Chapter Four

TERMINATION OF EMPLOYMENT
TOPICS PER SYLLABUS
E. Constructive Dismissal

E.
CONSTRUCTIVE DISMISSAL1
1. CONSTRUCTIVE DISMISSAL.
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued employment is rendered impossible,
unreasonable or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an employer which becomes unbearable to the
employee that it could foreclose any choice by him except to forego his continued employment.2
2. INVOLUNTARY RESIGNATION.
The termination initiated by the employee based on the just causes described and enumerated in Article
2853 of the Labor Code is in the nature of involuntary resignation. Thus, an employee may put an end to the
employment relationship without need of serving any notice on the employer for any of the following just causes:
(1) Serious insult by the employer or his representative on the honor and person of the employee;
(2) Inhumane and unbearable treatment accorded the employee by the employer or his representative;
(3) Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and
(4) Other causes analogous to any of the foregoing.4
Thus, unlike resignation without just cause under the same Article 2855 where the law requires prior written
notice, the employee may terminate his employment without serving any notice to the employer if such is
occasioned by any of the just causes mentioned above.
3. FORCED RESIGNATION.
There is forced resignation where the employee is made to do or perform an involuntary act - submission or
tender of resignation - meant to validate the action of management in inveigling, luring or influencing or practically
forcing the employee to effectuate the termination of employment, instead of doing the termination himself. 6
4. COMMON DENOMINATOR.
Both involuntary and forced resignations are embraced within the concept of constructive dismissal. The
common character pervading involuntary or forced resignation or constructive dismissal is the act of quitting
from employment by the employee because of the attendant just causes, acts, facts or circumstances which render
the continued employment impossible, unreasonable or unlikely. 7 Thus, if there is no cessation of work, there can
be no constructive dismissal.8
5. TEST OF CONSTRUCTIVE DISMISSAL.
The test of constructive dismissal is whether a reasonable person in the employees position would have
felt compelled to give up his position under the circumstances. It is an act amounting to dismissal but made to
appear as if it were not. In fact, the employee who is constructively dismissed may be allowed to keep on coming
to work. Constructive dismissal is, therefore, a dismissal in disguise.9 The law recognizes and resolves this
situation in favor of the employees in order to protect their rights and interests from the coercive acts of the
employer.10
6. VOLUNTARY RESIGNATION VS. CONSTRUCTIVE DISMISSAL.
 Voluntary resignation is likewise distinct from constructive dismissal. For instance, it was held in Concrete
Aggregates v. NLRC,11 that an employee who tendered her voluntary resignation and signed the quitclaim after
receiving all the benefits due her for her separation cannot claim that she was constructively dismissed. The fact of
her transfer due to a new secretarial staffing pattern which she objected to, or the alleged hostility on the part of her
employer, cannot render nugatory the voluntary nature of her resignation. She was not eased out much less was she
forced to resign. This is a case of voluntary resignation and not a constructive dismissal.
In Admiral Realty Company, Inc. [Admiral Hotel] v. NLRC, 12 it was ruled that the transfer of the
location of an employees office from under the steps of the stairs to the kitchen which allegedly caused her mental
torture which forced her to resign does not amount to constructive dismissal but a case of voluntary resignation. It
was not shown that her transfer was prompted by ill will of management. It merely involved a change in location of
the office and not a change of her position.
An indication that the resignation was voluntary and does not constitute constructive dismissal is the act of
the employee who resigned and took a leave of absence on the date of effectivity of his resignation and while on
leave, he worked for the release of his clearance and the payment of his 13 month pay and leave pay benefits. In
th

doing so, he, in fact, performed all that an employee normally does after he resigns. If indeed he was forced into
resigning, he would not have sought to be cleared by his employer and to be paid the monies due him. The voluntary
nature of his acts has manifested itself clearly and belied his claim of constructive dismissal. 13
An example of a resignation which was deemed indicative of constructive dismissal is the 2014 case of
Dreamland Hotel Resort v. Johnson. 14 Respondent, an Australian citizen, worked as Operations Manager for
about three (3) months with petitioner hotel but he was not paid his salaries corresponding thereto, prompting him to
tender his resignation letter, the tenor of which reads:
I hereby tender my resignation to you, Mr[. ] Wes Prentice, Dreamland Resort, Subic, Zambales,
Philippines.
Since joining Dreamland Resort & Hotel over three months ago, I have put my heart and soul
into the business. I have donated many hours of my personal time. I have frequently worked seven
days a week and twelve to thirteen hours a day. I am now literally penniless, due totally to the fact
that I have lent you and your resort/hotel well over $200,000AU (approx 8million pesos) and
your non-payment of wages to me from 1 August 2007 as per Employment Agreement. xxx.15
st

The above statement only goes to show that while it was Johnson who tendered his resignation, it was due
to the petitioners acts that he was constrained to resign. The petitioners cannot expect Johnson to tolerate working
for them without any compensation. It is impossible, unreasonable or unlikely that any employee, such as Johnson,
would continue working for an employer who does not pay him his salaries.
7. ILLEGAL DISMISSAL VS. CONSTRUCTIVE DISMISSAL.
Illegal dismissal is readily shown by the act of the employer in openly and expressly seeking the
termination of employment of an employee; while constructive dismissal, being dismissal in disguise, is not
readily indicated by any similar act of the employer that would openly and expressly show its desire and intent to
terminate the employment relationship.
More concretely, the employer in illegal dismissal cases would normally defend and justify the termination
but in constructive dismissal, there being no express dismissal to speak of, the employer would normally contend
that there was no termination at all.
In terms of evidence, in illegal dismissal cases, documentary, testimonial and other forms of evidence are
adduced by the employer to secure affirmation from the court of the validity of the termination; in constructive
dismissal, the employer, who normally denies the termination, would advance arguments against the circumstantial
evidence being presented by the employee to prove his constructive dismissal.
As far as the reliefs under Article 27916 of the Labor Code are concerned, the same are available to both
illegal and constructive dismissal.
8. INSTANCES OF CONSTRUCTIVE DISMISSAL OR FORCED RESIGNATION.
Denying to the workers entry to their work area and placing them on shifts not by weeks but almost by month
by reducing their workweek to three days.17
 Barring the employees from entering the premises whenever they would report for work in the morning without
any justifiable reason, and they were made to wait for a certain employee who would arrive in the office at
around noon, after they had waited for a long time and had left. 18
Instructing the employee to go on indefinite leave and asking him to return to work only after more than three
(3) years from the time he was instructed to go on indefinite leave during which period his salaries were
withheld.19
Implementing a rotation plan for reasons other than business necessity. 20
Sending to an employee a notice of indefinite suspension which is tantamount to dismissal.21
Demoting a worker or re-assigning him involving a demotion in rank or diminution of salaries, benefits and
other privileges.22
Reducing the employees functions which were originally supervisory in nature and such reduction is not
grounded on valid grounds such as genuine business necessity.23
Imposing indefinite preventive suspension without actually conducting any investigation. It was only after
almost one (1) year that the employer made known the findings in its investigation which was conducted ex
parte. 24
Threatening a sickly employee with dismissal if he will not retire and promising employment to his son and
daughter. The employee retired and signed two (2) quitclaims entitled Receipt and Release in favor of the
company.25
Forcing the employee to resign with threat that if he will not resign, he will file charges against him that would
adversely affect his chances for new employment.26
Asking the employee to choose whether to continue as a faculty member or to withdraw as a lawyer against the
mayor with whom the former owes certain favors, makes the cessation from employment of said employee not
voluntary. Such act is in the nature of a contrivance to effect a dismissal without cause. 27
Asking the employee to file a resignation on the condition or promise that she would be given priority for re-
employment and in consideration of immediately paying her two (2) months vacation which she desperately
needed then because she was ill. The employers refusal in bad faith to reemploy her despite its promise to do
so amounted to illegal dismissal.28
Changing the employees status from regular to casual constitutes constructive dismissal. 29
Offer made by a labor contractor to reassign its employees to another company but with no guaranteed working
hours and payment of only the minimum wage. The terms of the redeployment thus became unacceptable for
said employees and foreclosed any choice but to reject the employers offer, involving as it does a demotion in
status and diminution in pay.30
Preventing the employee from reporting for work by ordering the guards not to let her in. This is clear notice of
dismissal.31
Transfer of respondent employee from Credit and Collection Manager to Marketing Assistant which resulted in
demotion as it reduced his duties and responsibilities although there was no corresponding diminution in his
salary. In holding that there was constructive dismissal, the court took note of the fact that the former position is
managerial while the latter is clerical in nature.32
Reducing the number of trips of the drivers and shortening their workdays which resulted in the diminution of
their pay.33
Forcing the employee to tender her resignation letter in exchange for her 13 month pay, the reason being that
th

the employee was found by the employer to have violated its no-employment-for-relatives-within-the-third-
degree-policy, she having been impregnated by a married co-employee.34
9. EXAMPLES OF CASES WHERE FACTS PROVED CONSTRUCTIVE DISMISSAL.
1. Cosare v. Broadcom Asia, Inc. 35 - In this 2014, the Supreme Court declared petitioner as having been
constructively dismissed based on the facts and circumstances obtaining herein. It is clear that the respondents
already rejected Cosares continued involvement with the company. Even their refusal to accept the explanation
which Cosare tried to tender on April 2, 2009 further evidenced the resolve to deny Cosare of the opportunity to be
heard prior to any decision on the termination of his employment. The respondents allegedly refused acceptance of
the explanation as it was filed beyond the mere 48-hour period which they granted to Cosare under the memo dated
March 30, 2009. However, even this limitation was a flaw in the memo or notice to explain which only further
signified the respondents discrimination, disdain and insensibility towards Cosare, apparently resorted to by the
respondents in order to deny their employee of the opportunity to fully explain his defenses and ultimately, retain his
employment. The Court emphasized in King of Kings Transport, Inc. v. Mamac, 36 the standards to be observed by
employers in complying with the service of notices prior to termination which require compliance with the
reasonable period of at least five (5) calendar days from receipt of the notice within which to explain his side.
In sum, the respondents were already resolute on a severance of their working relationship with Cosare,
notwithstanding the facts which could have been established by his explanations and the respondents full
investigation on the matter. In addition to this, the fact that no further investigation and final disposition appeared to
have been made by the respondents on Cosares case only negated the claim that they actually intended to first look
into the matter before making a final determination as to the guilt or innocence of Cosare. This also manifested from
the fact that even before Cosare was required to present his side on the charges of serious misconduct and willful
breach of trust, he was summoned to his superiors office and was asked to tender his immediate resignation in
exchange for financial assistance.
2. Tuason v. Bank of Commerce.37 In this 2012 case, the Supreme Court ruled that petitioner was forced
to resign. Pressure was exerted on her to resign from her work. The Court has in fact examined the exchange of
communications between petitioner and the respondent officers of respondent bank before it arrived at its ruling that
petitioner was constructively dismissed. It was proved, among others, that petitioner was replaced in her position
while she was on leave. Like Tuason, any reasonable person similarly situated would have felt compelled to give up
her post as she was, in fact, stripped of it considering that someone else was already discharging her functions and
occupying her office.
10. SOME PRINCIPLES ON CONSTRUCTIVE DISMISSAL OR INVOLUNTARY OR FORCED
RESIGNATION.
Mere allegations of threat or force do not constitute evidence to support a finding of forced resignation or
constructive dismissal.38
A threat to sue the employee is not unjust and will not amount to forced resignation or constructive dismissal.
For instance, a threat to file estafa case, not being an unjust act, but rather a valid and legal act to enforce a
claim, cannot at all be considered as intimidation. A threat to enforce ones claim through competent authority,
if the claim is just or legal, does not vitiate consent.39
Employee who alleges that he was coerced or intimidated into resigning has the burden to prove such claim. 40
Giving the employee the choice or option between resignation and investigation is not illegal.41
The facts of the case should be considered to determine if there is constructive dismissal. 42
Voluntary resignation is different from constructive dismissal. An employee who tendered her voluntary
resignation and signed the quitclaim after receiving all the benefits due her for her separation cannot claim that
she was constructively dismissed.43
An employee may be constructively dismissed and at the same time legally dismissed. The case in point is
Formantes v. Duncan Pharmaceuticals Phils. , Inc. 44 Petitioner45 was constructively dismissed because,
while still employed with the respondent, he was compelled to resign and forced to go on leave. After being
confronted with the complaint for sexual abuse lodged by a subordinate female employee and before being
required to explain his side, petitioner was no longer allowed to participate in the activities of respondent
company. His salary was no longer remitted to him. His subordinates were directed not to report to him and the
company directed one of its district managers to take over his position and do his functions without prior
notice to him. He was required to explain his side on the issue of sexual abuse as well as the charge of
insubordination only after these things have already been done to him. However, his dismissal was considered
legal because there was a just cause for his dismissal from the service consisting of his sexual abuse of a
subordinate female employee which, although not cited in the Notice of Termination served on him when he
was terminated, was duly proved during the trial of the case before the Labor Arbiter. Since the dismissal,
although for a valid cause, was done without due process of law, the employer was ordered to indemnify
petitioner with nominal damages in the amount of P30,000.00.

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Endnotes:

1 Relevant Provision: Article 285, Labor Code.

2 Diamond Taxi and Bryan Ong v. Felipe Llamas, Jr. , G.R. No. 190724, March 12, 2014; Cosare v. Broadcom Asia,
Inc. , G.R. No. 201298, Feb. 5, 2014; Gemina, Jr. v. Bankwise, Inc. , G.R. No. 175365, Oct. 23, 2013; SME Bank,
Inc. v. De Guzman, G. R. Nos. 184517 & 186641, Oct. 8, 2013 (En Banc) ; Ang v. San Joaquin, Jr. , G.R. No.
185549, Aug. 07, 2013; Gan v. Galderma Philippines, Inc. , G.R. No. 177167, Jan. 17, 2013; Verdadero v. Barneys
Autolines Group of Companies Transport, Inc. , G.R. No. 195428, Aug. 29, 2012, 679 SCRA 545, 555.

3 See paragraph (b) thereof. This article involves termination of employment initiated by the employee which is commonly
known as resignation.

4 Article 285(b) , Labor Code; Section 11, Rule I, Book VI, Rules to Implement the Labor Code.

5 See paragraph (a) thereof.

6 Nitto Enterprises v. NLRC, G.R. No. 114337, Sept. 29, 1995; Phil. Employ Services and Resources, Inc. v. Paramio,
G.R. No. 144786, April 15, 2004; Siemens Philippines, Inc. v. Domingo, G .R. No. 150488, July 28, 2008; SHS Perforated
Materials, Inc. v. Diaz, G.R. No. 185814, Oct. 13, 2010.

7 Mobile Protective & Detective Agency v. Ompad, G.R. No. 159195, May 9, 2005.

8 University of the Immaculate Conception v. NLRC and Teodora Axalan, G.R. No. 181146, Jan. 26, 2011.

9 Ang v. San Joaquin, Jr. , G.R. No. 185549, Aug. 07, 2013; Galang v. Malasugui, G.R. No. 174173, March 7, 2012,
667 SCRA 622, 634-635.

10 Diamond Taxi and Bryan Ong v. Felipe Llamas, Jr. , G.R. No. 190724, March 12, 2014; Cosare v. Broadcom Asia,
Inc. , G.R. No. 201298, Feb. 5, 2014; Dimagan v. Dacworks United, Incorporated, G.R. No. 191053, Nov. 28, 2011,
661 SCRA 438, 446; CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23, 2009.

11 G.R. No. 82458, Sept. 7, 1989; See also Philippine Wireless, Inc. [Pocketbell] v. NLRC, G.R. No. 112963, July 20,
1999.

12 G.R. No. 112043, May 18, 1999.

13 Go v. CA, G.R. No. 158922, May 28, 2004.

14 G.R. No. 191455, March 12, 2014.

15 Emphasis and underscoring supplied in the original text of the decision.

16 New Ever Marketing, Inc. v. CA, G.R. No. 140555, July 14, 2005.
17 Pasig Cylinder Mfg. , Corp. v. Rollo, G.R. No. 173631, Sept. 8, 2010.

18 New Ever Marketing, Inc. v. CA, G.R. No. 140555, July 14, 2005.

19 Dynamic Signmaker Outdoor Advertising Services, Inc. v. Potongan, G.R. No. 156589, June 27, 2005.

20 Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, Nov. 25, 2004.

21 Oriental Mindoro Electric Cooperative, Inc. v. NLRC, G.R. No. 111905, July 31, 1995.

22 Garcia v. NLRC, G.R. No. 116568, Sept. 3, 1999; Oscar Ledesma & Company v. NLRC, G.R. No. 110930, July 13,
1995, 246 SCRA 47, 51.

23 Globe Telecoms, Inc. v. Florendo-Flores, G.R. No. 150092, Sept. 27, 2002, 390 SCRA 201.

24 C. Alcantara & Sons, Inc. v. NLRC, G.R. No. 73521, Jan. 5, 1994.

25 Zurbano, Sr. v. NLRC, G.R. No. 103679, Dec. 17, 1993.

26 Guatson International Travel and Tours, Inc. v. NLRC, G.R. No. 100322, March 9, 1994.

27 Rizal Memorial Colleges Faculty Union v. NLRC, G.R. No. 59012-13, Oct. 12, 1989.

28 Reyes v. NLRC, G.R. No. 78997, Aug. 31, 1989.

29 Sy v. NLRC, G.R. No. 85365, June 21, 1989.

30 R. P. Dinglasan Construction, Inc. v. Atienza, G.R. No. 156104, June 29, 2004.

31 Litonjua Group of Companies v. Vigan, G.R. No. 143723, June 28, 2001; See also Suldao v. Cimech System
Construction, Inc. , G.R. No. 171392, Oct. 30, 2006.

32 Norkis Trading Co. , Inc. v. Gnilo, G.R. No. 159730, Feb. 11, 2008.

33 Sapitan v. JB Line Bicol Express, Inc. , G.R. No. 163775, Oct. 19, 2007.

34 Star Paper Corp. v. Simbol, Comia and Estrella, G.R. No. 164774, April 12, 2006.

35 G.R. No. 201298, Feb. 5, 2014.

36 G.R. No. 166208, June 29, 2007.

37 G.R. No. 192076, Nov. 21, 2012.

38 Mandapat v. Add Force Personnel Services, Inc. , G.R. No. 180285, July 6, 2010.

39 Callanta v. NLRC, G.R. No. 105083, Aug. 20, 1993, 225 SCRA 526.

40 Gan v. Galderma Philippines, Inc. , G.R. No. 177167, Jan. 17, 2013.

41 Belaunzaran v. NLRC, G.R. No. 120038, Dec. 23, 1996, 265 SCRA 800; Mandapat v. Add Force Personnel Services,
Inc. , G.R. No. 180285, July 6, 2010; Cathay Pacific Airways, Ltd. v. Marin, G.R. No. 148931, Sept. 12, 2006.
42 Philippine Rural Reconstruction Movement [PRRM] v. Pulgar, G.R. No. 169227, July 5, 2010.

43 Concrete Aggregates v. NLRC, G.R. No. 82458, Sept. 7, 1989.

44 G.R. No. 170661, December 4, 2009.

45 The Acting District Manager of respondent for the Ilocos District.