liability for the willful commission of any unlawful act as provided in this Article or any violation of the rules and regulations
issued pursuant to Section 2 hereof shall be penalized as provided in Articles 288 and 289 of this Code: Provided, That the institution of
any criminal action under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct action for
money claims, which may include claims for damages and other affirmative reliefs. The actions hereby authorized shall proceed
independently of each other. (As amended by Republic Act No. 6725, May 12, 1989)
Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.
Art. 137. Prohibited acts.
1. It shall be unlawful for any employer:

1. To deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of
preventing her from enjoying any of the benefits provided under this Code.

2. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy;

3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant.
Art. 138. Classification of certain women workers. Any woman who is permitted or suffered to work, with or without compensation, in any
night club, cocktail lounge, massage clinic, bar or similar establishments under the effective control or supervision of the employer for a
substantial period of time as determined by the Secretary of Labor and Employment, shall be considered as an employee of such
establishment for purposes of labor and social legislation.
Chapter II
EMPLOYMENT OF MINORS
Art. 139. Minimum employable age.
1. No child below fifteen (15) years of age shall be employed, except when he works directly under the sole responsibility of his parents or
guardian, and his employment does not in any way interfere with his schooling.

2. Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of hours and such periods of the day as
determined by the Secretary of Labor and Employment in appropriate regulations.

3. The foregoing provisions shall in no case allow the employment of a person below eighteen (18) years of age in an undertaking which is
hazardous or deleterious in nature as determined by the Secretary of Labor and Employment.
Art. 140. Prohibition against child discrimination. No employer shall discriminate against any person in respect to terms and conditions
of employment on account of his age.
Chapter III
EMPLOYMENT OF HOUSEHELPERS
Art. 141. Coverage. This Chapter shall apply to all persons rendering services in households for compensation.
"Domestic or household service" shall mean service in the employers home which is usually necessary or desirable for the
maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the
employers household, including services of family drivers.
Art. 142. Contract of domestic service. The original contract of domestic service shall not last for more than two (2) years but it may be
renewed for such periods as may be agreed upon by the parties.
Art. 143. Minimum wage.
1. Househelpers shall be paid the following minimum wage rates:

1. Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay, and Caloocan cities and municipalities of Makati, San Juan,
Mandaluyong, Muntinlupa, Navotas, Malabon, Paraaque, Las Pias, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in
highly urbanized cities;

2. Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first-class municipalities; and

3. Five hundred fifty pesos (P550.00) a month for those in other municipalities.
Provided, That the employers shall review the employment contracts of their househelpers every three (3) years with the end in view of
improving the terms and conditions thereof.
Provided, further, That those househelpers who are receiving at least One thousand pesos (P1,000.00) shall be covered by the Social
Security System (SSS) and be entitled to all the benefits provided thereunder. (As amended by Republic Act No. 7655, August 19, 1993)
Art. 144. Minimum cash wage. The minimum wage rates prescribed under this Chapter shall be the basic cash wages which shall be
paid to the househelpers in addition to lodging, food and medical attendance.
Art. 145. Assignment to non-household work. No househelper shall be assigned to work in a commercial, industrial or agricultural
enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural workers as prescribed herein.
 Art. 146. Opportunity for education. If the househelper is under the age of eighteen (18) years, the employer shall give him or her an
opportunity for at least elementary education. The cost of education shall be part of the househelpers compensation, unless there is a
stipulation to the contrary.
Art. 147. Treatment of househelpers. The employer shall treat the househelper in a just and humane manner. In no case shall physical
violence be used upon the househelper.
Art. 148. Board, lodging, and medical attendance. The employer shall furnish the househelper, free of charge, suitable and sanitary living
quarters as well as adequate food and medical attendance.
Art. 149. Indemnity for unjust termination of services. If the period of household service is fixed, neither the employer nor the
househelper may terminate the contract before the expiration of the term, except for a just cause. If the househelper is unjustly
dismissed, he or she shall be paid the compensation already earned plus that for fifteen (15) days by way of indemnity.
If the househelper leaves without justifiable reason, he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15)
days.
Art. 150. Service of termination notice. If the duration of the household service is not determined either in stipulation or by the nature of
the service, the employer or the househelper may give notice to put an end to the relationship five (5) days before the intended
termination of the service.
Art. 151. Employment certification. Upon the severance of the household service relation, the employer shall give the househelper a
written statement of the nature and duration of the service and his or her efficiency and conduct as househelper.
Art. 152. Employment record. The employer may keep such records as he may deem necessary to reflect the actual terms and
conditions of employment of his househelper, which the latter shall authenticate by signature or thumbmark upon request of the
employer.
Chapter IV
EMPLOYMENT OF HOMEWORKERS
Art. 153. Regulation of industrial homeworkers. The employment of industrial homeworkers and field personnel shall be regulated by the
government through the appropriate regulations issued by the Secretary of Labor and Employment to ensure the general welfare and
protection of homeworkers and field personnel and the industries employing them.
Art. 154. Regulations of Secretary of Labor. The regulations or orders to be issued pursuant to this Chapter shall be designed to assure
the minimum terms and conditions of employment applicable to the industrial homeworkers or field personnel involved.
Art. 155. Distribution of homework. For purposes of this Chapter, the "employer" of homeworkers includes any person, natural or
artificial who, for his account or benefit, or on behalf of any person residing outside the country, directly or indirectly, or through an
employee, agent contractor, sub-contractor or any other person:
1. Delivers, or causes to be delivered, any goods, articles or materials to be processed or fabricated in or about a home and thereafter to be returned
or to be disposed of or distributed in accordance with his directions; or

2. Sells any goods, articles or materials to be processed or fabricated in or about a home and then rebuys them after such processing or fabrication,
either by himself or through some other person.

Breach of trust

Article 279 of the Labor Code mandates that the employers shall not terminate the services of an employee
except for a just and authorized case and upon the proper observance of the procedural requirements. Article
282 of the Labor Code has laid down the following just grounds for a dismissal to be valid: (a) serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or representative; (b)
gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized representatives; (d) commission of a crime or an offense by
the employee against the person of his employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.

As mentioned above, willful breach by the employee of the trust reposed to him by the employer is one of the
just causes to terminate employment. However, this ground of lack of trust and confidence can only dismiss an
employee who occupies a position of confidence. By this, he must be invested with confidence on delicate
matters, such as custody, handling or care and protection of the property and assets of the employer (Panday v.
NLRC, G.R. No. 67664, 20 May 1992).

The dismissal of an employee for lack of trust and confidence must be based on substantial evidence and not on
the employers whims or caprices or suspicions; otherwise, the employee would eternally remain at the mercy
of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a
claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the
act complained of must be work-related and shows that the employee concerned is unfit to continue working for
the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the
fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee
concerned is entrusted with confidence with respect to delicate matters such as the handling or care and
protection of the property and assets of the employer (Qurico Lopez v. Alturas Group of Companies, G.R. No.
191008, April 11, 2011).

Of course, the employer in dismissing his employee must comply with the procedural requirement before
termination is effected. The employer is bound to furnish the employee concerned with two written notices
before termination of employment can be legally effected. One is the notice apprising the employee of the
particular acts or omissions for which dismissal is sought and this may loosely be considered as the proper
charge. The other is the notice informing the employee of the managements decision to sever his employment.
This decision, however, must come only after the employee is given a reasonable period from receipt of the first
notice within which to answer the charge, thereby giving him ample opportunity to be heard and defend himself
with the assistance of his representative should he so desire (Errector Advertising Sign Group, Inc. And Arch
Jimmy C. Amoroto vs. NLRC, G.R. No. 167218, July 2, 2010).

Serious Misconduct as a Termination Ground in the Labor

Code of the Philippines

Introduction
The employer is allowed by law to dismiss an employee based on just causes under the Labor
Code.[1] One of the just causes is serious misconduct.[2]
In practice, serious misconduct is often the most commonly cited ground for dismissing an employee.
Unfortunately, employers or managers are not fully aware of the context and scope of its application.
When serious misconduct is incorrectly applied, it will result in an illegal dismissal.
Moreover, the Supreme Court reiterates the rule that it is cruel and unjust to impose the drastic penalty of
dismissal if not commensurate to the gravity of the misdeed.[3] Thus:
[W]here 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 laws 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. The misery and pain attendant on the loss of jobs then
could be avoided if there be acceptance of the view that under all circumstances of this case, [the
employees] should not be deprived of their means of livelihood. Nor is this to condone what had been
done by them. For all this while, since private respondent considered them separated from the service,
they had not been paid[4]
Hence, not all misconduct warrant the penalty of dismissal. A misconduct must be serious, grave, and
aggravated in nature such that dismissal would be the commensurate penalty.
For these reasons, this resource material is aimed at providing employers and managers insights on how
to properly use serious misconduct as a valid ground for terminating an employee.
Concept of Serious Misconduct
Misconduct is defined as the transgression of some established and definite rule of action, a forbidden
act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment.[5]
It becomes a serious misconduct when it is grave and an aggravated character. As stated by the
Supreme Court, the employees misconduct must be serious, i.e., of such grave and aggravated
character and not merely trivial or unimportant.[6]
Further, the following requirements are present. When the requirements are met, it may be a ground for
termination.

4 Requirements of Serious Misconduct

For serious misconduct to be a valid ground for dismissal, it must comply with the following requirements:

1. It must be serious; [7]

2. It must relate to the performance of the employees duties; [8]
3. It must show that the employee has become unfit to continue working for the employer;[9] and
4. It must performed with wrongful intent.[10]

The first three requirements are discussed in a case law as follows:

One of the just causes enumerated in the Labor Code is serious misconduct. Misconduct is improper or
wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. Such
misconduct, however serious, must nevertheless be in connection with the employees work to constitute
just cause for his separation. Thus, for misconduct or improper behavior to be a just cause for dismissal,
(a) it must be serious; (b) it must relate to the performance of the employees duties; and (c) it must show
that the employee has become unfit to continue working for the employer.[11]
Meanwhile, the fourth requirement has been added through a separate case, viz:
Misconduct is defined as improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character and implies wrongful
intent and not mere error of judgment. The misconduct to be serious within the meaning of the act
must be of such a grave and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious, must nevertheless be in connection with the work of the employee to
constitute just cause from his separation.[12]
In order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph
(a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated
some established rules or policies. It is equally important and required that the act or conduct must have
been performed with wrongful intent.

Case Law on Serious Misconduct

The following are the cases decided upon by the Supreme Court on labor cases involving serious
misconduct. As Supreme Court Decisions form part of the legal system,[13] these jurisprudence may be
cited as legal basis and precedent for application of the law on similarly situated cases.
Violation of Company Policy
A violation of a company policy may be a serious misconduct. Violation of a company rule prohibiting the
infliction of harm or physical injury against any person under the particular circumstances provided for in
the same rule may be deemed analogous to serious misconduct stated in Art. 282 (a) of the Labor
Code.[14]
In Yabut v. Manila Electric Company,[15] an employee challenged his dismissal claiming that he was not
involved in the shunting of electricity into his household. While he denied participation, it was established
that electricity was directed to his household resulting in the violation of the company policy. Thus:
The [employees] violation of the company rules was evident. While he denies any involvement in the
installation of the shunting wires which Meralco discovered, it is significant that said SIN 708668501 is
registered under his name, and its meter base is situated within the premises of his property. Said meter
registered electric consumption during the time his electric service was officially disconnected by Meralco.
It was the [employee] and his family who could have benefited from the illegal connection, being the
residents of the area covered by the service. His claim that he failed to know or even notice the shunted
wires fails to persuade as we consider the meter located in the front of his house, the nature of his work
as branch field representative, his long-time employment with Meralco and his familiarity with illegal
connections of this kind.
The logical conclusion that may be deduced from these attending circumstances is that the [employee]
was a party, or at the very least, one who agreed to the installation of the shunted wires, and who also
benefited from the illegal connection at the expense of his employer-company
Significantly, (t)ampering with electric meters or metering installations of the Company or the installation
of any device, with the purpose of defrauding the Company is classified as an act of dishonesty from
Meralco employees, expressly prohibited under company rules. It is reasonable that its commission is
classified as a severe act of dishonesty, punishable by dismissal even on its first commission, given the
nature and gravity of the offense and the fact that it is a grave wrong directed against their employer.
xxx
In reviewing the CAs Decision, we again consider the petitioners duties and powers as a Meralco
employee. And we conclude that he committed a serious misconduct. Installation of shunting wires is
without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to
wrongfully obtain electric power through unlawful means. The act clearly relates to the petitioners
performance of his duties given his position as branch field representative who is equipped with
knowledge on meter operations, and who has the duty to test electric meters and handle customers
violations of contract. Instead of protecting the companys interest, the petitioner himself used his
knowledge to illegally obtain electric power from Meralco. His involvement in this incident deems him no
longer fit to continue performing his functions for respondent-company.

Sexual Harassment
Sexual harassment abounds in all sick societies. It is reprehensible enough but more so when inflicted by
those with moral ascendancy over their victims. We [the Supreme Court] rule that it is a valid cause for
separation from service.[16] Thus, in Villarama v. Golden Donuts,[17] a material manager found liable for
sexual harassment against his subordinate was validly dismissed.
As a managerial employee, petitioner is bound by a more exacting work ethics. He failed to live up to this
higher standard of responsibility when he succumbed to his moral perversity. And when such moral
perversity is perpetrated against his subordinate, he provides justifiable ground for his dismissal for lack of
trust and confidence. It is the right, nay, the duty of every employer to protect its employees from over
sexed superiors.
Drug use in the workplace
Drug use in the premises of the employer constitutes serious misconduct.[18] In Bughaw, Jr. v. Treasure
Island Industrial Corporation,[19] the Supreme Court reiterated the rule that drug is in the workplace is a
serious misconduct that may warrant dismissal, viz:
The charge of drug use inside the companys premises and during working hours against petitioner
constitutes serious misconduct, which is one of the just causes for termination. Misconduct is improper or
wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not merely an error in judgment.
The misconduct to be serious within the meaning of the Act must be of such a grave and aggravated
character and not merely trivial or unimportant. Such misconduct, however serious, must nevertheless, in
connection with the work of the employee, constitute just cause for his separation. This Court took judicial
notice of scientific findings that drug abuse can damage the mental faculties of the user. It is beyond
question therefore that any employee under the influence of drugs cannot possibly continue doing his
duties without posing a serious threat to the lives and property of his co-workers and even his employer.
However, it should be emphasized that failure to follow the proper drug testing method will result in illegal
dismissal as stated in Nacague v. Sulpicio Lines:[20]
The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case,
Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center. Sulpicio Lines did
not even deny Nacagues allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test
was conducted to determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the
positive result of the screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that
Nacague was guilty of using illegal drugs amounting to serious misconduct and loss of trust and
confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for terminating
Nacagues employment. When the alleged valid cause for the termination of employment is not clearly
proven, as in this case, the law considers the matter a case of illegal dismissal.
Consequently, the employer has to follow the proper procedure for drug testing.

Accusatory and inflammatory language

An employee who resorts to accusatory and inflammatory language against the employer or superior may
be a ground for dismissal or termination.[21]
In Nissan Motors Phils. v. Angelo,[22] the employee was validly dismissed on the ground of serious
misconduct due to his letter-explanation which carried accusatory and inflammatory language against the
employer. Thus:
Going through the records, this Court found evidence to support the allegation of serious misconduct or
insubordination. [The employer] claims that the language used by [the employee] in his Letter-Explanation
is akin to a manifest refusal to cooperate with company officers, and resorted to conduct which smacks of
outright disrespect and willful defiance of authority or insubordination. The misconduct to be serious within
the meaning of the Labor Code must be of such a grave and aggravated character and not merely trivial
or unimportant. The Letter-Explanation partly reads:
Again, its not negligence on my part and Im not alone to be blamed. Its negligence on your part [Perla
Go] and A.A. Del Rosario kasi, noong pang April 1999 ay alam ninyo na hindi ako ang dapat may
responsibilidad ng payroll kundi ang Section Head eh bakit hindi ninyo pinahawak sa Section Head noon
pa. Pati kaming dalawa sa payroll, kasama ko si Thelma. Tinanggal nyo si Thelma. Hindi nyo ba naisip na
kailangan dalawa ang tao sa payroll para pag absent ang isa ay may gagawa. Dapat noon nyo pa naisip
iyan. Ang tagal kong gumawa ng trabahong hindi ko naman dapat ginagawa.
This Court finds the above to be grossly discourteous in content and tenor. The most appropriate thing he
could have done was simply to state his facts without resorting to such strong language. Past decisions of
this Court have been one in ruling that accusatory and inflammatory language used by an employee to the
employer or superior can be a ground for dismissal or termination.

False, malicious, and libelous remarks

In Torreda v. Toshiba Information Equipment (Phils.),[23] an employee who maliciously libeled his
supervisor was validly dismissed on the ground of serious misconduct. Thus:
There is abundant evidence on record showing that [the employee] committed libel against his immediate
superior, Sepulveda, an act constituting serious misconduct which warrants the dismissal from
employment.
[The employee] maliciously and publicly imputed on Sepulveda the crime of robbery of P200.00. As
gleaned from his Complaint dated September 7, 1999 which he filed with the General Administration, he
knew that it was Delos Santos who opened his drawer and not Sepulveda. Thus, by his own admission,
petitioner was well aware that the robbery charge against Sepulveda was a concoction, a mere fabrication
with the sole purpose of retaliating against Sepulvedas previous acts.
The records show that Sepulveda was impelled to forcibly open petitioners drawer. She needed to retrieve
the benefits applications of retirees and incumbent employees of respondent-corporation, which petitioner
had failed to process for payment before his leave. The claimants sought to have their claims approved
and released with dispatch. Before opening [the employees] drawer, Sepulveda saw to it that she had
Kobayashis approval. Delos Santos opened the drawer of petitioner in the presence of his co-employees
in the Financial Section. Thereafter, the claims were processed and payments were effected. Thus,
Sepulveda acted in good faith.
[The employee] admitted that his charge of robbery/theft against Sepulveda was baseless, but claimed
that he fabricated the charge because of his exasperation and anger at Sepulvedas repeated acts of
opening his drawer without prior permission while he was on leave, not only on September 7, 1998 but
also on September 10 and 11, 1998; he also pointed out that Sepulveda looked into his personal files in
his computer. In fine, by falsely ascribing a crime to Sepulveda, petitioner was merely retaliating against
perceived misdeeds she had committed against him. However, the manner resorted to by petitioner of
redressing the wrong committed by Sepulveda is a criminal act. As the adage goes, the end cannot justify
the means used by [the employee].
In Asian Design and Manufacturing Corporation vs. Deputy Minister of Labor,[24] the dismissed employee
made false and malicious statements against the foreman (his superior) by telling his co-employees: If
you dont give a goat to the foreman you will be terminated. If you want to remain in this company, you
have to give a goat. The dismissed employee therein likewise posted a notice in the comfort room of the
company premises which read: Notice to all Sander Those who want to remain in this company, you
must give anything to your foreman. Failure to do so will be terminated Alice 80.
In Reynolds Philippine Corporation vs. Eslava,[25] the dismissed employee circulated several letters to
the members of the companys board of directors calling the executive vice-president and general
manager a big fool, anti-Filipino and accusing him of mismanagement, inefficiency, lack of planning
and foresight, petty favoritism, dictatorial policies, one-man rule, contemptuous attitude to labor, anti-
Filipino utterances and activities.

Insulting and offensive language

In Dela Cruz v. NLRC,[26] an employee was validly dismissed after he shouted sayang ang pagka-
professional mo! and putang ina mo at the company physician after the latter refused to give the said
employee a referral slip.
In Autobus Workers Union (AWU) vs. NLRC,[27] an employee was legally dismissed after calling his
supervisor gago ka and taunted the latter by saying bakit anong gusto mo, tang ina mo.
In both cases, the dismissed employees personally subjected their respective superiors to the foregoing
verbal abuses. The utter lack of respect for their superiors was patent.[28]

Theft of company property

In Rene Foods v. Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan,[29] an employee who was
caught stealing six cans of company products was valid dismissed. Jurisprudence has classified theft of
company property as a serious misconduct and denied the award of separation pay to the erring
employee.[30]
In Nagkakaisang Laskas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) v. Kiehin Philippines
Corporation,[31] an employee who was dismissed after being caught stealing a packing tape challenged
her dismissal. For her defense, she argued that the tape was already half used and had no great value to
the company. More importantly, she readily admitted to having such tape during the routine inspection
and before the guard opened her bag. Thus, she did not have any malicious intent as it a mere error of
judgment on her part. Notwithstanding, she was validly dismissed for serious misconduct. Thus:
In the case at bar, Helen took the packing tape with the thought that she could use it for her own personal
purposes. When Helen was asked to explain in writing why she took the tape, she stated, Kumuha po ako
ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay. In other
words, by her own admission, there was intent on her part to benefit herself when she attempted to bring
home the packing tape in question.
It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving
both respondent companys property and personal belongings of other employees. In order to address
this issue of losses, respondent company issued two memoranda implementing an intensive inspection
procedure and reminding all employees that those who will be caught stealing and performing acts of
vandalism will be dealt with in accordance with the companys Code of Conduct. Despite these reminders,
Helen took the packing tape and was caught during the routine inspection. All these circumstances point
to the conclusion that it was not just an error of judgment on the part of Helen, but a deliberate act of theft
of company property.
xxx
The [employee] also argue that the penalty of dismissal is too harsh and disproportionate to the offense
committed since the value of the thing taken is very minimal. [The employee] cite the case of Caltex
Refinery Employees Association v. National Labor Relations Commission[32]where [the complainant] was
found to have willfully breached the trust and confidence reposed in him by taking a bottle of lighter fluid.
In said case, we refrained from imposing the supreme penalty of dismissal since the employee had no
violations in his eight years of service and the value of the lighter fluid is very minimal compared to his
salary
After a closer study of both cases, we are convinced that the case of Caltex is different from the case at
hand. Although both Clarete and Helen had no prior violations, the former had a clean record of eight
years with his employer. On the other hand, Helen was not even on her second year of service with Keihin
when the incident of theft occurred. And what further distinguishes the instant case from Caltex is that
respondent company was dealing with several cases of theft, vandalism, and loss of company and
employees property when the incident involving Helen transpired.

Theft against co-employee

In Cosmos Bottling Corp. v. Fermin,[33] an employee who stole a co-employees cellphone was dismissed
from employment on the ground of serious misconduct. When he filed a labor complaint, he claimed that
he was incorrectly dismissed as his conduct is not a serious misconduct against the employer. Thus:
It must be noted that in the case at bar, all the lower tribunals were in agreement that Fermins act of
taking Bragas cellphone amounted to theft The only disputed issue left for resolution is whether the
imposition of the penalty of dismissal was appropriate. We rule in the affirmative.
Theft committed against a co-employee is considered as a case analogous to serious misconduct, for
which the penalty of dismissal from service may be meted out to the erring employee
xxx
In this case, petitioner dismissed respondent based on the NBIs finding that the latter stole and used
Yusecos credit cards. But since the theft was not committed against petitioner itself but against one of its
employees, respondents misconduct was not work-related and therefore, she could not be dismissed for
serious misconduct.
Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are
susceptible of comparison to another in general or in specific detail. For an employee to be validly
dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary
and/or willful act or omission of the employee.
A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an
employees moral depravity. Theft committed by an employee against a person other than his employer, if
proven by substantial evidence, is a cause analogous to serious misconduct.[34]
In this case, the LA has already made a factual finding, which was affirmed by both the NLRC and the CA,
that Fermin had committed theft when he took Bragas cellphone. Thus, this act is deemed analogous to
serious misconduct, rendering Fermins dismissal from service just and valid.

Physically assaulting a co-employee

In Ha Yuan Restaurant v. Soria, an employee who physically assaulted a co-employee was validly
dismissed, viz:
While it is true, as [the employee] contends, that the Labor Arbiter did not tag her cause of dismissal as
serious misconduct, nevertheless, it is its nature, not its label that characterizes the cause as serious
misconduct. There is no question as regards the incident that caused [the employees] dismissal. While
[the employees] co-worker Sumalague was eating at the back of the store, [the employee] rushed toward
Sumalague and hit the latter on the face causing injuries. A scuffle ensued and despite their supervisor
Recides pleas, the two continued to fight, prompting Recide to call the mall security. When the two were
brought to the administration office, they continued bickering and did not heed the request of the manager
to stop, and thus they were brought to the Customer Relations Office. Because of the incident, the two
were banned from working within the premises. The fact that Sumalague sustained injuries is a matter
that cannot be taken lightly. Moreover, the incident disturbed the peace in the work place, not to mention
that respondent and Sumalague committed a breach of its discipline. Clearly, [the employee] committed
serious misconduct within the meaning of Art. 282 of the Labor Code, providing for the dismissal of
employees.
In Technol Eight Philippines Corporation v. Amular,[35] an employee was validly dismissed after mauling
a co-employee even outside the workplace and work time. Thus:
The CA misappreciated the true nature of Amulars involvement in the mauling incident. Although it
acknowledged that Amular committed a misconduct, it did not consider the misconduct as work-related
and reflective of Amulars unfitness to continue working for Technol. The appellate courts benign treatment
of Amulars offense was based largely on its observation that the incident happened outside the company
premises and after working hours; did not cause a disruption of work operations; and did not result in a
hostile environment in the company. Significantly, it did not condone Amulars infraction, but it considered
that Amulars dismissal was a harsh penalty that is disproportionate with his offense. It found support for
this liberal view from the pronouncement of the Court inAlmira v. B.F. Goodrich Philippines, Inc.,[36]that
where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to
be visited with a consequence so severe.
The record of the case, however, gives us a different picture.Contrary to the CAs perception, we find
a work-connection in Amulars and Ducays assault on Mendoza. As the CA itself noted, the underlying
reason why Amular and Ducay confronted Mendoza was to question him about his report to De
Leon Technols PCD assistant supervisor regarding the duos questionable work behavior. The
motivation behind the confrontation, as we see it, was rooted on workplace dynamics as Mendoza,
Amular and Ducay interacted with one another in the performance of their duties.
The incident revealed a disturbing strain in Amulars and Ducays characters the urge to get even for a
perceived wrong done to them and, judging from the circumstances, regardless of the place and time. The
incident could very well have happened inside company premises had the two employees found time to
confront Mendoza in the workplace as they intimated in their written statements. Having been the subject
of a negative report regarding his work must have rankled on Amular that he resolved to do something
about it; thus, he confronted Mendoza.
From the records, Ducay appeared to have cooperated with Amular in the violent confrontation with
Mendoza. Ducay, however, resigned on June 7, 2002 a week before the filing of the complaint. Hence,
Technol did not act against him a move that is within its prerogative to make.
In an obvious effort to mitigate his involvement in the mauling incident, Amular claimed in the
administrative proceedings that while he and Ducay were walking around the shopping mall in Balibago,
Sta. Rosa, Laguna, they incidentally saw their co-employee Mendoza with whom they wanted to clear
some personal matters. We find this claim a clear distortion of what actually happened. Again, based on
their written statements, Amular and Ducay purposely set out for the Balibago commercial area on April
16, 2002 looking for Mendoza. It was not an incidental or casual encounter. They sought Mendoza out
and confronted him regarding what they perceived as Mendozas negative attitude towards them or
pamamarako as Mendoza described it. Considering the subject Amular and Ducay raised with Mendoza,
it is not surprising that they had a heated verbal exchange (mostly between Amular and Mendoza) that
deteriorated into a fistcuff fight, with Mendoza at the losing end as he suffered injuries from the blows he
received.
Amular and Ducay point to Mendoza as the proximate cause of the fight because he challenged them to a
one-on-one (isa-isa lang) bout. Looking back at the reason why Amular and Ducay were at the mall in the
first place, this attributed causation hardly makes sense. To reiterate, they were purposely there to
confront Mendoza about their work-related problem. They waited for him at the place where they expected
him to be. When Mendoza appeared, they accosted him and put into motion the entire sorry incident.
Under these circumstances, Amular undoubtedly committed a misconduct or exhibited improper
behavior that constituted a valid cause for his dismissal under the law and jurisprudential
standards. The circumstances of his misdeed, to our mind, rendered him unfit to continue working
for Technol; guilt is not diminished by his claim that Technols management called the three of
them to a meeting, and asked them to explain their sides and settle their differences, which they
did. Mendoza significantly denied the alleged settlement, maintaining that while they were summoned by
De Leon after the incident, he could not shake hands and settle with Amular and Ducay since they did not
even apologize or ask forgiveness for what they did. We do not find Mendozas denial of Amulars claim
unusual as Mendoza would not have stood his ground in this case if a settlement had previously been
reached. That a meeting had taken place does not appear disputed, but a settlement cannot be inferred
simply because a meeting took place.
xxx
Thus, Amular was not illegally dismissed; he was dismissed for cause.
(Emphasis supplied.)
Fighting within company premises
While the Supreme Court has recognized that fighting within company premises may constitute serious
misconduct, it also held that not every fight within company premises in which an employee is involved
would automatically warrant dismissal from service.[37]
If employees were dismissed for their alleged involvement in a fight, the employer must prove by
substantial evidence the accusation of serious misconduct, and that in failing to discharge the burden, the
employee is deemed to have been illegally dismissed.[38]
In Supreme Steel Pipe v. Bardaje,[39] an employee who was provoked to a fight by the security within
company premises was considered to have been illegally dismissed. Thus:
On August 19, 1999, [the employee] reported for work at 6:45 a.m. It was a common practice among
warehousemen to wear long-sleeved shirts over their uniforms to serve as protection from heat and dust
while working, and on this day, [the employee] had on a green long-sleeved shirt over his uniform.
Momentarily, security guard Christopher Barrios called him in a loud voice, and arrogantly ordered him to
remove and turn-over to him (Barrios) the long-sleeved shirt. Insulted and feeling singled-out from the
other warehousemen who were also wearing long-sleeved shirts over their uniforms, [the employee]
replied: Ano ba ang gusto mo, hubarin ko o magsuntukan na lang tayo sa labas? A heated exchange of
words ensued, but the brewing scuffle between the two was averted by a co-employee from the
Production Division, Albert A. Bation. A security guard, Ricky Narciso, was able to keep the parties apart.
Barrios reported the incident to the SSPC management.
The next day, [the employee] received a Memorandum from petitioner SSPC stating that pending the
investigation for his alleged violation of the company rule prohibiting inciting a fight, harassing, coercing,
intimidating and/or threatening co-workers, he was being meted a 30-day preventive suspension
beginning August 23, 1999. He was also required to submit his Answer/Comment to the incident, to which
he readily complied.
When [the employee] reported back to work a month after, he was served with a Notice dated September
8, 1999, terminating his employment effective September 23, 1999. [Employer] SSPC had taken into
account the August 19, 1999 incident as well as [the employees] previous infractions of company rules.
[Employer] SSPC declared that [the employees] continued employment would pose serious and imminent
threat to the lives of his co-workers and to the property of the corporation and its employees.
xxx
[The employees] actuations during the August 19, 1999 incident were not entirely baseless. To begin
with, it is certain that the verbal tussle between him and Barrios did not start due to the alleged violent
temper and tendency to violate company rules and regulations of respondent; the incident was primarily
due to Barrios provoking attitude. Other than the self-serving allegation of [the employer] SSPC that
Barrios politely advised [the employee] to remove his green long-sleeved shirt and to wear the company-
issued uniform, no competent and credible evidence was shown to support the claim. In fact, even the
handwritten statements of the three security guards, including that of Barrios himself, did not dwell on the
manner by which [the employee] was instructed. On the other hand, [the employees] narrations, as
corroborated by the duly notarized affidavit of fellow warehouseman Jury Lobitania, revealed how insulting
and arrogant Barrios was. This, aside from petitioners feeling that he was being singled out from other
warehousemen, who were similarly-clothed while on duty, sufficiently explained why he challenged
Barrios to a fight.
We agree with the Labor Arbiters conclusion that [the employees] misconduct on August 19, 1999 does
not warrant the imposition of the ultimate sanction of dismissal. Undeniably, the altercation between
respondent and Barrios was nipped in the bud by the timely intervention of other employees. The
momentary work stoppage did not pose a threat to the safety or peace of mind of the workers. Neither did
such disorderly behavior cause substantial prejudice to the business of [the employer] SSPC.
Forgery
In Telecommunications Distributors Specialist v. Garriel,[40] an employee who forged the signature of the
companys customers was validly dismissed on the ground of serious misconduct, viz:
[The employee] failed to make [customers] Ratcliffe and Huilar sign the coverage waivers. Such failure, in
itself, although a misconduct, was not serious enough to warrant dismissal. The serious misconduct was
respondents act of forging the signatures of Ratcliffe and Huilar to cover up his negligence. In fact, he
even instructed Ratcliffe to lie and just say yes to the questions that may be asked of her by the company.
xxx
Respondents acts of forging subscribers signatures, attempting to cover up his failure to secure their
signatures on the coverage waivers, selling a personally owned mobile phone to a company customer (a
defective one at that) and attempting to connive with other TDSI employees to cover up his illicit schemes
were serious acts of dishonesty, according to TDSIs Code of Discipline
xxx
Respondents acts clearly constituted serious misconduct which is a ground for termination of employment
by an employer.

Series of irregularities
In Quiambao v. Manila Electric Company,[41] an employee who habitually takes unauthorized absences
with several infractions for tardiness was validly dismissed. The employees unauthorized absences as
well as tardiness are habitual despite having been penalized for past infractions. Thus, a series of
irregularities when put together may constitute serious misconduct.
In Gustilo v. Wyeth Philippines,[42] a series of irregularities when put together may constitute serious
misconduct. In this case, an employee who have several and repeated violations against the company
policies was legally dismissed.

Disloyalty to the employer

In Elizalde International (Philippines) v. Daland,[43] a sales representative who sold products of a
competitor was validly dismissed on the ground of disloyalty.
One who asserts an interest, or performs acts adverse or disloyal to ones employer commits a breach of
an implied condition of the contract of employment which may warrant discharge, as, for example, where
one secretly engages in a business which renders him a competitor and rival of his employer (Emphasis
supplied). Aside from any duties expressly imposed upon or undertaken by the employee in the contract
of employment, the law implies various obligations and undertakings by an employee in entering into a
contract of employment An employer has the right to expect loyalty from his employees as long as the
employment relationship continues. Implicit in the contract of employment is the undertaking that the
employee shall be faithful to the interest of the employer during the term of the employment. When an
employee deliberately acquires an interest adverse to his employer, he is disloyal, and his discharge is
justified. And where an employee engages in a business which necessarily renders him a competitor and
rival of his employer, no matter how much or how little time and attention he may devote to it, he is
deemed to have an interest which conflicts with his duty to his employer, and for this cause may be
dismissed In the absence of a specific provision, the employee must be deemed to have been rightfully
discharged where it appears that his activities tended to injure or endanger the business of his
employer On the other hand, where an occupation or business is conducted by a servant out of the
hours of service, and is not inconsistent with his duties to the master or antagonistic to or competitive with
the masters business, it furnishes no ground for the discharge of the servant.
Celestino Galans act of engaging in a business in competition with petitioner was not only an act of
disloyalty but more specifically a wilful breach of the trust reposed in him by petitioner as his employer,
which is a just cause for termination As Sales Representative of [the employer], it was the duty of
Celestino Galan to promote and sell the products of petitioner, which duty is incompatible with his
undisclosed ownership of a company, found to be the source of the new product with the label TDY
RHUM manufactured by the Mabuhay Distillery Inc., distributed and sold in Cebu, in competition with the
Tanduay Rhum distributed by petitioner. It was an act inimical to his employers interest and, therefore, a
just cause for dismissal.

Improper pressure and influence

In Padilla v. San Beda College,[44] a college professor exerted pressure and influence on a co-faculty into
passing a student with failing grade. In so doing, the said professor misrepresented that the student was
his nephew. He was validly dismissed on the ground of serious misconduct. This Court is convinced that
the pressure and influence exerted by the petitioner on his colleague to change a failing grade to a
passing one, as well as his misrepresentation that Santos is his nephew, constitute serious misconduct,
which is a valid ground for dismissing an employee.

Immorality or Moral Depravity

A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an
employees moral depravity.[45]However, as a general rule, immorality may not be a ground for
dismissing an employee unless the misconduct is prejudicial or in some way detrimental to the
employers interests.[46]
In Santos v. Hagonoy Institute Inc.,[47] a private school teacher who entered into an extra-marital
relationship with a co-teacher was validly dismissed on grounds of immorality.
It is to state the obvious that schools, next only to the home, wield a weighty influence upon the students,
especially during the latters formative years, for it instills in them the values and mores which shall
prepare them to discharge their rightful responsibilities as mature individuals in society. At the vanguard in
nurturing their growth are the teachers who are directly charged with rearing and educating them. As
such, a teacher serves as a role model for his students. Corollarily, he must not bring the teaching
profession into public disrespect or disgrace. For failure to live up to the exacting moral standards
demanded by his profession, petitioner Jose Santos was dismissed from his employment on the ground of
immorality. We uphold his dismissal.
xxx
[At] the outset, it must be stressed that to constitute immorality, the circumstances of each particular case
must be holistically considered and evaluated in light of the prevailing norms of conduct and applicable
laws. [American] jurisprudence has defined immorality as a course of conduct which offends the morals of
the community and is a bad example to the youth whose ideals a teacher is supposed to foster and to
elevate, the same including sexual misconduct. Thus, in petitioners case, the gravity and seriousness of
the charges against him stem from his being a married man and at the same time a teacher.
We cannot overemphasize that having an extra-marital affair is an affront to the sanctity of marriage,
which is a basic institution of society. Even our Family Code provides that husband and wife must live
together, observe mutual love, respect and fidelity. This is rooted in the fact that both our Constitution and
our laws cherish the validity of marriage and unity of the family. Our laws, in implementing this
constitutional edict on marriage and the family underscore their permanence, inviolability and solidarity.
As a teacher, petitioner serves as an example to his pupils, especially during their formative years and
stands in loco parentis to them. To stress their importance in our society, teachers are given substitute
and special parental authority under our laws.
Consequently, it is but stating the obvious to assert that teachers must adhere to the exacting standards
of morality and decency. There is no dichotomy of morality. A teacher, both in his official and personal
conduct, must display exemplary behavior. He must freely and willingly accept restrictions on his conduct
that might be viewed irksome by ordinary citizens. In other words, the personal behavior of teachers, in
and outside the classroom, must be beyond reproach.
Accordingly, teachers must abide by a standard of personal conduct which not only proscribes the
commission of immoral acts, but also prohibits behavior creating a suspicion of immorality because of the
harmful impression it might have on the students. Likewise, they must observe a high standard of integrity
and honesty.
From the foregoing, it seems obvious that when a teacher engages in extra-marital relationship, especially
when the parties are both married, such behavior amounts to immorality, justifying his termination from
employment.

Case Law on No Serious Misconduct

The following are jurisprudence wherein an employees misconduct was not considered serious enough to
warrant the penalty of dismissal. As stated earlier, the penalty of dismissal must be commensurate to the
gravity of the offense in order for the termination to be valid.

Minor misconduct
In Radio Communications of the Philippines (RCPI) v. Villaflores,[48] an employee who uttered invectives
against his superior after nearly being physically assaulted by the latter was held to have been guilty of
minor misconduct only, and not serious misconduct. Thus:
The issue in these two consolidated [cases] is whether or not the Radio Communications of the
Philippines, Inc. (RCPI) illegally terminated the services of its Assistant Vice-President for Management
Services, Mario Danilo B. Villaflores, on the grounds of gross misconduct and loss of confidence.
Villaflores was employed by the RCPI on July 1, 1975. A certified public accountant (CPA), who finished
the law course while working, he also took units in Master of Laws at the University of Sto. Tomas. In the
course of his employment, he became the Internal Auditor, Acting Assistant Vice-President for Finance
and Comptroller, and Assistant Vice-President for Management Services
xxx
German Bernardo Mattus was hired by RCPI on July 2, 1990 as manager of its Management Information
System Department. He was under the division of Villaflores but he was required to report directly to
Norberto T. Braga, the Executive Vice-President (EVP) for Corporate Services.
On October 29, 1990, Mattus posted a copy of an invitation to a computer seminar on the bulletin board
without having sought the permission of Villaflores. When the latter arrived and saw the poster, he asked
his secretary, Lydia Henares, to remove it from the bulletin board. Lydia Henares followed Villaflores
order. When Mattus learned of its removal, he took the poster from Lydia Henares and sought out
Villaflores.
Mattus found Villaflores at work in the computer room. He said, Ano ba ito, Danny? Villaflores replied,
Hindi puede, at the same time getting a stapler with the apparent intention of throwing it at Mattus. When
a co-employee grabbed the stapler from Villaflores, the latter snatched the poster from Mattus, tore and
crumpled it, and threw the pieces at Mattus but missed. Had it not yet been for the timely intervention of
the other employees present, the two would have assaulted each other. As Mattus was leaving the room,
Villaflores shouted invectives such as bullshit ka, baboy ka and gago ka at him.
On the same day, Mattus lodged a complaint against Villaflores for: (a) conduct unbecoming of an
assistant vice-president of the company; (b) threatening a subordinate with physical injury, and (c)
shouting invectives at a subordinate in the presence of the Management Services staff.
The next day, EVP Braga asked Villaflores to explain why no administrative action should be taken
against him for provoking and instigating a fight within company premises, using abusive and dirty
language directed to your Manager, and for threatening the MIS Manager.
In his explanation, Villaflores claimed that after he had instructed his secretary to remove all the
publications posted on the bulletin board, Mattus rushed into the computer room and shouted at the top of
his voice, Ano ito, Danny? Mattus, who was bigger than Villaflores, allegedly attempted to attack him but
was prevented by co-employees from doing so. Villaflores admitted having uttered shit, baboy but these
were mere expressions of disgust at and by way of objecting to the imminent attack against his person
and dignity.
The RCPI management scheduled a formal investigation and summoned several employees who
witnessed the incident. Both parties, however, agreed to forego the trial-type investigation, opting
instead to submit their formal explanations. Mattus submitted his explanation on November 13, 1990 while
Villaflores submitted his on November 26, 1990.
On December 10, 1990, RCPI, through EVP Braga, placed Villaflores under preventive suspension, at the
same time giving him a final chance to explain further why no drastic administrative action should be
taken against him for serious misconduct and for acts unbecoming of a company official. On December
13, 1990, Villaflores submitted his final explanation.
After investigation and personally evaluating all the evidence presented by both parties, EVP Braga
issued a memorandum dated January 18, 1991 advising Villaflores of the termination of his services
effective December 10, 1990 on grounds of gross misconduct unbecoming of a company official in gross
violation of Rules 52, 53 and 55 of the Company Rules and Regulations. As a consequence, the company
had lost trust and confidence in him.
On December 19, 1990, several of Villaflores co-employees wrote Braga a letter stating that the penalty
imposed upon Villaflores appeared to be not commensurate and too harsh a penalty for the alleged
offense committed and praying that the penalty imposed upon Villaflores be reconsidered, but the plea
was ignored.
xxx
Labor Arbiter Amansec rendered a decision [stating that] complainant was not guilty of serious
misconduct. Complainant reacted to the posting by Mattus of a poster at the bulletin board without his
consent and the latters angrily barging into the room where he was seated but his reaction his attempt to
throw a stapler at Mattus and, thereafter, his uttering foul language at him although constituting
misconduct cannot, we are confident, fall under the category of a serious misconduct. Complainant was
provoked by Mattus who unjustifiably barged into his room. Complainant did not actually throw a stapler at
Mattus. He could have just tried to scare him with the stapler. He allowed himself to be pacified by cooler
heads. These attending circumstances removed complainants reaction from the classification of a serious
misconduct. [NLRC affirmed.]
xxx
Consequently, we agree with the public respondents that the termination of employment of petitioner
Villaflores on account of a minor misconduct was illegal because Art. 282 of the Labor Code mentions
serious misconduct as a cause for cessation of employment.

First time offender

In Pacific Products/Fortuna Employees and Workers Association-Tupas v. Pacific Products,[49] it was
held that dismissal of an employee for a first-time offense was drastic and hence termination was illegal.
In resume, We believe that the acts committed by [the employee] (being a first offender) do not warrant
the drastic remedy of dismissal. As provided for in the company rules and regulations, presented by [the
employee] in his memorandum, the penalty for vending, soliciting, engaging in usurious activities is a
written reprimand for the first offense, six (6) days suspension for the second offense, and discharge for
the third offense. Nothing specific however is provided with respect to deductions from salaries with the
express consent of the employees.

Fist fight between employees on private matters

In North Camarines Lumber Co. v. Barreda,[50] it was not a serious misconduct when a scaler employee
got into a fist fight with a security guard over a private matter and such did not have any deleterious effect
on the substantial interests of the employer.
While conceding the employers basic right to regulate the conduct of its employees while inside company
premises, we cannot help but notice the unusual zeal and haste displayed by [the employer] in applying
the full force of its rules on Barreda. Undoubtedly, the boxing episode was completely blown out of
proportion. The fisticuffs were plainly a private matter between the two employees which had no apparent
deleterious effect on the substantial interests of the company. Considering Barredas length of service
with [the employer], coupled with the attendant circumstances, the penalty of dismissal was certainly not
commensurate with his alleged misconduct. We affirm his reinstatement with backwages for two years.

Offensive utterances and obscene gestures in a companys

informal party
In Samson v. Schering-Plough Corporation,[51] a terminated employee who made offensive utterances
and obscene gestures during a companys informal party was considered to have been illegally
dismissed. Thus:
As borne by the records, [the employees] dismissal was brought about by the utterances he made during
an informal Christmas gathering of respondent companys Sales and Marketing Division on 17 December
1993. [The employee] was heard to have uttered, Si EDT(referring to Epitacio D. Titong, General
Manager and President of respondent company), bullshit yan, sabihin mo kay EDT yan and sabihin mo
kay EDT, bullshit yan, while making the dirty finger gesture. [The employee] likewise told his co-
employees that the forthcoming national sales conference of respondent company would be a very
bloody one.
The NLRC ruled that the foregoing actuation of [the employee] constituted gross misconduct warranting
his dismissal. Citing jurisprudence, the NLRC held that in terminating the employment of managerial
employees, the employer is allowed a wider latitude of discretion than in the case of ordinary rank-and-
file.
We do not agree with the findings of the NLRC.
Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment. The misconduct to be serious must be of such grave and aggravated character and not
merely trivial and unimportant. Such misconduct, however serious, must, nevertheless, be in connection
with the employees work to constitute just cause for his separation.
In this case, the alleged misconduct of [the employee], when viewed in its context, is not of such serious
and grave character as to warrant his dismissal. First, [the employee] made the alleged offensive
utterances and obscene gesture during an informal Christmas gathering of respondent companys district
sales managers and marketing staff. The gathering was just a casual get-together of employees. It is to
be expected during this kind of gatherings, where tongues are more often than not loosened by liquor or
other alcoholic beverages, that employees freely express their grievances and gripes against their
employers. Employees should be allowed wider latitude to freely express their sentiments during these
kinds of occasions which are beyond the disciplinary authority of the employer. Significantly, it does not
appear in the records that [the employee] possessed any ascendancy over the employees who heard his
utterances as to cause demoralization in the ranks.
Second, [the employees] outburst was in reaction to the decision of the management in the Cua Lim
case. Admittedly, using the words bullshit and putang ina and making lewd gesture to express his
dissatisfaction over said management decision were clearly in bad taste but these acts were not intended
to malign or cast aspersion on the person of respondent companys president and general manager.
xxx
Third, respondent company itself did not seem to consider the offense of [the employee] serious and
grave enough to warrant an immediate investigation on the matter. It must be recalled that [the employee]
uttered the alleged offensive language at an informal gathering on 17 December 1993. He then allegedly
made threatening remarks about the forthcoming sales conference on 3 January 1994. During a meeting
on 4 January 1994, Mr. Titong, Jr., the president and general manager of respondent company and
allegedly to whom the offensive words were directed, merely admonished petitioner stating that, when
there is a disagreement, act in a professional and civilized manner. Respondent company allowed
several weeks to pass before it deemed it necessary to require petitioner to explain why no disciplinary
action should be taken against him for his behavior. This seeming lack of urgency on the part of
respondent company in taking any disciplinary action against petitioner negates its charge that the latters
misbehavior constituted serious misconduct.
xxx
Further, respondent companys rules and regulations [show that the properly penalty for sucha first
offense is a only a verbal reminder and not dismissal]
Indeed, the penalty of dismissal is unduly harsh considering that [the employee] had been in the employ
of respondent company for eleven (11) years and it does not appear that he had a previous derogatory
record. It is settled that notwithstanding the existence of a valid cause for dismissal, such as breach of
trust by an employee, nevertheless, dismissal should not be imposed, as it is too severe a penalty if the
latter had been employed for a considerable length of time in the service of his employer, and such
employment is untainted by any kind of dishonesty and irregularity.

Failure to have customers sign a coverage waiver

While a misconduct, the failure of an employee to require a customer to sign a coverage waiver is not
serious enough to warrant dismissal.[52]

Error of judgment
In St. Jude Catholic School v. Salgarino,[53] a private school teacher who passed students with failing
marks was considered to have been illegally dismissed. Thus:
There is no evidence to show that there was ulterior motive on the part of the respondent when she
decided to pass her students. Also, it was not shown that respondent received immoral consideration
when she did the same. From the Labor Arbiter up to this Court, respondent has maintained her stand
that her decision to pass the concerned students was done out of humanitarian consideration.
Respondent was moved by pity when she learned that some of her students obtained a failing grade in
her subject and, thus, will not graduate on time. Respondent believes that some of her students obtained
a failing grade in her subject because they were not properly prepared for the 4th periodical exams. She
claims that, although the substitute teachers conducted the 4th periodical exams and computed their
grades, there were no teachers assigned to conduct classes, lectures and review before the said exam.
Thus, unmindful of the events that may transpire thereafter, respondent decided to increase the marks of
her students and gave them passing grades.
Respondent argued that had she failed the subject students, some of them would be enrolling in more
than two subjects for summer which is not allowed under Section 68(b), Article XIII of the Manual that
provides that a student may enroll in no more than two subjects during the summer, either for the purpose
of making up for subjects previously failed, or for earning advanced credits in other subjects. Respondent
avers that some of the students with failing grades in Math had also failed in their two Chinese subjects.
Hence, to avoid the violation of the Manual, respondent decided to pass these students.
Based on the foregoing, respondent may have committed an error of judgment in deciding to pass her
students, but it cannot be said that she was motivated by any wrongful intent in doing so. As such, her
misconduct cannot be considered as grave in character which would warrant her dismissal from
employment. We, thus, find her to be guilty only of simple misconduct. It is settled that a misconduct,
which is not serious or grave, cannot be a valid basis for dismissing an employee

Remarks and apprehensions by superior

All the shipmaster says in his report is that he considered [the employee] to be hot-tempered and he was
apprehensive the seaman might get into trouble. Such apprehension is, of course, not a ground for
dismissal.[54]

Private teacher marrying student

In Chua-Qua v. Tay Tung High School,[55] a private school teacher who fell in love and married her
6th grade student was considered was held to have been illegally dismissed. The school failed to show by
substantial evidence that the teacher took advantage of her position to court her student.
This would have been just another illegal dismissal case were it not for the controversial and unique
situation that the marriage of herein petitioner, then a classroom teacher, to her student who was fourteen
(14) years her junior, was considered by the school authorities as sufficient basis for terminating her
services.
xx
Private respondent Tay Tung High School, Inc. is an educational institution in Bacolod City. Petitioner had
been employed therein as a teacher since 1963 and, in 1976 when this dispute arose, was the class
adviser in the sixth grade where one Bobby Qua was enrolled. Since it was the policy of the school to
extend remedial instructions to its students, Bobby Qua was imparted such instructions in school by
petitioner. In the course thereof, the couple fell in love and on December 24, 1975, they got married in a
civil ceremony solemnized in Iloilo City by Hon. Cornelio G. Lazaro, City Judge of Iloilo. Petitioner was
then thirty (30) years of age but Bobby Qua being sixteen (16) years old, consent and advice to the
marriage was given by his mother, Mrs. Concepcion Ong. Their marriage was ratified in accordance with
the rites of their religion in a church wedding solemnized by Fr. Nick Melicor at Bacolod City on January
10, 1976.
xxx
As earlier stated, from the outset even the labor arbiter conceded that there was no direct evidence to
show that immoral acts were committed. Nonetheless, indulging in a patently unfair conjecture, he
concluded that it is however enough for a sane and credible mind to imagine and conclude what
transpired during those times. In reversing his decision, the National Labor Relations Commission
observed that the assertions of immoral acts or conducts are gratuitous and that there is no direct
evidence to support such claim, a finding which herein public respondent himself shared.
xxx
With the finding that there is no substantial evidence of the imputed immoral acts, it follows that the
alleged violation of the Code of Ethics governing school teachers would have no basis. Private
respondent utterly failed to show that petitioner took advantage of her position to court her student. If the
two eventually fell in love, despite the disparity in their ages and academic levels, this only lends
substance to the truism that the heart has reasons of its own which reason does not know. But, definitely,
yielding to this gentle and universal emotion is not to be so casually equated with immorality. The
deviation of the circumstances of their marriage from the usual societal pattern cannot be considered as a
defiance of contemporary social mores.
It would seem quite obvious that the avowed policy of the school in rearing and educating children is
being unnecessarily bannered to justify the dismissal of petitioner. This policy, however, is not at odds
with and should not be capitalized on to defeat the security of tenure granted by the Constitution to labor.
In termination cases, the burden of proving just and valid cause for dismissing an employee rests on the
employer and his failure to do so would result in a finding that the dismissal is unjustified.

[1] LABOR CODE. Article 297.

[2] Ibid. Article 297(a).
[3] Supreme Steel Pipe v. Bardaje, G.R. No. 170811, 24 April 2007.
[4] Almira v. Goodrich Philippines, No. L-34974, July 25, 1974, 58 SCRA 120.
[5] Yabut v. Manila Electric Compant, G.R. No. 190436, 16 January 2012.
[6] Imasen Philippine Manufacturing Corporation v. Alcon, G.R. No. 194884, 22 October 2014.
[7] Nissan Motors Phils. v. Angelo, G.R. No. 164181, 14 September 2011.
[8] Nissan Motors Phils. v. Angelo, G.R. No. 164181, 14 September 2011.
[9] Nissan Motors Phils. v. Angelo, G.R. No. 164181, 14 September 2011.
[10] Gurango v. Best Chemical and Plastics, G.R. No. 174593, 25 August 2010.
[11] Nissan Motors Phils. v. Angelo, G.R. No. 164181, 14 September 2011.
[12] G.R. No. 164376, 31 July 2006.
[13] CIVIL CODE. Article 8.
[14] Oania v. Philex Mining Corporation, G.R. No. 97162-64, 01 June 1995.
[15] Yabut v. Manila Electric Company, G.R. No. 190436, 16 January 2012.
[16] Villarama v. Golden Donuts, G.R. No. 106341, 02 September 1994.
[17] Supra.
[18] Jose v. Michaelmar Phils., G.R. No. 169606, 27 November 2009.
[19] G.R. No. 173151, 28 March 2008, 550 SCRA 307, 319.
[20] G.R. No. 172589, 08 August 2010.
[21] Nissan Motors Phils v. Angelo, citing St. Marys College v. National Labor Relations Commission, 260
Phil. 63, 67 (1990); Garcia v. Manila Times, G.R. No. 99390, July 5, 1991, 224 SCRA 399, 403; Asian
Design and Manufacturing Corp. v. Department of Labor and Employment, 226 Phil. 20, 23 (1986).
[22] Ibid.
[23] G.R. No. 165960, 08 February 2007.
[24] 142 SCRA 79 (1986), cited in Samson v. Schering-Plough Corporation, G.R. No. 121035, 12 April
2000.
[25] 137 SCRA 259 (1985), cited in Samson v. Schering-Plough Corporation, G.R. No. 121035, 12 April
2000.
[26] 177 SCRA 626 (1989).
[27] 291 SCRA 219 (1998).
[28] Samson v. Schering-Plough Corporation, G.R. No. 121035, 12 April 2000.
[29] Rene Foods v. Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan on behalf of its member
Nenita Capor, G.R. No. 164016.
[30] Rene Foods v. NLM, citing Philippine Long Distance Telephone Company v. National Labor Relations
Commission, supra note 12; Zenco Sales, Inc. v. National Labor Relations Commission, G.R. No. 111110,
August 2, 1994, 234 SCRA 689.
[31] G.R. No. 171115, 09 August 2010.
[32] 316 Phil. 335 (1995).
[33] G.R. No. 193676, 29 June 2012.
[34] John Hancock Life Insurance Corporation v. Davis, G.R. No. 169549, 3 September 2008, 564 SCRA
92.
[35] G.R. No. 187605, 13 April 2010.
[36] 157 Phil 110, 121 (1972).
[37] Supreme Steel Pipe v. Bardaje, G.R. No. 170811, 24 April 2007.
[38] Supreme Steel Pipe v. Bardaje, G.R. No. 170811, 24 April 2007.
[39] G.R. No. 170811, 24 April 2007.
[40] G.R. No. 174981, 25 May 2009.
[41] G.R. No. 171023, 18 December 2009.
[42] G.R. No. 149629, 04 October 2004.
[43] G.R. No. L40553, 26 February 1981.
[44] G.R. No. 114764, 13 June 1997.
[45] Hancock Life Insurance Corporation v. Davis, G.R. No. 169549, citingOania v. National Labor
Relations Commission, G.R. Nos. 97162-64, 1 June 1995, 244 SCRA 669, 674. A thorough reading of
the Oania case, however, does not indicate of mention moral depravity as an analogous ground to serious
misconduct.
[46] CA Azucena, The Labor Code with Comments and Cases (8th ed.), Rex Bookstore, 2013,
citing Adams v. Southern P. Co., 204 Cal. 63, 266, p. 541, 57 ALR 1066.
[47] G.R. No. 115795, 06 March 1998.
[48] G.R. Nos. 113178 and 114777, 05 July 1996.
[49] G.R. No. L-51592, 18 September 1987.
[50] G.R. No. 75436, 21 August 1987.
[51] G.R. No. 121035, 12 April 200.
[52] Telecommunications Distributors Specialist v. Garriel, G.R. No. 174981, 25 May 2009.
[53] Supra.
[54] Abacast Shipping and Management Agency v. Modelo, G.R. No. 81124-26, 23 June 1988.
[55] G.R. No. 49549, 30 August 1990.

DUE PROCESS IN TERMINATION AND DISCIPLINARY

ACTIONS; MINIMUM PERIOD FOR REPLY TO SHOW-CAUSE
NOTICE
By: Atty.Fred | March 4, 2015 in HR and Labor

40 Replies | Related posts at the bottom of article

Practitioners in the field of labor or Human Resources (HR), as well as managers and executive officers of companies,
are aware that an employee may only be dismissed for cause. Disciplinary actions, including dismissal from work,
must comply with both substantive and procedural due process. Substantive due process requires a valid cause for
the dismissal. For procedural due process, outlined below, an interesting question is this: is there a minimum period
that must be given to the employee to answer the show-cause notice?

We recently received a query as to how many days should be given to the employee to answer the show-cause notice.
We find this query interesting because there is no provision in the Labor Code, or its Implementing Rules and
Regulations, which spells out a specific period. Whats more interesting, however, is that the Supreme Court has
construed this period to mean five (5) days from receipt of the show cause notice. The procedural requirements,
as summarized by the Supreme Court, are:

(A) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to prepare adequately for their defense.
This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees
an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently
prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances
that will serve as basis for the charge against the employees. A general description of the charge will not suffice.
Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.

(B) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2)
present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.

(C) After determining that termination of employment is justified, the employers shall serve the employees a written
notice of termination indicating that: (1) all circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of their employment.
G.R. No. 198656, September 08, 2014, NANCY S.
MONTINOLA, PETITIONER, VS. PHILIPPINE AIRLINES,
RESPONDENT

There is denial of an opportunity to be heard if the

employee is not clearly apprised of the acts she
committed that constituted the cause for disciplinary
action. The Omnibus Rules Implementing the Labor Code requires that a
written notice [be] served on the employee specifying the ground or
grounds for termination, and giving said employee reasonable opportunity
within which to explain his side. Reasonable opportunity has been
described as every kind of assistance that management must accord to the
employees to enable them to prepare adequately for their defense.

When the alleged participation of the employee in the illicit act which
serves as a basis for the disciplinary action is not clear from the notice, the
opportunity to be heard will not be reasonable. The notice fails to meet
reasonable standards. It does not have enough information to enable the
employee to adequately prepare a defense.
xxx
Montinola was found by PAL to be guilty of all the charges against her.
According to PAL, [t]hese offenses call for the imposition of the penalty of
Termination, however, we are imposing upon you the reduced penalty of
One (01) year Suspension. It is not clear how she could violate all the
prestations in the long list of rules she allegedly violated. There is also no
clear explanation why termination would be the proper penalty to impose.
That the penalty was downgraded, without legal explanation, to suspension
appears as a further badge of intimidation and bad faith on the part of the
employer.
Nothing in PALs action supports the finding that Montinola committed
specific acts constituting violations of PALs Code of Discipline.
This act of PAL is contrary to morals, good customs, and public policy. PAL
was willing to deprive Montinola of the wages she would have earned
during her year of suspension even if there was no substantial evidence
that she was involved in the pilferage.
Moral damages are, thus, appropriate. In Almira v. B.F. Goodrich
Philippines, this court noted that unemployment brings untold hardships
and sorrows on those dependent on the wage-earner. This is also true for
the case of suspension. Suspension is temporary unemployment. During the
year of her suspension, Montinola and her family had to survive without her
usual salary. The deprivation of economic compensation caused mental
anguish, fright, serious anxiety, besmirched reputation, and wounded
feelings. All these are grounds for an award of moral damages under the
Civil Code.
The nature of moral damages is defined under our Civil
Code. Article 2220 states that [w]illful injury to
property may be a legal ground for awarding moral
damages if the court should find that, under the
circumstances, such damages are justly due.The same rule
applies to breaches of contract where the defendant acted fraudulently or
in bad faith. In Primero v. Intermediate Appellate Court, this court stated
that damages, as defined in the Civil Code, is recoverable in labor cases.
Thus, moral damages:
. . . cannot be justified solely upon the premise (otherwise sufficient for
redress under the Labor Code) that the employer fired his employee
without just cause or due process. Additional facts must be pleaded and
proven to warrant the grant of moral damages under the Civil Code, these
being, to repeat, that the act of dismissal was attended by bad faith or
fraud, or was oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy; and, of course, that social humiliation,
wounded feelings, grave anxiety, etc., resulted therefrom.
Under Article 2229 of the Civil Code, [e]xemplary or
corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages. As
this court has stated in the past: Exemplary damages
are designed by our civil law to permit the courts to
reshape behaviour that is socially deleterious in its
consequence by creating negative incentives or
deterrents against such behaviour.

If the case involves a contract, Article 2332 of the Civil Code provides that
the court may award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. Thus, in
Garcia v. NLRC, this court ruled that in labor cases, the court may award
exemplary damages if the dismissal was effected in a wanton, oppressive
or malevolent manner.
It is socially deleterious for PAL to suspend Montinola without just cause in
the manner suffered by her. Hence, exemplary damages are necessary to
deter future employers from committing the same acts.

PREVENTIVE SUSPENSION
Preventive suspension is a prerogative which an employer may exercise pending the
administrative investigation of an erring employee, in order to prevent the latter from
inflicting further harm against the person or property of the employer or his/her co-workers.
In the case of Philippine Airlines, Inc. vs. National Labor Relations Commission (G.R. No. 114307, July 8,
1998), the Supreme Court had the occasion to explain preventive suspension in this wise:

Preventive suspension is a disciplinary measure for the protection of the companys property pending
investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may place
the worker concerned under preventive suspension if his continued employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers.

Sections 3 and 4, Rule XIV of the Omnibus Rules Implementing the Labor Code provides:

Sec. 3. Preventive suspension. The employer can place the worker concerned under preventive suspension if
his continued employment poses a serious and imminent threat to the life or property of the employer or of his
co-workers.

Sec. 4. Period of suspension. No preventive suspension shall last longer than 30 days. The employer shall
thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend
the period of suspension provided that during the period of extension, he pays the wages and other benefits due
to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the
extension if the employer decides, after completion of the hearing, to dismiss the worker (Underscoring
supplied).

It is clear, based on the foregoing discussions, that an employer cannot impose upon his/her employees a
preventive suspension for an indefinite period of time. The most that can be imposed is 30 days. The employer
may, however, extend the said period, provided that the employee is paid his/her wages and other benefits due
to him/her after the lapse of the said 30 day period.

Employment Relations Rule

Once employed, the employee is presumed to have acquired job and employment security and he/she can not be
removed by dismissal or termination unless for just and authorized causes. To a lesser degree, even suspension
without due process is illegal as this may be considered breach of the employment contract between the employer
and the employee.

HR Philosophy

The right to discipline is a Management right. Instilling discipline, forming desirable and productive behaviors and
norms in the Company must stem from a clear Company Philosophy.

Just like most HR management functions, the duty to discipline is a line function, wielded by shopfloor supervisors and
line managers. The responsibility to discipline when used effectively enhances the leadership skills and credibility of
the supervisor and manager.

This is the Labor Codes provision on just cause termination. We may simply define just cause termination as
employer initiated termination because of employees fault. Art 282 provides for employers legitimate bases for
initiating termination procedures the substantive due process.

1. Dapat may rules ka [ang company] on proper, restricted, regulated and prohibited behaviors for all
employees. These rules must be applied for all work-related situations and circumstances. (see my entry
on valid work rules.)
2. Publish these rules. Be sure to have proof that all employees regardless of employment status have
been oriented regarding these rules.[/color]
3. When information of violation reaches you as superior of a subordinate, do an initial investigation.
4. The results of the initial investigation should give you an idea if the employee violated a rule. Parang probable
cause ito sa korte.
5. Write the first notice as as described above. Some companies call this the show cause notice. I call it simply first
notice. Better charge notice.
6. Conduct the due process hearing. Tatlo yung role mu as boss investigator, prosecutor, and judge. Be careful not
to confuse your roles in front of the employee.
7. After the hearing, inform the employee when the decision regarding his case may be expected.
8. Best to arrive at a decision within a week after the first report of violation reached your office; or days after your
due-process hearing.
9. If your decision is to terminate, best to serve the notice to the employee before the end of office/work day, and to
make sure that he clears his table as he will not be reporting back anymore.

In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just cases as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel, if he so desires, is
given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be
deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the
Department of Labor and Employment at least thirty days before effectivity of the termination, specifying the ground
or grounds for termination.

If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to
meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice
is served the employee within a reasonable time from the effective date of termination.

An employee charged with an offense may be placed under preventive suspension while he or she is
preparing to answer charges filed against him or her by the employer

Only on grounds that his or her continued presence inside the company premises poses a serious imminent threat to
the life or property of the employer or his or her co-workers, and only for a period of 30 days may be placed under
preventive suspension. After 30 days, the employee should be reinstated to his or her former position or in a
substantially equivalent position.

The employer, however, may extend the period of suspension provided that the employee is paid his or her wages
and other benefits during the extension. If the employer decides to dismiss the employee after completion of the
investigation, the employee is not bound to reimburse the amount paid to him or her during the extended period. The
employer is required to immediately notify the employee in writing of a decision to dismiss him or her stating clearly
the reasons for the dismissal.

Preventive suspension is not a disciplinary measure, and should be distinguished from suspension imposed as a
penalty.

Should the employer decide to terminate the employee, he must still comply with the twin notice requirement. Under Philippine labor
laws, the employer is bound to furnish the employee with two (2) written notices before termination of employment. The first notice is
one apprising the employee of the particular acts or omissions for which his dismissal is sought. On the other hand, the second notice
is the one informing the employee of the managements decision to sever his employment. It must be noted that the second notice can
only be given after the employee was given a reasonable period from receipt of the first notice within which to answer the charge,
thereby giving him ample opportunity to be heard and defend himself with the assistance of his representative should he so desire. It
should be borne in mind that the notice of suspension does not supplant the two notices required by law.

Validity of the Employers Decision on Termination[/color]

A dismissed employee may still question the validity or legality of his or her dismissal by filing a complaint for illegal
or unjust dismissal before the Arbitration Branch of NLRC. In such a case, the burden of proving that the dismissal is
for a valid or authorized cause rests on the employer.
During the pendency of the termination case, an employee may be be retained in his or her work[/color]

An employee may be retained in his or her work even during the pendency of a termination case under the following
circumstances:

1. Upon serving the preventive suspension period of 30 days; and

2. Upon management prerogative allowing the employee to be retained at work and his or her continued employment
poses no serious nor imminent threat to the life or property of the employer or his or her co-employees.

The Effects of Termination may be Suspended Pending Resolution of the Case[/color]

The Secretary of Labor of the Philippines may provisionally order a reinstatement in the event of prima facie finding
that the dismissal may cause a serious labor dispute as in a strike or lock-out, or is in implementation of mass lay-
off.

c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative. This includes such acts as competing with the employer, making clandestine profits, accepting bribes,
as well as other acts that result in loss of trust and confidence on the part of the employer. There is no question that
fraud committed by an employee against his employer is a just cause for dismissal but loss of trust (and confidence)
of the employer in his employee requires further elaboration. It has been held that the basic premise for loss of
confidence as a just cause for dismissal is that the employee concerned holds a position of trust and
confidence, otherwise it is not a valid ground. (Quezon Electric Corp. vs. NLRC, 172 SCRA 88) In addition, the
act complained of must be work-related and shows that the employee is unfit to work for his employer. (Aris Phil. Inc.
vs. NLRC, 238 SCRA 59) A position of trust and confidence has been defined as one where a person is
entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the
employer's property. (Panday vs. NLRC, 209 SCRA 122) In another case, the observation was made that
interpretation of the term "trust and confidence" should be restricted to managerial employees. (Marina Port Services
vs. NLRC, 193 SCRA 420) This seems to be the later trend.

Thus in a recent case the Court made the observation that loss of confidence should ideally apply only to cases
involving employees occupying positions of trust and confidence or to those situations where the employee is routinely
charged with care and custody of the employer's money or property. To the first class belong manageable employees,
and to the second class belong cashiers, auditors, property custodians, etc. or those who, in the normal and
routine exercise" of their functions, regularly handle significant amounts of money or property. (Mabeza
vs. NLRC, 271 SCRA 670) In a more recent case, the Court upheld the dismissal of a shift supervisor on the ground of
breach of trust and confidence for tampering highly sensitive equipment in an oil terminal thereby exposing the entire
terminal complex and the adjacent communities to the danger of a major disaster that may be caused by oil tank
explosion and conflagration. (Deles Jr. vs. NLRC et al, March 1, 2000). However, there are decisions that have
considered this cause asset applies to rank-and-file, as well as to managerial employees, leading to a distinction
between the two. As a general rule, employers are allowed a wider latitude of discretion in terminating managerial
personnel or those of similar rank performing functions which by their nature require the employer's full trust and
confidence, than in the case of ordinary rank and file employees. Thus the rule has been laid that in rank-and-file
employees, loss of trust and confidence requires proof of involvement in the events in question, and that mere
uncorroborated assertions and accusations of the employer will not suffice. (Midtown Ramada vs. NUWHRAIN, 159
SCRA 212) By way of example, a salesman-collector was deemed to hold a fiduciary position. Although loss of trust
and confidence constitutes a valid cause for termination, it must nonetheless rest on solid grounds that reasonably
evince an actual breach thereof by an employee. The act upon which the loss of trust Is predicated must be related to
the performance of the duties of th employee such as would thereby show him to be Indeed unfit to continue working
for the employer. (San Antonio vs. NLRC, 250 SCRA 359). This requirement was reiterated in several cases where the
High Court held that in order t constitute a just cause for dismissal, the act complained of must be work related and
shows that the employee concerned is uiifit to continue to work for the employer. (Sulpicio Lines, Inc. vs. GuIde, Feb.
22, 2002).

Preventive suspension is generally a legally recognized measure used by an employer to

suspend an employee during an investigation in relation to an incident affecting the
workplace. According to the Omnibus Rules Implementing the Labor Code of the Philippines:
Section 8. Preventive suspension. The employer may place the worker concerned under preventive suspension
only if his continued employment poses a serious and imminent threat to the life or property of the employer or
of his co-workers (Rule XXIII, Book V).

The purpose and nature of preventive suspension is further explained by the Supreme Court in the case of
Gatbonton vs. NLRC (G.R. No. 146779, January 23, 2006), wherein it stated that:

Preventive suspension is a disciplinary measure for the protection of the companys property pending
investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may place
the worker concerned under preventive suspension if his continued employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers. However, when it is determined that there is
no sufficient basis to justify an employees preventive suspension, the latter is entitled to the payment of salaries
during the time of preventive suspension.

Considering the above explanation on the nature of preventive suspension, it can be seen that the issuance by
the employer of a preventive suspension is not an arbitrary measure but rather a reasonable option legally given
to the employer for the purpose of investigating and or resolving work place related incidents that can impede
its operations. And based from your situation, the violent altercation you mentioned that occurred between you
and a co-employee qualifies as a threat to life and property in your work place which justifies the issuance of a
preventive suspension. Thus, despite your sentiment that the preventive suspension is not fair to you, you must
respect and recognize this decision of your employer since this is justified and allowed by law.

Albeit, remember that the period of preventive suspension is limited as the law provides that:

Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The employer
shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may
extend the period of suspension provided that during the period of extension, he pays the wages and other
benefits due to the worker (Rule XXIII, Book V, Omnibus Rules Implementing the Labor Code, as amended
by Department Order No. 9, Series of 1997).

Therefore, should your employer continue to preventively suspend you for more than thirty (30) days, you are
entitled either to an actual reinstatement to your previous work or to a payroll reinstatement wherein you are
given your salary in case you are not actually reinstated by your employer.

Finally, with regard to your salary during the period of your suspension, an employee placed under preventive
suspension is not entitled to payment of wages. However, if the basis for suspension is later proven to be
unfounded or invalid, you are entitled for your salary during the whole period of your suspension (Gatbonton
vs. NLRC).

Dismissal of employees; procedural due process. Furnishing the employee with a suspension order prior to his notice of
termination does not satisfy the requirement of a first notice. It implies that the employer has already decided, for the
reasons stated therein, to suspend the employee from work in the company, and the wording of the order in the
present case gives no indication that the employee is being given an opportunity to submit his defense or
explanation. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2,
2010.
Dismissal of employees; procedural due process. In order to validly dismiss an employee, he must be accorded both substantive
and procedural due process by the employer. Procedural due process requires that the employee be given a notice of the charge
against him, an ample opportunity to be heard, and a notice of termination. Even if the aforesaid procedure is conducted after
the filing of the illegal dismissal case, the legality of the dismissal, as to its procedural aspect, will be upheld provided that the
employer is able to show that compliance with these requirements was not a mere afterthought. New Puerto Commercial and
Richard Lim vs. Rodel Lopez and Felix Gavan, G.R. No. 169999, July 26, 2010.
Preventive suspension. Preventive suspension is justified where the employees continued employment poses a
serious and imminent threat to the life or property of the employer or of the employees co-workers. Without this
kind of threat, preventive suspension is not proper. Jose P. Artificio vs. National Labor Relations Commission, RP
Guardians Security Agency, Inc. Juan Victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26,
2010

Q: What are the steps to follow to ensure that the dismissed employee is given due process?

A: a. Notice of Dismissal The employer shall furnish the workers a written notice stating the particular acts or
omissions constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served
at the workers last known address.

b. Answer The worker may answer the allegations stated against him in the notice of dismissal within a reasonable
period.

c. Hearing The employer shall afford the worker ample opportunity to be heard and defend himself with the
assistance of his representative, if he so desires.

d. Notice of decision The employer shall immediately notify a worker in writing of a decision to dismiss him
stating clearly the reasons therefor.

e. Report on dismissal The employer shall submit a monthly report to the regional Office having jurisdiction over
the place of work, all dismissals effected by him during the month, specifying therein the names of the dismissed
workers, the reasons for their dismissal, the dates of commencement and termination of employment, the positions
last held by them and such other information as may ber required by the Department of labor for policy guidance
and statistical purposes.