Labor Relations - Atty. Santamaria Up To Article 302 (2018)

Labor Relations – Atty.
Santamaria
UNIVERSITY OF SANTO TOMAS – FACULTY OF CIVIL LAW Jhoven Paul Tolentino
Labor Standards - It is that body of statutes, rules, and doctrines that governs the rights and
duties of workers and employers respecting terms and conditions of employment by prescribing
certain standards.
Labor relations - is that body of rules, statutes, doctrines and principles that defines status rights;
duties and institutional mechanisms that govern the individual and collective interactions of both
the employers and employees.
Articles 293 and 294 - Security of Tenure

Articles 295 and 296
Kinds of employee:
1. Regular–
a. Those engaged to perform activities which are necessary or desirable in the usual
business or trade of the employer; and
b. those casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are employed.
2. Casual - Those engaged to perform activities which are not necessary or desirable in the
usual business or trade of the employer
3. Project- Where an employee has been employed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the engagement of the
employee.
4. Seasonal - Where one is engaged to perform work or services which are seasonal in nature
and the employment is for the duration of the season.
5. Fixed-term - Where an employee is engaged to perform work or services for a fixed term and
the termination of which is determined at the time of engagement,Such agreement must be
voluntarily agreed upon by the employer and the employee.
6. Probationary - is one, who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for a permanent position. A probationary
appointment affords the employer an opportunity to observe the skill, competence, as well as
the attitude of a probationer.
I. Regular Employment
Reasonable Connection Test

The primary standard to determine a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the business or trade of
the employer.
The test is whether the former is usually necessary or desirable in the usual business or
trade of the employer.
Labor Relations – Atty. Santamaria
Length of Time
While length of time may not be a sole controlling test for project employment, it can be
a strong factor to determine whether the employee was hired for a specific undertaking or in fact
tasked to perform functions which are vital, necessary and indispensable to the usual trade or
business of the employer.
Pakyao/Piece Workers may be considered Regular Employees

Employees under a “pakyao” basis or piece workers does not imply that they are not
regular employees entitled to reinstatement. (Labor Congress of the Philippines v. NLRC
[1998]).
There are two categories of employees paid by results:

(1) those whose time and performance are supervised by the employer. (Here, there is an
element of control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs his
work in the company premises.); and
(2) those whose time and performance are unsupervised. (Here, the employer’s control is
over the result of the work. Workers on pakyao and takay basis belong to this group.)
Case:
1. Lambo v. NLRC [1999] - The mere fact that they were paid on a piece-rate basis does not
negate their status as regular employees of private respondents.
II. Casual Employment
Casual employee; at least 1 year

Any employee who has rendered at least one year of service, whether continuous or
broken, is deemed regular with respect to the activity performed and while such activity actually
exists.
Casual employees who have rendered at least one year of service become regular
employees by operation of law. The status of regular employment attaches to the casual worker
on the day immediately after the end of his first year of service.
The law does not provide the qualification that the employee must first be issued a
regular appointment or must first be formally declared as such before he can acquire a regular
status. Obviously, where the law does not distinguish, no distinction should be drawn.
Article 295, paragraph 3 of the Labor Code, pertains only to casual employees (not
project employees).
III. Project employment
Department Order No. 19, Series of 1993–

2.1 Classification of employees. – The employees in the construction industry are generally
categorized as a) project employees and b) non-project employees.
Project employees are those employed in connection with a particular construction project or
phase thereof and whose employment is coterminous with each project or phase of the
project to which they are assigned.
Non-project employees are those employed without reference to any particular construction
project or phase of a project.
2.2 Indicators of project employment. – Either one or more of the following circumstances,
among other, may be considered as indicators that an employee is a project employee.
(a) The duration of the specific/identified undertaking for which the worker is engaged is
reasonably determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in an
employment agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular
project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his
services to any other employer.
(e) The termination of his employment in the particular project/undertaking is reported to
the Department of Labor and Employment (DOLE) Regional Office having jurisdiction
over the workplace within 30 days following the date of his separation from work,
using the prescribed form on employees’ terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay completion bonus
to the project employee as practiced by most construction companies.
Paragraph No. 5, Policy Instruction No. 20

If a construction project or any phase thereof has a duration of more than one year and a
Project employee is allowed to be employed therein for at least one year, such employee
may not be terminated until the completion of the project or of any phase thereof in which
he is employed without a previous written clearance from the Secretary of Labor.
If such an employee is terminated without a clearance from the Secretary of Labor, he

shall be entitled to reinstatement with backwages. (This policy instruction was cited in the
case of PNOC-EDC v. NLRC [1993]).
3.3(a) Project employees whose aggregate period of continuous employment in a construction

company is at least one year shall be considered regular employees, in the absence of a "day
certain" agreed upon by the parties for the termination of their relationship. Project employees
who have become regular shall be entitled to separation pay.
A "day" as used herein, is understood to be that which must necessarily come, although it
may not be known exactly when. This means that where the final completion of a project or
phase thereof is in fact determinable and the expected completion is made known to the
employee, such project employee may not be considered regular, notwithstanding the one-year
duration of employment in the project or phase thereof or the one-year duration of two or
more employments in the same project or phase of the project.
Project Employment; Test

Whether or not the “project employees” were assigned to carry out a “specific project or
undertaking,” the duration (and scope) of which were specified at the time the employees were
engaged for that project.
2 Distinguishable types of activities (project)

Firstly, a project could refer to a particular job or undertaking that is within the regular or
usual business of the employer company, but which is distinct and separate, and identifiable as
such, from the other undertakings of the company. Such job or undertaking begins and ends at
determined or determinable times. (If not satisfied -> regular employee)
The term “project” could also refer to, secondly, a particular job or undertaking that is
not within the regular business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations of the
employer. The job or undertaking also begins and ends at determined or determinable times. (If
not satisfied -> Casual employee) (GMA Network, Inc. v. Pabriga, et. al [2013])
Designation as project employee; Good faith

Whichever type of project employment is found in a particular case, a common requisite
is that the designation of named employees as "project employees" and their assignment to a
specific project, are effected and implemented in good faith, and not merely as a means of
evading otherwise applicable requirements of labor laws. The employment of each 'project
worker' is dependent and co-terminous with the completion or termination of the specific activity
or undertaking [for which] he was hired which has been pre-determined at the time of
engagement.
Extension; Project Employment

The extension of the employment of a project employee long after the supposed project
has been completed removes the employee from the scope of a project employee and makes him
a regular employee. (D.M. Consunji Construction Corp. v. Bello [2013]; Tomas Lao
Construction v. NLRC[1997]).
Length of time; Rehiring

GR: Length of Employment is not the controlling test for Project Employment; Re-hiring
does not automatically confer regular employment
However, Once a project or work pool employee has been:

(1) continuously, as opposed to intermittently, re-hired by the same employer for the same
tasks or nature of tasks; and
(2) these tasks are vital, necessary and indispensable to the usual business or trade of the
employer.
–then the employee must be deemed a regular employee (Macarthur Malicdem and
Hermenigildo Flores v. Marulas Industrial Corp [2014]).
While length of time may not be a controlling test for project employment, it can be a
strong factor in determining whether the employee was hired for a specific undertaking or in
fact tasked to perform functions which are vital, necessary and indispensable to the usual
business or trade of the employer.
Duties of the Employer to avoid the regularization of a project employee:

1. Properly inform the employee of the nature of his work (that he is a project employee) at
the time of hiring (Dacuital v. L.M. Camus Engineering Corp. [2010]);
2. Inform the employee of the period of termination of employment (that his employment is
coterminus with the undertaking or specific project) which must be determined at the time
of hiring;
3. There must be a specific project for which the employee is to be engaged (Malicdem and
Flores v. Marulas Industrial Corp. [2014]);
4. Submit a report termination of employment for each project to DOLE within 30 days
following the date of separation of the employee from work, using the prescribed form on
employees’ terminations/dismissals/suspensions.
>Failure of the employer to do so, in case of illegal dismissal cases, may convince the Court
that the employee terminated was indeed a regular employee.
Q:Pwede ba i-assign ni employer si project employee for 2 different projects at the same time?
A: No, one project at a time, otherwise, magiging regular employee siya.
Workpool
Cases:
1. Dacuital v. L.M. Camus Engineering Corp. [2010] - the absence of a written contract does
not by itself grant regular status to petitioners, such a contract is evidence that petitioners
were informed of the duration and scope of their work and their status as project employees.
In this case, where no other evidence was offered, the absence of the employment contracts
raises a serious question of whether the employees were properly informed at the onset of
their employment of their status as project employees. (Not essential for validity of project
employment, but it is considered as best proof that employees are not regular employees)
2. Abesco Constuction and Development Corporation v. Ramirez [2008] - There should be a

written contract informing employees of their status as project employees in order for the
employer to substantiate their claim that respondents were project employees.
3. D.M. Consunji, Inc. v. NLRC [1995] - The length of service of a project employee is not the
controlling test of employment tenure but whether or not the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee.
4. Tomas Lao Construction v. NLRC [1997] - T]he cessation of construction activities at the
end of every project is a foreseeable suspension of work. Of course, no compensation can be
demanded from the employer because the stoppage of operations at the end of a project and
before the start of a new one is regular and expected by both parties to the labor relations.
Similar to the case of regular seasonal employees, the employment relation is not severed by
merely being suspended.
The employees are, strictly speaking, not separated from services but merely on leave of
absence without pay until they are reemployed.
5. Pasos v. PNCC [2013] - While for first three months, petitioner can be considered a project
employee of PNCC, his employment thereafter, when his services were extended without
any specification of as to the duration, made him a regular employee of PNCC.
6. Macarthur Malicdem and Hermenigildo Flores v. Marulas Industrial Corporation [2014] - the
Court ruled that for there to be project employment, there must first be a project.
The only stipulations in the contracts were the dates of their effectivity, the duties and
responsibilities of the petitioners as extruder operators, the rights and obligations of the
parties, and the petitioners’ compensation and allowances. As there was no specific project or
undertaking to speak of, there was obvious circumvention of the law to frustrate the
regularization of the employees.
7. Price v. Innodata Phils, Inc. [2008] - Petitioners were considered regular employees because
INNODATA failed to reveal any mention therein of what specific project or undertaking
petitioners were hired for.
8. Olongapo Maintenance Services, Inc. v. Chantengco [2007] - The employment contracts for
the specific project signed by the respondents were never presented. All that OMSI
submitted in the proceedings a quo are the service contracts between OMSI and the MIAA.
Clearly, OMSI utterly failed to establish by substantial evidence that, indeed, respondents
were project employees and their employment was coterminous with the MIAA contract.
9. PNOC-EDC v. NLRC [2007] - the petitioner failed to substantiate its claim that respondents
were hired merely as project employees. A perusal of the records of the case reveals that the
supposed specific project or undertaking of petitioner was not satisfactorily identified in the
contracts of respondents. (Contracts were vague)
The alleged projects stated in the employment contracts were either too vague or
imprecise to be considered as the specific undertaking contemplated by law. Petitioners act of
repeatedly and continuously hiring respondents to do the same kind of work belies its
contention that respondents were hired for a specific project or undertaking. The absence of a
definite duration for the project/ s has led the Court to conclude that respondents are, in fact,
regular employees.
10. Hanjin Heavy Industries and Construction Co., Ltd. v. Ibanez [2008] - A completion bonus,
if paid as a mere afterthought, cannot be used to determine whether or not the employment
was regular or merely for a project. Otherwise, an employer may defeat the workers security
of tenure by paying them a completion bonus at any time it is inclined to unjustly dismiss
them.
IV. Seasonal employment
Requisites:
1. the employee must be performing work or services that are seasonal in nature; and
2. he had been employed for the duration of the season.
On leave during off-season

If these workers are called to work from time to time and are only temporarily laid off
during the off-season, the law does not consider them separated from the service during the off-
season period. The law simply considers these seasonal workers on leave until re-employed.
(Universal Robina Sugar Milling Corp. v. Acibo [2014]; Abasolo v. NLRC [2000] ).
Regularization of Seasonal employees

When the “seasonal” workers are continuously and repeatedly hired to perform the same
tasks or activities for several seasons or even after the cessation of the season, this length of time
may likewise serve as badge of regular employment. In fact, even though denominated as
“seasonal workers,” if these workers are called to work from time to time and are only
temporarily laid off during the off-season, the law does not consider them separated from the
service during the off-season period. The law simply considers these seasonal workers on
(Universal Robina Sugar Milling Corp. v. Acibo [2014]).
- Rehiring must be continuous
- Once considered a regular employee, such employee may demand to work for the season, the
employer cannot hire another person. (Security of Tenure)
It is important to make a distinction between Mercado and Hacienda Fatima.
In the former, the workers were required to perform phases of agricultural work for a
definite period of time, after which their services would be available to any other farm owner.
They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on
and off for any single phase thereof. (In this case, petitioners did not attain the status of a
regular employee)
On the other hand, in the latter, having performed the same tasks for petitioners every
season for several years, are considered the latter’s regular employees for their respective tasks.
Petitioners’ eventual refusal to use their services -- even if they were ready, able and willing to
perform their usual duties whenever these were available -- and hiring of other workers to
perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter.
Case:
1. Bustamante v. NLRC [1996] - walang season, so they are not seasonal employee
V. Fixed-term employment
Rules governing project employees may be applied, by analogy, to fixed-term employees.
GR: an employee engaged to perform activities which are necessary or desirable to the usual
business or trade of the employer is considered a regular employee.
XPN: Fixed-term employment–

For a valid fixed-term employment, the following requisites must be present:
a. The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent; or
b. It satisfactorily appears that the employer and the employee dealt with each other on
more or less equal terms with no moral dominance exercised by the former or the latter.
XPN to XPN: However, where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee, they should be struck
down as contrary to public policy, morals, good custom or public order. (Caramol v. NLRC
[1993])
Cases:
1. Rowell Industrial Corp. v. CA [2007] - As a power press operator, a rank and file employee,
he can hardly be on equal terms with petitioner RIC. (SC said the employee is not in equal
footing with the employer when they signed the contract. Moreover, employment contract
did not mention that he was hired only for a specific undertaking).
2. Pure Foods Corp. v. NLRC [1997] - Cannery workers are never on equal terms with their
employers. Almost always, they agree to any terms of an employment contract just to get
employed considering that it is difficult to find work given their ordinary qualifications.
Their freedom to contract is empty and hollow because theirs is the freedom to starve if
they refuse to work as casual or contractual workers. Indeed, to the unemployed, security of
tenure has no value.
3. Fuji Television Network, Inc. v. Espiritu [2014] - Where an employee’s contract “had been
continuously extended or renewed to the same position, with the same duties and remained
in the employ without any interruption,” then such employee is a regular employee. The
continuous renewal is a scheme to prevent regularization.
Other discussion; cases:

1. Philips Semiconductors (Phils.), Inc. v Fadriquela [2004] - The limited period specified in
petitioner’s employment contract having been imposed precisely to circumvent the
constitutional guarantee on security of tenure should, therefore, be struck down or
disregarded as contrary to public policy or morals. To uphold the contractual arrangement
would, in effect, permit the former to avoid hiring permanent or regular employees by simply
hiring them on a temporary or casual basis, thereby violating the employee’s security of
tenure in their jobs.
In this case, the employees were subjected to periodic performance appraisal based on
output, quality, attendance and work attitude. One was required to obtain a performance rating
of at least 3.0 for 17 months of service to be considered a regular employee.
2. D.M. Consunji Construction Corp. v. Bello [2013] - For the resignation of an employee to be
a viable defense in an action for illegal dismissal, an employer must prove that the
resignation was voluntary, and its evidence thereon must be clear, positive and convincing.
The employer has the burden to prove the due execution and genuineness of the document as
a letter of resignation. The employer cannot rely on the weakness of the employee's
evidence.
3. Equipment Technical Services v. Court of Appeals [2008] - The service of project employees
are coterminus with the project and may be terminated upon the end or completion of that
project or project phase for which they were hired. Regular employees, in contrast, enjoy
security of tenure and are entitled to hold on to their work or position until their services are
terminated by any of the modes recognized under the Labor Code.
VI. Probationary Employment
Probation - is a process of testing and observing the character or abilities of a person who is new
to a role or job.
Probationary employment
There is probationary employment where 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. The
probationary employment is intended to afford the employer an opportunity to observe the fitness
of a probationary employee while at work, and to ascertain whether he will become an efficient
and productive employee. While the employer observes the fitness, propriety and efficiency of a
probationer to ascertain whether he is qualified for permanent employment, the probationer, on
the other hand, seeks to prove to the employer that he has the qualifications to meet the
reasonable standards for permanent employment. Thus, the word probationary, as used to
describe the period of employment, implies the purpose of the term or period, not its length.
The law mandates that in all cases of probationary employment, the employer must
inform the probationary employee of the standard which he must meet in order to be regularized.
Failure of which, he may be validly dismissed by just cause or such unsatisfactory service during
the duration of the term or at the end of it he may not be rehired. In the absence of the foregoing
standard or appraisal thereof, he is deemed a regular employee. (Tamson’s Enterprises, Inc. v. CA
[2011]).
Conditions and Standards of Probation

1. Probationary employment must have been expressly agreed upon. Without such explicit
agreement, the employment is considered regular.
2. The agreement must be genuine.
3. The standards by which the employee will qualify as a regular employee must be made
known to the him at the time he is hired.
4. The standards must be reasonable.
Security of Tenure
Probationary employee also enjoys security of tenure, however, the services of an
employee hired on probationary basis may be terminated when he or she fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement.
Computation of Time
- The computation of the 6-month probationary period is reckoned from the date of appointment
up to the same calendar date of the 6th month following (CALS Poultry Supply Corporation,
et al. vs. Roco, et al. [2002]).
- Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of
one hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the
Civil Code, which provides that the months which are not designated by their names shall be
understood as consisting of thirty (30) days each. The number of months in the probationary
period, six (6), should then be multiplied by the number of days within a month, thirty (30);
hence, the period of one hundred eighty (180) days. (Mitsubishi Motors Philippines
Corporation v. Chrysler Philippines Labor Union [2004]).
Extension of Probation Period

GR: Probationary employment shall not exceed six (6) months from the date the employee
started working, xxx . An employee who is allowed to work after a probationary period shall be
considered a regular employee.
When an employer renews a contract of employment after the lapse of the six -
month probationary period, the employee thereby becomes a regular employee. No
employer is allowed to determine indefinitely the fitness of its employees. (Malicdem
v. Marulas Industrial Corporation [2014]).
XPN: where an employee is given a second chance to prove himself (Mariwasa Manufacturing,
Inc. v. Leogardo, Jr. [1989])
An act of liberality on the part of his employer affording him a second chance to
make good after having initially failed to prove his worth as an employee. Such an
act cannot now unjustly be turned against said employer's account to compel it to
keep on its payroll one who could not perform according to its work standards. The
law was never meant to produce such an inequitable result.
By voluntarily agreeing to an extension of the probationary period, Dequila in

effect waived any benefit attaching to the completion of said period if he still failed
to make the grade during the period of extension. Nothing in the law prohibits such a
waiver. No public policy protecting the employee and the security of his tenure is
served by prescribing voluntary agreements which, by reasonably extending the
period of probation, actually improve and further a probationary employee's
prospects of demonstrating his fitness for regular employment.
Extension - it is required that the employee failed to meet the standard, extension of probationary
period is not allowed if the employee passed.
Teacher (Universidad De Sta. Isabel v. Sambajon [2014])

Probationary period in academe - for those engaged in teaching jobs, is three years.
The probationary employment of teachers in private schools is not governed purely by

the Labor Code. The Labor Code is supplemented with respect to the period of probation by
special rules found in the Manual of Regulations for Private Schools.
On the matter of probationary period, Section 92 of the 1992 Manual of Regulations for
Private Schools regulations states:
Section 92. Probationary Period.— x xx the probationary period for academic

personnel shall not be more than x xx six (6)consecutive regular semesters of
satisfactory service for those in the tertiary level x xx.
Thus, it is the Manual of Regulations for Private Schools, and not the Labor Code, that
determines whether or not a faculty member in an educational institution has attained regular or
permanent status. Section 93 of the1992 Manual of Regulations for Private Schools provides that
full-time teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent.
The common practice is for the employer and the teacher to enter into a contract,
effective for one school year. At the end of the school year, the employer has the option not to
renew the contract, particularly considering the teacher’s performance. If the contract is not
renewed, the employment relationship terminates. If the contract is renewed, usually for another
school year, the probationary employment continues. Again, at the end of that period, the parties
may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for
another school year would then be the last year – since it would be the third school year – of
probationary employment. At the end of this third year, the employer may now decide whether to
extend a permanent appointment to the employee, primarily on the basis of the employee having
met the reasonable standards of competence and efficiency set by the employer. For the entire
duration of this three-year period, the teacher remains under probation. Upon the expiration of
his contract of employment, being simply on probation, he cannot automatically claim security
of tenure and compel the employer to renew his employment contract. It is when the yearly
contract is renewed for the third time that Section 93 of the Manual becomes operative, and the
teacher then is entitled to regular or permanent employment status.
Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-
time teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent.
Longer period; nature of work - Company is engaged in advertisement and publication

Generally, the probationary period of employment is limited to six (6) months. The
exception to this general rule is when the parties to an employment contract may agree
otherwise, such as when the same is established by company policy or when the same is required
by the nature of work to be performed by the employee.
In the latter case, there is recognition of the exercise of managerial prerogatives in

requiring a longer period of probationary employment, such as in the present case where the
probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981
inclusive, especially where the employee must learn a particular kind of work such as selling, or
when the experience or training job.
Policy Instruction No. 11 clarifies that while the general probationary period set by law is
six (6) months, if the company policy sets it so otherwise, with the concurrence of the
employee who is engaged, the probationary period is binding along with the standards set
by the employer to the worker.
The purpose of this policy is to protect the worker at the same time enable the employer to
make a meaningful employee selection.
In the case at bar, it is shown that private respondent Company needs at least eighteen
(18) months to determine the character and selling capabilities of the petitioners as sales
representatives. The Company is engaged in advertisement and publication in the Yellow Pages
of the PLDT Telephone Directories. Publication of solicited ads are only made a year after the
sale has been made and only then will the company be able to evaluate the efficiency, conduct,
and selling ability of its sales representatives, the evaluation being based on the published ads.
Moreover, an eighteen-month probationary period is recognized by the Labor Union in the
private respondent company, which is Article V of the Collective Bargaining Agreement.
Therefore, the probationary employment of petitioners set to eighteen (18) months is

legal and valid. (Buiser v. Leogardo [1984]).
Longer probationary period is available in 2 situations:

a) when it is established by a company policy; or
b) When it is required by the nature of the work.
Conflict between a probationary employment and fixed-term employment

If there is an overlap between a probationary employment and fixed-term employment,
the former shall prevail. (University of Sta. Isabel v. Sambajon [2014]).
Dismissal of Probationary employee

The power of the employer to terminate an employee on probation is not without
limitations.
First, this power must be exercised in accordance with the specific requirements of the contract.
Second, the dissatisfaction on the part of the employer must be real and in good faith, not feigned
so as to circumvent the contract or the law; and third, there must be no unlawful discrimination
in the dismissal. (Dusit Hotel Nikko v. Gatbonton [2006]).
Grounds for dismissal; probationary employee:

The services of an employee who has been engaged on probationary basis may be
terminated for any of the following:
a) A just cause
b) An authorized cause; and
c) When he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer
Where Utterances is tantamount to dismissal:

It is undisputed that Mr. Sasaki made an utterance to the effect that private
respondents should go home and never come back to work for the company again.
Such utterance is tantamount to a dismissal. Considering further that Mr. Sasaki was
in charge of the training of the private respondents, his words carry authority and
conviction. Even assuming for the sake of argument that Mr. Sasaki was never vested
with the power of dismissal, the petitioner company ratified Mr. Sasaki's acts. When
petitioner company sent a strongly worded memorandum to private respondents
asking them to explain why their services should not be terminated for failure to live
up to the company's expectations, it showed intention to terminate. (Cebu Marine
Beach Resort v. NLRC [2003])
Standards
Basic knowledge and common sense dictate that the adequate performance of one's duties
is an inherent and implied standard for a probationary employee. Such standards need not be
literally spelled out into technical indicators. (Abbot Laboratories, Philippines v. Alcaraz
[2013]).
Dissenting Opinion; Justice Brion - He essentially maintained that there was not
only non-observance of procedural due process, there was also Abbott's failure to
establish the existence of valid cause to dismiss. How can Abbott cite "unsatisfactory
performance" when it did not do its own performance assessment procedure
requiring two performance appraisals? He argued that Agabon doctrine should not be
applied because Agabon presupposes that the valid cause of the dismissal has been
shown. Here, it was not, he insisted.
If the probationary employee had been fully apprised by his employer of these duties and
responsibilities, then basic knowledge and common sense dictate that he must adequately
perform the same, else he fails to pass the probationary trial and may therefore be subject to
termination. (Abbot Laboratories, Philippines v. Alcaraz [2014]).
The rule on notifying a probationary employee of the standards of regularization should

not be used to exculpate an employee who acts in a manner contrary to basic knowledge and
common sense in regard to which there is no need to spell out a policy or standard to be met. In
the same light, an employee’s failure to perform the duties and responsibilities which have been
clearly made known to him constitutes a justifiable basis for a probationary employee’s non-
regularization. (Aberdeen Court, Inc. v. Agustin)

1. Cebu Marine Beach Resort v. NLRC [2003] - For abandonment to be accepted however, it
must be shown clearly that the workers deliberately and unjustifiably want to sever
employer-employee relations.
2. Agabon v. NLRC - where the dismissal is for a just cause, the lack of statutory due process
should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer
should indemnify the employee for the violation of his statutory rights. Thus, in Agabon, the
employer was ordered to pay the employee nominal damages in the amount of P30,000.00.
3. Carvajal v. Luzon Development Bank [2012] - Punctuality is a reasonable standard imposed

on every employee, whether in government or private sector. As a matter of fact, habitual
tardiness is a serious offense that may very well constitute gross or habitual neglect of duty, a
just cause to dismiss a regular employee.
Assuming that petitioner was not apprised of the standards concomitant to her job, it is
but common sense that she must abide by the work hours imposed by the bank. As we have
aptly stated in Aberdeen Court, Inc. v. Agustin, Jr., the rule on reasonable standards made
known to the employee prior to engagement 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.
4. PDI v. Magtibay, Jr. [2007]??? - Notice is not required in terminating probationary

employees based on the ground of failing to meet the reasonable standards made know to the
employee at the time he was engaged.
Unlike under the first ground for the valid termination of probationary employment
which is for just cause, the second ground (when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the
time of his engagement) does not require notice and hearing.
Due process of law for this second ground consists of making the reasonable standards
expected of the employee during his probationary period known to him at the time of his
probationary employment. By the very nature of a probationary employment, the employee
knows from the very start that he will be under close observation and his performance of his
assigned duties and functions would be under continuous scrutiny by his superiors. It is in
apprising him of the standards against which his performance shall be continuously assessed
where due process regarding the second ground lies, and not in notice and hearing as in the
case of the first ground.
5. Tamson’s Enterprises, Inc. v. CA [2011]??? - Even on the assumption that Sy indeed failed to
meet the standards set by them and made known to the former at the time of her engagement,
still, the termination was flawed for failure to give the required notice to Sy. Section 2, Rule
I, Book VI of the Implementing Rules provides:
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.
6. Lucero v. CA [2003] -
7. Robinsons Galleria v. Ranchez [2011]

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 Prosecutor's Office. They are mandated to conduct their own separate
investigation, and to accord the employee every opportunity to defend himself.
In this case, 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 Prosecutor's Office, left respondent with no
choice but to cry foul. Administrative investigation was not conducted by petitioner
Supermarket. (There must be an administrative investigation conducted by the employer).
Article 297 - JUST CAUSES

DO 147-15
I. Serious Misconduct
Misconduct is defined as an improper or wrong conduct. It is a 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.
For misconduct or improper behavior to be a just cause for dismissal, the following
elements must concur:
(a) the misconduct must be serious;
(b) it must relate to the performance of the employee’s duties showing that the employee
has become unfit to continue working for the employer; and
(c) it must have been performed with wrongful intent.
An employee may also be validly dismissed for violation of a reasonable company rule or
regulation adopted for the conduct of the company's business. (Universal Canning, Inc. v.
CA [2016]).
It is necessary that the employee is informed of the company policy.
Sexual Intercourse
When the employees engage in sexual intercourse within the company premises and
during work hours, they did not only disregard company rules but flaunted their disregard in a
manner that could reflect adversely on the status of ethics and morality in the company. These
circumstances, by themselves, are already punishable misconduct. (Imasen Philippine
Manufacturing Corporation v. Alcon [2014]).
Fight
Fight must be of a serious character to constitute gross misconduct. Fight was held to be
more than just an exchange of words that usually succeeded the provacation by either party.
(Pilares, Sr. v. People [2007]).
In the case of Northwest Airlines, Inc. v. Del Rosario [2014], The gravity of the fight,
which was not more than a verbal argument between them, was not enough to tarnish or diminish
Northwest's public image.
If the same was made in front of passengers, their dismissal may be justified as
it may tarnish or diminish Northwest's public image.
Other related cases:

1. Lagrosas v. Bristol-Myers Squibb [2008]
However serious, such misconduct must, nevertheless, be in connection with the
employees work to constitute just cause for his separation.
First, the incident occurred outside of company premises and after office hours since the
district meeting of territory managers which Lim attended at McDonalds had long been
finished. McDonalds may be considered an extension of BristolMyers office and any business
conducted therein as within office hours, but the moment the district meeting was concluded,
that ceased too. When Lim dined with her friends, it was no longer part of the district meeting
and considered official time. Thus, when Lagrosas assaulted Lim and Menquito upon their
return, it was no longer within company premises and during office hours.
Second, BristolMyers itself admitted that Lagrosas intended to hit Menquito only. In the
Memorandum dated March 23, 2000, it was stated that You got out from your car holding an
umbrella steering wheel lock and proceeded to hit Mr. Menquito. Dulce tried to intervene, but
you accidentally hit her on the head, knocking her unconscious. Indeed, the misconduct was
not directed against a coemployee who unfortunately got hit in the process.
Third, Lagrosas was not performing official work at the time of the incident. He was not
even a participant in the district meeting.
Hence, the court fail to see how his action could have reflected his unfitness to continue
working for BristolMyers. (employee in this case is not guilty of serious misconduct)
2. Royo v. NLRC [1996]

Mario Alvarez, while working, was grabbed by Segundino Royo and boxed him in the
face together with the other petitioners for the reason that he was accusing petitioner
Segundino of theft.
The mauling incident was not just a private matter which had no effect on the interests of
the company. The fact is that petitioners mauled Alvarez because the latter had reported them
to the management for alleged anomalies committed against the company.
SC: held that Royos are guilty of serious misconduct.
Q: what if the mauling was done outside the company premises?

A: still work related and may constitute serious misconduct.
Q: what if the reason is personal and outside the work premises?

A: not serious misconduct, so beat him up outside.
Q: what if the mauling was for a personal reason not connected with the work of the
employee, but was made within the premises of the employer
A: serious misconduct, because it will cause disruption of the peace and order of the
company.
3. Supreme Steel Pipe Corp. v. Bardaje [2007]

Security guard called Bardaje in a loud voice, and arrogantly ordered him to remove and
turover to him (Barrios) the longsleeved shirt. Insulted and feeling singledout from the other
warehousemen who were also wearing longsleeved shirts over their uniforms, respondent
replied: Ano ba ang gusto mo, hubarin ko o magsuntukan na lang tayo sa labas?
SC: held that Bardaje is not guilty of serious misconduct. Although fighting within company
premises may constitute serious misconduct, not every fight within company premises in
which an employee is involved would automatically warrant dismissal from service. It is cruel
and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the
misdeed.
4. Solvic Industrial Corp. v. NLRC [1998]

Respondent struck another employee with the blunt side of a bolo.
SC held that Respondent is not guilty of serious misconduct since he could have attacked
the said employee with the blade of the weapon, and he could have struck him several times.
But he did not, thus negating any intent on his part to inflict fatal injuries. The victim merely
sustained a minor abrasion and has since forgiven and reconciled with the private respondent.
If the party most aggrieved has already forgiven the private respondent, then petitioner cannot
be more harsh and condemning than the victim.
5. Gatus v. Quality House, Inc.[2009]

Petitioner told her husband that she was being harassed by the three co-employees, especially
Nilo Echavez, because she did not join the Philippine Association of Free Labor Unions
(PAFLU). As a result, her husband mauled another Echavez.
SC: Petitioner Gatus is guilty of Serious Misconduct because of instigating her husband to
inflict more violence. It is undisputed that private respondents act of instigating her husband to
inflict more violence (Sige pa! Sige pa!) on her supervisor enraged and emboldened him.
The incident was workrelated having been brought about by respondents constant
complaints about perceived discrimination against her in the workplace. The fact that her
husband, who was not an employee of the corporation, came to the waiting shed at the precise
time that the unsuspecting supervisor Echavez was in the waiting shed supported Arbiter
Caňizares finding that the husband purposely went to the companys premises to confront the
supervisor and thereafter to maul the latter.
Q: what if the husband is just jealous of the victim?

A: it will not be work-related
Q: What if petitioner did not utter Sige pa Sige pa?

A: she will not be guilty of serious misconduct, unless it can be established that the petitioner
really intended to provoke her husband.
Gambling
The use of the company's time and premises for gambling activities is a grave offense
which warrants the penalty of dismissal for it amounts to theft of the company's time and it is
explicitly prohibited by the company rules on the ground that it is against public morals.
(Universal Canning, Inc. v. CA [2016]).
Offensive Remarks/Utterances
1. Samson v. NLRC [2000]
Samson he directed his verbal abuse against General Manager and President Epitacio
D. Titong, Jr. by uttering "Si EDT, bullshit yan", "sabihin mo kay EDT yan"; and
"sabihin mo kay EDT, bullshit yan" while gesturing and making the "dirty finger" sign.
SC held : such utterances do not constitute serious misconduct.
First, petitioner made the alleged offensive utterances and obscene gesture during an informal
Christmas gathering of respondent company's district sales managers and marketing staff.
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.
Second, petitioners 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.
Third, respondent company itself did not seem to consider the offense of petitioner serious and
grave enough to warrant an immediate investigation on the matter. 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
2. Punzal v. ETSI Technologies, Inc. [2007]

Email : "Sorry for the mail that I sent you, unfortunately the SVP of ETSI Technologies,
Inc. did not agree to our idea to bring our children in the office for the TRICK or
TREATING. He was so unfairpara bang palagi siyang iniisahan sa trabahobakit most of the
parents na magjoined ang anak ay nakaVL naman. Anyway, solohin na lang niya bukas ang
office. "
SC : held that these utterances constitute serious misconduct.
Samson v. NLRC - where the Court held that the Punzal v. ETSI Technologies, Inc.
dismissal of the therein petitioner was too harsh
as penalty.
the Court found that the misconduct committed The assailed conduct was related to her work.
was not related with the employee’s work.
Samson was held to be merely expressing his It reflects an unwillingness to comply with
dissatisfaction over a management decision reasonable management directives. petitioner’s
oﬀensive remarks were directed against Geisert
the Court found that the "lack of urgency on the the management acted 14 days after petitioner
part of the respondent company in taking any circulated the quoted e-mail message.
disciplinary action against [the employee] negates
its charge that the latter’s misbehavior constituted
serious misconduct.
There was no intention to reach the directives There was an intention on the part of the petitioner
that her e-mail will reach the management.
3. Solid Dev’t Corp. Workers Ass’n v. Solid Dev’t Corp [2007]

Employee was caught loafing around - "Bakit mo ako sinisita porke mahirap lang kaming mga
trabahador ninyo eh. Kayo talagang mga intsek."
Villena's(employee) act of insulting Gaw, the companys owner and president, may be
considered, from a layman's perspective, as a serious misconduct. Moreover, it was done in
relation to the performance of his duties as would show him to be unfit to continue working
for the company
SC: held that Villena is guilty of serious misconduct.
4. Pasamba v. NLRC [2007]

Pasamba made the following remarks against Dr. Lopez, Assistant Chairman of the
Department of Pediatrics:
"Bakit si Dra. Lopez pa ang napili mong pedia eh ang tandatanda na nun? x x x Alam
mo ba, kahit wala namang diperensya yung baby, ipinapaisolate nya? Minsan nga,
meron bagong baby siyang pasyente na ipinasok dito, sabi ko, bah, himala! Walang
ikinabit sa kanya. Tapos, kinabukasan . . . kinabitan din pala!"
In the present case, petitioner was not dismissed for serious misconduct, which is among
the grounds for dismissing regular employees enumerated under Article 282 of the Labor
Code. Petitioner was a probationary employee, not a regular employee. A probationary

employee is one, who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for a permanent position. A probationary appointment
affords the pemployer an opportunity to observe the skill, competence, as well as the attitude
of a probationer.
SLMC is engaged in a business whose survival is dependent on the reputation of its

medical practitioners. To impute unethical behavior and lack of professionalism to a medical
professional, to one who is also a hospital official, would be inimical to the interests of SLMC
Immorality
Immorality is not a ground for dismissal under the labor code. Company policy must
expressly provide that the commission of an immoral act would constitute a ground for
dismissal.
Cases:
1. Santos v. NLRC; GR 115795, March 6, 1998
Extramarital affair is an immoral act under the law because the society respects the
sanctity of marriage and the Constitution and other law protects the institution of marriage.
Immorality in not a ground under the Labor Code, there must be a policy that immorality
will be a ground for dismissal.
2. Leus v. St. Scholastica’s College Westgrove; GR 187226, January 28, 2015

The morality referred to in the law is public and necessarily secular, not religious.
Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it pertains
to public and secular morality; it refers to those conducts which are proscribed because they
are detrimental to conditions upon which depend the existence and progress of human society.
Definition of immorality cannot be based on religious grounds, otherwise you would be

imposing the religious beliefs of one person or society on another person and that would
violative of the Religious freedom under the Constitution. So it's public and secular morality
is the standard, not religious morality.
In this case, there was no immorality because Leus and her BF have no legal impediment
to marry each other.
3. Chua-Qua v. Clave; GR L-49549, August 30, 1990

Teacher and Student fell in love with each other.
If society punishes something, the society considers the act being punished as immoral.
There is still no crime committed during this time. Age of majority(lower age of
majority) is different in our law. Hence, no Seduction was committed.
The case would be different if it would happen today.
SC said: “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.”
Previous Infractions - RULE

Previous infractions may be used as justification for an employee's dismissal from work
in connection with a subsequent similar offense. (Stellar Industrial Services, Inc. v. NLRC
[1996]).
Length of service
Length of service was used against the employee
1. the longer an employee stays in the service of the company, the greater is his
responsibility for knowledge and compliance with the norms of conduct and the code of
discipline in the company. (Punzal v. ETSI Technologies, Inc. [2007] - Trick or Treat
Case)
Years of service was used in favor of the employee

1. Herein respondent deserves compassion and humane understanding more than
condemnation, especially considering that he had been in petitioner's employ for
nineteen (19) years already, and this is the first time that he had been involved in taking
company property, which item, at the end of the day, is practically of no value. (Holcim
Philippines, Inc. v. Obra [2016] - Scrapped metal case)
2.Caltex Refinery Employees Association (CREA) v. NLRC [1995] - Clarete may be

guilty of violation of company rules, as the version of respondents was correct, the
Court finds the penalty of dismissal imposed upon him by respondent Caltex too harsh
and unreasonable.
As stated in Radio Communications of the Philippines, Inc. v. NLRC, The penalty

of dismissal must be commensurate with the act, conduct or omission imputed to the
employee and imposed in connection with the employer's disciplinary authority. Clarete
has no previous record in his eight years of service and the value of the lighter fluid,
placed at P8.00, is very minimal compared to his salary of P325.00 a day. Also,
respondent Caltex did not lose anything as the bottle of lighter fluid was retrieved on
time. There was no showing that Clarete's retention in the service would work undue
prejudice to the viability of employer's operations or is patently inimical to its interest.
Thus, the preventive suspension imposed upon private respondent is a sufficient penalty
for the misdemeanour committed by petitioner.

1. Naranjo v. Biomedica Health Care, Inc. [2012] - In the absence of procedure by which leaves
may be enjoyed by employees, leaves of absence taken by them are not illegal.
Reasonable Opportunity - 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.
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.
Acts constituting illegal strike must be specified by the employer
It is incumbent upon the Employer to show that petitioners were duly informed of said
company policies at the time of their employment and were given copies of these policies.
The burden of proving that the termination was for a valid or authorized cause shall rest
on the employer.
mass leave” may refer to a simultaneous availment of authorized leave benefits by a large
number of employees in a company.
2. Holcim Philippines, Inc. v. Obra [2016] (Taking of Company property)

Ill will or wrongful intent cannot be ascribed to respondent, considering that, while he
asked Castillo not to report the incident to the management, he also volunteered the
information that he had a piece of scrap wire in his bag and offered to return it if the same
could not possibly be brought outside the company premises sans a gate pass.
Holcim Philippines, Inc. v. Obra Reno Foods, Inc. v. Nagkakaisang Lakas ng

Manggagawa (NLM) - KATIPUNAN
Main issue - illegal dismissal the main issue was the payment of separation
pay and/or financial assistance and not the
validity of the employee's dismissal.
respondent tried to take a piece of scrap wire tried to steal items manufactured and sold by
the company.
respondent volunteered the information that he Employee's wrongful intent is also evident as
had a piece of scrap wire in his bag. she tried to hide the canned goods by wrapping
them in nylon leggings.
Dismissal was held to be invalid

3. St. Luke’s Medical Center, Inc. v. Sanchez [ 2015]
Sanchez knowingly violated the explicit company policy.
"xxx
Humihingi po ako ng tawad sa aking ginawa. Isinakripisyo ko ang hindi pagiging “toxic”
sa pagkuha ng gamit para sa bagay na alam kong mali. Inaamin ko na ako’y naging
madamot, pasuway at makasalanan. Inuna ko ang comfort ko keysa gumawa ng tama.
Manikluhod po akong humihingi ng tawad."
The mere fact that the "hoarding " practice in violation of a company policy as
practiced by other employees is not a defense.
4. Hocheng Philippines Corp. v. Farrales [2015] - the Court agrees that Farrales committed no
serious or willful misconduct or disobedience to warrant his dismissal. It is not disputed that
Farrales lost no time in returning the helmet to Reymar the moment he was apprised of his
mistake by Eric, which proves, according to the CA, that he was not possessed of a depravity
of conduct as would justify HPC’s claimed loss of trust in him. Farrales immediately
admitted his error to the company guard and sought help to find the owner of the yellow
helmet, and this, the appellate court said, only shows that Farrales did indeed mistakenly
think that the helmet he took belonged to Eric.
5. Yabut v. Manila Electric Co. [2012]

Tampering 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.
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 petitioner's 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. As a
supervisor with duty and power that included testing of service meters and investigation of
violations of contract of customers, his position can be treated as one of trust and confidence,
requiring a high degree of honesty as compared with ordinary rank-and-file employees. The
acts complained of were clearly work-related because they related to matters the petitioner
handled as branch field representative.
6. Sang-an v. Equator Knights Detective and Security Agency [2013] - By losing two firearms
and issuing an unlicensed firearm, Jonathan committed serious misconduct. He did not
merely violate a company policy; he violated the law itself (Presidential Decree No. 1866 or
Codifying the Laws on Illegal/Unlawful Possession, Manufacture, Dealing in, Acquisition or
Disposition, of Firearms, Ammunition or Explosives or Instruments Used in the Manufacture
of Firearms, Ammunition or Explosives, and Imposing Stiffer Penalties for Certain
Violations Thereof and for Relevant Purposes), and placed Equator and its employees at risk
of being made legally liable. Thus, Equator had a valid reason that warranted Jonathan’s
dismissal from employment as Assistant Operation Manager.
7. Fujitsu Computer Products v. CA; GR 158232, March 31, 2005 - The term trust and
confidence is restricted to managerial employees.
to be valid ground for dismissal, loss of trust and confidence must be based on a willful
breach of trust and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly, or inadvertently. It must rest on substantial
grounds and not on the employers arbitrariness, whims, caprices or suspicion; 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 workrelated and shows that the employee concerned is unfit to
continue working for the employer.
No fraud or bad faith could be attributed to respondent De Guzman, as evinced by his

readiness to disclose his participation in the transaction between Saros and Sta. Rosa.
Whether respondent De Guzman was the buyer of the steel purlins or merely facilitated
the sale thereof to Sta. Rosa is of no moment. The fact is that as per the Garbage Collection
Agreement dated January 15, 1999, the scrap metals in the premises of petitioner FCPP were
regularly bought by Saros. Hence, after such scrap materials are weighed, loaded onto a truck
and carried out of the company premises, the petitioner FCPP can no longer be considered the
owner thereof, and ceases to exercise control over such property. Loss of trust and confidence
as a just cause for termination of employment is premised on the fact that the employee
concerned is invested with delicate matters, such as the handling or care and protection of the
property and assets of the employer.
a condemnation of dishonesty and disloyalty cannot arise from suspicions spawned by

speculative inferences.
8. Kephilco Malaya Employees Union v. Kepco Philippines Corp. [2007] (Union president
Case)
Serious misconduct requires a wrongful intent.
The magnitude of the infraction must thus be weighed and equated with the penalty
prescribed and must be commensurate thereto. Where a penalty less punitive would suffice,
whatever missteps may have been committed by the employee ought not to be visited with a
consequence so severe such as dismissal from employment.
9. Bodoc v. NLRC [1997] - A dismissal without the benefit of a hearing prior to his termination
violates an employee's constitutional right to due process which requires that the person
sought to be dismissed must be given a chance to answer the charges against him before he is
dismissed.
Any employer who seeks to dismiss a worker shall furnish him 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.
10. Nagkakaisang Lakas ng Manggagawa sa Keihin v. Keihin Phils Corp.; GR 171115, August 9,
2010
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, 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 company's 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 company's 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.
Company policy in this case is reasonable. Company is just addressing the problem.
Tenure was taken into account by the Court

The petitioners 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. Petitioners cite
the case of Caltex Refinery Employees Association v. NLRC where Arnelio M. Clarete
(Clarete) 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 x x x is very minimal compared to his salary x x x.
After a closer study of both cases, the Court was 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.
11. Villamor Golf Club v. Pehid [2005]

Estafa case - not work related.
12. Phil. Aeolus Automotive United Corporation v. NLRC [2000] - Stapler Case - Compare with
case of Solid Dev’t Corp. Workers Ass’n v. Solid Dev’t Corp.
Throwing a stapler to her supervisor is not a serious misconduct because the acts
complained of, under the circumstances they were done, did not in any way pertain to her
duties as a nurse. Her employment identification card discloses the nature of her employment
as a nurse and no other. Moreover, the SC found that the employee was being harassed by her
supervisor.
13. Roquero v. PAL [2003]

Roquero was dismissed for using illegal drugs. He violated Chapter 2, Article VII, section
4 of the PAL Code of Discipline which states:
"Any employee who, while on company premises or on duty, takes or is under the
influence of prohibited or controlled drugs, or hallucinogenic substances or narcotics
shall be dismissed."
It is of public knowledge that drugs can damage the mental faculties of the user. Roquero
was tasked with the repair and maintenance of PAL's airplanes. He cannot discharge that duty
if he is a drug user. His failure to do his job can mean great loss of lives and properties. Hence,
even if he was instigated to take drugs he has no right to be reinstated to his position. He took
the drugs fully knowing that he was on duty and more so that it is prohibited by company
rules. Instigation is only a defense against criminal liability. It cannot be used as a shield
against dismissal from employment especially when the position involves the safety of human
lives.
14. Mirant v. Caro [2014] -

Q:May a refusal to undergo drug test be a ground for termination?
A: Yes, Willful disobedience / Insubordination
Q: what if there is an acceptable excuse?

A: No.
Managerial prerogatives are subject to limitations provided by law, collective bargaining

agreements, and the general principles of fair play and justice. In the exercise of its
management prerogative, an employer must therefore ensure that the policies, rules and
regulations on work-related activities of the employees must always be fair and reasonable
and the corresponding penalties, when prescribed, commensurate to the offense involved and
to the degree of the infraction. The Anti-Drugs Policy of Mirant fell short of being fair and
reasonable.
According to SC the term "unjustified refusal to submit to random drug test" as used in the
company policy is too vague. In order for the dismissal on account of willful disobedience to
be valid, the order that was disobeyed must be reasonable. According to SC, this order is
unreasonable since it is vague. Hence, the dismissal is invalid.
15. Nacague v. Sulpicio Lines [2010]

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.
In order that the result of drug test may be used against an employee, the same must be
done by an accredited drug testing center.
16. Alilem Cooperative, Inc. v. Bandiola; GR 173489, February 25, 2013

While respondent’s act of engaging in extra-marital affairs may be considered personal to
him and does not directly affect the performance of his assigned task as bookkeeper, aside
from the fact that the act was specifically provided for by petitioner’s Personnel Policy as one
of the grounds for termination of employment, said act raised concerns to petitioner as the
Board received numerous complaints and petitions from the cooperative members themselves
asking for the removal of respondent because of his immoral conduct. (In this case there is a
policy which punished immorality or "an act that brings discredit to the cooperative
organization like immorality specially but not limited to conviction of any crime, illicit marital
affairs, scandalous acts inimical to established and accepted social mores." - The ground is
immorality but it is really a violation of a reasonable company policy).
Q: kung walang policy?

A: hindi pwede i-dismiss dahil walang work connection, otherwise marami nang nasisanteng
empleyado.
17. Villarama v. Golden Donuts, Inc.[1994 ]?
RA 7877 - Anti-Sexual Harassment Act

Section 3. Work, Education or Training -Related, Sexual Harassment Defined. - Work, education
or training-related sexual harassment is committed by an employer, employee, manager,
supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral ascendancy over another in a work or training
or education environment, demands, requests or otherwise requires any sexual favor from the
other, regardless of whether the demand, request or requirement for submission is accepted by
the object of said Act.
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment
or continued employment of said individual, or in granting said individual favorable
compensation, terms of conditions, promotions, or privileges; or the refusal to grant the sexual
favor results in limiting, segregating or classifying the employee which in any way would
discriminate, deprive or diminish employment opportunities or otherwise adversely affect said
employee;
(2) The above acts would impair the employee's rights or privileges under existing labor laws;
or
(3) The above acts would result in an intimidating, hostile, or offensive environment for the
employee.
(b) In an education or training environment, sexual harassment is committed:
(1) Against one who is under the care, custody or supervision of the offender;
(2) Against one whose education, training, apprenticeship or tutorship is entrusted to the
offender;
(3) When the sexual favor is made a condition to the giving of a passing grade, or the granting
of honors and scholarships, or the payment of a stipend, allowance or other benefits,
privileges, or consideration; or
(4) When the sexual advances result in an intimidating, hostile or offensive environment for
the student, trainee or apprentice.
Any person who directs or induces another to commit any act of sexual harassment as
herein defined, or who cooperates in the commission thereof by another without which it would
not have been committed, shall also be held liable under this Act.
18. PLDT v. NLRC; GR 74562, July 31, 1987

Acts of disloyalty to the company is punishable with dismissal. In effect they act as competitors
with their employers.
19. Lopez v. NLRC [2005]

In the case of Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado ng
WellcomeDFA (NEWDFA), it was held that deliberate disregard or disobedience of company
rules could not be countenanced, and any justification that the disobedient employee might put
forth would be deemed inconsequential. The lack of resulting damage was unimportant,
because the heart of the charge is the crooked and anarchic attitude of the employee towards
his employer. Damage aggravates the charge but its absence does not mitigate nor negate the
employees liability. What is abhorrent and punishable is the act of contracting unauthorized
work for a fee, regardless of whether the act caused damage to the company.
In this case, Lopez contracted with Gopez for an unauthorized work for a fee. He, in
effect engaged in a business that competed with Maynilads and thus came in conflict of
interest with the latter. He cannot serve himself and his employer at the same time all at the
expense of the latter.
As a measure of self-preservation against acts inimical to its interests, an employer has

the right to dismiss an employee found committing acts of dishonesty and disloyalty. The
employer may not be compelled to continue to employ such a person whose continuance in
the service would patently be inimical to his employers interest.
20. CBTL v. Arenas [2015]

The facts on record reveal that there was no active dishonesty on the part of Arenas.
When questioned about who placed the bottled iced tea inside the ice bin, his immediate
reaction was not to deny his mistake, but to remove the bottle inside the bin and throw it
outside. More importantly, when he was asked to make a written explanation of his action, he
admitted that the bottled iced tea was his. Thus, even if there was an initial reticence on
Arenas’ part, his subsequent act of owing to his mistake only shows the absence of a
deliberate intent to lie or deceive his CBTL superiors. On this score, we conclude that Arenas’
action did not amount to serious misconduct.
II. Insubordination
Insubordination refers to the refusal to obey some order, which a superior is entitled to give and
have obeyed. It is willful or intentional disregard of the lawful and reasonable instructions of the
employer.
For insubordination or willful disobedience to be a just cause for dismissal, the following
elements must concur:
1. There must be disobedience or insubordination;
2. The disobedience or insubordination must be willful or intentional characterized by a
wrongful and perverse attitude;
3. The order violated must be reasonable, lawful, and made known to the employee; and
4. The order must pertain to the duties which he has been engaged to discharge.
Prolonged Practice
GR: Long-standing practice is not an excuse for violation of a company policy/non-compliance
with company policy. (Santos v. San Miguel Corp. [2003])
XPN: But if the company itself, not just the employees, is implementing the practice as a
business measure, then the employee may be excused from non-compliance of the
company policy. (Ramos v. BPI Family Savings Bank, Inc [2013]).
Violation of Company Policy (with superior's approval) : Mirant (Philippines) Corp. v.

Sario [2012] vs. Llosa-Tan v. Silahis International Hotel [1990]
GR: Mirant case - the fact that his recommendations were approved by his superior does not
erase his liability. (So if it's wrong, it's wrong!) Superior who approved is also liable for
violation of company policy.
XPN:Llosa-Tan case - violation of company policy with the superior's approval is an excuse
because in this case, petitioner initially refused to the directive of the superior for it is
contrary to company policy.
Why is Llosa-Tan an exception?
1. She initially refused and she was told that it had the approval of the executive vice
president of Silahis.
2. SC noted the finding of the LA and said that Llosa-Tan was not motivated by bad
faith. The policy had been relaxed repeatedly to meet business exigencies (but we
know this is not an excuse)
What really tilted the scale in favor of Llosa-Tan was the fact that there was a previous
situation where she refused and she was reprimanded by the company. So there was a
prior incident where she refused and she was punished for her refusal.
Cases:
1. Ace Promotion and Marketing Corp. v. Ursabia [2006]
To be validly dismissed on the ground of willful disobedience requires the concurrence of

at least two requisites: (1) the employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful and perverse attitude; and (2)
the order violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge.
In this case, Respondent never replied to any of the Memorandums presented to him. The
Respondent had worked with petitioner for almost seven years yet he did not give the
courtesy, if not gratitude due it by complying with its directives and explaining his conduct
either verbally or in writing.
Refusal to reply/respond to a notice to explain - that would constitute willful disobedience
GR: failure to respond - will just be considered as a waiver to present evidence

XPN: But in this case, his failure/refusal to respond was used against the employee as willful
disobedience.
2. e-Pacific Global Contact Center, Inc. v. Cabansay [2007]

Cabansay was ordered by his boss to postpone the presentation. He replied to his boss through
an email which states:
"This is a very simple presentation and I WILL NOT POSTPONE it today, its very easy
to comprehend and as per YOUR INSTRUCTION we will be implementing it next
week, so when should we present this to the TLs? Lets not make SIMPLE THINGS
COMPLICATED. I will go on with the presentation this afternoon."
As to the willfulness of her conduct, the same is manifest in her e-mail reply, which, as it
is written, is characterized by abject aggressiveness and antagonism: the e-mail has a
begrudging tone and is replete with capitalized words eliciting her resolve to indeed
contravene the SVPs directive.
Indeed, by refusing to postpone the presentation and implementation of the new training
process, respondent intentionally, knowingly and purposely, without justifiable excuse,
breached the trust and confidence reposed in her by her employer. To present and discuss a
training module, which is deemed by management as still inadequate in its content, will
certainly not only waste the time, effort and energy of the participants in the discussion but
will also entail losses on the part of the company.
In this case, capitalization in a email was used against the employee because that was the
equivalent of shouting in real life. Moreover, the tenor of the email was really disrepectful.
"Let's not make simple things complicated" - as if hindi naiintindihan ng boss niya ang
instruction niya.
3. Alcantara, Jr. v. Court of Appeals [2002]

Petitioner said we will not abide by the rules because the rules are not proper. He used the
union office during the prohibited hours. Thus he was dismissed.
Q:What is the effect of an employee's questioning of the reasonableness or validity of a

company policy on their obligation to observe that policy? Should the rules be suspended
while the questioning is still being decided?
A: No. The rules will still be implemented. Even if you question it, you violate it at your own
risk because if the Court uphold the policy as reasonable the fact that they are questioning it
cannot be used by them as an excused or their non-compliance
4. FLP Enterprises, Inc. v. Dela Cruz [2014]

For any company policy to be binding, it must be published. Notice must be given to the
employees about the policy.
The employer has the burden of proving that the employee had notice of the policy.
Proof of notice may be proved by oral testimonies of witnesses
5. Santos v. San Miguel Corp. [2003] c.w. BPI case
SC held in this case that prolonged practice of encashing personal checks among respondents
payroll personnel does not excuse or justify petitioners misdeeds.
Q: Is it an excuse that everybody else is doing the violation?

A: No.
Q: is it an excuse that you are being held accountable while others are not?
A: No. their time will come.
Q: what if the violation had the approval of superiors?

A: No. Both will be held accountable for the violation.
6. R.B. Michael Press v. Galit [2008] - willful disobedience must not just be mere refusal
In Lakpue Drug Inc. v. Belga, willfulness was described as "characterized by a wrongful

and perverse mental attitude rendering the employee's act inconsistent with proper
subordination." The fact that respondent refused to provide overtime work despite his knowledge
that there is a production deadline that needs to be met, and that without him, the offset machine
operator, no further printing can be had, shows his wrongful and perverse mental attitude; thus,
there is willfulness.
Respondent's excuse that he was not feeling well that day is unbelievable and obviously
an afterthought. He failed to present any evidence other than his own assertion that he was sick.
Also, if it was true that he was then not feeling well, he would have taken the day off, or had
gone home earlier, on the contrary, he stayed and continued to work all day, and even tried to go
to work the next day, thus belying his excuse, which is, at most, a self-serving statement.
Read also : Article 89 Labor Code
III. Gross and habitual neglect
Neglect - there is neglect when there is absence of the required level of diligence depending on
the circumstances.
Gross Neglect refers to the absence of that diligence that and ordinary prudent man would use in
his/her own affairs. In the case of Citibank, N.A. v. Gatchalian, G.R. No. 111222, [January 18,
1995], Gross negligence implies a 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.
Habitual Neglect refers to repeated failure to perform one's duties over a period of time,
depending upon the circumstances.
Cases:
1. Tres Reyes v. Maxim's Tea House, G.R. No. 140853, [February 27, 2003]
The test to determine the existence of negligence is as follows: Did petitioner in doing
the alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would use in the same situation? It is not disputed that petitioner tried to turn left to
avoid a collision. To put it otherwise, petitioner did not insist on his right of way,
notwithstanding the green light in his lane. Still, the collision took place as the ten-wheeler
careened on the wrong lane. Clearly, petitioner exerted reasonable effort under the
circumstances to avoid injury not only to himself but also to his passengers and the van he was
driving. To hold that petitioner was grossly negligent under the circumstances goes against the
factual circumstances shown. It appears to us he was more a victim of a vehicular accident
rather than its cause.
The standard of diligence is that diligence under the Civil Code, diligence of a good father of a
family.
2. Citibank, N.A. v. Gatchalian, G.R. No. 111222, [January 18, 1995]

The mere fact that the incident might still have occurred even without the negligence of
the employee concerned does not erase that employee's liabilities which caused the occurrence
of the incident.
3. Nissan Motors Phils. Inc. v. Angelo, G.R. No. 164181, [September 14, 2011]
Petitioner claims that the language used by respondent 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 Letter-
Explanation partly reads:
Again, it's not negligence on my part and I'm not alone to be blamed. It's
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.
The SC used the tone of his explanation that his violation or his failure to prepare the payroll
was willful in nature.
The Court finds the above to be grossly discourteous in content and tenor. Past decisions
of the 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.
Neglect of duty, to be a ground for dismissal, must be both gross and habitual. In finding
that petitioner was able to adduce evidence that would justify its dismissal of respondent, the
NLRC correctly ruled that the latter's failure to turn over his functions to someone capable of
performing the vital tasks which he could not effectively perform or undertake because of his
heart ailment or condition constitutes gross neglect.
However, although the dismissal was legal, respondent is still entitled to a separation pay
as a measure of financial assistance, considering his length of service and his poor physical
condition which was one of the reasons he filed a leave of absence. As a general rule, an
employee who has been dismissed for any of the just causes enumerated under Article 282 of
the Labor Code is not entitled to separation pay. Although by way of exception, the grant of
separation pay or some other financial assistance may be allowed to an employee dismissed
for just causes on the basis of equity.
Requirement of being gross and habitual

GR: To warrant removal from service, should not merely be gross but also habitual. (Chavez v.
National Labor Relations Commission, G.R. No. 146530, [January 17, 2005])
XPN: if so gross, or if so habitual.

So gross, that you can excuse the requirement or forego the element of habituality; or
So habitual, that you can excuse the lack of grossness.
Cases (XPN):
1. PAL v. NLRC; GR 82471; February 18, 1991.
One time big time lang siya, Gross lang pero dinismiss. Pagpark ng eroplano.
Pinuela’s act of towing beyond normal speed, his failure to observe proper parking
procedure as provided in the Engineering and Maintenance Manual, and the unanimous
statement of the members of the towing crew that he completely disregarded their warning
shouts indicate that Pinuela is grossly negligent of his responsibilities as a tug operator.
Pinuela’s dismissal must therefore follow for a company has the right to dismiss its erring
employees if only as a measure of self-protection against acts inimical to its interest.
Philippine Airlines, as employer, cannot be legally compelled to continue with the
employment of a person admittedly guilty of gross negligence in the performance of his
duties.
Why so gross? It was just a scratch

A mere delay on petitioner's flight schedule due to aircraft damage entails problems like
hotel accommodations for its passengers, re-booking, the possibility of law suits, and payment
of special landing fees not to mention the soaring costs of replacing aircraft parts. All told,
Pinuela's gross negligence which called for dismissal is evident.
It caused delay, and the airline company will be open to lawsuits.
15. Fuentes v. National Labor Relations Commission, G.R. No. 75955, [October 28, 1988]
The loss of the amount of P50,000 was sufficient to justify the dismissal of the bank
employee. So you have to adjust that for inflation, 1988 pa tong case na to. Siguro mga
P100,000 ngayon. (Considered by the court as so gross)
16. School of the Holy Spirit of Quezon City v. Taguiam, G.R. No. 165565, [July 14, 2008]
Notably, respondent’s negligence, although gross, was not habitual. In view of the
considerable resultant damage, however, the SC agreed that the cause is sufficient to dismiss
respondent. Indeed, the sufficiency of the evidence as well as the resultant damage to the
employer should be considered in the dismissal of the employee. In this case, the damage went
as far as claiming the life of a child.
YOU KILLED THE PERSON, YOU KILLED THE CHILD, AND YOU SHOULDN'T BE
DISMISSED? Kasi gross lang, hindi habitual? First time lang naman e, there is no element of
habituality your Honor.
OBVIOUSLY GROSS, sufficient to justify termination.
Insufficiency or failure to meet quota is similar to neglect

Inefficiency or failure to meet quota, or failure to meet work standard is similar to neglect
may also justify termination of employment.
To show that dismissal resulting from inefficiency in work is valid, it must be shown that:
1) the employer has set standards of conduct and workmanship against which the employee
will be judged; 2) the standards of conduct and workmanship must have been communicated
to the employee; and 3) the communication was made at a reasonable time prior to the
employee’s performance assessment. (Sameer Overseas Placement Agency, Inc. v. Cabiles,
G.R. No. 170139, [August 5, 2014])
Tolerance of violation or non-compliance of company policy

What level of tolerance would excuse non-compliance?
A: you have to distinguish the level of tolerance.
When the tolerance is such that it is equivalent to the company itself adopting the
tolerated practice as company policy then that would excuse non-compliance
But if the tolerance is being made by individual officer or high ranking employees then
that would not constitute tolerance that would excuse non-compliance. Because that would
only mean that the officer or high ranking employee tolerating is violating the same policy.
You have to look on the officer's level of authority if he can set a company policy. If you can
equate it with tolerance by the company itself then that would excuse non-compliance,
otherwise, it's just another employee violating the same policy, therefore, not excused.
Case:
1.Philippine National Bank v. Padao, G.R. Nos. 180849 and 187143, [November 16, 2011]
This is an example of gross and habitual neglect along with a fraudulent scheme.
The CA was correct in stating that when the violation of company policy or breach of
company rules and regulations is tolerated by management, it cannot serve as a basis for
termination. (Tolerance of violation of company policy is an excuse, sabi dito e.) Such ruling,
however, does not apply here. The principle only applies when the breach or violation is one
which neither amounts to nor involves fraud or illegal activities. In such a case, one cannot
evade liability or culpability based on obedience to the corporate chain of command
Other cases:
1. Ramos v. BPI Family Savings Bank, Inc., G.R. No. 203186 (Resolution), [December 4, 2013]
2. Phil. Aeolus Automotive United Corporation v. NLRC; GR 124617, April 28, 2000
The mere delay/failure to open an ATM account for nine employees is not sufficient, by
itself, to support a conclusion that Rosalinda is guilty of gross and habitual neglect of duties.
First, petitioner did not show that opening an ATM is one of her primary duties as company
nurse. Second, petitioner failed to show that Rosalinda intentionally, knowingly, and
purposely delayed the opening of ATM accounts for petitioner's employees.
3. Jumuad v. Hi-Flyer Food, Inc. GR 187887; September 7, 2011.

After an assiduous review of the facts as contained in the records, the Court is convinced
that Jumuad cannot be dismissed on the ground of gross and habitual neglect of duty. The
Court notes the apparent neglect of Jumuad of her duty in ensuring that her subordinates were
properly monitored and that she had dutifully done all that was expected of her to ensure the
safety of the consuming public who continue to patronize the KFC branches under her
jursidiction. Had Jumuad discharged her duties to be highly visible in the restaurants under her
jurisdiction, monitor and support the day to day operations of the branches and ensure that all
the facilities and equipment at the restaurant were properly maintained and serviced, the
deplorable conditions and irregularities at the various KFC branches under her jurisdiction
would have been prevented.
Considering, however, that over a year had lapsed between the incidences at KFC-
Gaisano and KFC-Bohol, and that the nature of the anomalies uncovered were each of a
different nature, the Court finds that her acts or lack of action in the performance of her duties
is not born of habit.
Magkakalayo naman daw, tapos iba iba naman yung nature, 1 year apart, tapos dati patay na
DAGA!, ngayon ipis naman.
Absences
Q: how many days of absences would be sufficient to justify termination of employment?
A: unauthorized unjustified absence of 9 days in the case of PLDT v. Teves; GR 143511, Nov 15,
2010 is not sufficient to justify termination of employment.
There is no magic number, case to case basis, consider all the circumstances of each
case. Did he have some excuse for his absence? Was the number of days spread across a long
period of time? THE SC HAS NOT FIXED a magic number that would justify termination
automatically and that's the correct thing to do para SUSPENSE!
Habitual tardiness
Q: what if you are always late because you have obligations at home? You're taking care of your
ailing parents. Is that an excuse?
Kate: No
Sir: Malupit ka rin! But you're correct, sabi ng SC–
A: Moral obligations, performance of household chores, traffic problems, health conditions, and domestic
and financial concerns are not sufficient reasons to excuse habitual tardiness or to exempt the guilty
employee from the imposition of the penalty, although these may be considered to mitigate their liability.
(Re: Employees Incurring Habitual Tardiness in the 1st Semester of 2007; A.M. No. 2007-15-SC, January
19, 2009)
Case:
1. Philips Semiconductors v. Fadriquela; GR 141717, April 14, 2004
Given the factual milieu in this case, the respondents dismissal from employment for
incurring five (5) absences in April 1993, three (3) absences in May 1993 and four (4)
absences in June 1993, even if true, is too harsh a penalty.
13 days of absences in 3 months under the factual circumstances, not sufficient to justify
dismissal.
2. Valiao v. CA; G.R. No. 146621, July 30, 2004

The latest re-assignment was due to his tardiness and absences, as reflected in the
summary of tardiness and absences report, which showed him to have been absent or late for
work from a minimum of seven (7) to a maximum of seventy-five (75) minutes for the period
March to October 31, 1991, and to have reported late almost every day for the period
November to December 1991.
xxxThe Labor Arbiter's findings that petitioner's habitual absenteeism and tardiness
constitute gross and habitual neglect of duties that justified his termination of employment are
sufficiently supported by evidence on record. Petitioner's repeated acts of absences without
leave and his frequent tardiness reflect his indifferent attitude to and lack of motivation in his
work. More importantly, his repeated and habitual infractions, committed despite several
warnings, constitute gross misconduct unexpected from an employee of petitioner's stature.
This Court has held that habitual absenteeism without leave constitute gross negligence and is
sufficient to justify termination of an employee.
3. Mansion Printing Center v. Bitara, Jr.; G.R. No. 168120, January 25, 2012
The imputed absence and tardiness of the complainant are documented. He faltered on his
attendance 38 times of the 66 working days. His last absences on 11, 13, 14, 15 and 16 March
2000 were undertaken without even notice/permission from management. These attendance
delinquencies may be characterized as habitual and are sufficient justifications to terminate the
complainant's employment.
Abandonment
Elements:
1. the failure to report for work or absence without valid or justifiable reason; and
2. a clear intention to sever the employer-employee relationship.
The second element is more determinative factor and must be evinced by overt acts.
(Sugue v. Triumph International (Phils.), Inc., G.R. No. 164804, 164784, [January 30,
2009])
Element number 2 may easily be negated by the fact of filing a complain of illegal
dismissal, because the SC said that a person who files a case for illegal dismissal has no intention
to sever the employment relationship. It is only true when the employee claims reinstatement in
the complaint for illegal dismissal.
Yung number 1 madali lang yun, It's more difficult to determine whether there is clear intent to
sever the employment relationship.
Q: so what would be an example of an intent to sever employment relationship?
A:
1. their overt act of writing letters informing Triumph that they considered themselves
constructively dismissed was a clear manifestation of their intention to desist from their
employment. (Ibid.)
2. Their defiance and disregard of the memorandum sent by Triumph requiring them to explain
their unauthorized absences demonstrated a clear intention on their part to sever their
employer-employee relationship. (Ibid.)
3. Seeking regular employment elsewhere even prior to the termination of the employment is
indicative of the intent to sever
Q: what if you file a case for constructive dismissal and then you claim reinstatement but you
apply for a job elsewhere, what would be the effect of your filing or seeking employment
elsewhere after you've filed the complaint for illegal dismissal.
A: seeking employment elsewhere will not mean that you have abandoned your employment
with your original employer. The SC recognizes that during the pendency of illegal dismissal
case, the employee has to earn a living.
Cases:
1. Metro Transit Organization, Inc. v. National Labor Relations Commission, G.R. No. 119724
[May 31, 1999]
However, it is one thing to say that private respondent did not abandon his work. It is
quite another to say that he is likewise not guilty of absence without leave (AWOL). No
matter what marital problems private respondent had, he had no excuse for not informing his
employer of the reason for his failure to report for work. The record shows that he went on
leave for three days on February 17, 20, and 21, 1990, but after his leave had expired, he did
not report for work. Considering that just a month before, on January 9, 1990, he had been
suspended for precisely being absent without leave, private respondent should have taken care
that his absence was not considered habitual, at least by sending word to his employer that this
time he had a good excuse.
Consequently, we hold that while private respondent may not be dismissed for
abandonment of work, he should be suspended for three months for being absent without
leave. For this purpose, he should be considered suspended for the period March 29, 1990 to
June 26, 1990, inclusive.
2. Philippine Rural Reconstruction Movement v. Pulgar, G.R. No. 169227, [July 5, 2010]
Although under normal circumstances, an employee's act of filing an illegal dismissal
complaint against his employer is inconsistent with abandonment; in the present case, we
simply cannot use that one act to conclude that Pulgar did not terminate his employment with
PRRM, and in the process ignore the clear, substantial evidence presented by PRRM that
proves otherwise.
3. Intertranz Container Lines, Inc. v. Bautista, G.R. No. 187693, [July 13, 2010]
In summary, Bautista's actuations within a span of little time over a week again
confirmed Mira's statement that Bautista confided to her that she was leaving her employment
with the company because of the truck rental transaction. They also validated the company's
submission that after her confrontation with Tumibay, Bautista did not return for work because
she was busy servicing the company's competitor (Ramaga Cargo Express) and attending to
her own business (Pure Goal Cargo Express), in competition with her former employer, herein
petitioners.
The elements of abandonment are present in Bautista's case: (1) the failure to report for
work without valid or justifiable reason and (2) a clear intention on her part to sever the
employer-employee relationship. While as a rule, the immediate filing of a complaint for
illegal dismissal negates abandonment, peculiar circumstances can arise when the immediate
filing of an illegal dismissal complaint does not disprove abandonment of work.
IV. Fraud or Willful Breach of Trust
Fraud refers to any act, omission, concealment which involves a breach of legal duty, trust or
confidence justly reposed, and is injurious to another.
Requisites of Fraud or Willful Breach of Trust:

1. There must be an act, omission, or concealment;
2. The act, omission or concealment involves a breach of legal duty, trust, or confidence
justly reposed;
3. It must be committed against the employer or his/her representative; and
4. It must be in connection with the employees' work. (DO No. 147-15)
V. Loss of Confidence
Requisites:
1. There must be an act, omission or concealment;
2. The act, omission or concealment justifies the loss of trust and confidence of the employer
to the employee;
3. The employee concerned must be holding a position of trust and confidence;
4. The loss of trust and confidence should not be simulated;
5. It should be used as a subterfuge for causes which are improper, illegal, or unjustified; and
6. It must be genuine and not a mere afterthought to justify an earlier action taken in bad
faith. (DO No. 147-15)
Cases:
1. Inocente v. St. Vincent Foundation; GR 202621; June 22, 2016
(1) the loss of confidence should not be simulated; (2) it should not be used as a subterfuge for
causes which are improper, illegal or unjustified; (3) it should not be arbitrarily asserted in the
face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere
afterthought to justify earlier action taken in bad faith.
In short, there must be an actual breach of duty which must be established by substantial
evidence.
In the present case, we agree that Zaida indeed held a position of trust and confidence.
Nonetheless, we cannot support the NLRCʼs findings that she committed act/s that breached
St. Vincentʼs trust. Zaidaʼs relationship with Marlon, to reiterate, was not wrong, illegal, or
immoral from the perspective of secular morality; it is also not prohibited by the Non-
Fraternization Policy nor is it required, by the Policy, to be disclosed to St. Vincentʼs
management or officials. In short, Zaida did not commit any act or misconduct that willfully,
intentionally, or purposely breached St. Vincentʼs trust.
Notably, St. Vincent did not charge Zaida with, nor terminate her employment for, willful
breach of trust. Rather, it charged her with violation of the Non-Fraternization Policy and of
the Code of Conduct, and dismissed her for immorality, gross misconduct, and violation of the
Code of Conduct – none of which implied or suggested willful breach of trust.
34. Marina Port Services, Inc. v. National Labor Relations Commission, G.R. No. 80962,
[January 28, 1991]
Security guard must also be considered as enjoying the trust and confidence of his
employer, whose property he is safeguarding. Like the janitor, he has access to this property.
He too, is charged with its care and protection.
Notably, however, and like the janitor again, he is entrusted only with the physical task of
protecting that property. The employer's trust and confidence in him is limited to that
ministerial function. He is not entrusted, in the Labor Arbiter's words, "with the duties of
safekeeping and safeguarding company policies, management instructions, and company
secrets such as operation devices." He is not privy to these confidential matters, which are
shared only in the higher echelons of management. It is the persons on such levels who,
because they discharge these sensitive duties, may be considered holding positions of trust and
confidence. The security guard does not belong in such category.
Loss of confidence constitutes a just cause for terminating an employer-employee

relationship. But for dismissal for loss of confidence to be warranted, there should naturally be
some basis for it. Unsupported by sufficient proof, loss of confidence is without basis and may
not be successfully invoked as a ground for dismissal. Loss of confidence as a ground for
dismissal has never been intended to afford an occasion for abuse by the employer of its
prerogative, as it can easily be subject to abuse because of its subjective nature.
31. Philippine Airlines, Inc. v. National Labor Relations Commission, G.R. No. 117038,
[September 25, 1997]
32. Wesleyan University Phils. v. Reyes, G.R. No. 208321, [July 30, 2014]
The question of whether the respondent was a managerial or rank-and file employee does
not matter in this case because not only is there basis for believing that she breached the trust
of her employer, her involvement in the irregularities attending to petitioner’s finances has
also been proved. A company has the right to dismiss its employees if only as a measure of
self-protection. This is truer in the case of supervisors or personnel occupying positions of
responsibility. Respondent was not an ordinary rank-and-file employee as she was the
Treasurer who was in charge of the coffers of the University. It would be oppressive to require
petitioner to retain in their management an officer who has admitted to knowingly and
intentionally committing acts which jeopardized its finances and who was untrustworthy in
the handling and custody of University funds.
33. Esguerra v. Valle Verde Country Club, Inc., G.R. No. 173012, [June 13, 2012]
Esguerra was dismissed for a just cause.
Esguerra held the position of Cost Control Supervisor and had the duty to remit to the
accounting department the cash sales proceeds from every transaction she was assigned to.
This is not a routine task that a regular employee may perform; it is related to the handling of
business expenditures or finances. For this reason, Esguerra occupies a position of trust and
confidence – a position enumerated in the second class of positions of trust. Any breach of the
trust imposed upon her can be a valid cause for dismissal.
There is no merit in the allegation that it was Esguerra’s daughter who should be held
liable. She had no custody of the cash sales since it was not part of her duties as a food
checker. It was Esguerra’s responsibility to account for the cash proceeds; in case of problems,
she should have promptly reported it, regardless of who was at fault. Instead, she settled the
unaccounted amount only after the accounting department informed her about the discrepancy,
almost one month following the incident. Esguerra’s failure to make the proper report reflects
on her irresponsibility in the custody of cash for which she was accountable, it was her duty to
account for the sales proceeds, and she should have known about the missing amount
immediately after the event.
35. Cañete, Jr. v. National Labor Relations Commission, G.R. No. 130425, [September 30, 1999]
Petitioner insists that he cannot be dismissed on the basis of loss of trust and confidence
since the position of a security officer is not one of trust and confidence. He argues that a
security guard is entrusted only with the physical task of protecting property and the
employers' trust and confidence in him is to the execution of his ministerial functions alone.
He is not entrusted with the duties of safekeeping and safeguarding of company policies,
management instructions and company secrets; hence, he cannot be dismissed on the ground
of loss of confidence.
Contrary to petitioner's claim, he was not a mere security guard but one of the seven In-
house Security and Safety Officers of private respondent corporation and, as such, occupied a
position of trust and confidence. Moreover, apart from being an in-house security officer, he
was assigned the following additional responsibility contained in the Memorandum dated 20
June 1995 of the RLC's Security and Safety Office
RLC had clearly placed reliance on petitioner’s abilities. Therefore, the dismissal was
valid
Other discussion: 13th Month Pay:

Petitioner contends that the NLRC committed grave abuse of discretion in denying him
his 13th month pay since private respondents never questioned the award thereof.
We agree. Petitioner should be paid his full 13th month pay for 1995 since private respondents
never assailed the award before the Labor Arbiter. We cannot adhere to private respondents'
claim that he should only be paid one-half (1/2) thereof on the ground that he received the
same in his November payroll since this is the first time this matter has been alleged.
36. Santos v. Shin Hung Plastics Co. Inc., G.R. No. 172306, [September 29, 2008]
Petitioner was dismissed by reason of loss of trust and confidence. 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 the care and
custody of the employers money or property. To the first class belong managerial employees,
i.e., those vested with the powers or prerogatives to lay down management policies and/or to
hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions; 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.
In this case, petitioner’s duties included purchasing supplies and equipment of the
corporation. He thus regularly handled significant amounts of money and property in the
normal and routine exercise of his functions. His position was thus one of trust and
confidence, loss of which is a just cause for dismissal.
Therefore, he was dismissed for just cause.
37. Reyes-Rayel v. Philippine Luen Thai Holdings, Corp., G.R. No. 174893, [July 11, 2012]
Mere existence of a basis for believing that a managerial employee has breached the trust
of the employer justifies dismissal. "Loss of confidence as a ground for dismissal does not
require proof beyond reasonable doubt as the law requires only that there be at least some
basis to justify it."
The Petitioner was directly responsible for managing her own departmental staff. It is
therefore without question that the CHR Director for Manufacturing is a managerial position
saddled with great responsibility. Because of this, petitioner must enjoy the full trust and
confidence of her superiors. Not only that, she ought to know that she is "bound by more
exacting work ethics".
Respondents also impute upon petitioner gross negligence and incompetence which are
likewise justifiable grounds for dismissal. The burden of proving that the termination was for
a valid cause lies on the employer. Here, respondents were able to overcome this burden as the
evidence presented clearly support the validity of petitioner’s dismissal.
1. Records show that petitioner indeed unreasonably failed to effectively communicate
with her immediate superior. This is evident from the various emails showing that she
failed to update Sauceda on the progress of her important assignments on several
occasions.
2. the affidavits of petitioner’s co-workers revealed her negative attitude and
unprofessional behavior towards them and the company. Agnes Suzette Pasustento,
L&T’s Manager for the Corporate Communications Department, attested to
petitioner’s "badmouthing" of Sauceda (petitioner’s superior) in one of their meetings
abroad and of discussing with her about filing a labor case against the company. There
were also testimonies of her bad temper and petitioner was described as irrational and
condescending.
3. Petitioner’s also displayed inefficiency and ineptitude in her job as a CHR Director.
In the affidavit of Ornida B. Calma, Chief Accountant of L&T’s affiliate company,
petitioner, on two occasions, gave wrong information regarding issues on leave and
holiday pay which generated confusion among employees in the computation of
salaries and wages.
VI. Commission of a Crime
38. Torreda v. Toshiba Information Equipment (Phils.), Inc., G.R. No. 165960, [February 8,
2007]
Petitioner 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 Sepulveda's previous acts.
Petitioner 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 Sepulveda's
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
petitioner.
The Court found that petitioner committed grave slander when he concocted the charge of
theft against Sepulveda, the penalty for which, under the Employee's Handbook, is dismissal.
VII. Analogous
No act or omission shall be considered as analogous unless expressly specified in the

company rules and regulations (DO No. 147-15)
Cases:
1. Yrasuegui v. Pilippine Airlines, Inc., G.R. No. 168081, [October 17, 2008]
SC said that the obesity of petitioner, when placed in the context of his work as flight
attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies
his dismissal from the service. His obesity may not be unintended, but is nonetheless
voluntary. As the CA correctly puts it, “voluntariness basically means that the just cause is
solely attributable to the employee without any external force influencing or controlling his
actions. This element runs through all just causes under Article 282, whether they be in the
nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is
considered voluntary although it lacks the element of intent found in Article 282(a), (c), and
(d).”
The dismissal of petitioner can be predicated on the bona fide occupational qualification
defense. Employment in particular jobs may not be limited to persons of a particular sex,
religion, or national origin unless the employer can show that sex, religion, or national origin
is an actual qualification for performing the job. The qualification is called a bona fide
occupational qualification (BFOQ). In short, the test of reasonableness of the company policy
is used because it is parallel to BFOQ. BFOQ is valid “provided it reflects an inherent quality
reasonably necessary for satisfactory job performance.”
The business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its employees,
most particularly the cabin flight deck crew who are on board the aircraft. The weight
standards of PAL should be viewed as imposing strict norms of discipline upon its employees.
The primary objective of PAL in the imposition of the weight standards for cabin crew is
flight safety. Separation pay, however, should be awarded in favor of the employee as an act of
social justice or based on equity. This is so because his dismissal is not for serious misconduct.
Neither is it reflective of his moral character.
Articles 298 and 299 - Authorized Causes

DO 147-15 -
Authorized Causes:
1. Installation of labor saving devices
2. Redundancy
3. Retrenchment to prevent losses
4. Closure or cessation of operations
5. Disease
Grounds Exclusive
Before amendment by BP 130, the article read: “The termination of employment of any
employee due to the installation of labor saving devices, redundancy, retrenchment to prevent
losses and other similar causes shall entitle the employee affected thereby to separation pay.
I. Labor Saving Devices/Redundancy
Installation of Labor-saving Devices refers to the reduction of the number of workers in any
workplace made necessary by the introduction of labor saving machinery or devices (DO No.
147-15)
The validity of dismissal on this ground is not dependent on the effectiveness of the
installation of the Labor-saving devices, provided it must be done in good faith.
Redundancy exists when the service capability of the work force is in excess of what is
reasonably needed to meet the demands of the enterprise. (Santos v. CA (GR 141947, July 5,
2001)
Factors
A redundant position is one rendered superfluous by a number of factors, such as –
• overhiring of workers,
• decreased volume of business,
• dropping of a particular product line previously manufactured by the company or
• phasing out of a service previously undertaken by the business. (Santos v. CA (GR
141947, July 5, 2001)
• Merger - could also result in redundancy because there will be duplication of functions
when you combine 2 corporations.
Case:
1. Santos v. CA (GR 141947, July 5, 2001
Based on the fact that PEPSI's Metro Manila Sales Operations were not meeting its sales
targets, and on the fact that new positions were subsequently created, it is evident that PEPSI
wanted to restructure its organization in order to include more complex positions that would
either absorb or render completely unnecessary the positions it had previously declared
redundant..
Business Judgement Rule

Under the Business judgement rule, courts cannot inquire into the wisdom behind
legitimate business decision.
While it is true that management may not, under the guise of invoking its prerogative,
ease out employees and defeat their constitutional right to security of tenure, the same must be
respected if clearly undertaken in good faith and if no arbitrary or malicious action is shown.
xxx SC held that the characterization of private respondent's services as no longer necessary or
sustainable, and therefore properly terminable, was an exercise of business judgment on the part
of petitioner company. (Santos v. CA (GR 141947, July 5, 2001)
Note: The wisdom or soundness of such characterization or decision is not subject to

discretionary review on the part of the Labor Arbiter or of the NLRC so long as no violation of
law or arbitrary and malicious action is indicated.
Cases
1. Ocean East Agency Corp. v. Lopez (GR 194410; October 14, 2015)
While it is true that the characterization of an employee's services as superfluous or no
longer necessary and, therefore, properly terminable, is an exercise of business judgment on
the part of the employer, the exercise of such judgment must not violate the law, and must not
be arbitrary or malicious. An employer cannot simply declare that it has become over-manned
and dismiss its employees without adequate proof to sustain its claim of redundancy. To dispel
any suspicion of bad faith on the part of the employer, it must present adequate proof of the
redundancy, as well as the criteria in the selection of the employees affected. The following
evidence may be proffered to substantiate redundancy, to wit: the new staffing pattern,
feasibility studies/proposal on the viability of the newly-created positions, job description and
the approval by the management of the restructuring.
In this case, petitioners were able to establish through Ocean East's Quality Procedures
Manual that Lopez' position as a Documentation Officer was redundant because its duties and
functions were similar to those of the Documentation Clerks in its operations department.
However, they failed to prove by substantial evidence their observance of the fair and
reasonable criteria of seniority and efficiency in ascertaining the redundancy of the position of
Documentation Officer, as well as good faith on their part in abolishing such position.
Petitioners were unable to justify why it was more efficient to terminate Lopez rather
than its two other Documentation Clerks, Reynolds and Hing. Also, while Reynolds was
supposedly retained for being more senior than Lopez, petitioners were silent on why they
chose to retain Hing who was hired in 1996, instead of Lopez who was hired about eight (8)
years earlier in 1988
Q: how does employer proves good faith?

A: by presenting the following evidence, by conducting a feasibility study of why it would
benefit the business to have B absorb the functions of A. In that feasibility study would include a
comparison of positions and tasks, then evaluate functions that can be absorbed by B.
sabi ng SC, submission of notice to the DOLE is also and indicator of Good Faith.
Pag walang feasibility study, B absorb the functions of A, ganun lang, sabi ng court, self-
serving yun.
Evidence
The following may be proffered to substantiate redundancy:
• the new staffing pattern - Org chart
• feasibility studies/proposal on the viability of the newly created positions,
• Job description and
• the approval by the management of the restructuring. (AMA Computer College v. Garcia (GR
166703, April 14, 2008)
This is not exclusive, you have to determine facts of each case.
Affidavits - pede ba yun?
Q: pano kung yung affidavit ng nag conduct ng Feasibility study yung sinubmit mo but
you did not submit the feasibility study itself, but they contain exactly the same
information, anong mas mabigat sayo?
A: mas mabigat ang Feasibility study, kasi yun yung nasa list ng Supreme Court.
Affidavits are sufficient as evidence of the factual basis of redundancy because in the
case of Soriano, Jr. v. NLRC [2007], the affidavits executed by the officers of PLDT
explain the reasons and necessities for the implementation of redundancy program.
Certification of HR manager is insufficient kasi hindi under oath.
Q: hindi ba kaduda duda na isusubmit mo affidavit pero hindi mo isusubmit yung

feasibility study? What would be a valid reason for not submitting a feasibility study?
A: When the feasibility study covers multiple corporations in a group of companies.
Ex; Corporations A, B , C conducted a feasibility study for corporations A B and
C, and then si Corp. A lang ang nasa Pilipinas, only the facts pertaining to A may
be disclose, kasi ayaw ni B and C because it contains confidential information

pertaining to B and C. So in that situation, mag submit ka nalang ng affidavit.
Example/Cases:
1. AMA Computer College v. Garcia (GR 166703, April 14, 2008)
ACC attempted to establish its streamlining program by presenting its new table of
organization.
ACC also submitted a certification by its Human Resources Supervisor *** that the
functions and duties of many rank and file employees, including the positions of Garcia and
Balla as Library Aide and Guidance Assistant, respectively, are now being performed by the
supervisory employees
As they are, they are grossly inadequate and mainly self-serving. More compelling
evidence would have been --
• a comparison of the old and new staffing patterns,
• a description of the abolished and newly created positions, and
• proof of the set business targets and failure to attain the same which necessitated the
reorganization or streamlining.
2. Santos v. CA (GR 141947, July 5, 2001

The job descriptions submitted by PEPSI are replete with information and is an adequate
basis to compare and contrast the two (2) positions.
3. Andrada v. NLRC (GR 173231; 12/28/07)

According to the CA, Legend proved the existence of redundancy when it submitted a
status review of its project division where it reported that
• the 78-man personnel exceeded the needs of the company.
• there was duplication of functions and positions, or an over supply of employees, especially
among architects, engineers, draftsmen, and interior designers.
The pieces of evidence submitted by Legend are mere allegations and conclusions not
supported by other evidence.
Legend did not even bother to illustrate or explain in detail how and why it considered
petitioners' positions superfluous or unnecessary
Criteria
Among the accepted criteria in implementing a redundancy are:
1. less preferred status, e.g., temporary employee;
2. efficiency; and
3. seniority.(AMA Computer College v. Garcia (GR 166703; 4/14/08))
In the case of AMA Computer College v. Garcia, it was held that failure to use fair and
reasonable criteria in choosing which employees to dismiss would make the dismissal arbitrary
and illegal.
Other cases:
1. Oriental Petroleum & Minerals Corp. v. Fuentes (GR 151818; 10/14/05)
xxx Though petitioner therein was justified in ordering a retrenchment, its
implementation of the scheme without taking seniority into account rendered the retrenchment
invalid. In that case, petitioner's criteria for retrenchment included dependability, adaptability,
trainability, job performance, discipline and attitude towards work.
2. Arabit v. Jardine Pacific Finance, Inc. (GR 181719; 4/21/14)

To sum up, based on the guidelines set by the Court in the cases of Golden Thread and
Asian Alcohol, we find that at two levels, Jardine failed to set the required fair and reasonable
criteria in the termination of the petitioners' employment, leading to the conclusion that the
termination from the service was arbitrary and in bad faith.
Just cause irrelevant in proving existence of redundancy, but may be used as criteria
1. AMA Computer College v. Garcia (GR 166703; 4/14/08)
To further justify its dismissal of Garcia and Balla, ACC presented several memoranda to
prove that Garcia and Balla had been remiss in the performance of their duties, as well as
perennially tardy and absent.
Other than being self-serving, said memoranda are irrelevant to prove redundancy of the
positions held by Garcia and Balla. Redundancy arises because there is no more need for the
employee's position in relation to the whole business organization, and not because the
employee unsatisfactorily performed the duties and responsibilities required by his position.
2. Dole Phils. Inc. v. NLRC (GR 120009; 9/13/01)

Private respondents also point to references in petitioner's studies of the redundancy
program to the elimination of "undesirables," "abusers" and "worst performers" as another
indicia of petitioner's bad faith.
The Court is not too keen on attaching such a sinister significance to these allusions,
however. It may be argued that the elimination of the so-called "undesirables" was merely
incidental to the redundancy program or that past transgressions could have been part of the
criteria in determining who among the redundant employees is to be dismissed.
Subsequent hiring of casuals or engaging a contractor

Did not affect the validity of redundancy program
1. Dole Phils. Inc. v. NLRC (GR 120009; 9/13/01)
Dole’s redundancy program does not appear to be tainted by bad faith although it hired
casuals after implementation of redundancy program since it has always hired casuals to
augment the company's manpower requirements in accordance with the demands of the
industry; and that the number of casuals remained relatively constant after the
implementation of the redundancy program.
2. Serrano v. NLRC (GR 117040; 1/27/2000)

The company merely exercised its business judgment or management prerogative. And
in the absence of any proof that the management abused its discretion or acted in a
malicious or arbitrary manner, the court will not interfere with the exercise of such
prerogative.
It ruled that an employer's good faith in implementing a redundancy program is not

necessarily put in doubt by the availment of the services of an independent contractor to
replace the services of the terminated employees to promote economy and efficiency.
The management of a company cannot be denied the faculty of promoting efficiency and
attaining economy by a study of what units are essential for its operation. To it belongs the
ultimate determination of whether services should be performed by its personnel or
contracted to outside agencies . . . While there should be mutual consultation, eventually
deference is to be paid to what management decides.
3. Asian Alcohol Corporation v. National Labor Relations Commission; De Ocampo v.

National Labor Relations Commission, cited in the case of Seranno
4. Soriano, Jr. v. NLRC; G.R. No. 165594, April 23, 2007

It is evident from the foregoing facts that respondent PLDT's utilization of high
technology equipment in its operation such as computers and digital switches necessarily
resulted in the reduction of the demand for the services of a Switchman since computers
and digital switches can aptly perform the function of several Switchmen. Indubitably, the
position of Switchman has become redundant.
The fact that respondent PLDT hired contractual employees after implementing its
redundancy program does not necessarily negate the existence of redundancy. As amply
stated by the respondent PLDT, such hiring was intended solely for winding up operations
using the old system. Hiring of contractors is really part of the plan. Hiring of contractors
may be a part of the redundancy program pero mas mahirap iprove yung Good faith dito
because re-hiring after implementation of redundancy program is an indication of bad
faith.
Negates valid redundancy; used against the employer

1. Arabit v. Jardine Pacific Finance, Inc. (GR 181719; 4/21/14)
It is illogical for Jardine to terminate the petitioners' employment and replace them with
contractual employees. The replacement effectively belies Jardine's claim that the
petitioners' positions were abolished due to superfluity. Redundancy could have been
justified if the functions of the petitioners were transferred to other existing employees of
the company.
To dismiss the petitioners and hire new contractual employees as replacements

necessarily give rise to the sound conclusion that the petitioners' services have not really
become in excess of what Jardine's business requires. To replace the petitioners who were
all regular employees with contractual ones would amount to a violation of their right to
security of tenure.
Jardine never undertook what the employer in Asian Alcohol did. Jardine was never able
to explain in any of its pleadings why the petitioners' positions were redundant. It never
even attempted to discuss the attendant facts and circumstances that led to the conclusion
that the petitioners' positions had become superfluous and unnecessary to Jardine's business
requirements. Thus, we can only speculate on what actually happened.
2. General Milling Corporation v. Viajar cited in the case of PAL v. Dawal
3. PAL v. Dawal (GR 173921; 2/24/16)

When PAL spun off the engineering and maintenance facilities, it also created a new
engineering department called the Technical Services Department. Moreover, after it fired
the affected employees, PAL offered to rehire the same retrenched personnel as new
employees. The Court of Appeals found that there was "availability of work in PAL [and
this] belies its claim that PAL has become over manned.
Q: How long can an employer rehire after redundancy program?

A: no fixed period; the LONGER THE BETTER to give more credibility.
II. Retrenchment
Retrenchment is the termination of employment effected by management during periods of

• business recession,
• industrial depression,
• seasonal fluctuations,
• lack of work or
• considerable reduction in the volume of the employer's business.
(AMA Computer College v. Garcia [2008]).
Redundancy Retrenchment
Definition Redundancy refers to the Retrenchment refers to the

condition when the services of economic ground for dismissing
an employee are in excess or employees and is resorted to
superfluous of what is primarily to avoid or minimize
reasonably demanded by the business losses.
actual requirements of the
enterprise.
Basis Positions Losses
Separation Pay At least 1 month pay or 1 month At least 1 month pay or 1/2
pay for every year of service, month pay for every year of
whichever is higher. service, whichever is higher
Q:what kind of loss?

A:serious, actual and real, or if only expected, it must be reasonably imminent.
To determine whether or not the losses of a company are substantial, the company must
be viewed as a whole. It must be viewed in the context of the company as a whole.
Retrenchment; a measure of last resort

In the case of Andrada v. NLRC [2007], the Court ruled that the employer should have
taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs
other than labor costs. The employer's prerogative to bring down labor costs by retrenching must
be exercised essentially as a measure of last resort, after less drastic means — e.g., reduction of
both management and rank-and-file bonuses and salaries, going on reduced time, improving
manufacturing efficiencies, trimming of marketing and advertising costs, etc. — have been tried
and found wanting.
Evidence; Audited Financial Report

Q: Financial statements, are they an absolute requirement to prove substantial losses?
A: No. they are not an absolute requirement,
In the case of Flight Attendants and Stewards Association of the Philippines (FASAP) vs.
Philippine Airlines, Inc., Patria Chiong and the Court Of Appeals [2018], the court said that, as
a general rule, audited financial statements are the best evidence of the substantial losses
However in this case, audited financial statement is no longer needed to prove financial losses
because:
1. FASAP admitted that PAL was suffering from substantial losses( may judicial
admission ang employees, under the rule on evidence, something that is already
admitted need not be proved again;
2. Pal was undergoing rehabilitation. (you undergo rehabilitation if you're suffering from
substantial losses.
Even if you're undergoing rehabilitation, you still have to submit financial statement if it
is possible to submit. Para mas sure. SC might change its mind few years from now and
baka ikaw yung tamaan.
In the case of Beralde v. Lapanday Agri and Devt Corp [2015], it was held that The
audited financial report presented in evidence was found to conclusively show that Lapanday has
indeed suffered serious financial losses for the last three years prior to its retrenchment. These
financial statements cannot be whimsically assailed as self-serving, as these documents were
prepared and signed by SGV & Co., a firm of reputable independent external auditors.
While it is true that the Court has ruled that financial statements audited by independent
external auditors constitute the normal method of proof of the profit and loss performance of a
Company, financial statements, in themselves, do not suffice to meet the stringent requirement of
the law that the losses must be substantial, continuing and without any immediate prospect of
abating.(Oriental Petroleum & Minerals Corp. v. Fuentes [2005]).
Note: Retrenchment being a measure of last resort, petitioner should have been able to
demonstrate that it expected no abatement of its losses in the coming years. However,
Petitioner in this case failed in this regard, so the Court ruled that the Court of Appeals did
not err in dismissing as unimpressive and insufficient petitioner's audited financial
statements.
Losses sought to be forestalled must be proved by sufficient and convincing evidence.The

reason for requiring this quantum of proof is readily apparent: any less exacting standard of
proof would render too easy the abuse of this ground for termination of services of employees.
(Andrada v. NLRC [2008]).
Other case:
1. Sanoh Fulton Phils., Inc. v. Bernardo [2013]
Sanoh asserts that cancelled orders of wire condensers led to the phasing out of the
Wire Condenser Department which triggered retrenchment. Sanoh presented the letters
of cancellation given by Matsushita and Sanyo as evidence of cancelled orders.
The evidence presented by Sanoh barely established the connection between the
cancelled orders and the projected business losses that may be incurred by Sanoh. Sanoh
failed to prove that these cancelled orders would severely impact on their production of
wire condensers.
Criteria same with Redundancy - Click here

III. Closure
Closure or Cessation of Business refers to the complete or partial cessation of operations and/or
shutdown of the establishment of the employer. (DO No. 147-15)
Q; can you close down for no reason?

A: yes, what is prohibited is faking closure to get rid of employees.
Separation pay
If due to serious business losses - no separation pay
If not due to serious business losses - 1 month pay or 1/2 month pay for every year of service,
whichever is higher
Notice
Q: pede ba yung instead of giving notice, you'll just give 1 month salary? "Dismiss ka na,
effective today, April 24, pero ito yung suswelduhin mo from April 25 to May 24".
A: sabi ng SC no! Separate pay in lieu of notice is not allowed because the employment of a
person is much more than the salary that goes with it.______ dignity of a person.
Garden Leave - The employee has the option. The employee is still considered employed.
The effective date of termination is still May 24, that would still be your last day. The
employee has the option of going on leave to take care of his garden.
Cases:
1. Sanoh Fulton Phils., Inc. v. Bernardo [2013]
The law authorizes termination of employment due to business closure, regardless of the
underlying reasons and motivations therefor, be it financial losses or not. However, to put a
stamp to its validity, the closure/ cessation of business must be bona fide, i.e., its purpose is
to advance the interest of the employer and not to defeat or circumvent the rights of
employees under the law or a valid agreement.
2. Me-Shurn Corp. v. Me-Shurn Workers Union [2005]

The cessation of a company's operations shortly after the organization of a labor union, as
well as the resumption of business barely a month after, gives credence to the employees'
claim that the closure was meant to discourage union membership and to interfere in union
activities.
3. Cheniver Deco Print Technics Corp. v. NLRC [2000]; end of lease contract
There appears no complete dissolution of petitioner's business undertaking but the
relocation of petitioner's plant to Batangas, in our view, amounts to cessation of petitioner's
business operations in Makati. It must be stressed that the phrase "closure or cessation of
operation of an establishment or undertaking not due to serious business losses or reverses"
under Article 283 of the Labor Code includes both the complete cessation of all business
operations and the cessation of only part of a company's business.
There is no doubt that petitioner has legitimate reason to relocate its plant because of the
expiration of the lease contract on the premises it occupied. That is its prerogative. But even
though the transfer was due to a reason beyond its control, petitioner has to accord its
employees some relief in the form of severance pay. Thus, in E. Razon, Inc. vs. Secretary of
Labor and Employment, petitioner therein provides arrastre services in all piers in South
Harbor, Manila, under a management contract with the Philippine Ports Authority. Before the
expiration of the term of the contract, the PPA cancelled the said contract resulting in the
termination of employment of workers engaged by petitioner. Obviously, the cancellation
was not sought, much less desired by petitioner. Nevertheless, this Court required petitioner
therein to pay its workers separation pay in view of the cessation of its arrastre operations.
4. SMC v. Aballa [2005]

In the case at bar, a particular department under the SMC group of companies was closed
allegedly due to serious business reverses. This constitutes retrenchment by, and not closure
of, the enterprise or the company itself as SMC has not totally ceased operations but is still
very much an on-going and highly viable business concern. 
IV. Disease
Requisites under DO 147-15:

1. The employee must be suffering from any disease;
2. The continued employment of the employee is prohibited by law or prejudicial to his health
as well as to the health of his co-employees; and
3. There must be certification by a competent public health authority that the disease is
incurable within a period of 6 months even with proper medical treatment
With respect to the first and second elements, the Court liberally construed the phrase
"prejudicial to his health as well as to the health of his co-employees" to mean "prejudicial to his
health "or" to the health of his co-employees" (Deoferio v. Intel Technology Phils., Inc. [2014]).
Q: What if the continued employment of the employee is not probihited by law or prejudicial to
his health or to the health of his co-employees, kaya lang di siya makapasok? For example sa
isang taon, pumapasok lang siya 3 months? What if it is prejudicial to the business? Pede ba siya
i-dismiss?
A: Yes, in the case of Sy v. CA; GR 142293, Feb 27 2003, however in this case, the employer
failed to present the requirement medical certificate making the dismissal illegal.
Kind of Disease
Any disease could potentially be the basis of termination of employment if other
substantive requirements are also present. It is not limited to contagious diseases.
Circumstances prejudicial to the employee

In the case of Baby Bus, Inc. v. Minister of Labor, the Court upheld the labor arbitration's
finding that Jacinto Mangalino's continued employment — after he suffered several strokes —
would be prejudicial to his health.
In the case of Duterte v. Kingswood Trading Co., Inc., the Court recognized the
applicability of Article 284 of the Labor Code to heart attacks. However in that case, the Court
held that the employer-company's failure to present a certification from a public health authority
rendered Roque Duterte's termination due to a heart attack illegal.
Dismissal must be the last resort

The employer must find alternative where the employee can be assigned; and only if the
employer cannot find any alternative, he may terminate the employment of his employee.
However, if assigning the employee to an alternative position would be prejudicial to the

business (like 50% effective lang siya) the employee may be terminated because such assignment
is not a viable alternative.
Evidence - Certification from a competent public health authority

In the case of Manly Express, Inc. v. Payong, Jr., the Court ruled that the employer-
company's non-presentment of a certification from a public health authority with respect to
Romualdo Payong Jr.'s eye cataract was fatal to its defense.
The third element substantiates the contention that the employee has indeed been
suffering from a disease that:
(1)is prejudicial to his health as well as to the health of his co-employees; and
(2)cannot be cured within a period of six months even with proper medical treatment.
Without the medical certificate, there can be no authorized cause for the employee's
dismissal. The absence of this element thus renders the dismissal void and illegal. (Deoferio v.
Intel Technology Phils., Inc. [2014]).
2 conflicting public certificate?

a) when in doubt rule in favor of labor (Article 4 of the Labor Code); or
b) Third Doctor Rule in Seafarer - Appoint a 3rd doctor.
In one of the cases, the employer was able to get a certification from a public authority
however it only states "Unfit for underground mine work". This certification is insufficient. We
don't know if it is incurable within 6 months, if may disease ba? Kung prejudicial ba? Baka
naman kasi matatakutin lang siya sa dilim.
Q: What if incurable within 6 months, do you have to wait?

A: No. as soon as you find out that it is incurable within 6 months then you can already dismiss.
PD No. 856 - Code on Sanitation
RA No. 7277 - Magna Carta for Disabled Persons

Under RA No. 7277, No entity, whether public or private, shall discriminate against a
qualified disabled person by reason of disability in regard to job application procedures, the
hiring, promotion, or discharge of employees, employee compensation, job training, and other
terms, conditions, and privileges of employment. The following constitute acts of discrimination:
a) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his
work opportunities;
b) Using qualification standards, employment tests or other selection criteria that screen out or tend to
screen out a disabled person unless such standards, tests or other selection criteria are shown to be job-
related for the position in question and are consistent with business necessity;
c) Utilizing standards, criteria, or methods of administration that:
1) have the effect of discrimination on the basis of disability; or
2) perpetuate the discrimination of others who are subject to common administrative control.
d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits,
to a qualified disabled employee, by reason of his disability, than the amount to which a non-disabled
person performing the same work is entitled;
e) Favoring a non-disabled employee over a qualified disabled employee with respect to promotion,
training opportunities, study and scholarship grants, solely on account of the latter's disability;
f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by reason of his
disability;
g) Dismissing or terminating the services of a disabled employee by reason of his disability unless
the employer can prove that he impairs the satisfactory performance of the work involved to the
prejudice of the business entity: provided, however, that the employer first sought to provide
reasonable accommodations for disabled persons;
The employer may dismiss an employee on the ground of disability if the former can prove that
the disability prevents the proper performance of the work to the prejudice of the business but
before the employer can dismiss, he must attempt to provide reasonable accommodations Ililipat
mo siya ng trabaho na kaya niya i-perform despite his disability.
h) Failing to select or administer in the most effective manner employment tests which accurately reflect
the skills, aptitude or other factor of the disabled applicant or employee that such tests purports to
measure, rather than the impaired sensory, manual or speaking skills of such applicant or employee, if
any; and
i) Excluding disabled persons from membership in labor unions or similar organizations.
Notices; Disease - Deoferio v. Intel Technology Phils., Inc. [2014] citing Sy v. Court of Appeals
[2003] and Manly Express, Inc. v. Payong, Jr., [2005]
Aside from the requirement of service of notices to employee and to DOLE for
termination of employment based on authorized cause, the employer must furnish the employee
two written notices in terminations due to disease, namely:
(1) the notice to apprise the employee of the ground for which his dismissal is sought; and
(2) the notice informing the employee of his dismissal, to be issued after the employee has
been given reasonable opportunity to answer and to be heard on his defense.
Separation Pay: Article 299 of the Labor Code vs. RA No. 7277
If by accident falling under RA 7277 - no separation pay (but with benefits under other laws,
Read also: GSIS Law, SSS Law, ECC under the Labor Code, etc.)
If by disease under Article 299 of the Labor Code - with separation pay equivalent to atleast 1
month salary or 1/2 month for every year of service, whichever is higher.
Obligation to Monitor the Health Status of the employee

Q: does the employer have the obligation to monitor the health status of his employer?
A: Yes, as you would have learned in your Labor Standards, the occupational health and safety
standards, merong such a thing as pre-employment medical examination (PEME) and that would
tell you whether such person is fit to work for the particular task that you would be assigning
him. And then apart from the PEME, you also have the annual physical examination which looks
out for the same things as PEME.
Article Art. 1711 of the Civil Code provides that, Owners of enterprises and other employers are
obliged to pay compensation for the death of or injuries to their laborers, workmen, mechanics or
other employees, even though the event may have been purely accidental or entirely due to a
fortuitous cause, if the death or personal injury arose out of and in the course of the employment.
The employer is also liable for compensation if the employee contracts any illness or disease
caused by such employment or as the result of the nature of the employment. If the mishap was
due to the employee's own notorious negligence, or voluntary act, or drunkenness, the employer
shall not be liable for compensation. When the employee's lack of due care contributed to his
death or injury, the compensation shall be equitably reduced. C.w State Insurance Fund
The heirs of the deceased employee may choose whether to enforce claim under 1711 of
the Civil Code or against the SIF under the Labor Code
Other Cases:
1. Agustilo v. Court of Appeals, G.R. No. 142875, [September 7, 2001]
9. Hotel Enterprises of the Philippines v. SAMASAH-NUWHRAIN, G.R. No. 165756, June 5,
2009.
12.Abbott Laboratories (Philippines), Inc. v. Torralba, G.R. No. 229746, [October 11, 2017]
13.SPI Technologies v. Mapua; G.R. No. 191154, April 7, 2014
17.Flight Attendants and Stewards Association of the Philippines v. Philippine Airlines, Inc.,
G.R. Nos. 178083 & A.M. No. 11-10-1-SC (Resolution), [March 13, 2018])
23. Sy v. CA; GR 142293, Feb 27 2003.
24. Crayons Processing, Inc. v. Pula; G.R. No. 167727. July 30, 2007.
25. General Textile, Inc. v. NLRC; G.R. No. 102969. April 4, 1995.
Articles 300 to 302 of the Labor Code

Section 32(B)(6)(a) of the NIRC
Sec 14, par. 3, DO 174-17

Where the termination results from the expiration of the Service Agreement, or from the
completion of the phase of the job or work for which the employee is engaged, the latter may opt
to wait for re-employment within three (3) months to resign and transfer to another contractor-
employer. Failure of the contractor to provide new employment for the employee shall entitle the
latter to payment of separation benefits as may be provided by law or the Service Agreement,
whichever is higher, without prejudice to his/her entitlement to completion bonuses or other
emoluments, including retirement benefits whenever applicable. The mere expiration of the
Service Agreement shall not be deemed as a termination of employment of the contractor's/
subcontractor's employees who are regular employees of the latter.
Article 300 - Resignation

Resignation
Resignation is the voluntary act of an employee who is in a situation where one believes
that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office accompanied by the act
of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment,
the acts of the employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended to sever his or her employment.”
Read also Article 300

- Parties may agree for a longer period
Abandonment
Elements:
1. the failure to report for work or absence without valid or justifiable reason; and
2. a clear intention to sever the employer-employee relationship.
GR: the filing of illegal dismissal negates abandonment (only if the employee asks for
reinstatement)
XPN: filing of illegal dismissal without prayer for reinstatement & backwages does not
negate abandonment..
In the case of Jo v. National Labor Relations Commission, G.R. No. 121605,
February 2, 2000, the employee filed a complaint for illegal dismissal + separation
pay, no prayer for reinstatement. The SC held that the employee really has no
intention of returning to his previous work, hence, there is abandonment.
Constructive Dismissal
Constructive dismissal is defined as quitting or cessation of work because continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank
or a diminution of pay and other benefits.
It exists if an act of clear discrimination, insensibility, or disdain by an employer becomes

so unbearable on the part of the employee that it could foreclose any choice by him except to
forego his continued employment. There is involuntary resignation due to the harsh, hostile, and
unfavorable conditions set by the employer.
The test of constructive dismissal is whether a reasonable person in the employee's

position would have felt compelled to give up his employment/position under the circumstances
You won't find constructive dismissal under any provision of the labor code, galing yan sa
jurisprudence.
Acts constituting Constructive Dismissal - It has to be viewed from the perspective of a

REASONABLE PERSON
Defense against constructive dismissal:
- Nag oover-react lang yung employee
Circumstances where consent was vitiated - invalidating resignation:

1. Coercion
2. Intimidation
Elements of coercion/intimidation that would vitiate consent:
1. that the coercion/intimidation caused the consent to be given;
2. that the threatened act be unjust or unlawful;
3. that the threat be real or serious, there being evident disproportion between the evil
and the resistance which all men can offer, leading to the choice of doing the act
which is forced on the person to do as the lesser evil; and
4. that it produces a well-grounded fear from the fact that the person from whom it
comes has the necessary means or ability to inflict the threatened injury to his
person or property.
3. Deceit/deception - a force resignation can be a product of deception (SME Bank, Inc. v. De

Guzman [2013]). Such deception also applies with Retirement, retirement has to be
voluntary as well.
4. Serious family problem
In the case of Metro Transit Organization, Inc. v. National Labor Relations Commission,
G.R. No. 122046, [January 16, 1998] The consent of the employee was vitiated but not due to
coercion, intimidation or deceit. It is a situation where the employee is given the option to
resign or be terminated for a cause.
In this case, Garcia had been absent for a number of days because he is looking for his
family.
The SC held that an examination of the circumstances surrounding the submission of the
letter indicates that the resignation was made without proper discernment so that it could not
have been intelligently and voluntarily done. During his encounter with Pili, respondent
Garcia asked, " x x x ano ba ang gagawin ko kasi aalis uli ako, kailangan kong ayusin ang
problema ko x x x sabi n'ya mag-resign ka na lang para hindi ka na ma-terminate" Verily,
what Pili did as petitioner's representative was to advise Garcia, who at that time was
thoroughly confused and bothered no end by a serious family problem, that he had better
resign or face the prospect of an unceremonious termination from service for abandonment of
work.
At that precise moment, the employee could not be said to have fully understood what he
was doing, i.e., writing his resignation letter, nor could have foreseen the consequences
thereof, for it is established that as soon as he came out of the investigation office he prepared
his resignation letter right then and there at a table nearby with no time for reflection. It is
noteworthy that shortly thereafter he consulted his union president for help regarding his
forced resignation.
This does not indicate by any means a resignation that was knowingly and voluntarily
done. On the contrary, it shows that his writing and handing in the resignation letter to
petitioner were a knee-jerk reaction triggered by that singular moment when he was left with
no alternative but to accede, having been literally forced into it by being presented with the
more unpleasant fate of being terminated.
in that situation I think it is important for the employer to show that it tried to
accommodate the employee and that the employee's absences were already
unreasonable. The employer should bend a little backward.
Circumstances showing voluntariness

Since Gan submitted a resignation letter, it is incumbent upon him to prove with clear,
positive, and convincing evidence that his resignation was not voluntary but was actually a case
of constructive dismissal; that it is a product of coercion or intimidation. (Gan v. Galderma; GR
177164, January 17, 2013)
It is incumbent upon the employee to prove that the filing of the resignation letter was
due to coercion or intimidation
However in the case of D.M. Consunji Corp v. Bello, G.R. No. 159371, [July 29, 2013],
the Court said that even had the letter been actually signed by the employee, the voluntariness of
the resignation could not be assumed from such fact alone. His claim that he had been led to
believe that the letter would serve only as the means of extending his sick leave from work
should have alerted DMCI to the task of proving the voluntariness of the resignation.
Because the employee in this case testified that he was misled into submitting the
resignation letter, he really had no intention to resign, but he believe it was necessary for
him to extend his sickleave.
In Intel Technology Philippines, Inc. v. NLRC [2014], The court ruled that resignation
was voluntary notwithstanding that no resignation letter was submitted by the employee. There
was no resignation letter but the Court gathered the intent to sever the employment relationship
from the words used by the employee in his various communication with the employer.
The words he used - local hire, close, clearance – denote nothing but his firm resolve to
voluntarily disassociate himself from Intel Phil. and take on new responsibilities with Intel HK.
Employee stopped reporting for work although she met with the officers of the
corporation to settle her accountabilities but never raised the alleged intimidation employed on
her. Also, though the complaint was filed within the 4year prescriptive period, its belated filing
supports the contention of respondent that it was a mere afterthought. Taken together, these
circumstances are substantial proof that petitioners resignation was voluntary. (Vicente v. Court
of Appeals G.R. No. 175988, August 24, 2007).
Words of Gratitude
General rule, if there are words of gratitude in the resignation letter, then that would be
additional proof of voluntariness but if there is proof of coercion or intimidation, then the
Court can not just turn a blind eye just because the letter said "THANK YOU"
Big Salary; voluntariness

A big salary is not a bar or hindrance to voluntary dismissal, because according to the SC,
people resign for all sorts of reason; in the case of Globe Telecom v. Crisologo [2007], the
employee resigned because she was pregnant and she was worried the well-being of her
unborn child.
Read: Article 135 - termination on account of pregnancy is unlawful.
In the case of Hantex Trading Co., Inc. v. CA, G.R. No. 148241. September 27, 2002, the
Court Said that Considering the hard times in which we are in, it is incongruous for
respondent to simply give up his work after receiving a mere reprimand from his employer.
No employee would recklessly abandon his job knowing fully well the acute
unemployment problem and the difficulty of looking for a means of livelihood nowadays.
With a family to support, we doubt very much that respondent would so easily sacrifice his
only source of income and unduly expose his family to hunger and untold hardships.
Certainly, no man in his right mind would do such thing.
Just note na yung sinabi na yon ng Court appears to be an obiter because the case was
not resolve on the facts. Sana di nalang nagsalita yung SC
Case:
1. Chiang Kai Shek College, et al. v. Torres (G.R. No. 189456, April 2, 2014)
Respondent Torres leaked a special quiz in HEKASI,
Respondent offered to voluntarily resign at the end of the school year, provided
that her punishment be changed from termination to suspension. She bargained for a
better exit.
The Court did not find anything irregular with respondent’s handwritten letter.
The letter came about because respondent was faced with an imminent dismissal and
opted for an honorable severance from employment. That respondent voluntarily
resigned is a logical conclusion. Justice Arturo D. Brion correctly observed that
respondent’s infraction and the inevitable and justifiable consequence of that infraction,
i.e., termination of employment, induced her to resign or promise to resign by the end of
the school year.
Given the indications of voluntary resignation, the Court ruled that there is no
constructive dismissal in this case.
Options given by the employer which do not vitiate consent:

1. Resign or face disciplinary investigation (Mandapat v. Add Force Personnel Services,
Inc., et al. (G.R. No. 180285, July 6, 2010) such option does not vitiate consent.
the employee was given the option to either resign or face disciplinary investigation.
In this case, there was no demand that the employee should resign.
Q: what if there is a demand?

A: If the employee must be left with no choice other than to resign, then there is
constructive dismissal.
2. Resign or be terminated for a cause

XPN: read the case of Metro Transit Organization, Inc. v. NLRC [1998]
3. Severance package + resignation or dismissal for a cause without getting anything

(Ledesma, Jr. v. National Labor Relations Commission (G.R. No. 174585, October 19,
2007) The Court held that the consent was not vitiated. It was a valid option, no
circumstance vitiating consent is present. The court held that there was voluntary
resignation in this case. Much better because the employee will get something.
Existence of Constructive Dismissal and Just Cause

Even if the employee proved the existence of constructive dismissal, the employee is not
entitled to reinstate if there is a just cause for termination of employment
Cases:
1.Uniwide Sales Warehouse, Inc. v. NLRC, G.R. No. 154503, February 29, 2008 - sinigaw
sigawan siya hanggang himatayin siya.
The sending of several memoranda addressed to a managerial or supervisory employee

concerning various violations of company rules and regulations, committed on different
occasions, are not unusual. The alleged February to June 1998 series of memoranda given by
petitioners to private respondent asking the latter to explain the alleged irregular acts should
not be construed as a form of harassment but merely an exercise of managements prerogative
to discipline its employees.
The right to impose disciplinary sanctions upon an employee for just and valid cause, as well
as the authority to determine the existence of said cause in accordance with the norms of due
process, pertains in the first place to the employer. Precisely, petitioners gave private
respondent successive memoranda so as to give the latter an opportunity to controvert the
charges against her. Clearly, the memoranda are not forms of harassment, but petitioners
compliance with the requirements of due process.
The existence of constructive dismissal must be viewed from the perspective of a

reasonable person.
Dito sa case, nagsubmit siya ng med cert after long absence pero mali, hindi niya
surname nakalagay sa med cert and therefore nireject ng boss niya. Then, the boss requested
to have a copy of that med cert, but the employee refused to give a copy to the boss, kaya
nagalit si Boss, e nagkataon na hypertensive siya, nag collapse. So we can say, in this specific
set of facts, that a shouting incident leading to an employee becoming unconscious is not
Q: Could a shouting incident leading to unconsciousness be considered a constructive

dismissal?
A: yes, possibly depending on what really happen, so you really have to look in to the details
of what really happened.
SC said the fact that the employer set the administrative matter for hearing negates
constructive dismissal, because it was still willing to proceed with the investigation. It appears
that the filing of the constructive dismissal complaint is simply an excuse to avoid that same
investigation, kase ayaw niya mag hearing so ang ginawa niya, nagfile nalang siya ng kaso.
SC also said in this case that even if the employee was mistakenly believing that she was
constructively dismissed, we should equate the mistake automatically with abandonment.
In this case, there was no Constructive dismissal, no abandonment, but there was just
cause in dismissing the employee. Hence, the employee is not entitled to reinstatement.
2. Formantes vs. Duncan Pharmaceuticals Phils., Inc. G.R. No. 170661, December 4, 2009
In this case, there was constructive dismissal, but there was also just cause
(insubordination and sexual abuse). Hence the employee is not entitled to be reinstated.
Other Cases:
1.Gan v. Galderma; GR 177164, January 17, 2013 (I suggest reading the full text)
Reduction of incentives in this case does not amount to diminution of benefit. Since there
was no diminution of benefit, such there was no Constructive dismissal to speak of.
The words allegedly uttered by Veneracion which asked Gan to “reconsider his stay,”
“make[his move,” or that “[Galderma] will be better off without him,” are ambivalent and
susceptible of varying interpretations depending on one’s feelings, bias, and emotional threshold.
All these are subjective and highly speculative or even presumptuous. Veneracion’s intent to
dismiss Gan cannot reasonably be inferred therefrom. Much less, the words do not definitely
show Veneracion's firm resolve to act on such intent. At the most, the remarks may be regarded
as sarcastic or suggestive of a plan of action which may or may not include a plot to actually, or
even constructively, dismiss Gan.
3. Bilbao v. Saudi Arabian Airlines, G.R. No. 183915, [December 14, 2011]
7. SME Bank, Inc. v. De Guzman G.R. 184517, October 8, 2013, 707 SCRA 35.
This case is one example where corporate directors were held to be personally liable for
the dismissal because termination in this case was attended bad faith. Generally, the corporation
is the one liable for illegal dismissal because it has a separate personality.
The Court ruled that the corporate officers are solidarily liable with the corporation.
9. Peñaflor v. Outdoor Clothing Manufacturing Corporation G.R. No. 177114, April 13, 2010,
618 SCRA 208. TIME OF HIRING
A critical fact necessary in resolving this issue is whether Peñaflor filed his letter of
resignation before or after the appointment of Buenaobra as the new/concurrent HRD manager.
This question also gives rise to the side issue of when Buenaobra's appointment was made. If the
resignation letter was submitted before Syfu's appointment of Buenaobra as new HRD manager,
little support exists for Peñaflor's allegation that he had been forced to resign due to the
prevailing abusive and hostile working environment. Buenaobra's appointment would then be
simply intended to cover the vacancy created by Peñaflor's resignation. On the other hand, if the
resignation letter was submitted after the appointment of Buenaobra, then factual basis exists
indicating that Peñaflor had been constructively dismissed as his resignation was a response to
the unacceptable appointment of another person to a position he still occupied.
Q: what is the most important circumstance that you have to look out for in relation to the hiring
of a replacement
A: The crucial circumstance is the time of hiring of the replacement. If the replacement was hired
prior to resignation then would be an evidence of constructive dismissal, kasi nandyan ka pa,
pinalitan ka na. If the replacement was hired after resignation, then it's just a reaction to your
resignation, then there would be no constructive dismissal.
One other thing that is notable in this case is that the employee submitted an irrevocable
resignation, is that proof of voluntariness? Can irrevocability of resignation be equated with
voluntariness of the resignation?
A: No, SC said in this case that it's just irrevocable, but it is not proof of voluntariness of the
employee
In the event that the employee is absent, you may employ replacement, but only temporary
or fixed-term otherwise it may amount to constructive dismissal of the absent employee.
12. Norkis Trading Co., Inc. vs. Gnillo G.R. No. 159730, February 11, 2008, 544 SCRA 279.
The Court consistently recognized and upheld the prerogative of management to transfer
an employee from one office to another within the business establishment, provided that there is
no demotion in rank or diminution of his salary, benefits and other privileges and the action is
not motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause.
The employer bears the burden of showing that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; and does not involve a demotion in rank or a
diminution of his salaries, privileges and other benefits. Should the employer fail to overcome
this burden of proof, the employees transfer shall be tantamount to constructive dismissal.
Constructive dismissal is defined as a quitting because continued employment is rendered

impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay.
Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee, leaving him with no option but to
forego his continued employment. A transfer is defined as a movement from one position to
another which is of equivalent rank, level or salary, without break in service.
Promotion, on the other hand, is the advancement from one position to another with an
increase in duties and responsibilities as authorized by law, and usually accompanied by an
increase in salary. Conversely, demotion involves a situation in which an employee is relegated
to a subordinate or less important position constituting a reduction to a lower grade or rank, with
a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease
in salary.
In this case, there was a reduction in his duties and responsibilities which amounted to a
demotion tantamount to a constructive dismissal.
17. Ico v. STI; GR 185100, July 9, 2014 - Discrimination amounting to Constructive dismissal
Read the fulltext
This case gives examples of the discrimination that can be done to an employee such that
would be sufficient for us to say that there was constructive dismissal.
Ex: hindi siya sinama sa outing.
18. Star Paper Corp. v. Espiritu; GR 154006, November 2, 2006 - Transfer leading to
The transfer in this case was immediate and they were not given the chance to wind up
their affairs.
The employer failed to sufficiently prove that respondents’ transfer to far-off provincess
is for a just and valid cause and not unreasonable, inconvenient, or prejudicial to the employee,
making it liable for constructive dismissal.
19. Peckson v. Robinsons Supermarket; GR 198534, July 3, 2013

There was a change of assignment from category buyer to provincial coordinator, but the
reason why there was a change was because the position of category buyer requires somebody
who is always there, who is not tardy or absent. The employee is always tardy and always absent.
So sabi ng Robinsons, dito ka nalang, position where your tardiness and absences would not be
so prejudicial to the company. (Yon bending over backwards nga yung ginawa ng company, she
could have been dismissed for cause because of her tardiness and absences but instead, binigyan
siya ng position that would accommodate her tardiness and absences.
Pero siyempre makapal muka niya, nag file ng constructive dismissal.
The Court held that there was no constructive dismissal. This Court has consistently
refused to interfere with the exercise by management of its prerogative to regulate the
employees’ work assignments, the working methods and the place and manner of work. xxx
Indeed, labor laws discourage interference with an employer’s judgment in the conduct of his
business. Under the doctrine of management prerogative, every employer has the inherent right
to regulate, according to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of
employees. The only limitations to the exercise of this prerogative are those imposed by labor
laws and the principles of equity and substantial justice.
It is the employer’s prerogative, based on its assessment and perception of its employees’
qualifications, aptitudes, and competence, to move them around in the various areas of its
business operations in order to ascertain where they will function with maximum benefit to the
company. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it
does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges,
the employee may not complain that it amounts to a constructive dismissal.
20. Almario v. PAL; GR 170928, Sept 11, 2007 - damages

Suspension of operation must be for a bona fide reason; Read Article 301
Compare with closure(authorized cause)
21. Hechanova Bugay Vilchez Lawyers v. Matorre, G.R. No. 198261, [October 16, 2013])
There was no evidence of resignation letter, but the employee admitted it. (Resignation requires
no particular form)
The notice period is for the benefit of the employer for the employer to adjust, the
employer may waive the notice period. Hence, the shortening of the notice period is not
Also, not giving work to an employee who has already tendered resignation is not
constructively dismissal. Bakit mo pa bibigyan ng trabaho eh aalis na nga, mahihirapan ka lang
sa turnover.
ART. 301
22. Lopez v. Irvine Construction Corp., G.R. No. 207253, August 20, 2014.
23. Sebuguero v. National Labor Relations Commission, G.R. No. 115394, September 27, 1995.
24. San Pedro Hospital of Digos, Inc. v. Secretary of Labor; G.R. No. 104624, October 11, 1996.
ART. 302
25. Oxales v. Unilab; GR 152991, July 21, 2008
26. Brion v. South Philippine Union Mission of the Seventh Day Adventist Church, G.R. No.
135136, May 19, 1999.
27. Nestle Phils v. NLRC; GR 91231, February 4, 1991
28. Capili v. University of Mindanao; GR 120802, June 17, 1997
29. Jaculbe v. Siliman University; GR 156934, March 16, 2007
30. UST v. NLRC; GR 89885, August 6, 1990
31. Capitol Wireless, Inc. v. Confesor; GR 117174, November 13, 1996
32. R&E Transport, Inc. v. Latag; GR 155214, February 13, 2004
33. Goodyear Philippines, Inc. v. Angus; GR 185449, November 12, 2014

Labor Relations - Atty. Santamaria Up To Article 302 (2018)

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Labor Relations – Atty.

Articles 293 and 294 - Security of Tenure

Reasonable Connection Test

Pakyao/Piece Workers may be considered Regular Employees

There are two categories of employees paid by results:

II. Casual Employment

Casual employee; at least 1 year

III. Project employment

Department Order No. 19, Series of 1993–

Paragraph No. 5, Policy Instruction No. 20

If such an employee is terminated without a clearance from the Secretary of Labor, he

3.3(a) Project employees whose aggregate period of continuous employment in a construction

Project Employment; Test

2 Distinguishable types of activities (project)

Designation as project employee; Good faith

Extension; Project Employment

Length of time; Rehiring

However, Once a project or work pool employee has been:

Duties of the Employer to avoid the regularization of a project employee:

2. Abesco Constuction and Development Corporation v. Ramirez [2008] - There should be a

IV. Seasonal employment

On leave during off-season

Regularization of Seasonal employees

It is important to make a distinction between Mercado and Hacienda Fatima.

Rules governing project employees may be applied, by analogy, to fixed-term employees.

XPN: Fixed-term employment–

Other discussion; cases:

VI. Probationary Employment

Conditions and Standards of Probation

Extension of Probation Period

By voluntarily agreeing to an extension of the probationary period, Dequila in

Teacher (Universidad De Sta. Isabel v. Sambajon [2014])

The probationary employment of teachers in private schools is not governed purely by

Section 92. Probationary Period.— x xx the probationary period for academic

Longer period; nature of work - Company is engaged in advertisement and publication

In the latter case, there is recognition of the exercise of managerial prerogatives in

Therefore, the probationary employment of petitioners set to eighteen (18) months is

Longer probationary period is available in 2 situations:

Conflict between a probationary employment and fixed-term employment

Dismissal of Probationary employee

Grounds for dismissal; probationary employee:

Where Utterances is tantamount to dismissal:

The rule on notifying a probationary employee of the standards of regularization should

Other discussion; cases:

3. Carvajal v. Luzon Development Bank [2012] - Punctuality is a reasonable standard imposed

4. PDI v. Magtibay, Jr. [2007]??? - Notice is not required in terminating probationary

If the termination is brought about by the completion of a contract or phase thereof, or by

7. Robinsons Galleria v. Ranchez [2011]

Article 297 - JUST CAUSES

Misconduct is defined as an improper or wrong conduct. It is a transgression of some

Other related cases:

2. Royo v. NLRC [1996]

SC: held that Royos are guilty of serious misconduct.

Q: what if the mauling was done outside the company premises?

Q: what if the reason is personal and outside the work premises?

3. Supreme Steel Pipe Corp. v. Bardaje [2007]

4. Solvic Industrial Corp. v. NLRC [1998]

5. Gatus v. Quality House, Inc.[2009]

Q: what if the husband is just jealous of the victim?

Q: What if petitioner did not utter Sige pa Sige pa?

SC held : such utterances do not constitute serious misconduct.

2. Punzal v. ETSI Technologies, Inc. [2007]

SC : held that these utterances constitute serious misconduct.