LABOR LAW REVIEW

LABOR RELATIONS
OCTOBER 14, 2017

TERMINATION OF EMPLOYMENT

BASIC PRINCIPLES IN TERMINATION CASES

Balancing of interests in disciplinary cases
a. Labors interests
b. Managements interests
LABORS INTERESTS MANAGEMENTS INTERESTS
A workers right to labor is Employer is allowed , in the exercise of its
recognized by the management prerogative, to promulgate
Constitution as a property rules and regulations and to
right. As such, an employee enforce/implement them for the efficient
cannot be deprived of his operations of the business. (San Miguel
work without just cause or Brewery Sales Force Union vs. Ople, 170
due process. SCRA 25 [1989]; Abbott Laboratories vs.
NLRC, 154 SCRA 713 [1987])
The law also recognizes the right of the
employer to expect from its workers not
only good performance, adequate work
and diligence, but also good conduct and
loyalty. (Virginia Sugue, et al., v. triumph
International (Phils.) Inc., GR 164804, 30
January 2009)
BALANCING OF INTEREST
In the context of implementing the rules and
regulations for the conduct of human
relationships and work performance within
the business, certain parameters will have to
be observed:
Burden of proof is upon the employer
to show just cause for the imposition
of a penalty upon the employee.
In the imposition of penalty, whether
for suspension or terminations, the
same must be commensurate to the
offense committed.
For valid termination, there must
both be JUST CAUSE AND DUE
PROCESS.

c. Balancing of Interest
Burden of proof is upon the employer to show just cause for the imposition of a penalty upon the employee.
o There must exist substantial evidence to prove just or authorized cause of termination.
o When there is an allegation of non-payment of salaries and other monetary benefits, it is the
employers burden to prove its payments to its employees. The employers evidence must show, with a
reasonable degree of certainty, that it paid and that the workers actually received the payment.
o The finding of probable cause by the DOJ Secretary in the criminal aspect of the case against the
employee is sufficient justification for his termination of employment in the administrative aspect of the
case. (Concepcion v. Minex Import Corporation)
o Failure of employer to submit documents which are presumed to be in its possession, inspite of an
Order to do so, implies that the presentation of said documents is prejudicial to its case. (De Guzman v.
NLRC, 540 SCRA 210)
In the imposition of penalty, whether for suspension or terminations, the same must be commensurate to the
offense committed.
o Sagales v. Rustans Commercial corporation GR No. 166554, 27 November 2008
The Supreme Court also emphasized: the right of every employee to security of tenure is all the more
secured by the Labor Code by providing that the employer shall not terminate the services of an
employee except for a just cause or when authorized by law. However, the employer, in exercising its
right to terminate employees for just and authorized causes must impose a penalty commensurate with
the act, conduct, or omission imputed to the employee.
o Negros Slashers v. Alvin Teng GR No. 187122, 22 February 2012
The Supreme court find that the penalty of dismissal handed out of against Teng was indeed too harsh.
Missing a team game is indeed a punishable offense. However, we agree that the Labor Arbiter that
such isolated foolishness of an employee does not justify the extreme penalty of dismissal from service.
Petitioners could have opted to impose a fine or suspension on Teng for his unacceptable conduct.
REQUIREMENTS FOR LEGALITY
Substantive and Procedural due process in termination cases
o Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, the dismissal of
an employee must be for a just cause or authorized cause, and after due process. The 2 requirements of
this legal provision are:
a. The legality of the act of dismissal, that is, dismissal under the grounds provided under Article 282 of
the New Labor Code; and
b. The legality in the manner of dismissal, that is, with due observance of the procedural requirements
of Sections 2, 5, and 6 of Batas Pambansa Blg.130.
While the Labor code of the nature and remedies available with regard to the first, such as: (a) reinstatement to
his former position without loss of seniority rights, and (b) payment of backwages corresponding to the period
 from his dismissal up to actual reinstatement, said Code does not deal at all with the second, that is, the manner
of dismissal, which is therefore, governed exclusively by the Civil Code.

JUST CAUSES FOR TERMINATION

The just causes for termination of employment are enumerated in Articles 282 of th.e Labor Code, viz.,
Art. 282 Labor Code. Termination by employer.An employer may terminate an employment for any of the
following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
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 representative;
d. Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
SERIOUS MISCONDUCT
Misconduct- improper or wrong conduct
Requisites:
a. It must be serious
b. Must relate to the performance of the employees duties; and
c. Must show that the employee has become unfit to continue working for the employer.
For misconduct to be a just cause for termination, the same must be serious. This implies that it must be of
such grave and aggravated character and not merely trivial or unimportant.
See: Colegio de San Juan de LetranCalamba v. Villas, GR 137795, 26 March 2003
Ex.
1. Falsification of time records
2. Immorality
Jose S. Santos, Jr. v. NLRC, Hagonoy Institute, Inc.,its Directress, Marta B. Zuniga and Principal Elisea B.
Banag
287 SCRA 117 (1998)
On the outset, it must be stressed that to constitute immorality, the circumstances of each particular
case must be holistically considered and valuated in light of the prevailing norms of conduct and
applicable lawsTeachers must adhere to the exacting standards of morality and decency.
3. Moonlighting
Capitol Wireless, Inc. v. Balagot, 513 SCRA 672 (2007)
Jurisprudence recognizes as a valid ground for dismissal of an employee for his unauthorized use of
company time. It would be unfair to compensate private respondent who does not devote his time and
effort to his employer.
4. Theft of company property v. personal property of co-employee.
GR: If company property, valid termination on the ground of serious misconduct.
Caltex (Phils,) Inc v. Agad GR No. 162017, 23 April 2010
Theft of Company Property (scrap metal)
Even if considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot
appropriate for himself without Caltexs consent.
EXC: if not company property but personal property of co-employee, Supreme Court has made divergent
rulings.
Villamor Golf Club v. Pehid. GR 166152, Cosmos Bottling v. Wilson Fermin. GR 193676 and Wilson
04 October 2005 Fermin V. Cosmos Bottling. GR 194303, 20 June 2012

Malversation of a Paluwagan or Theft committed against a co-employee is considered as a

voluntary contribution to a common
fund by the employees which was not
known by the employer is not serious
misconduct.
It must relate to or involve the
misappropriation or malversation of
the club funds, or cause or tend to
cause prejudice VGC.
case analogous to serious misconduct for which the penalty
of dismissal from service may be meted out to the erring
employeeTheft is the unlawful taking away of property
which is not ones own, and hence, may very well be
considered as analogous to serious misconduct regardless of
whether or not it was not in relation to the discharge of ones
duties and responsibilities.

5. Conspiracy vis--vis serious misconduct

Sargasso Construction and Development Corporation v. NLRC
GR 164118 09February 2010
There must at least be adequate proof that the malefactors had come to an agreement concerning the
commission of a felony and decided to commit it.
 White Diamond Trading Corporation v. NLRC
GR 186019, 29 March 2010
The payment of the purchase price, the issuance of the receipt and the handing of the deed of sale to
Aquino were not separate isolated acts. They occurred in one continuous logical sequence with the
players in close proximity with one another.
6. Serious misconduct by a manager
A managers stubbornness, arrogance, hostility and uncompromising stance, reading confidential letter
not intended for her (but about her) constitutes serious misconduct. Sim v. NLRC, 534 SCRA 515 (2007):
See also: Tirazona v. CA, 548 SCARA 560 (2008)
7. Attitude problem e.g., negative attitude
When an employee, despite repeated warnings from the employer, obstinately refuses to curtail a
bellicose inclination such that it erodes the morale of the co-employees, the same may be a ground for
dismissal for serious misconduct. Citibank NA v. NLRC 544 SCRA (2008)
8. Drug Abuse
It is beyond question 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. Bughaw Jr. v. treasure Island, 550 SCRA 307 (2008)
WILLFUL DISOBEDIENCE (Insubordination)
Requisites
Willful disobedience of the employers lawful orders, a a just cause for the dismissal of an employee, evisages
the concurrence of the following requisites:
a) The employees assailed conduct must have been willful or intentional,
b) The willfulness being characterized by a wrongful and perverse attitude;
c) The order violated must have been reasonable, lawful, made known to the employee; and
d) Must pertain to the duties which he had been engaged to discharge. (Alcantara, Jr. v. CA, et al., 386 SCRA
370 [2002])

Lores Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia,

GR No. 171189, 09 March 2011
Gross Insubordination
The court held that respondent employee was illegally dismissed. Though there is nothing unlawful in the directive of
petitioner employer to prepare checks in payment of petitioners obligations, respondent employees intitial reluctance
to prepare checks, although seemingly disrectful and defiant, was for honest and well intentioned reasons. Protecting
the petitioner employer frpm liability under the Bouncing Checks Law was foremost in her mind. It was not wrongful or
willful.
Question: Can the employees refuse to comply with company rules and regulations by the simple expedient of
challenging their reasonableness?
Answer: NO. Company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally
binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably
through negotiation or by competent authority. The court explained the rationale for this rule in GTE Directories
Corporation v. Sanchez, 197 SCRA 452 (1991) as follows:
To sanction disregard or disobedience by employees of a rule or order lain down by management,
on the pleaded theory that the rule or order is unreasonable, illegal or otherwise irregular for one
reason or another, would be disastrous to the discipline and order that it is in the interest of both
the employer and his employees to preserve and maintain in the working establishment and
without which no meaningful operation and progress is possible. (GTE Directories Corporation v.
Sanchez, 197 SCRA 452 [1991]
GROSS NEGLIGENCE AND HABITUAL NEGLECT OF DUTIES
Gross Negligence- want or absence of or failure to exercise slight care or diligence, or the entire
absence of care.
Significantly, in order to constitute a just cause for the employees dismissal, the neglect of duties
must not only be gross but also habitual. Thus, single or isolated act of negligence does not constitute
a just cause for dismissal of the employee. (National Bookstore, Inc. . CA Special 8th Division, et al)
GROSS NEGLIGENCE HABITUAL NEGLECT FRAUD AND WILLFUL
NEGLECT OF DUTIES
Connotes want of care in the Implies repeated failure to perform Imply bad faith on the part of the
performance of ones duties ones duties over a period of time, employee in failing to perform his
1. Absenteeism depending upon the circumstances job to the detriment of the
2. Habitual absenteeism and employer and the latters
tardiness business. (JGB and Associates, Inc.
3. Abandonment of work v. NLRC, 254 SCRA 457, 464
[1996])
FRAUD AND LOSS OF TRUST AND CONFIDENCE
Fraud- deemed to comprise anything calculated to deceive, including all acts, omissions, and
concealment involving a breach of legal or equitable duty, trust, or confidences justly reposed,
resulting in damage to another, or by which an undue and unconscientious advantage is taken of
another. (Yolanda Garcia v. People of the Philippines, GR No. 144785, 11 September 2003)
Question: May an employee be dismissed for fraud if the company did not suffer from it?
Answer: YES. Deliberate disregard or disobedience of rules by the employees cannot be countenanced. The
lack of resulting damage was unimportant. Damage aggravates the charge but its absence does not mitigate
nor negate the employees liability.
Elements of willful breach of trust leading to loss of trust and confidence:
Requisite:
1st, ground of loss and trust must be holding a position of trust and confidence.
2nd there must be an act that would justify the loss of trust and confidence.
a) The breach must be willful and not ordinary breach;
b) Employee holds a position of trust and confidence;
c) Must be in relation to the work performed;
d) There must exist substantial evidence, and should not be based on mere surmises, speculations and
conjectures. (Roberto Gonzales v. NLRC and PEPSI Cola Products Philippines, Inc., GR. No. 131653, 26
March 2001)
Loss of confidence as a ground for termination of employment; Other guidelines.
a) Loss of confidence should not be simulated;
b) It should not be used as a subterfuge for causes which are improper, illegal, or unjustified;
c) Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and
d) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
Ordinary breach of trust will not suffice, it must be willful.
o Such breach is willful if it is done intentionally, knowingly, and purposely, without justiciable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or
inadvertently.
o Dismissal based on loss of trust and confidence to be valid, the breach of trust must be
founded on dishonest, deceitful or fraudulent act.
The basic requisite for dismissal on the ground of loss of confidence is that the employee concerned
must be one holding a position of trust and confidence.
o It is the betrayal of this trust which is the essence of the offense for which the employee is
penalized. (Santos v. San Miguel Corp., 14 March 2003)
o TWO CLASSES OF POSITIONS OF TRUST:
1ST Managerial employees- those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial employees.
2nd Cashiers, auditors, property custodians, etc. - they are those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money or property,
or is entrusted with confidence on delicate matters, or with custody, handling or care and
protection of the employers purpose.
(Abelardo Abel v. Philex Mining Corporation, GR. 202158, 25 September 2013)
Loss of confidence (breach of trust) is a work-related offense.
The breach of trust must be related to the performance of the employees functions. (Quezon
Electric Cooperation v. NLRC, 172 SCRA 88)
Loss of confidence must rest on actual breach of duty committed by the employee and not on the
employers caprices.
It must not be simulated, nor be used as a subterfuge for causes which are improper, illegal or
unjustified. It must be genuine and not a mere afterthought to justify earlier action taken in
bad faith. (General Bank and Trust Company v. CA 135 SCRA 569)
Loss of confidence on managerial employees
Termination for breach of trust; proof required.
The law does not require proof beyond reasonable doubt of the employees misconduct to
invoke such justification. It is sufficient that there is some basis for the loss of trust or that the
employer has reasonable grounds to believe that the employee is responsible for the
misconduct which renders him unworthy of the trust and confidence demanded of his
position.
Penalty of dismissal for breach of trust cannot be mitigated by length of service.
o Length of service as aggravating circumstances
The longer an employee stays in the service of the company, the greater is his responsibility
for knowledge and compliance with the norms and conduct; and the code of discipline of the
company.
 o Where the infraction involves dishonesty and pilferage, length of service is immaterial.
Bago v. NLRC, Standard Insurance Co. Inc., GR. 17000
The infraction that she committed, vis--vis her long years of service with the company, reflects
a regrettable lack of loyalty which ought to have been strengthened, rather than betrayed.
On misappropriation of company funds
Where an employee intentionally circumvented a strict company policy, manipulated another
entity to carry out her instructions without the companys knowledge and approval, and
directed the diversion of funds, which she even admitted doing under the guise of shortening
the laborious process of securing funds for promotional activities from the head office.
(Unilever Phils v. Ma. Ruby Rivera, GR 201701)

COMMISSION OF A CRIME OR OFFENSE BY THE EMPLOYEE AGAINST THE PERSON OF HIS EMPLOYER OR
IMMEDIATE MEMBER OF HIS FAMILY OR DULY AUTHORIZED REPRESENTATIVE
The act of the employer in terminating the services of an employee in this case can be said to be an
act of self-defense impelled by the natural instinct of self-preservation.
The fact that the employee has been absolved in a criminal prosecution involving misconduct does not
preclude the employer from attempting to prove the same before the labor arbiter or the latter from
accepting that evidence as sufficient foundation for a finding of lawful termination of employment.
(Commercial Motors Corporation v. Commissioner, NLRC 192 SCRA 191)
Conviction of an employee in a criminal case is not indispensable to warrant his dismissal by his
employer (Mercury Drug Corp. v. NLRC, 177 SCRA 580) and the fact that a criminal complaint against
the employees has been dropped by the city fiscal is not binding and conclusive upon a labor tribunal.
(Starlight Plastic Industrial Corporation v. NLRC, 171 SCRA 315)
Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa-Katiounan, GR 164016
The SC has held that a criminal conviction is not necessary to find just cause for employment
termination. Neither was there any legal or equitable justification for awarding financial assistance to
an employee who as dismissed for stealing company property. While compassion for the poor is
desirable, it is not meant to coddle those who are unworthy of such consideration.

OTHER ANALOGOUS CAUSES

Attitude problem as a valid ground for termination
An employee who cannot get along with co-employees is detrimental to the company for he
can upset and strain the working environment. (Heavylift Manila v. Court of Appeals, GR.
154410)
Termination of employment pursuant to a union security clause.
NOTE: For valid termination on this ground, the following must be proven by the employer
a. The union security clause is applicable;
b. The union is requesting for the enforcement of the union security provision in the CBA; and
c. There is sufficient evidence to support the Unions decision to expel the employee from the union or
company.