THE LAW AND JURISPRUDENCE ON (1) REGULAR, CASUAL AND PROBATIONARY EMPLOYMENT AND (2) TERMINATION OF EMPLOYMENT

THE LAW AND JURISPRUDENCE ON REGULAR, CASUAL AND PROBATIONARY EMPLOYMENT

ARTICLE 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where 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 or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist.

The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual 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. The connection can be determined by considering the nature of the work

performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. What determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence. (Randy Almeda, vs. Asahi Glass Phil., Inc., G.R. No. 177785, September 3, 2008)

While the Constitution recognizes the primacy of labor, it also recognizes the critical role of private enterprise in nation-building and the prerogatives of management. A contract of perpetual employment deprives management of its prerogative to decide whom to hire, fire and promote, and renders inutile the basic precepts of labor relations. While management may validly waive it prerogatives, such waiver should not be contrary to law, public order, public policy, morals or good customs. An absolute and unqualified employment for life in the mold of petitioner's concept of perpetual employment is contrary to public policy and good customs, as it unjustly forbids the employer from terminating the services of an employee despite the existence of a just or valid cause. It likewise compels the employer to retain an employee despite the attainment of the statutory retirement age, even if the employee has became a "non-performing asset" or, worse, a liability to the employer. (Ronilo Sorreda vs. Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010)

The test for distinguishing a "project employee" from a "regular employee" is whether or not he has been assigned to carry out a "specific project or undertaking," with the duration and scope of his engagement specified at the time

his service is contracted. Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over which construction companies have no say. For this reason, the Supreme Court held in Caseres v. Universal Robina Sugar Milling Corporation that the repeated and successive rehiring of project employees do not qualify them as regular employees, as length of service is not the controlling determinant of the employment tenure of a project employee, but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the employee. However, DOLE Order 19 required employers to submit a report of termination of employees every completion of construction project. (William Uy Construction Corp. vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010)

A project employee is defined under Article 280 of the Labor Code as one whose 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 or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. Cioco, Jr. v. C.E. Construction Corporation explained that this is because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE on the termination of the employment. Hence, prior or advance notice of termination is not part of procedural due process if the termination is brought about by the completion of the contract or phase thereof for which the employee was engaged. Employer, therefore, did not violate any requirement of procedural due process by failing to give employees advance notice

of their termination. In sum, absent the requirement of prior notice of termination when the termination is brought about by the completion of the contract or phase thereof for which the worker was hired, employees are not entitled to nominal damages for lack of advance notice of their termination. (D.M. Consunji, Inc. vs. Antonio Gobres et al., G.R. No. 169170, August 9, 2010)

A project employee is assigned to a project which begins and ends at determined or determinable times. Employees who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work. Length of service is not a controlling factor in determining the nature of one's employment. Their rehiring is only a natural consequence of the fact that experienced construction workers are preferred. In fact, employees who are members of a "work pool" from which a company draws workers for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has consistently held that members of a "work pool" can either be project employees or regular employees. The principal test used to determine whether employees are project employees is whether or not the employees were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the employees were engaged for that project. Moreover, Department Order No. 19 (as well as the old Policy Instructions No. 20) requires employers to submit a report of an employee's termination to the nearest public employment office everytime the employment is terminated due to the completion of a project. (Judy O. Dacuital et al. vs. L.M. Camus Engineering Corporation, G.R. No. 176748, September 1, 2010)

ARTICLE 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or 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. An employee who is allowed to work after a probationary period shall be considered a regular employee.

An employer, in the exercise of its management prerogative, may hire an employee on a probationary basis in order to determine his fitness to perform work. Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his employment may be considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six (6) months from the date the employee started working. The employee's services may be terminated for just cause or for his failure to qualify as a regular employee based on reasonable standards made known to him. 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. As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded and the last day included. (Mitsubishi Motors Philippines Corporation vs. Chrysler Philippines Labor Union, G.R. No. 148738, June 29, 2004.)

It can be gleaned from Article 281 of the Labor Code that there are two grounds to legally terminate a probationary employee. It may be done either: a) for a just cause or b) when employee fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the start of the employment. However, the rudiments of due process demand that an employee should be apprised beforehand of the conditions of his employment and the basis for his advancement. In Secon Philippines Ltd. v. NLRC, the dismissal of the employee was declared illegal by the Court because the employer did not prove that the employee was properly apprised of the standards

of the job at the time of his engagement and, naturally, the employer could not show that the employee failed to meet such standards. (Aberdeen Court, Inc. vs. Mateo C. Agustin, Jr., G.R. No. 149371, April 13, 2005.)

A reality we have to face in the consideration of employment on probationary status of teaching personnel is that they are 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 these regulations provides:

Subject in all instances to compliance with the Department and school requirements, the probationary period for academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.

The provision on employment on probationary status under the Labor Code is a primary example of the fine balancing of interests between labor and management that the Code has institutionalized pursuant to the underlying intent of the Constitution. On the one hand, employment on probationary status affords management the chance to fully scrutinize the true worth of hired personnel before the full force of the security of tenure guarantee of the Constitution comes into play. Based on the standards set at the start of the probationary period, management is given the widest opportunity during the probationary period to reject hirees who fail to meet its own adopted but reasonable standards. These standards, together with the just and authorized causes for termination of employment the Labor Code expressly provides, are the grounds available to terminate the employment of a teacher on probationary status. For example, the school may impose reasonably stricter attendance or report compliance records on

teachers on probation, and reject a probationary teacher for failing in this regard, although the same attendance or compliance record may not be required for a teacher already on permanent status. At the same time, the same just and authorizes causes for dismissal under the Labor Code apply to probationary teachers, so that they may be the first to be laid-off if the school does not have enough students for a given semester or trimester. Termination of employment on this basis is an authorized cause under the Labor Code. Labor, for its part, is given the protection during the probationary period of knowing the company standards the new hires have to meet during the probationary period, and to be judged on the basis of these standards, aside from the usual standards applicable to employees after they achieve permanent status. Under the terms of the Labor Code, these standards should be made known to the teachers on probationary status at the start of their probationary period, or at the very least at the start of the semester or the trimester during which the probationary standards are to be applied. Of critical importance in invoking a failure to meet the probationary standards, is that the school should show as a matter of due process how these standards have been applied. This is effectively the second notice in a dismissal situation that the law requires as a due process guarantee supporting the security of tenure provision, and is in furtherance, too, of the basic rule in employee dismissal that the employer carries the burden of justifying a dismissal. These rules ensure compliance with the limited security of tenure guarantee the law extends to probationary employees. 44 To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The school, however, cannot forget that its system of fixed-term contract is a system that operates during the probationary period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the requirements of this Article on probationary status would be fully negated as the school may freely choose not to renew contracts simply because their terms have expired. The inevitable effect of course is to wreck the scheme that the Constitution and the Labor Code established to balance relationships between labor and management. Given the clear constitutional and statutory intents, we cannot but conclude that in a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281 should assume primacy and the fixed-period character of the contract must give way.

A replacement teacher, for example, may be contracted for a period of one year to temporarily take the place of a permanent teacher on a one-year study leave. The expiration of the replacement teacher's contracted term, under the circumstances, leads to no probationary status implications as she was never employed on probationary basis; her employment is for a specific purpose with particular focus on the term and with every intent to end her teaching relationship with the school upon expiration of this term. (Yolanda M. Mercado et al. vs. AMA Computer College Paranaque City, Inc., G.R. No. 183572, April 13, 2010)

THE LAW AND JURISPRUDENCE ON TERMINATION OF EMPLOYMENT

TERMINATION OF EMPLOYENT

In Alabang Country Club, Inc. v. National Labor Relations Commission, the Supreme Court laid down the grounds for which an employee may be validly terminated, thus: Under the Labor Code, an employee may be validly terminated on the following grounds: (1) just causes under Article 282; (2) authorized causes under Article 283; (3) termination due to disease under Article 284; and (4) termination by the employee or resignation under Art. 285. Another cause for termination is dismissal from employment due to the enforcement of the union security clause in the CBA. "Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment.

ARTICLE 282. Termination by employer. An employer may terminate an employment for any of the following just causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing.

In an unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the dismissal of the employee. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. (Hilton Heavy Equipment Corporation vs. Ananias P. Dy, G.R. No. 164860, February 2, 2010) When there is no showing of a clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid or authorized cause. The quantum of proof which the employer must discharge is substantial evidence. Substantial evidence is that amount of relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. (Caltex (Philippines), INC. vs. Hermie G. Agad and Caltex United Supervisors Association, G.R. No. 162017, April 23, 2010)

While 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, the Court has allowed in numerous cases the grant of separation pay or some other financial assistance to an employee dismissed for just causes on the basis of equity. In the leading case of Philippine Long Distance Telephone Co. v. NLRC, the Supreme Court stated that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. However, the succeeding case of Toyota Motor Phils. Corp. Workers Association v. NLRC reaffirmed the general rule that separation pay shall be

allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his moral character. These five grounds are just causes for dismissal as provided in Article 282 of the Labor Code. In the recent case of Reno Foods v. NLM, the Supreme Court reiterated the Toyota ruling and maintained that labor adjudicatory officials and the Court of Appeals must demur the award of separation pay based on social justice when an employee's dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family grounds under Art. 282 of the Labor Code that sanction dismissals of employees. (BPI vs. NLRC, G.R. No. 179801, June 18, 2010) They must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers.

While an employer has its own interest to protect, and pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer should bear in mind that, in the execution of the said prerogative, what is at stake is not only the employee's position, but his very livelihood, his very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for justifiable cause. (Lima Land, Inc. vs. Marlyn Cuevas, G.R. No. 169523, June 16, 2010)

Our Courts are not unmindful of the rule in labor cases that the employer has the burden of proving that the termination was for a valid or authorized cause; however, it is likewise incumbent upon the employees that they should first

establish by competent evidence the fact of their dismissal from employment. The one who alleges a fact has the burden of proving it and the proof should be clear, positive and convincing. (Romeo Basay vs. Hacienda Consolation, G.R. No. 175532, April 19, 2010)

The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. The management also has its own rights, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privilege in life, the Supreme Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine. (Solidbank Corporation vs. NLRC, G.R. No. 165951, March 30, 2010)

Serious Misconduct or Willful Disobedience by the employee of the lawful orders of his employer or representative in connection with his work:

Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee's work to constitute just cause for his separation. (Wilfredo Baron vs. NLRC, G.R. No. 182299, February 22, 2010)

For misconduct to be a just cause for dismissal, (a) it must be serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that the employee has become unfit to continue working for the employer. (Blazer Car Marketing, Inc. vs. Spouses Tomas T. Buluan and Analyn A. Briones, G.R. No. 181483, March 9, 2010)

Jurisprudence has classified theft of company property as a serious misconduct. The employees twenty years of service with no negative record prior to his dismissal, does not call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an employee's length of service is to be regarded as justification for moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to clean its ranks of undesirables. Indeed, length of service and a previously clean employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer. (Reno Foods, Inc. vs. Nagkakaisang Lakas Ng Manggagawa (NLM) Katipunan, G.R. No. 164016, March 15, 2010)

That the utterance of obscene, insulting or offensive words against a superior constitutes gross misconduct, which is one of the grounds to terminate the services of an employee, is settled. (Echeverria vs.Venutek Medika, Inc., G.R. No. 169231, February 15, 2007) In the old case of Radio Communications of the Philippines, Inc. v. NLRC, the Court considered the dismissed employee's act of hurling invectives at a co-employee as a minor offense. The Court therein ruled that the

termination of an employee on account of a minor misconduct is illegal because Article 282 of the Labor Code mentions "serious misconduct" as a cause for cessation of employment

When an employee, despite repeated warnings from the employer, obstinately refuses to curtail a bellicose inclination such that it erodes the morale of co-employees, the same may be a ground for dismissal for serious misconduct. A series of irregularities when put together may constitute serious misconduct, which under Article 282 of the Labor Code, is a just cause for termination. And as it held in Asian Design and Manufacturing Corporation v. Deputy Minister of Labor, acts destructive of the morale of one's co-employees may be considered serious misconduct. (Citibank vs. NLRC, G.R. No. 159302, February 6, 2008)

For her act of understating the company's profits or financial position was willful and not a mere error of judgment, committed as it was in order to "save" costs, which to her warped mind, was supposed to benefit respondent. It was not merely a violation of company policy, but of the law itself, and put respondent at risk of being made legally liable. An employer cannot be compelled to retain in its employ someone whose services are inimical to its interests. (Eden Llamas, vs. Ocean Gateway Maritime and Management, Inc., G.R. No. 179293, August 14, 2009)

Examples of serious misconduct justifying termination, as held in some of the Supreme Court decisions, include: sexual harassment (the manager's act of fondling the hands, massaging the shoulder and caressing the nape of a secretary); fighting within company premises; uttering obscene, insulting or offensive words against a superior; misrepresenting that a student is his nephew and pressuring and intimidating a co-teacher to change that student's failing grade to passing. (Colegio De San Juan de Letran Calamba vs. Belen P. Villas, G.R. No. 137795, March 26, 2003)

Sleeping on the job and leaving the work area without prior authorization is a failure to live up to the employers reasonable expectation. No employer may rationally be expected to continue in employment a person whose lack of morals, respect and loyalty to his employer, regard for his employer's rules, and appreciation of the dignity and responsibility of his office, has so plainly and completely been bared. (Eduardo Tomada, Sr. vs. RFM Corporation Bakery Flour Division, G.R. No. 163270, September 11, 2009)

Drug use in the premises of the employer constitutes serious misconduct. The charge of drug use inside the company's premises and during working hours against the employee constitutes serious misconduct, which is one of the just causes for termination. The Supreme Court took judicial notice of scientific findings that drug abuse can damage the mental faculties of the user. It is beyond question therefore that any employee under the influence of drugs cannot possibly continue doing his duties without posing a serious threat to the lives and property of his co-workers and even his employer. (Bernardo B. Jose vs. Michaelmar Phils., Inc., G.R. No. 169606, November 27, 2009)

If the teacher and her pupil eventually fell in love, despite the disparity in their ages and academic levels, this only lends substance to the truism that the heart has reasons of its own which reason does not know. But, definitely, yielding to this gentle and universal emotion is not to be so casually equated with immorality. The deviation of the circumstances of their marriage from the usual societal pattern cannot be considered as a defiance of contemporary social mores.

It would seem quite obvious that the avowed policy of the school in rearing and educating children is being unnecessarily bannered to justify the dismissal of the teacher. This policy, however, is not at odds with and should not be capitalized on to defeat the security of tenure granted by the Constitution to labor. (Evelyn Chua Qua vs. Hon. Jacobo C. Clave, G.R. No. 49549, August 30, 1990)

A teacher is no ordinary employee. She is expected to be an exemplar of uprightness, integrity and decency, not only in the school, but also in the larger community. She is a role model for her students; she stands in loco parenti to them. She is looked up to and is accorded genuine respect by almost everyone as a person tasked with the heavy responsibility of molding and guiding the young into what they should be productive and law-abiding citizens. Failure of a teacher in honestly rating the performance of her students, her most basic task, is a demonstration, through her infractions, that she is not fit to continue undertaking the serious task and the heavy responsibility of a teacher. Teachers are being looked up as the models who should lead the way and set the example in fostering a culture of uprightness among the young and in the larger community. (Technological Institute of the Philippines Teachers and Employees Organization vs. Technological Institute of the Philippines, G.R. No. 158703, June 26, 2009)

As a just cause for dismissal of an employee under Article 282 of the Labor Code, willful disobedience of the employer's lawful orders requires the concurrence of two elements: (1) the employee's assailed conduct must have been willful, i.e., 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. Deliberate disregard or disobedience of rules by the employee cannot be countenanced. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe. (Jimmy Areno, Jr. vs. Skycable PCC Baguio, G.R. No. 180302, February 5, 2010)

While it is well recognized that an employee's violation of lawful and reasonable company rules or regulations constitutes a just cause for his dismissal, it is also true that the application of such company rules must be done without abuse of discretion, for what is at stake is not only his position, but also his means of livelihood. (Coca-Cola Bottlers Philippines, Inc. vs. Dominic E. Vital, G.R. No. 154384, September 13, 2004.)

A waiver is a voluntary and intentional relinquishment or abandonment of a known legal right or privilege. It has been ruled that "a waiver to be valid and effective must be couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him." Hence, the management prerogative to discipline employees and impose punishment is a legal right which cannot, as a general rule, be impliedly waived. Thus it is incumbent upon the employee to adduce substantial evidence to demonstrate condonation or waiver on the part of management to forego the exercise of its right to impose sanctions for breach of company rules. 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." Refusal 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. (R.B. Michael Press vs. Nicasio C. Galit, G.R. No. 153510, February 13, 2008)

Not every case of willful disobedience by an employee of a lawful workconnected order of the employer may be penalized with dismissal. There must be reasonable proportionality between, on the one hand, the willful disobedience by the employee and, on the other hand, the penalty imposed therefore. (Elizabeth C. Bascon vs. CA, G.R. No. 144899, February 5, 2004.)

Theft committed by an employee is a valid reason for his dismissal by the employer. Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property, are a different matter. (Maribago Bluewater Beach Resort, Inc. vs. Nito Dual, G.R. No. 180660, July 20, 2010)

Gross and habitual neglect by the employee of his duties:

Gross negligence connotes want or absence of or failure to exercise even slight care or diligence, or the total absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. To warrant removal from service, the negligence should not merely be gross, but also habitual. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.

In JGB and Associates, Inc. v. National Labor Relations Commission, the Supreme Court further declared that gross negligence connotes want of care in the performance of one's duties. Habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. Fraud and willful neglect of duties imply bad faith of the employee in failing to perform his job, to the detriment of the employer and the latter's business. (Chona Estacio vs. Pampanga I Electric Cooperative, G.R. No. 183196, August 19, 2009)

It bears stressing that in dismissing an employee for gross and habitual neglect of duties, the negligence should not merely be gross. It should also be habitual. The single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. (Abelardo P. Abel vs. Philex Mining Corporation, G.R. No. 178976, July 31, 2009; Anabel Benjamin vs. Amellar Corporation, G.R. No. 183383, April 5, 2010)

Habitual absenteeism and tardiness constitute gross and habitual neglect of duties that justifies termination of employment provided that they are sufficiently supported by evidence on record. Repeated acts of absences without leave and employees frequent tardiness reflect his indifferent attitude to and lack of motivation in his work. More importantly, repeated and habitual infractions, committed despite several warnings, constitute gross misconduct.

Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to come to work on time everyday exhibits the employee's deportment towards work. Habitual and excessive tardiness is inimical to the general productivity and business of the employer. This is especially true when the tardiness and/or absenteeism occurred frequently and repeatedly within an extensive period of time. (R.B. Michael Press vs. Nicasio C. Galit, G.R. No. 153510, February 13, 2008)

Article 282 (b) and (c) of the Labor Code provide that an employer may terminate an employee for "gross and habitual neglect by the employee of his duties" and for "fraud." In both instances, substantial evidence is necessary for an employer to effectuate any dismissal. Uncorroborated assertions and accusations by the employer do not suffice, otherwise the constitutional guaranty of security of tenure of the employee would be jeopardized. (Kulas Ideas & Creations vs. Juliet Alcoseba, G.R. No. 180123, February 18, 2010)

Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative:

Loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such

as custody, handling or care and protection of the property and assets of the employer. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer. (Joeb M. Alivado vs. Procter & Gamble Philippines, Inc., G.R. No. 160506, March 9, 2010)

In Sagales v. Rustan's Commercial Corporation, the Supreme Court held that in loss of trust and confidence, as a just cause for dismissal, it is sufficient that there must only be some basis for the loss of trust and confidence or that there is reasonable ground to believe, if not to entertain the moral conviction, that the employee concerned is responsible for the misconduct and that his participation in the misconduct rendered him absolutely unworthy of trust and confidence.

The quantum of proof which the employer must discharge is substantial evidence. An employee's dismissal due to serious misconduct and loss of trust and confidence must be supported by substantial evidence.

To validly dismiss an employee on the ground of loss of trust and confidence, the confluence of the following requisites must be established: (a) the loss of confidence must not be simulated; (b) it should not be used as a subterfuge for causes which are illegal, improper or unjustified; (c) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; (d) it must be genuine, not a mere afterthought, to justify earlier action taken in bad faith; and (e) the employee involved holds a position of trust and confidence. While proof beyond reasonable doubt is not required still, substantial evidence is vital and the burden rests on the employer to establish it. Any other rule would place the employee eternally at the mercy of the employer. Moreover, the term trust and confidence is restricted to managerial employees only. (BPI vs. Ramon A. Uy, G.R. No. 156994, August 31, 2005; Rolando P. Ancheta vs. Destiny Financial Plans, Inc., G.R. No. 179702, February 16, 2010.)

With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question and that mere uncorroborated assertions and accusations by the employer will not suffice. But as regards a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. (Triumph International (Phils.), Inc. vs. Ramon L. Apostol, G.R. No. 164423, June 16, 2009)

Inefficiency should have a factual basis to be a ground of loss of trust and confidence on managerial employee. Inefficiency may be unmasked either by: (a) comparing it with efficiency or (b) by showing its effects on the company. (Rosemarie Balba vs. Peak Development, G. R. No. 148288, Aug. 12, 2005; Equitable PCI Bank vs. Generosa A. Caquioa, G.R. 159170, August 12, 2005)

The rule, therefore, is that if there is sufficient evidence to show that the employee occupying a position of trust and confidence is guilty of a breach of trust, or that his employer has ample reason to distrust him, the labor tribunal cannot justly deny the employer the authority to dismiss such employee. (EatsCetera Food Services Outlet vs. Myrna B. Letran, G.R. No. 179507, October 2, 2009)

The settled rule is that the mere existence of a basis for believing that a managerial employee has breached the trust of the employer justifies dismissal. The law, in protecting the rights of labor, authorizes neither oppression nor selfdestruction of an employer company which itself is possessed of rights that must be entitled to recognition and respect. (Cynthia Gana vs. NLRC, G.R. No. 164640, June 13, 2008; Chona Estacio vs. Pampanga I Electric Cooperative, Inc., G.R. No. 183196, August 19, 2009)

Employees acceptance of commissions and rebates from a customer, without the knowledge and consent of the employer and without said rebates and commissions being reported and turned over to the latter, are acts which can clearly be considered as a willful breach of trust and confidence reposed by the employer upon him. Settled is the rule that an employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests of the employer. A company has the right to dismiss its employees if only as a measure of selfprotection. This is all the more true in the case of supervisors or personnel occupying positions of responsibility. (Felix Cruz vs. CA, G.R. No. 148544, July 12, 2006)

Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative:

Article 282 of the Labor Code enumerates the just causes wherein an employer may terminate an employment. Verily, conviction of a crime involving moral turpitude is not one of these justifiable causes. Neither may said ground be justified under Article 282 (c) nor under 282 (d) by analogy. Fraud or willful breach by the employees of the trust reposed in him by his employer or duly authorized representative under Article 282 (c) refers to any fault or culpability on the part of the employee in the discharge of his duty rendering him absolutely unworthy of the trust and confidence demanded by his position. It cannot be gainsaid that the breach of trust must be related to the performance of the employee's function. On the other hand, the commission of a crime by the employee under Article 282 (d) refers to an offense against the person of his employer or any immediate member of his family or his duly authorized representative. Analogous causes must have an element similar to those found in the specific just causes enumerated under Article 282. (International Rice Research Institute vs. NLRC, G.R. No. 97239, May 12, 1993)

Other causes analogous to the foregoing:

A purely private quarrel or fighting within the premises of a company which disturbed the peace in the company is analogous to serious misconduct within the meaning of Article 282 (a) of the Labor Code, providing for the dismissal of employees. (Segundino Royo vs. NLRC, G.R. No. 109609, May 8, 1996)

An employee who cannot get along with his co-employees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employee's attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. But the employee's supposed attitude problem must be shown by clear and convincing evidence. The mere mention of negative feedback from the employee's team members is not sufficient proof of her attitude problem. And her failure to refute the employer's allegation of her negative attitude does not amount to admission. (Heavylift Manila vs. CA, G.R. No. 154410, October 20, 2005)

Article 282 (e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail. For an employee to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the employee. A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an employee's moral depravity. Theft committed

by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct. (John Hancock Life Insurance Corp., et al. vs. Joanna Cantre Davis, G.R. No. 169549, September 3, 2008)

Abandonment of work is analogous to gross and habitual neglect by the employee of his duties. To constitute abandonment, two elements must concur: (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, with the second element as the more determinative factor and being manifested by some overt acts. Mere absence is not sufficient. The employer has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning. (RBC Cable Master System vs. Macial Baluyot, G.R. No. 172670, January 20, 2009)

The law clearly spells out the manner with which an unjustified refusal to return to work by an employee may be established. Thusly, the employer should have given the emploee a notice with warning concerning her alleged absences (Section 2, Rule XIV, Book V, Implementing Rules and Regulations of the Labor Code). The notice requirement actually consists of two parts to be separately served on the employee to wit: (1) notice to apprise the employee of his absences with a warning concerning a possible severance of employment in the event of an unjustified excuse therefor, and (2) subsequent notice of the decision to dismiss in the event of an employee's refusal to pay heed to such warning. Only after compliance had been effected with those requirements can it be reasonably concluded that the employee had actually abandoned his job. (Diversified Security, Inc. vs. Alicia V. Bautista, G.R. No. 152234, April 15, 2010)

In a number of cases, the Supreme Court ruled that an employer's claim that an employee was not dismissed but voluntarily left his employment is effectively belied by the filing of a complaint for illegal dismissal. It is settled, after all, that

the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who takes steps to protest his dismissal cannot, by logic, be said to have abandoned his work. It then becomes imperative that the employer affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. (Blazer Car Marketing, Inc. vs. Spouses Tomas T. Bulauan and Analyn A. Briones, G.R. No. 181483, March 9, 2010)

ARTICLE 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

The Supreme Court held that Article 283 of the Labor Code was drafted by the legislature, taking the best interest of laborers in mind. It is clear that the causes of the termination of an employee under Article 283 are due to circumstances beyond their control, such as when management decides to reduce personnel based on valid grounds, or when the employer decides to cease operations. Thus, the bias towards labor is very apparent, as the employer is statutorily required to pay

separation pay, the amount of which is also statutorily prescribed. Thus, any business establishment that decides to cease its operations has the burden of complying with the law. The labor tribunals and the courts should refrain from adding more than what the law requires, as the same is within the realm of the legislature. (Solidbank Corporation vs. NLRC, G.R. No. 165951, March 30, 2010)

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 have been tried and found wanting. As long as no arbitrary or malicious action on the part of an employer is shown, the wisdom of a business judgment to implement a cost saving device is beyond the court's determination. After all, the free will of management to conduct its own business affairs to achieve its purpose cannot be denied. As held in International Harvester Macleod, Inc. v. Intermediate Appellate Court, the determination of the need to phase out a particular department and consequent reduction of personnel and reorganization as a labor and cost saving device is a recognized management prerogative which the courts will not generally interfere with. (Dannie M. Pantoja vs. SCA Hygiene Products Corporation, G.R. No. 163554, April 23, 2010)

Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the employees. It is resorted to during periods of business recession, industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant to a new production program, or automation. It is a management prerogative resorted to avoid or minimize business losses, and is recognized by Article 283 of the Labor Code. To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the DOLE at least one month before the intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in

an amount prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained. (Lambert Pawnbrokers and Jewelry Corporation vs. Helen Binamira, G.R. No. 170464, July 12, 2010)

The Supreme Court has identified the necessary conditions for the company losses to justify retrenchment: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (d) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence. (AMA Computer College, Inc. vs. Ely Garcia, G.R. No. 166703, April 14, 2008) The condition of business losses is normally shown by audited financial documents, like yearly balance sheets and profit and loss statements as well as annual income tax returns. (Stanley Garments Specialist vs. George Gomez et al., G.R. No. 154818, Aug. 11, 2005)

It must be stressed, however, that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. This is so because Article 283 itself does not speak of temporary or permanent retrenchment; hence, there is no need to qualify the term. However, the employer's failure to comply with the one month notice requirement prior to retrenchment does not render the termination illegal; it merely renders the same defective, entitling the dismissed employee to payment of indemnity in the form of nominal damages. (Philippine Telegraph and Telephone Corporation, vs. NLRC et al., G.R. No. 147002, April 15, 2005.)

The employer must prove that the cessation of or withdrawal from business operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees. Parenthetically, if the business losses that justify the closure of the establishment are duly proved, the right of affected employees to separation pay is lost for obvious reasons. Otherwise, the employer

closing his business is obligated to pay his employees their separation pay. (Danzas International, Inc. et al., vs. Henry M. Daguman et al., G.R. No. 154368, April 15, 2005.)

The phrase closures or cessation of operations of establishment or undertaking includes a partial or total closure or cessation. And the phrase closures or cessation x x x not due to serious business losses or financial reverses recognizes the right of the employer to close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their length of service. Clearly then, the right to close an establishment or undertaking may be justified on grounds other than business losses but it cannot be an unbridled prerogative to suit the whims of the employer. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. And the burden of proving such falls upon the employer. (Capitol Medical Center, Inc. vs. Dr. Cesar E. Meris, G.R. 155098, Sept. 16, 2005)

Closure or suspension of operations for economic reasons is, therefore, recognized as a valid exercise of management prerogative. The determination to cease or suspend operations is a prerogative of management, which the State does not usually interfere with as no business or undertaking is required to continue operating at a loss simply because it has to maintain its workers in employment. Such an act would be tantamount to a taking of property without due process of law. However, the burden of proving, with sufficient and convincing evidence, that such closure or suspension is bona fide falls upon the employer. (Nasipit Lumber Company and Philippine Wallboard Corporation vs. National Organization of Workingmen et al., G.R. No. 146225, November 25, 2004.)

The decision to close business is a management prerogative exclusive to the employer, the exercise of which no court or tribunal can meddle with, except only

when the employer fails to prove compliance with the requirements of Art. 283, to wit: a) that the closure/cessation of business is 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; b) that written notice was served on the employees and the DOLE at least one month before the intended date of closure or cessation of business; and c) in case of closure/cessation of business not due to financial losses, that the employees affected have been given separation pay equivalent to 1/2 month pay for every year of service or one month pay, whichever is higher. (Eastbridge Golf Club, Inc., G.R. No. 166760, August 22, 2008)

Based on Article 283, in case of cessation of operations, the employer is only required to pay his employees a separation pay of one month pay or at least one-half month pay for every year of service, whichever is higher. That is all that the law requires. (Solidbank Corporation vs. NLRC, G.R. No. 165951, March 30, 2010)

A redundant position is one rendered superfluous by any number of factors, such as over-hiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of a service activity priorly undertaken by the business

Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. Under these conditions, the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business. A reasonably redundant position is one rendered superfluous by any 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 service activity priorly undertaken by the business. Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. It is the burden of the

employer to prove the factual and legal basis for the dismissal of its employees on the ground of redundancy. (Dusit Hotel Nikko et al. vs. NUWHRAIN and Rowena Agoncillo, G. R. No. 160391, Aug. 9, 2005.)

The trial courts dismissal of the criminal case for insufficiency of evidence tantamount to an acquittal of the crime charged and the arrest and detention were without factual and legal basis. Detention of an employee while his case is being tried by the court is not a ground for termination of employment due to abandonment. However, the employee is not entitled to salary during his detention. His entitlement to full backwages should commence from the time he was refused reinstatement. (Standard Electric Manufacturing Corporation vs. Rogelio Javier et al., G.R. No. 166111, August 25, 2005)

ARTICLE 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee's illness and thus defeat the public policy on the protection of labor. (Triple Eight Integrated Services, Inc. vs. NLRC, G.R. No. 129584, December 3, 1998)

The dismissal of the regular employees by the employer due to disease or incurable illness must comply with the requirements of Article 284 of the Labor Code. It is not disputed that an employer may terminate the services of his

employee who has been found to be suffering from a disease when the latter's continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. However, the dismissal may not be summarily carried out. The employer must comply with certain prerequisites contained in Sec. 8, Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code. (ATCI Overseas Corp. vs. Court of Appeals, G.R. No. 143949, August 9, 2001)

For a dismissal on the ground of disease to be considered valid, two requisites must concur: (a) the employee must be suffering from a disease which cannot be cured within six months and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees; and (b) a certification to that effect must be issued by a competent public health authority. The burden falls upon the employer to establish these requisites, and in the absence of such certification, the dismissal must necessarily be declared illegal. (Crayons Processing, Inc. vs. Felipe Pula, et al., G.R. No. 167727, July 30, 2007)

ARTICLE 285. Termination by employee. (a) An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages. (b) An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes: (1) Serious insult by the employer or his representative on the honor and person of the employee; (2) Inhuman and unbearable treatment accorded the employee by the employer or his representative; (3) Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and

(4)

Other causes analogous to any of the foregoing.

There can be no valid resignation where the act was made under compulsion or under circumstances approximating compulsion, such as when an employee's act of handing in his resignation was a reaction to circumstances leaving him no alternative but to resign. Even if the letter states that the employees resignation was irrevocable, it does not necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working environment, the employee decided to permanently sever his ties with his employer. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee. The gauge for constructive dismissal is whether a reasonable person in the employee's position would feel compelled to give up his employment under the prevailing circumstances. The fact of filing a resignation letter alone does not shift the burden of proving that the employee's dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco, the Supreme Court ruled that should the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. (Manolo A. Penaflor vs. Outdoor Clothing Manufacturing Corporation, G.R. No. 177114, April 13, 2010)

The rule in termination cases is that the employer bears the burden of proving that he dismissed his employee for a just cause. 2 And, when the employer claims that the employee resigned from work, the burden is on the employer to prove that he did so willingly. 3 Whether that is the case would largely depend on the circumstances surrounding such alleged resignation. Those circumstances must be consistent with the employee's intent to give up work. (Elsa S. Malig on vs. Equitable General Services, Inc., G.R. No. 185269, June 29, 2010)

Constructive dismissal is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, or when there is a demotion in rank or a diminution of pay. It exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment. (Estrella Velasco vs. Transit Automotive Supply, Inc., G.R. No. 171327, June 18, 2010)

In constructive dismissal cases, the employer has the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee. Failure of the employer to overcome this burden of proof taints the employee's transfer as a constructive dismissal. The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his position under the circumstances. (Philippine Veterans Banks vs. NLRC, G.R. No. 188882, March 30, 2010)

In a number of cases, the Supreme Court has ruled that an employer's claim that an employee was not dismissed but voluntarily left his employment is effectively belied by the filing of a complaint for illegal dismissal. It is settled, after all, that the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who takes steps to protest his dismissal cannot, by logic, be said to have abandoned his work. It then becomes imperative that the employer affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. (Blazer Car Marketing, Inc. vs. Spouses Tomas T. Bulauan and Analyn A. Briones, G.R. No. 181483, March 9, 2010)

When preventive suspension exceeds the maximum period allowed without reinstating the employee either by actual or payroll reinstatement or when

preventive suspension is for indefinite period, only then will constructive dismissal set in. (Ma. Socorro Mandapat vs. Add Force Personnel Services, Inc., G.R. No. 180285, July 6, 2010)

Employers are liable for constructive dismissal for placing employees on shifts of a few days per month and in eventually denying them workplace access, rendering employees employment impossible, unreasonable or unlikely, leaving them no choice but to quit. (Pasig Cylinder Mfg. Corporation, et al. vs. Danilo Rollo et al., [G.R. No. 173631, September 8, 2010)

Before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. Logically, if there is no dismissal, then there can be no question as to its legality or illegality. Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence. (Philippine Rural Reconstruction Movement vs. Virgilio Pulgar, G.R. No. 169227, July 5, 2010)

Another cause for termination is dismissal from employment due to the enforcement of the union security clause in the CBA:

"Union security" is a generic term, which is applied to and comprehends "closed shop," "union shop," "maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out

of the bargaining unit or the agreement is terminated. A closed shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. Nothing in this Code or in any other law shall stop the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees who are already members of another union at the time of the signing of the collective bargaining agreement. In terminating the employment of an employee by enforcing the union security clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA. (General Milling Corporation vs. Ernesto Casio et al., G.R. No. 149552, March 10, 2010; PICOP Resources, Incorporated (PRI), vs. Anacleto L. Taneca, G.R. No. 160828, August 9, 2010)

The right of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own Union is not wiped away by a Union Security Clause or a Union Shop Clause in a collective bargaining agreement. An employee is entitled to be protected not only from a company which disregards his rights but also from his own Union, the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job. (Inguillo vs. First Philippine Scales, Inc., G.R. No. 165407, June 5, 2009)

ARTICLE 286. When employment not deemed terminated. The bona fide suspension of the operation of a business or undertaking for a period not

exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment.

In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

The Supreme Court recognizes that security guards may be temporarily sidelined by their security agency as their assignments primarily depend on the contracts entered into by the latter with third parties. However, the sidelining should continue only for six months. Otherwise, the security agency concerned could be liable for constructive dismissal. (Mobile Protective & Detective Agency vs. Alberto G. Ompad, G.R. No. 159195, May 9, 2005.)

Under Article 286 of the Labor Code, an employer may bona fide suspend the operation of its business for a period of not exceeding six (6) months. In such a case, there is no termination of the employment of the employees, but only a temporary displacement. When the suspension of the business operations exceeds six (6) months, then the employment of the employees would be deemed terminated. On the other hand, if the operation of the business is resumed within six (6) months from the bona fide suspension thereof, it shall be the duty of the employer to reinstate his employees to their former positions without loss of seniority rights, if the latter would indicate their desire to resume work within one (1) month from such resumption of operations, conformably to Article 286 of the Labor Code. Closure or suspension of operations for economic reasons is, therefore, recognized as a valid exercise of management prerogative. The determination to cease or suspend operations is a prerogative of management, which the State does not usually interfere with as no business or undertaking is required to continue operating at a loss simply because it has to maintain its workers in employment. Such an act would be tantamount to a taking of property

without due process of law. However, the burden of proving, with sufficient and convincing evidence, that such closure or suspension is bona fide falls upon the employer. (Nasipit Lumber Company and Philippine Wallboard Corporation vs. National Organization of Workingmen, G.R. No. 146225, November 25, 2004)

ARTICLE 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one half (1/2) month salary's shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

An underground mining employee upon reaching the age of fifty (50) years or more, but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers, who has served at least five (5) years as underground mine workers, may retire and shall be entitled to all the retirement benefits provided for in this article. (An amendment by RA No. 8558, Feb. 26, 1998).

Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.

Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code.

Under Article 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years. (URSUMCO, et al. vs. Agripino Caballeda, G.R. No. 156644, July 28, 2008)

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. (R & E Transport Inc. et al., vs. Avelina P. Latag, G.R. No. 155214, February 13, 2004.)

By his acceptance of retirement benefits the employee is deemed to have opted to retire under the third paragraph of Article 287 of the Labor Code, as amended by R.A. No. 7641. Thereunder he could choose to retire upon reaching the age of 60 years, provided it is before reaching 65 years, which is the compulsory age of retirement. (Korean Air Co., Ltd. vs. Adelina A. S. Yuson, G.R. No. 170369, June 16, 2010)

While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited, however, such interpretation cannot be made in light of the clear lack of consensual and statutory basis of the grant of retirement benefits. (Divina S. Lopez vs. National Steel Corporation, G.R. No. 149674, February 16, 2004.)

If retirement plan provides that employee cannot receive both retirement benefits and separation pay then he is not entitled to both. (Jose B. Cruz et al., vs. Philippine Global Communications, Inc. et al., G.R. No. 141868, May 28, 2004.)

There are three kinds of retirement schemes. The first type is compulsory and contributory in character. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. The third type is one that is voluntarily given by the employer, expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. The first paragraph of Article 287 deals with the retirement age of an employee established in (a) a collective bargaining agreement or (b) other applicable employment contract. The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have earned under (a) an existing law, (b) a collective bargaining or (c) other agreements. (Marilyn Odchimar Gerlach vs. Reuters Limited, Philippines G.R. No. 148542, January 17, 2005.)

It is apparent that Article 287 does not itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws. In other words, Article 287 recognizes that existing laws already provide for a scheme by which retirement benefits may be earned or accrue in favor of employees, as part of a broader social security system that provides not only for retirement benefits but also death and funeral benefits, permanent disability benefits, sickness benefits and maternity leave benefits. (Llora Motors, Inc. vs. Franklin Drilon, G.R. No. 82895, November 7, 1989)