Termination of Employment

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.
LAST-MINUTE
NOTES ON THE 2012 BAR EXAMINATION IN LABOR LAW BASED ON THE
SUPREME COURT-PRESCRIBED SYLLABUS
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Prof. Joselito Guianan Chan
D. TERMINATION OF EMPLOYMENT
[These 8-part Notes discuss all topics/sub-topics in the Supreme Court-prescribed Syllabus for Labor Law]
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2. Termination of Employment
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a. Substantive Due Process
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1. Employer-Employee Relationship
a. Four-fold Test
b. Probationary Employment
c. Kinds of Employment
(1) Regular employment
(a) Reasonable connection rule
(2) Project employment
(a) Indicators of project employment
(3) Seasonal employment
(4) Casual employment
(5) Fixed term employment
(a) Requisites for validity
d. Job contracting and Labor-only contracting
(1) When is there job contracting?
(2) When is there labor-only contracting?
(3) Conditions that must concur in legitimate job contracting
(4) Effects of finding that there is labor-only contracting
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(a) Just Causes

(a) Serious misconduct or willful disobedience
i. Requisites
(b) Gross and habitual neglect of duties
i. Requisites
(c) Fraud or willful breach of trust (loss of trust and confidence)
i. Requisites
(d) Abandonment of employment; Elements that must concur
(e) Termination of employment pursuant to a Union Security Clause
(f) Totality of infractions doctrine
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(b) Authorized Causes
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b. Procedural Due Process
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(a) Redundancy, Retrenchment and Closure

i. Procedural steps required
ii. Requirements for valid retrenchment/redundancy
iii. Criteria in selecting employees for dismissal
iv. Standards to be followed
(b) Disease or illness
i. Requisites
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c. Reliefs for illegal dismissal

(1) Reinstatement aspect
(a) Immediately executory
i. Actual reinstatement
ii. Payroll reinstatement
(2) Separation pay in lieu of Reinstatement
(a) Strained Relation rule
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(1) Procedure to be observed in termination cases

(2) Guiding Principles in connection with the hearing requirements in dismissal cases
(3) Agabon doctrine
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TOPICS UNDER THE SYLLABUS
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LABOR LAW: D. TERMINATION OF EMPLOYMENT

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(3) Backwages
(a) Components of the amount of backwages
(4) Constructive dismissal
(5) Preventive Suspension
(6) Quitclaims
(7) Termination of employment by employee
3. Retirement Pay Law
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1.FOURFOLDTESTOFEMPLOYEREMPLOYEERELATIONSHIP.
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a.4foldtest.
1.Selectionandengagementoftheemployee;
2.Paymentofwagesorsalaries;
3.Exerciseofthepowerofdismissal;or
4.Exerciseofthepowertocontroltheemployeesconduct.1
Thesetests,however,arenotfoolproofastheyadmitofexceptions.
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b.Controltest,thecontrollingtest.
The control test is the controlling test. It addresses the issue of whether the employer controls or has
reservedtherighttocontroltheemployeenotonlyastotheresultoftheworktobedonebutalsoastothemeansand
methodsbywhichthesameistobeaccomplished.2
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c.Someprinciplesonemployeremployeerelationship.
1. Absenceofuniformtestprescribedbylaworjurisprudence.3
2. The existence of the employeremployee relationship is essential inthat it comprisesas the jurisdictional
basis for recovery under the law. Only cases arising from said relationship are cognizable by the labor
courts.4
3. Therelationshipofemployerandemployeeiscontractualinnature.Itmaybeanoralorwrittencontract.A
writtencontractisnotnecessaryforthecreationandvalidityoftherelationship.5
4.Stipulationinacontractnotcontrollingindeterminingexistenceoftherelationship.Theemploymentstatus
ofapersonisdefinedandprescribedbylawandnotbywhatthepartiessayitshouldbe.6
5. The mode of paying the salary or compensation of a worker does not preclude existence of employer
employeerelationship.Thus,paymentbycommission7oronapieceratebasis8oronanowork,nopay9
basisdoesnotaffectexistenceofemploymentrelationship.
6. Retainerfeearrangementdoesnotgiverisetoemploymentrelationship.10
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d.Caseswhereemploymentrelationshipexists.
Followingthe rightofcontroltest,theSupreme Court hasfoundthat employment relationship exists inthe

followingcases:
1. Dispatchersofatransportationcompany.11
2. Personspaidonboundarysystembasisinrelationtothetransportoperatorsuchasjeepneydriversand
conductors,12 taxi drivers,13 autocalesa driver,14 and bus driver.15 Under the boundary system, the
relationshipbetweenthedriverandconductorofabusandtheownerthereofisnotthatoflesseeand
lessorbutthatofemployeeandemployer.16
Philippine Global Communications, Inc. v. De Vera, G.R. No. 157214, June 7, 2005.
Gallego v. Bayer Philippines, Inc., G.R. No. 179807, July 31, 2009, 594 SCRA 736.
Caurdanetaan Piece Workers Union v. Laguesma, G.R. No. 113542. Feb. 24, 1998, 286 SCRA 401, 426.
4 Madrigal Shipping Co. v. Melad, G.R. Nos. L-17362 & L-17367-69, Feb. 28, 1963, 7 SCRA 330.
5 Compania Maritima v. Ernesta Cabagnot Vda. De Hio, G.R. No. L-10675, April 29, 1960, 107 Phil. 873.
6 Chavez v. NLRC, [G.R. No. 146530, January 17, 2005].
7 Lazaro v. Social Security Commission, [G.R. No. 138254, July 30, 2004].
8 Lambo v. NLRC, [G.R. No. 111042, October 26, 1999, 317 SCRA 420].
9 CRC Agricultural Trading v. NLRC, [G.R. No. 177664, December 23, 2009].
10 Philippine Global Communications, Inc. v. De Vera, [G.R. No. 157214, June 7, 2005].
11 Tiu v. NLRC, G.R. No. 95845, Feb. 21, 1996.
12 National Labor Union v. Dinglasan, 52, O.G. No. 4, p. 1933, 98 Phil 648 [1956]; See also Gabriel v. Bilon, G.R. No. 146989, Feb. 7, 2007; Villamaria, Jr. v. CA, G.R. No. 165881, April 19, 2006.
13 Jardin v. NLRC, G.R. No. 119268, Feb. 23, 2000.
14 Citizens League of Freeworkers v. Abbas, G.R. No. L-20946. Sept. 23, 1966, 18 SCRA 71, 73.
15 R. Transport Corporation v. Ejandra, G.R. no. 148508, May 20, 2004.
16 Paguio Transport Corporation v. NLRC, G.R. No. 119500, Aug. 28, 1998.
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TOPIC UNDER THE SYLLABUS:
a. Four-fold Test
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a. Coverage
b. Exclusions from coverage
c. Components of retirement pay
d. Retirement pay under RA 7641 vis--vis retirement benefits under SSS and GSIS laws
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b. Probationary Employment
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Relevant Provision: Article 281, Labor Code
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1.PROBATIONARYEMPLOYMENT.
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b.Probationaryperiod.
As a general rule, it should not exceed six (6) months from the date the employee started working.24 One
becomesaregularemployeeuponcompletionofhissixmonthperiodofprobation.25
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c.Exceptions.
ThesixmonthperiodprovidedinArticle281admitsofcertainexceptionssuchas:
1.Whentheemployerandtheemployeeagreeonashorterorlongerperiod;
2.Whenthenatureofworktobeperformedbytheemployeerequiresalongerperiod;
3.Whenalongerperiodisrequiredandestablishedbycompanypolicy.
Ifnotoneoftheexceptionalcircumstancesaboveisproven,theemployeewhoseemploymentexceedssix(6)
monthsisundoubtedlyaregularemployee.26
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Buiserv.Hon.Leogardo,[G.R.No.L63316,July31,1984].
Theprobationaryperiodof18monthswasconsideredvalidinthelightofthenatureofemploymentofthe
probationary employees. The company here is engaged in the publication of advertisements in PLDTs Yellow Pages
TelephoneDirectories.Solicitedadsarepublishedayearafterthesalehasbeenmadeandonlythencanthecompany
beabletoevaluatetheefficiency,conductandsellingabilityofthesalesrepresentatives,theevaluationbeingbasedon
thepublishedads.
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d.Probationaryperiod,howreckonedandcomputed.
The6monthprobationaryperiodshouldbereckonedfromthedateofappointmentuptothesamecalendar
dateofthe6thmonthfollowing.27
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e.Distinctionbetweenprobationaryemploymentandfixedtermemployment.
The intention of the parties (employer and employee) is material. Both involved fixed term or duration of
employment. However, in probationary employment, the parties intend to make their relationship regular after the
lapseoftheperiod.Infixedtermemployment,nosuchintentionexistsandtherelationshipautomaticallyterminatesat
theexpirationoftheperiod.
Aprobationaryperiodcannotbestipulatedwithinthefixedperiodofemployment.28
LVN Pictures, Inc. v. Philippine Musicians Guild, G.R. Nos. L-12582 and L-12598, Jan. 28, 1961, 1 SCRA 132.
Ruga v. NLRC, G.R. No. 72654-61, Jan. 22, 1990; See also Teng v. Pahagac, [G.R. No. 169704, November 17, 2010; Mercidar Fishing Corporation v. NLRC, G.R. No. 112574, Oct. 8, 1998, 297 SCRA 440.
Visayan Stevedore Transportation Company v. CIR, G.R. No. L-21696, Feb. 25, 1967, 19 SCRA 426.
20 Section 15, Rule X, Book III, Rules to Implement the Labor Code; Felix v. Buenaseda, G.R. No. 109704 Jan. 17, 1995, 240 SCRA 139.
21 Perpetual Help Credit Cooperative, Inc. v. Faburada, [G.R. No. 121948, October 8, 2001].
22 Investment Planning Corporation v. SSS, [G.R. No. L-19124, November 18, 1967, 21 SCRA 294].
23 De la Cruz, Jr. v. NLRC, G.R. No. 145417, Dec. 11, 2003.
24 Article 281, Labor Code.
25 Voyeur Visage Studio, Inc. v. CA, G.R. No. 144939, March 18, 2005; A Prime Security Services, Inc. v. NLRC, G.R. No. 107320, Jan. 19, 2000.
26 San Miguel Corp. v. Del Rosario, G.R. Nos. 168194 & 168603, Dec. 13, 2005.
27 Cebu Royal Plant [SMC] v. Deputy Minister of Labor, [G.R. No. L-58639, August 12, 1987, 153 SCRA 38]; Cals Poultry Supply Corporation v. Roco, [G.R. No. 150660, July 30, 2002].
28 Villanueva v. NLRC, [G. R. No. 127448, September 10, 1998, 356 Phil. 638]; Servidad v. NLRC, [G.R. No. 128682, March 18, 1999, 305 SCRA 49, 55; 364 Phil. 518]; Innodata Philippines, Inc. v. Quejada-Lopez, [G.R. No. 162839, October 12, 2006].
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a.Natureofprobationaryemployment.
Aprobationaryemployeeisonewho,foragivenperiodoftime,isonobservation,evaluationandtrialbyan
employerduringwhichtheemployerdetermineswhetherornotheisqualifiedforpermanentemployment.Duringthe
probationaryperiod,theemployerisgiventheopportunitytoobservetheskill,competence,attitudeandfitnessofthe
probationary employee while the latter seeks to prove to the employer that he has the qualifications to meet the
reasonablestandardsforpermanentemployment.23
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3. Musiciansemployedbyacompanyproducingmotionpicturesforpurposesofmakingmusicrecordingsfor
title music,background music, musical numbers, finale musicand other forms of music withoutwhich a
motionpictureisnotcomplete.17
4. Fishermencrew who rendered services in various capacities (patron/pilot, master fisherman, second
fisherman, chief engineer, and fisherman) aboard the fishing vessels of a company engaged in trawl
fishingandwhosecompensationwaspaidincashonpercentcommissionbasis.18
5. Stevedores,althoughsuppliedtothecompanybythelabororganizationcomposedofvariouslaborunions,
areemployeesofthecompany.19
6. Resident physicians. There is employeremployee relationship between resident physicians and the
traininghospitalsunless:
a.thereisatrainingagreementbetweenthem;and
b.thetrainingprogramisdulyaccreditedorapprovedbytheappropriategovernmentagency.20
7. Employeesofcooperatives,butnotitsmembersunless,themembersarealsoemployeesthereof.21
8. Insuranceagent.22
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2.TERMINATIONOFPROBATIONARYEMPLOYMENT.
a.Securityoftenureofprobationaryemployees.
Within the limited legal sixmonth probationary period, probationary employees are entitled to security of
tenurenotwithstandingtheirlimitedtenureandnonpermanentstatus.37Hence,duringtheirprobationaryemployment,
theycannotbedismissedexceptforjustorauthorizedcauseorwhenhefailstoqualifyasaregularemployee.38
b.Groundstoterminateprobationaryemployment.
UnderArticle281,aprobationaryemployeemaybeterminatedonlyontwo(2)grounds,towit:
1. Forajustcauseorauthorizedcause;or
2. When the probationary employee fails to qualify as a regular employee in accordance with reasonable
standardsmadeknownbytheemployertotheemployeeatthestartoftheemployment.39
c.Someprinciplesonterminationofemploymentofprobationaryemployees.
1. Proceduraldueprocessisrequiredonlyinthecaseofthefirstground(dismissalduetojustorauthorized
cause). The second ground (failure to qualify as a regular employee) does not require notice and
hearing.Dueprocessoflawforthesecondgroundconsistsofmakingthereasonablestandardsexpectedof
theemployeeduringhisprobationaryperiodknowntohimatthetimeofhisprobationaryemployment.40
2. Terminationtobevalidmustbedonepriortolapseofprobationaryperiod.41
3. Terminationafewdaysafterlapseofprobationaryperiod,cannotbedonewithoutdueprocessashehas
alreadybecomearegularemployeebythattime.42
4. Peremptoryandarbitraryterminationofprobationaryemployeesnotallowed.43
5. Noobligationtopayunexpiredportionincaseofvalidterminationpriortolapseofprobationaryperiod.44
6. Agabondoctrine45 applies ifdismissalofprobationary employee for ajustcause is without dueprocess.
Thus,theterminationisconsideredlegalbuttheemployeewillbeawardedanindemnityintheformof
nominaldamagesofP30,000.00.46
7. Jaka doctrine47 applies if dismissal of probationary employee for an authorized cause is without due
process.Theamountofindemnityishigher:P50,000.00.
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c. Kinds of Employment
(1) Regular employment
(a) Reasonable connection rule
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1.REGULAREMPLOYMENT.
a.Three(3)waysofattainingregularemployment.
UndertheLaborCode,regularemploymentmaybeattainedineitherofthree(3)ways,namely:
Mariwasa Manufacturing, Inc. v. Leogardo, [G.R. No. 74246, January 26, 1989]; Dusit Hotel Nikko v. Gatbonton, [G.R. No. 161654, May 5, 2006].
International Catholic Migration Commission v. NLRC, G.R. No. 72222, Jan. 30, 1989.
Article 281, Labor Code; Philippine National Bank v. Cabansag, G.R. No. 157010, June 21, 2005; Servidad v. NLRC, G.R. No. 128682, March 18, 1999.
32 ATCI Overseas Corporation v. CA, G.R. No. 143949, Aug. 9, 2001; A. M. Oreta & Co., Inc. v. NLRC, G.R. No. 74004, August 10, 1989.
33 San Miguel Corp. v. Del Rosario, [G.R. Nos. 168194 and 168603, Dec. 13, 2005].
34 Octaviano, v. NLRC, [G.R. No. 88636, October 3, 1991].
35 Espina v. Hon. CA, [G.R. No. 164582, March 28, 2007].
36 Voyeur Visage Studio, Inc. v. CA, [G.R. No. 144939, March 18, 2005].
37 Philippine Daily Inquirer, Inc. v. Magtibay, Jr., G.R. No. 164532, July 24, 2007.
38 Lacuesta v. Ateneo de Manila University, G.R. No. 152777, December 9, 2005, 477 SCRA 217, 225.
39 Sections 2 [b] and 6 [c], Rule I, Book VI, Rules to Implement the Labor Code, as amended by Article V, Department Order No. 10, Series of 1997; See also Cathay Pacific Airways, Ltd. v. Marin, G.R. No. 148931, Sept. 12, 2006; Athenna International Manpower Services, Inc. v. Villanos,
G.R. No. 151303, April 15, 2005; Aberdeen Court, Inc. v. Agustin, Jr., G.R. No. 149371, April 13, 2005.
40 Philippine Daily Inquirer, Inc. v. Magtibay, Jr., G.R. No. 164532, July 24, 2007; Sameer Overseas Placement Agency, Inc. v. NLRC, G.R. No. 132564, Oct. 20, 1999; Woodridge School [now known as Woodridge College, Inc.] v. Benito, [G.R. No. 160240, October 29, 2008].
41 Pasamba v. NLRC, G.R. No. 168421, June 8, 2007; See also Manila Electric Company v. NLRC, G.R. No. 83751, Sept. 29, 1989, 178 SCRA 198, 203.
42 San Miguel Corp. v. Del Rosario, [G.R. Nos. 168194 and 168603, December 13, 2005]; Cebu Royal Plant [San Miguel Corporation] v. Hon. Deputy Minister of Labor, [G.R. No. L-58639, August 12, 1986].
43 Cebu Marine Beach Resort v. NLRC, [G.R. No. 143252, October 23, 2003].
44 International Catholic Migration Commission v. NLRC, [G.R. No. 72222, January 30, 1989].
45 Agabon v. NLRC, [G.R. No. 158693, November 17, 2004].
46 Aberdeen Court, Inc. v. Agustin, Jr., G.R. No. 149371, April 13, 2005.
47 Jaka Food Processing Corporation v. Pacot, [G.R. 151378, March 28, 2005].
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f.Someprinciplesonprobationaryemployment.
1. Theprobationaryperiodmaybeextendedbutonlyuponthemutualagreementbytheemployerandthe
probationaryemployee.29
2. Purposeandnotlengthoftheprobationaryperiodismaterial.30
3. Anemployeewhoisallowedtoworkafteraprobationaryperiodisconsideredaregularemployee.31
4. Employmentisdeemedregulariftheemploymentcontracthasnostipulationonprobationaryperiod.32
5. Employeeisdeemedregularabsentanycontracttoproveprobationaryemployment.33
6. Repetitiverehiringofaprobationaryemployeemeanshehasbecomearegularemployee.34
7. Regularworkersofpreviousownerofbusinessmaybehiredasprobationaryemployeesofnewowner.35
8.Probationaryemploymentcannotbeadinfinitum.36
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1.PROJECTEMPLOYMENT.
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a.Concept.
Asdefinedbylaw,projectemployeesarethosehired:
1. foraspecificprojectorundertaking;and
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2. thecompletionorterminationofsuchprojecthasbeendeterminedatthetimeoftheirengagement.
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b.Principaldistinctionsbetweenprojectemploymentandregularemployment.
1. The services of project employees are coterminous with the project or any phase thereof and may be
terminatedupontheendorcompletionoftheprojectorphasethereofforwhichtheywerehired.Regularemployees,in
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Article 280, Labor Code; Paguio v. NLRC, G.R. No. 147816, May 9, 2003, 403 SCRA 190; Viernes v. NLRC, G.R. No. 108405, April 4, 2003, 400 SCRA 557.
Article 280, Labor Code; Conti v. NLRC, G.R. No. 119253, April 10, 1997, 271 SCRA 114; Philippine Fruit & Vegetable Industries, Inc. v. NLRC, G.R. No. 122122, July 20, 1999.
Article 281, Labor Code.
51 Association of Trade Unions [ATU] v. Abella, G.R. No. 100518, Jan. 24, 2000; San Miguel Corporation v. NLRC, G.R. 125606, Oct. 7, 1998, p. 5.
52 Brent School, Inc. v. Zamora, G.R. No. 48494, Feb. 5, 1990.
53 Labor Congress of the Philippines v. NLRC, G.R. No. 123938, May 21, 1998, 290 SCRA 509; RJL Martinez Fishing Corporation v. NLRC, G.R. Nos. L-63550-51, Jan. 31, 1984, 127 SCRA 454, 462.
54 Columbus Philippines Bus Corporation v. NLRC, [G.R. Nos. 114858-59, September 7, 2001].
55 Sonza v. ABS-CBN Broadcasting Corp., [G.R. No. 138051, June 10, 2004].
56 ABS-CBN Broadcasting Corporation v. Marquez, [G.R. No. 167638, June 22, 2005, pp. 5-6 (Unsigned Resolution), SC E-Library]; Dumpit-Murillo v. CA, [G.R. No. 164652, June 8, 2007]; Consolidated Broadcasting System, Inc. v. Oberio, [G.R. No. 168424, June 8, 2007].
57 ABS-CBN Broadcasting Corp. v. Nazareno, [G.R. No. 164156, September 26, 2006].
58 Orozco v. The Fifth Division of the Honorable Court of Appeals, [G.R. No. 155207, August 13, 2008].
59 Id.
60 San Miguel Corporation v. NLRC, G.R. No. 80774, May 31, 1988, 161 SCRA 719, 724.
61 National Federation of Labor v. Eisma, G,R, No. L-61236, Jan. 31, 1984, 127 SCRA 419, 428.
62 Dai-ichi Electronics Manufacturing Corporation v. Villarama, Jr. G.R. No. 112940, Nov. 21, 1994, 238 SCRA 267, 271.
63 San Miguel Corporation v. Etcuban, G. R. No. 127639, Dec. 3, 1999.
64 Article 280, Labor Code; Section 5 [a], Rule I, Book VI, Rules to Implement the Labor Code, as amended by Article IV, Department Order No. 10, Series of 1997; Saberola v. Suarez, G.R. No. 151227, July 14, 2008, 558 SCRA 135, 142; D. M. Consunji, Inc. v. NLRC, G.R. No. 116572,
Dec. 18, 2000; Association of Trade Unions [ATU] v. Abella, G.R. No. 100518, Jan. 24, 2000.
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2.REASONABLECAUSALCONNECTIONRULE.
a.Thisruleisusednotinconnectionwithregularemployment.
The reasonable causal connection rule is applied in case of conflict of jurisdiction between labor court and
regularcourt.Itisnotusedtodetermineregularityofemployment.Itisratheramisplacedtopicunderthistopicon
regularemployment.
Inanyevent,itiswellrecognizedthatnotallclaimsinvolvingworkersandtheiremployerscanberesolved
solelybythelaborcourts.60However,thepresenttrendistoreferworkeremployercontroversiestolaborcourts,unless
unmistakablyprovidedbythelawtobeotherwise.61Becauseofthistrend,jurisprudencehasdevelopedthereasonable
causalconnectionrule.Underthisrule,ifthereisareasonablecausalconnectionbetweentheclaimassertedandthe
employeremployeerelations,thenthecaseiswithinthejurisdictionoflaborcourts.62Intheabsenceofsuchnexus,itis
theregularcourtsthathavejurisdiction.63
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(2) Project employment
(a) Indicators of project employment
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1. Bynatureofwork.Theemploymentisdeemedregularwhentheemployeehasbeenengagedtoperform
activitieswhichareusuallynecessaryordesirableintheusualbusinessortradeoftheemployer.48
2. Byperiodofservice.Theemploymentisreckonedasregularwhentheemployeehasrenderedatleastone
(1)yearofservice,whethersuchserviceiscontinuousorbroken,withrespecttotheactivityinwhichheis
employedandhisemploymentshallcontinuewhilesuchactivityexists.49
3. By probationary employment. The employment is considered regular when the employee is allowed to
workafteraprobationaryperiod.50
b.Someprinciplesonregularemployment.
1. Writtenororalagreementisimmaterialinthedeterminationofregularemployment.51
2. ExceptiontotheruleonregularityofemploymentinArticle280isfixedperiodemployment.Thismeans
thatanemployeemayvalidlyenterintoafixedtermemploymentcontractevenifthenatureofhisworkis
directlyrelatedtotheprincipalbusinessortradeofhisemployer.52
3. Mannerormodeofpayingthewagesofemployeedoesnotaffecttheregularityofhisemployment.So,
even if an employee is paid on a perpiece basis53 or on commission basis,54 his becoming a regular
employeeisnotaffectedthereby.
4.TVandradiotalentsare,asageneralrule,notemployeesbutindependentcontractors.55Theyhavetheir
specialskillsandtalentsastools.Buttheymaybecomeregularemployeesiftheywerehirednotastalents
(independent contractors) but as employees.56 Production Assistants are not talents but regular
employees.57
5.Anewspapercolumnistisnotanemployeeofthenewspaperpublishingthecolumn.58Butregularreporters
areemployeesofthenewspaper.59
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c.Workpoolprinciple.
Asageneralrule,employersmayormaynotformaworkpool.Aworkpoolreferstoagroupofworkers
fromwhichanemployerlikeaconstructioncompanydrawstheworkersitdeploysorassignstoitsvariousprojectsor
anyphase/sthereof.Membersofaworkpoolmayconsistof:
1. Nonprojectemployeesoremployeesforanindefiniteperiod.Iftheyareemployedinaparticularproject,
the completion of the project or of any phase thereof will not mean severance of employeremployee
relationship.
2. Projectemployees.Theseworkersintheworkpoolwhoareemployedinaparticularprojectorinanyphase
thereof are considered as such if they are free to leave anytime and offer their services to other
employers.75
Meremembershipinaworkpooldoesnotresultintheworkersbecomingregularemployeesbyreasonof
thatfactalone.76However,underestablishedjurisprudence,aprojectemployeewhoisamemberofaworkpool,
mayattainregularstatusasaprojectemployee.Thiskindofemployeeisknownasregularprojectemployee.
3.TERMINATIONOFPROJECTEMPLOYMENT.
a.Someprinciplesrelevanttoterminationofemployment.
Millennium Erectors Corporation v. Magallanes, [G.R. No. 184362, November 15, 2010]; Equipment Technical Services v. Court of Appeals, [G.R. No. 157680, October 08, 2008, 568 SCRA 122, 130].
Section 2.2., Department Order No. 19, Series of 1993.
Abesco Construction and Development Corp. v. Ramirez, G.R. No. 141168, April 10, 2006.
68 Id.
69 Hanjin Heavy Industries and Construction Co, Ltd. v. Ibaez, [G.R. No. 170181, June 26, 2008].
70 Magcalas v. NLRC, G.R. No. 100333, March 13, 1997, 269 SCRA 453, 468.
71 Palomares v. NLRC, G.R. No. 120064, Aug. 15, 1997.
72 PLDT v. Ylagan, G.R. No. 155645, Nov. 24, 2006.
73 Salinas v. NLRC, G.R. No. 114671, Nov. 24, 1999.
74 Fabela v. San Miguel Corporation, G.R. No. 150658, Feb. 9, 2007.
75 Under Policy Instructions No. 20; Raycor Aircontrol Systems, Inc. v. NLRC, G. R. No. 114290, Sept. 9, 1996, 261 SCRA 589.
76 Abesco Construction and Development Corp. v. Ramirez, G.R. No. 141168, April 10, 2006.
65
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67
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contrast,enjoysecurityoftenureandarelegallyentitledtoremainintheserviceoftheiremployerandtoholdonto
theirworkorpositionuntiltheirservicesareterminatedbyanyofthemodesofterminationofservicerecognizedunder
theLaborCode.65
2. Due process likewise varies. In case of project employment, if the termination is brought about by the
completionoftheprojectoranyphasethereof,dueprocessiscompliedwithevenifnopriornoticeofterminationis
served.Forterminationofregularemployment,thedueprocessrequiredwouldnecessarilydependontheground/s
cited. If the termination is for just cause/s, due process applicable to Article 282 terminations applies. If due to
authorizedcause/s,dueprocessapplicabletoArticles283and284terminationsshouldbefollowed.
2.INDICATORSOFPROJECTEMPLOYMENT.
a.6indicatorsofprojectemployment.
Eitheroneormoreofthefollowingcircumstances,amongothers,maybeconsideredasindicator/sthatan
employeeisaprojectemployee:
1. The duration of the specific/identified undertaking for which the worker is engaged is reasonably
determinable.
2. Such duration, as well as the specific work/service to be performed, is defined in an employment
agreementandismadecleartotheemployeeatthetimeofhiring.
3. Thework/serviceperformedbytheemployeeisinconnectionwiththeparticularprojectorundertakingfor
whichheisengaged.
4. The employee, while not employed and awaiting engagement, is free to offer his services to any other
employer.
5. Theterminationofhisemploymentintheparticularproject/undertakingisreportedtotheRegionalOffice
oftheDepartmentofLaborandEmploymenthavingjurisdictionovertheworkplace,withinthirty(30)days
followingthedateofhisseparationfromwork,usingtheprescribedformonemployeesterminationsor
dismissalsorsuspensions.
6. An undertaking in the employment contract by the employer to pay completion bonus to the project
employeeaspracticedbymostconstructioncompanies.66
b.Someprinciplesonprojectemployment.
1. Projectemployeesshouldbeinformedoftheirstatusassuchatinceptionoftheemploymentrelationship.67
2. Theremustbeawrittencontractofprojectemploymentstatingthedurationoftheprojectemploymentas
wellastheparticularworkorservicetobeperformed.68
3. Failuretopresentcontractofprojectemploymentmeansthatemployeesareregular.69
4. Regularemploymentisinconsistentwithprojectemployment.Inotherwords,aregularemployeecannot
beatthesametimeprojectemployee.70
5. Intervalsinemploymentcontractsindicateprojectemployment.71
6. Continuous,asopposedtointermittent,rehiringshowsthatemployeeisregular.72
7. Projecttoprojectbasisofemploymentheldvalid.73
8. Lengthofservicenotcontrollingdeterminantofemploymenttenure.74
6

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1.SEASONALEMPLOYMENT.
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a.Concept.
A seasonal employee is one whose work or service to be performed is seasonal in nature and the
employmentisforthedurationoftheseason.86
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b.Regularseasonalemployment.
Seasonal employees may attain regularity in their employment as such. Once they attained such regularity,
theyareproperlytobecalledregularseasonalemployees.
Regularseasonalworkersarecalledtoworkfromtimetotime,mostlyduringcertainseason.Thenatureof
their relationship with the employer is such that during offseason, they are temporarily laid off but they are re
employedduringtheseasonorwhentheirservicesmaybeneeded.Theyarenot,strictlyspeaking,separatedfromthe
servicebutaremerelyconsideredasonleaveofabsencewithoutpayuntiltheyarereemployed.Theiremployment
relationshipisneverseveredbutonlysuspended.Assuch,theycanbeconsideredasbeingintheregularemployment
oftheemployer.87
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c.Requisitesforregularityofemploymentofseasonalemployees.
ThecaseofHaciendaFatimav.NationalFederationofSugarcaneWorkersFoodandGeneralTrade,[G.R.
No.149440,January28,2003],enunciatestherequisitesinorderthataseasonalemployeemaybedeemedtohave
attainedregularityofemploymentassuch,thus:
1. Theseasonalemployeeshouldperformworkorservicesthatareseasonalinnature;and
2. Theymusthavealsobeenemployedformorethanone(1)season.
Bothrequisitesshouldconcurinorderthattheemployeemaybeclassifiedasregularseasonalemployee.If
the seasonal worker is engaged only for the duration of one (1) season, then, he does not attain regularity of
employmentasaseasonalworker.
Tomas Lao Construction, v. NLRC, G.R. No. 116781, Sept. 5, 1997.

Filipinas Pre-Fabricated Building Systems [Filsystems], Inc. v. Puente, [G.R. No. 153832, March 18, 2005].
Section 3.2., Department Order No. 19, Series of 1993, Guidelines Governing the Employment of Workers in the Construction Industry which supersedes Policy Instructions No. 20 of 1977; Saberola v. Suarez, G.R. No. 151227, July 14, 2008; Salazar v. NLRC, G.R. No. 109210, April 17,
1996, 256 SCRA 273.
80 See Dacuital v. L.M. Camus Engineering Corp., [G.R. No. 176748, September 1, 2010].
81 Cioco v. C. E. Construction Corporation, G.R. No. 156748, Sept. 8, 2004.
82 Department Order No. 19, [April 1, 1993]; Cioco v. C. E. Construction Corporation, supra; See also PLDT v. Ylagan, G.R. No. 155645, Nov. 24, 2006; Phesco, Inc. v. NLRC, G.R. Nos. 104444-49, Dec. 27, 1994.
83 Dacuital v. L.M. Camus Engineering Corp., G.R. No. 176748, Sept. 1, 2010; Equipment Technical Services v. CA, G.R. No. 157680, Oct. 8, 2008; Goma v. Pamplona Plantation, Inc., G.R. No. 160905, July 4, 2008; Belle Corp. v. Macasusi, G.R. No. 168116, April 22, 2008.
84 Section 3.4. of Department Order No. 19, Series of 1993; Hanjin Heavy Industries and Construction Co, Ltd. v. Ibaez, [G.R. No. 170181, June 26, 2008].
85 Southern Cotabato Development and Construction, Inc. v. NLRC, G.R. No. 121582, Oct. 16, 1997, 280 SCRA 853.
86 Article 280, Labor Code; Section 5, Rule I, Book VI of the Rules to Implement the Labor Code.
87 Abasolo v. NLRC, G.R. No. 118475, Nov. 29, 2000; Bacolod-Murcia Milling Co., Inc. v. NLRC, G.R. No. 84272, Nov. 21, 1991, 204 SCRA 155, 158; Visayan Stevedore Transportation Company v. CIR, No. L-21696, Feb. 25, 1967.
77
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(3) Seasonal employment
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1. Projectemployeesenjoysecurityoftenureduringthetermoftheprojectemployment.77
2. Iftheprojectorthephaseoftheprojecttheprojectemployeeisworkingonhasnotyetbeencompleted
andhisservicesareterminatedwithoutjustorauthorizedcauseandthereisnoshowingthathisservicesare
unsatisfactory, such termination is considered illegal, hence, the project employee is entitled to
reinstatement with backwages to his former position or substantially equivalent position. If the
reinstatementisnolongerpossible,theemployeeisentitledtohissalariesfortheunexpiredportionofthe
agreement.78
3. Projectemployeesarenot,bylaw,entitledtoseparationpayiftheirservicesareterminatedasaresultof
thecompletionoftheprojectoranyphasethereofinwhichtheyareemployed.Thereasonisthattheir
servicesaredeemedcoterminouswiththeprojectorphasethereof.79
4. Project employees have presumably become regular employees if they are allowed to work beyond the
completionoftheprojectoranyphasethereoftowhichtheywereassignedorafterthedaycertainwhich
theyandtheiremployerhavemutuallyagreedforitscompletion.Havingbecomeregularemployees,they
cannolongerbeterminatedonthebasisofthecompletionoftheprojectoranyphasethereoftowhich
theyweredeployed.80
5. Advancenoticeofterminationofprojectemployment,notrequired.81
6. Report to DOLE on termination of project employees, required.82 Report should be made after every
completionofprojectorphasethereof.83
7. Completionbonusasindicatorofprojectemployment.84
8. Burdenofproofinterminationofprojectemploymentrestsontheemployer.85
7

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1.CASUALEMPLOYMENT.
Ch
na
a.Meaningofcasualemployment.
Thereiscasualemploymentwhereanemployeeisengagedtoperformajob,workorservicewhichismerely
incidentaltothebusinessoftheemployer,andsuchjob,workorserviceisforadefiniteperiodmadeknowntothe
employeeatthetimeofengagement.88
1.FIXEDTERMEMPLOYMENT.
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a.Requisitesforvalidityoffixedtermcontractsofemployment.
Thetwo(2)requisitesorcriteriaforthevalidityofafixedtermcontractofemploymentareasfollows:
1. Thefixedperiodofemploymentwasknowinglyandvoluntarilyagreeduponbytheparties,withoutany
force,duressorimproperpressurebeingbroughttobearupontheemployeeandabsentanyother
circumstancesvitiatinghisconsent;or
2. Itsatisfactorilyappearsthattheemployerandemployeedealtwitheachotheronmoreorlessequalterms
withnomoraldominancewhateverbeingexercisedbytheformeronthelatter.95
If the foregoing criteria are not present, the fixedterm contract of employment should be struck down for
beingillegal.96
b.Someprinciplesonfixedtermemployment.
1. Fixedtermemploymentisvalidevenifdutiesareusuallynecessaryordesirableintheemployersusual
businessortrade.97
2. Noticeofterminationnotnecessaryinfixedtermemployment.98
3. Employeeisdeemedregularifcontractfailedtostatethespecificfixedperiodofemployment.99
4. Chargesformisconductorotherwrongfulactsoromissions,relevantonlyinterminationpriortoexpiration
oftheterm.Notrelevantifterminationisduetoexpirationoffixedperiod.100
5. Employeesallowedtoworkbeyondfixedtermbecomeregularemployees.101
6. Renderingworkbeyondone(1)yearwouldresulttoregularemployment.102
7. Successiverenewalsoffixedperiodcontractswillresulttoregularemployment.103
8. Hiringofemployeesonauniformlyfixed5monthbasisandreplacingthemupontheexpirationoftheir
contracts with other workers with the same employment status circumvents their right to security of
tenure.104
89
f.
Article 280, Labor Code; Section 5 [b], Rule I, Book VI, Rules to Implement the Labor Code, as amended by Article IV, Department Order No. 10, Series of 1997; Conti v. NLRC, G.R. No. 119253, April 10, 1997, 271 SCRA 114.
Section 5 [b], Rule I, Book VI, Rules to Implement the Labor Code, as amended by Article IV, Department Order No. 10, Series of 1997; Capule, v. NLRC, G.R. No. 90653, Nov. 12, 1990.
Kimberly Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor Association In Line Industries and Agriculture v. Drilon, G.R. Nos. 77629 and 78791, May 9, 1990, 185 SCRA 190; See also Kay Products, Inc. v. CA, G.R. No. 162472, July 28, 2005; Cebu
Engineering and Development Company, Inc. v. NLRC, G.R. No. 118695, April 22, 1998.
91 Kimberly-Clark [Phils.], Inc. v. Secretary of Labor, [G.R. No. 156668, November 23, 2007].
92 Tan v. Lagrama, G.R. No. 151228, Aug. 15, 2002; Romares v. NLRC, G.R. No. 122327, Aug. 19, 1998.
93 Philippine American Management Association, v. CIR, G.R. No. L-37206, April 15, 1988.
94 Brent School, Inc. v. Zamora and Alegre, [G.R. No. 48494, February 5, 1990].
95 Philippine National Oil Company-Energy Development Corporation v. NLRC, [G.R. No. 97747, March 31, 1993]; See also Philips Semiconductors [Phils.], Inc. v. Fadriquela, G.R. No. 141717, April 14, 2004; Labayog v. M.Y. San Biscuits, Inc., G.R. No. 148102, July 11, 2006; Medenilla
v. Philippine Veterans Bank, G.R. No. 127673, March 13, 2000.
96 Pure Foods Corporation v. NLRC, [G.R. No. 122563, December 12, 1997, 283 SCRA 133].
97 Caparoso v. CA, G.R. No. 155505, February 15, 2007.
98 Pangilinan v. General Milling Corporation, supra; Blancaflor v. NLRC, G.R. No. 101013, Feb. 2, 1993, 218 SCRA 366; New Sunrise Metal Construction v. Pia, G.R. No. 171131, July 10, 2007.
99 Poseidon Fishing v. NLRC, [G.R. No. 168052, February 20, 2006].
100 AMA Computer College, Paranaque, v. Austria, [G.R. No. 164078, November 23, 2007].
101 Viernes v. NLRC, [G.R. No. 108405, April 4, 2003].
102 Megascope General Services v. NLRC, [G.R. No. 109224, June 19, 1997, 274 SCRA 147, 156]; Agusan del Norte Electric Cooperative, Inc. v. Cagampang and Garzon, [G.R. No. 167627, October 10, 2008].
103 Philips Semiconductors [Phils.], Inc. v. Fadriquela, [G.R. No. 141717, April 14, 2004].
88
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Relevant Provision: No Labor Code provision on fixed-term employment.94
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(5) Fixed term employment
(a) Requisites for validity
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b.Someprinciplesoncasualemployment.
1. Casualemployeebecomesregularafteroneyearofservicebyoperationoflaw.89
2. Noregularappointmentpapersnecessaryforcasualemployeestobecomeregular.90
3. Theone(1)yearperiodshouldbereckonedfromthehiringdate.91
4. Repeatedrehiringofacasualemployeemakeshimaregularemployee.92
5. Thewagesandbenefitsofacasualemployeewhosestatusisconvertedintoregularemploymentshould
notbediminished.93
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(4) Casual employment
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8

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2.FIXEDTERMEMPLOYMENTOFOVERSEASFILIPINOWORKERS(OFWs).
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1.JOBCONTRACTINGANDLABORONLYCONTRACTINGARRANGEMENT.
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Relevant Provisions: Articles 106 to 109, Labor Code
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d. Job contracting and Labor-only contracting
(1) When is there job contracting?
(2) When is there labor-only contracting?
(3) Conditions that must concur in legitimate job contracting
(4) Effects of finding that there is labor-only contracting
=====================================================
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a.Contractingorsubcontracting,defined.
Contracting or subcontracting refers to an arrangement whereby a principal or indirect or statutory
employeragreestoputoutorfarmoutwithacontractororsubcontractortheperformanceorcompletionofaspecific
job,workorservicewithinadefiniteorpredeterminedperiod,regardlessofwhethersuchjob,workorserviceistobe
performedorcompletedwithinoroutsidethepremisesoftheprincipal.118
The terms contracting and subcontracting are synonymous under Philippine labor law. The term that is
morecommonlyused,however,issubcontracting.119
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b.Trilateralarrangement.
Therearethree(3)partiesinvolvedinthesearrangements:
(1) Theprincipalwho/whichfarmsoutawork,job,task,projectorservicetoacontractororsubcontractor;
(2) The contractor or subcontractor who/which has the capacity to independently undertake the
performanceofthework,job,task,projectorservice;and
(3) Thecontractualworkersengagedbythecontractororsubcontractortoaccomplishthework,job,task,
projectorservice.120
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1.1.PERMISSIBLEORLEGITIMATEJOBCONTRACTINGARRANGEMENT.
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a.Requisites.
Thefollowingaretherequisitesforthevalidityofajobcontractingarrangement:
(1) Thecontractorcarriesonanindependentbusinessandundertakesthecontractworkonhisownaccount
underhisownresponsibilityaccordingtohisownmannerandmethod,freefromthecontrolanddirection
ofhisemployerorprincipal(indirect/statutoryemployer)inallmattersconnectedwiththeperformance
oftheworkexceptastotheresultsthereof.
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105
f.
Pure Foods Corporation v. NLRC, [G.R. No. 122653, December 12, 1997, 283 SCRA 133]; Universal Robina Corp. v. Catapang, [G.R. No. 164736, October 14, 2005].
Coca-Cola Bottlers Phils., Inc. v. De la Cruz, [G.R. No. 184977, December 7, 2009]; Pacquing v. Coca-Cola Philippines, Inc., [G.R. No. 157966, January 31, 2008]; Magsalin & Coca-Cola Bottlers Phils., Inc. v. National Organization of Working Men (N.O.W.M.), [G.R. No. 148492, May 9,
2003].
106 Medenilla v. Philippine Veterans Bank, infra; George Anderson v. NLRC, G.R. No. 111212, Jan. 22, 1996, 252 SCRA 116; 322 Phil. 122, 137.
107 New Sunrise Metal Construction v. Pia, [G.R. No. 171131, July 10, 2007].
108 See second 2002 Resolution in Millares v. NLRC, [G.R. No. 110524, July 29, 2002, 385 SCRA 306].
109 Pentagon International Shipping, Inc. v. Adelantar, [G.R. No. 157373, July 27, 2004].
110 Gu-Miro v. Adorable, G. R. No. 160952, Aug. 20, 2004.
111 Id.
112 De La Cruz v. Maersk Filipinas Crewing, Inc., [G.R. No. 172038, April 14, 2008].
113 Millares v. NLRC, [G.R. No. 110524, July 29, 2002, 385 SCRA 306]; See also De La Cruz v. Maersk Filipinas Crewing, Inc., G.R. No. 172038, April 14, 2008.
114 Ravago v. Esso Eastern Marine, Ltd., [G.R. No. 158324, March 14, 2005].
115 Ravago v. Esso Eastern Marine, Ltd., supra; Millares v. NLRC, supra.
116 OSM Shipping Philippines, Inc. v. NLRC, [G.R. No. 138193, March 5, 2003].
117 Delos Santos v. Jebsen Maritime, Inc., [G.R. No. 154185, November 22, 2005].
118 Section 4, Department Order No. 18-02, Series of 2002, [Feb. 21, 2002].
119 No. 1, DOLE Primer on Contracting and Subcontracting, Effects of Department Order No. 3, Series of 2001.
104
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a.SomeprinciplesonfixedtermemploymentofOFWs.
1. OFWscanneveracquireregularemployment.108
2. EmploymentcontractsofOFWsforindefiniteperiod,notvalid.109
3. OFWsdonotbecomeregularemployeesbyreasonofnatureofwork.110
4. SeriesofrehiringofOFWscannotripenintoregularemployment.111
5. CBAcannot override the terms andconditionsprescribed bythe POEAundertheStandardEmployment
ContractforOFWs.112
6. ProbationaryemploymentofOFWs,amisnomer.113
7. TheemploymentofOFWsforafixedperiod,notdiscriminatory.114
8. ThecontractsofOFWsceaseuponexpirationthereof.115
9. Hiringofseamanforoverseasemploymentbutassigninghimtolocalvesseldoesnotaffecthisstatusasan
OFW.116
10.Seamanhiredforoverseasdeploymentbutlaterassignedtodomesticoperationsaftertheexpirationofhis
overseascontractceasestobeanOFW.117
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9. Employmentonadaytodaybasisforatemporaryperiodwillresulttoregularemployment.105
10.Terminationpriortolapseoffixedtermcontractshouldbeforajustorauthorizedcause.106
11.Liabilityforillegaldismissaloffixedtermemployeeisonlyforsalaryforunexpiredportion.107
9

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(2) Thecontractorhassubstantialcapitalorinvestmentintheformoftools,equipment,machineries,work
premises,andothermaterialswhicharenecessaryintheconductofthebusiness.121
(3) The agreement between the principal (or indirect/statutory employer) and contractor/ subcontractor
assuresthecontractualemployeesentitlementtoalllaborandoccupationalsafetyandhealthstandards,
freeexerciseoftherighttoselforganization,securityoftenure,andsocialandwelfarebenefits.122
Absenceofanyoftherequisitesmakesitalaboronlycontractingarrangement.123
1.2.LABORONLYCONTRACTING.
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a.Laboronlycontracting,expresslyprohibitedbylawandtherules.
LaboronlycontractingisexpresslyprohibitedunderArticle106oftheLaborCode.125
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c.Requisites/Elementsoflaboronlycontracting.
(1) (a)thecontractor/subcontractordoesnothavesubstantialcapitalorinvestmentwhichrelatestothejob,
work or service to be performed and (b) the employees recruited, supplied or placed by such
contractor/subcontractorareperformingactivitieswhicharedirectlyrelatedtothemainbusinessofthe
principal;126
OR
(2) Thecontractor/subcontractordoesnotexercisetherightofcontrolovertheperformanceoftheworkof
thecontractualemployee.(Note:EmphasisandCAPITALIZATIONsuppliedbytheSupremeCourtinthe
samecaseofPhilippineAirlines,Inc.v.Ligan,[G.R.No.146408,February29,2008]).127
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Evenifonlyoneofthetwo(2)elementsaboveispresent,thereislaboronlycontracting.
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d.Effectsofalaboronlycontractingarrangement.
Insummary,thefollowingaretheeffectsofalaboronlycontractingarrangement:
1. Thelaboronlycontractorwillbetreatedastheagentorintermediaryoftheprincipal.Sincetheactofan
agentistheactoftheprincipal,representationsmadebythelaboronlycontractortotheemployeeswill
bindtheprincipal.
2. Theprincipalwillbecometheemployerasifitdirectlyemployedtheworkerssuppliedbythelaboronly
contractor to undertake the subcontracted job or service. It will be responsible to them for all their
entitlementsandbenefitsunderlaborlaws.
3. Theprincipalandthelaboronlycontractorwillbesolidarilytreatedastheemployer.
4. Theemployeeswillbecomeemployeesoftheprincipal,subjecttotheclassificationsofemployeesunder
Article280oftheLaborCode.128
f.
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2.TESTSTODETERMINETHEEXISTENCEOFPERMISSIBLEORLEGITIMATEJOBCONTRACTINGARRANGEMENT.
Todeterminetheexistenceofpermissibleorlegitimatejobcontractingarrangement,thefollowingtestsmay
beapplied:
a.Rightofcontroltest;
b.Substantialcapitalorinvestmenttest;and
c.Legalrightsandbenefitscompliancetest.
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De los Santos v. NLRC, [G.R. No. 121327, December 20, 2001, 423 Phil. 1020, 1032]; See also Manila Electric Company v. Benamira, G.R. No. 145271, July 14, 2005; Manila Water Co., Inc. v. Pena, G.R. No. 158255, July 8, 2004; Corporal, Sr. v. NLRC, G.R. No. 129315, Oct. 2,
2000, 395 Phil. 890.
See also Almeda v. Asahi Glass Philippines, Inc., G.R. No. 177785, Sept. 3, 2008; Acevedo v. Advanstar Co., Inc., G.R. No. 157656, Nov. 11, 2005; Vinoya v. NLRC, G.R. No. 126586, Feb. 2, 2000, 324 SCRA 469.
123 Philippine School of Business Administration [PSBA]-Manila v. NLRC, G.R. No. 114143, Aug. 28, 1996; Tabas v. California Manufacturing Co., Inc., G.R. No. 80680, Jan. 26, 1989, 169 SCRA 497.
124 Wack Wack Golf & Country Club v. NLRC, [G.R. No. 149793, April 15, 2005]; See also San Miguel Corp. v. Semillano, G.R. No. 164257, July 5, 2010.
125 Teng v. Pahagac, G.R. No. 169704, Nov. 17, 2010.
126 Section 5, Rules Implementing Articles 106 to 109 of the Labor Code, as amended by Department Order No. 18-02, [Series of 2002]; Philippine Airlines, Inc. v. Ligan, [G.R. No. 146408, February 29, 2008]; See Babas v. Lorenzo Shipping Corp., G.R. No. 186091, Dec. 15, 2010.
127 See Article 106, Labor Code; No. 9, DOLE Primer on Contracting and Subcontracting, Effects of Department Order No. 3, Series of 2001; See also Almeda v. Asahi Glass Philippines, Inc., G.R. No. 177785, Sept. 3, 2008; Coca-Cola Bottlers Phils., Inc. v. Agito, G.R. No. 179546, Feb.
13, 2009; Manila Water Co., Inc. v. Pena, G.R. No. 158255, July 8, 2004; Sandoval Shipyards, Inc. v. Pepito, G.R. No. 143428, June 25, 2001; Escario v. NLRC, G.R. No. 124055, June 8, 2000.
128 See Manila Electric Company v. Benamira, G.R. No. 145271, July 14, 2005; Also Coca-Cola Bottlers Phils., Inc. v. De la Cruz, [G.R. No. 184977, December 7, 2009]; Teng v. Pahagac, [G.R. No. 169704, November 17, 2010].
121
122
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b.Laboronlycontracting,meaning.
Laboronly contracting refers to an arrangement where the contractor merely recruits, supplies or places
workerstoperformawork,job,task,projectorserviceforaprincipal.
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b.Otherfactorsindicativeofpermissiblejobcontractingarrangement.
In order to be considered an independent contractor, it is not enough to show substantial capitalization or
investmentintheformoftools,equipment,machineryandworkpremises.Inaddition,thefollowingfactorsneedtobe
considered:
(1) Whetherthecontractoriscarryingonanindependentbusiness;
(2) Thenatureandextentofthework;
(3) Theskillrequired;
(4) Thetermanddurationoftherelationship;
(5) Therighttoassigntheperformanceofspecifiedpiecesofwork;
(6) Thecontrolandsupervisionoftheworkers;
(7) Thepoweroftheemployerwithrespecttothehiring,firingandpaymentofworkersofthecontractor;
(8) Thecontrolofthepremises;
(9) Thedutytosupplypremises,tools,appliances,materials,andlabor;and
(10) Themode,mannerandtermsofpayment.124
10

2.1.RIGHTOFCONTROLTEST.
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2.2.SUBSTANTIALCAPITALORINVESTMENTTEST.
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Ch
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b.Rightofcontrol,meaning.
Therighttocontrolreferstotherightreservedtothepersonforwhomtheservicesofthecontractualworkersare
performed,todeterminenotonlytheendtobeachieved,butalsothemannerandmeanstobeusedinreachingthat
end.(Section5,DepartmentOrderNo.1802,Seriesof2002,[Feb.21,2002]).
Ch
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a.Substantialcapitalorinvestmenttest,howmade.
Thesubstantialcapitalorinvestmenttestseekstoaddressthesecondofthethree(3)elementsofpermissible
jobcontractingarrangement,thatis,whetherthecontractorhassubstantialcapitalorinvestmentintheformoftools,
equipment,machineries,workpremises,andothermaterialswhicharenecessaryintheconductofitsbusiness.129
If the answer is in the affirmative, the second requisite in permissible job contracting/ subcontracting
arrangementisfullycompliedwith.
b.Substantialcapitalorinvestment,meaning.
Substantial capital or investment refers to the capital stocks and subscribed capitalization in the case of
corporations,aswellastools,equipment,implements,machineriesandworkpremises,actuallyanddirectlyusedbythe
contractor/subcontractorintheperformanceorcompletionofthejob,workorservicecontractedout.130
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2.3.LEGALRIGHTSANDBENEFITSCOMPLIANCETEST.
a.Elementofcompliancewithcontractualemployeesrightsandbenefitsinpermissiblejob
contracting/subcontractingarrangement.
Thelegalrightsandbenefitscompliancetestaddressesthethirdofthethree(3)elementsofpermissiblejob
contracting, that is, whether the agreement between the principal (or indirect/statutory employer) and contractor
assures the contractual employees of the latter of their entitlement to all labor and occupational safety and health
standards,freeexerciseoftherighttoselforganization,securityoftenure,andsocialandwelfarebenefits.132
If answered in the positive, the third and last element of permissible job contracting arrangement is fully
satisfiedandcompliedwith.
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b.Rightsofacontractualemployee.
Asanemployeeofthecontractorhisdirectemployer,acontractualemployeeisentitledtoalltherightsand
privilegesduearegularemployeeasprovidedforintheLaborCode.Suchrightsincludethefollowing:
(a) Safeandhealthfulworkingconditions;
(b) Laborstandardssuchasserviceincentiveleave,restdays,overtimepay,holidaypay,13thmonthpayand
separationpay;
(c) Socialsecurityandwelfarebenefits;
(d) Selforganization,collectivebargainingandpeacefulconcertedaction;and
(e) Securityoftenure.133
3.MAJORDISTINCTIONSBETWEENLEGITIMATEJOBCONTRACTINGANDLABORONLYCONTRACTING.
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Theprincipaldistinctionsbetweenlegitimateandpermissiblejobcontracting,ontheonehand,andthe
prohibitedlaboronlycontracting,ontheother,maybesummedupasfollows:
1.In the former, no employeremployee relationship exists between the contractual employees of the job
contractor and the principal; while in the latter, an employeremployee relationship is created by law
betweentheprincipalandthecontractualemployeesofthelaboronlycontractor.134
2.In the former, the principal is considered only an indirect employer, as this term is understood under
Article107oftheLaborCode;whileinthelatter,theprincipalisconsideredthedirectemployerofthe
contractualemployeesinaccordancewiththelastparagraphofArticle106oftheLaborCode.135
Manila Electric Company v. Benamira, G.R. No. 145271, July 14, 2005; Manila Water Co., Inc. v. Pena, G.R. No. 158255, July 8, 2004; Corporal, Sr. v. NLRC, G.R. No. 129315, Oct. 2, 2000, 395 Phil. 890.
Section 5, Department Order No. 18-02, Series of 2002, [Feb. 21, 2002]; No. 8, DOLE Primer on Contracting and Subcontracting, Effects of Department Order No. 3, Series of 2001.
Neri v. NLRC, G.R. Nos. 97008-09, July 23, 1993, 224 SCRA 7171.
132 See also Acevedo v. Advanstar Co., Inc., G.R. No. 157656, Nov. 11, 2005; Vinoya v. NLRC, G.R. No. 126586, Feb. 2, 2000, 324 SCRA 469.
134 PCI Automation Center, Inc. v. NLRC, G.R. No. 115920, Jan. 29, 1996 citing Philippine Bank of Communications v. NLRC, G.R. No. 66598, Dec. 19, 1986, 146 SCRA 347.
135 PCI Automation Center, Inc. v. NLRC, supra.
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Jurisprudentially,substantialcapitalandinvestmentintools,equipment,implements,machineriesandwork
premises should be treated as two (2) distinct and separate factors in determining whether permissible job
contracting/subcontractingarrangementexistsinacertaincase.131
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a.Rightofcontroltest,howmade.
Therightofcontroltestbasicallyaddressesthefirstofthethree(3)elementsofpermissiblejobcontracting
arrangement,thatis,whetherthecontractorcarriesonanindependentbusinessandundertakesthecontractworkon
his own account under his own responsibility according to his own manner and method, free from the control and
directionofhisemployerorprincipal(indirect/statutoryemployer)inallmattersconnectedwiththeperformanceofthe
workexceptastotheresultsthereof.
Iftheissueisansweredintheaffirmative,thenthefirstrequisiteofpermissiblejobcontractingarrangementis
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3.Intheformer,thejointandseveralobligationoftheprincipalandthelegitimatejobcontractorisonlyfora
limitedpurpose,thatis,toensurethattheemployeesarepaidtheirwages.Otherthanthisobligationof
payingthewages,theprincipalisnotresponsibleforanyclaimmadebythecontractualemployees;whilein
thelatter,theprincipalbecomessolidarilyliablewiththelaboronlycontractorforalltherightfulclaimsof
thecontractualemployees.136
4. In the former, the legitimate job contractor/subcontractor undertakes to perform a specific job for the
principal; while in the latter, the laboronly contractor merely provides the personnel to work for the
principal.137
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Relevant Provisions: Articles 277 [b], 279, 282 and 283, Labor Code
1.STATUTORYBASiSOFDUEPROCESS.
a. Dueprocessinterminationofemploymentreferstostatutory,andnotconstitutional,dueprocess.
144
ItisnowtheprevailingdoctrinethatitisnotthedueprocessprovidedintheConstitution thatisrequiredin
termination of employment but the statutory due process provided under Article 277 [b] of the Labor Code.
Constitutionaldueprocessprotectstheindividualfromthegovernmentandassureshimofhisrightsincriminal,civil
or administrative proceedings; while statutory due process protects employees from being unjustly terminated
withoutjustcauseafternoticeandhearing.Putdifferently,theBillofRightsisnotmeanttobeinvokedagainstactsof
private individuals like employers. Private actions, no matter how egregious, cannot violate the constitutional
guarantees.
b.Otherconstitutionalrightsthatcannotbeinvokedinadministrativeorlaborcases.
ForthesamereasonthatthedueprocessclauseintheConstitutioncannotbeinvokedagainsttheemployer,
thefollowingconstitutionalrightshavenoapplicationtoadministrativeorlaborcases:
1. Right against selfincrimination145 except if the case partakes of the character of a criminal proceeding
becauseofthenatureofthepenaltythatmaybeimposedfortheoffense.146
2. Right to counsel147 because it is meant to protect a suspect in a criminal case who is under custodial
investigation.148 But if the employer failed to inform the employee who is undergoing administrative
investigationofhisrighttocounsel,itwouldamounttodeprivationofdueprocess.149
3. Righttoequalprotectionofthelaws150becauseitisaddressedonlytothestateorthoseactingundercolor
ofitsauthority.151
Id.; Coca-Cola Bottlers Phils., Inc. v. Agito, G.R. No. 179546, Feb. 13, 2009.
PCI Automation Center, Inc. v. NLRC, supra.
Section 7, Department Order No. 18-02, Series of 2002, [Feb. 21, 2002]; Aboitiz Haulers, Inc. v. Dimapatol, G.R. No. 148619, Sept. 19, 2006.
139 Section 14, Ibid..
140 Acevedo v. Advanstar Co., Inc., [G.R. No. 157656, November 11, 2005].
141 Babas v. Lorenzo Shipping Corp., [G.R. No. 186091, December 15, 2010].
142 Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame v. Burlingame Corporation, [G.R. No. 162833, June 15, 2007].
143 SSS v. CA, [G.R. No. 100388, December 14, 2000].
144 Section 1, Article III [Bill of Rights], 1987 Constitution which states that no person shall be deprived of life, liberty or property without due process of law, nor shall any person be denied the equal protection of the laws.; Per Agabon v. NLRC, [G.R. No. 158693, November 17,
2004].
145 Section 17, Article III [Bill of Rights], 1987 Constitution.
146 Pascual, Jr. v. Board of Medical Examiners, G.R. No. L-25018, May 26, 1969; Cabal v. Kapunan, Jr., G.R. No. L-19052, Dec. 29, 1962.
148 Manuel v. N. C. Construction Supply, G.R. No. 127553, Nov. 28, 1997, 282 SCRA 326.
149 Punzal v. ETSI Technologies, Inc., [G.R. Nos. 170384-85, March 9, 2007].
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4.SOMEPRINCIPLESONLEGITIMATEJOBCONTRACTINGANDLABORONLYCONTRACTING.
1. Contractor,nottheprincipal,isconsideredthedirectemployerofthecontractualemployees.
2. Principalisdeemeddirectemployerofthecontractualemployeesinanyofthefollowingcases:
(a) Wherethereislaboronlycontracting;or
(b) WherethecontractingarrangementfallswithintheprohibitionsprovidedinSection6(Prohibitions)
thereof.138
3. Dutytoproducecopyofthecontractdevolvesuponboththeprincipalandthecontractor.139
4.Performanceoftheworkwithinoroutsidethepremisesoftheprincipal,notmaterialindeterminingthe
validityofjobcontractingarrangement.140
5.Thefactthatthecontractorhasonlytheprincipalasitssingleclientindicateslaboronlycontracting.141
6. Stipulation in the contract on nonexistence of employment relationship between the principal and the
employeesofthecontractor,notcontrolling.142
7.Incaseofdoubt,onemustbeclassifiedasanemployee,notasanindependentcontractor.143
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(a) Just Causes
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4. Right against unreasonable searches and seizures152 because it does not protect citizens from
unreasonablesearchesandseizuresperpetratedbyprivateindividualslikeemployers.153
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c.Doemployershavetherighttodueprocess?
Yes,forwhiletheintendmentofourlawsistofavortheemployee,however,innowayisitimpliedthatthe
employerisnotentitledtodueprocess.154
2.SUBSTANTIVEANDPROCEDURALASPECTSOFDUEPROCESS.
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b.Justcausesandauthorizedcauses,distinguished.
Adismissalbasedonajustcausemeansthattheemployeehascommittedawrongfulactoromission;whilea
dismissalbasedonanauthorizedcausemeansthatthereexistsagroundwhichthelawitselfallowstobeinvokedto
justifytheterminationofanemployeeevenifhehasnotcommittedanywrongfulactoromissionsuchasinstallationof
laborsavingdevices,redundancy,retrenchment,closureorcessationofbusinessoperations156ordisease.157
c.Proceduraldueprocessvariesdependingontheground/sinvoked.
Basedonlawandjurisprudence,itisclearthattheproceduraldueprocessrequiredtovalidlyterminatean
employeedependsonthegroundinvoked.
Ifforjustcause,dueprocessmeanscompliancewiththerequirementsof(1)serviceoffirstwrittennoticeto
explain,(2)hearingand(3)secondwrittennoticeoftermination.
If for authorized cause, due process means compliance with the requirement of service of notice to the
employeetobeterminatedandnoticetotheDOLEatleastone(1)monthpriortotheeffectivityofthetermination.No
hearingisrequired.
(SeefurtherdiscussiononthistopicundertheheadingofProceduralDueProcessbelow).
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(a) Just Causes
(a) Serious misconduct or
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1.SERIOUSMISCONDUCT.
a.Requisites.
Formisconductorimproperbehaviortobeajustcausefordismissal,thefollowingrequisitesmustconcur:
1. Itmustbeserious;
2. Itmustrelatetotheperformanceoftheemployeesduties;and
3. Itmustshowthattheemployeehasbecomeunfittocontinueworkingfortheemployer.158
Allthe3requisistesmustconcur.159
b.Someprinciplesonseriousmisconduct.
1. Thechargeforseriousmisconductmustnotbeamereafterthought.160
2. Seriesofirregularities,whenputtogether,mayconstituteseriousmisconduct.161
3. Actsdestructiveofthemoraleofcoemployeesconstituteseriousmisconduct.162
4. Committinglibelagainstanimmediatesuperiorconstitutesseriousmisconduct.163
Yrasuegui v. Philippine Airlines, Inc., [G.R. No. 168081, October 17, 2008]; Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc., [G.R. No. 162994, September 17, 2004].
Section 2, Article III, 1987 Constitution.
Waterous Drug Corporation v. NLRC, G.R. No. 113271, Oct. 16, 1997, 280 SCRA 735.
154 Unicraft Industries International Corporation v. CA, [G.R. No. 134903, March 26, 2001]; EDI-Staffbuilders International, Inc. v. NLRC, [G.R. No. 14558, October 26, 2007]; PLDT v. Honrado, G.R. No. 189366, Dec. 8, 2010.
155 Pascua v. NLRC, G.R. No. 123518, March 13, 1998; Manila Electric Co. [MERALCO] v. NLRC, G.R. No. 153180, Sept. 2, 2005; St. Lukes Medical Center, Inc. v. Notario, G.R. No. 152166, Oct. 20, 2010; Lima Land, Inc. v. Cuevas, G.R. No. 169523, June 16, 2010.
158 Roquero v. Philippine Air Lines, Inc., G.R. No. 152329, April 22, 2003.
159 Coca-Cola Bottlers, Phils., Inc. v. Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW, G.R. No. 148205, Feb. 28, 2005.
160 Coca-Cola Export Corp. v. Gacayan, [G.R. No. 149433, December 15, 2010].
161 Piedad v. Lanao del Norte Electric Cooperative, Inc., G.R. No. 73735, Aug. 31, 1987, 153 SCRA 500; See also Quiambao v. Manila Electric Company, G.R. No. 171023, Dec. 18, 2009.
162 Citibank, N.A. v. NLRC, G.R. No. 159302, Feb. 6, 2008.
163 Torreda v. Toshiba Information Equipment [Phils.], Inc., [G.R. No. 165960, February 8, 2007].
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a.Twofolddueprocessrequirement.
Therequirementofdueprocessistwofold,namely:
1. Substantive aspect which means that the dismissal must be for any of the just causes provided under
Article282oftheLaborCodeorthecompanyrulesandregulationspromulgatedbytheemployeroranyof
theauthorizedcausesunderArticles283and284thereof;and
2. Proceduralaspectwhichmeansthattheemployeemustbeaccordeddueprocess,theelementsofwhich
arenoticeandtheopportunitytobeheardandtodefendhimself.155
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(a) Just Causes
(a) Serious misconduct or
willful disobedience
i. Requisites
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1.INSURBORDINATIONORWSILLFULDISOBEDIENCEEOFTHELAWFULORDEROFTHEEMPLOYER.
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Roquero v. Philippine Air Lines, Inc., [G.R. No. 152329, April 22, 2003]; Plantation Bay Resort and Spa v. Dubrico, [G.R. No. 182216, December 4, 2009].
Santos, Jr. v. NLRC, G.R. No. 115795, March 6, 1998, 287 SCRA 117.
Navarro III v. Damasco, [G.R. No. 101875, July 14, 1995].
167 Stanford Microsystems, Inc. v. NLRC, [G.R. No. L-74187, January 28, 1988].
168 Chua-Qua v. Clave, [G.R. No. L-49549, August 30, 1990, 189 SCRA 117].
169 Garcia v. NLRC, G. R. No. 116568, Sept. 3, 1999; Supreme Steel Pipe Corp. v. Bardaje, [G.R. No. 170811, April 24, 2007].
170 Flores v. NLRC, [G.R. No. 109362, May 15, 1996, 256 SCRA 735].
171 Luzon Stevedoring Corporation v. CIR, G.R. No. L-18683, Dec. 31, 1965.
172 Haverton Shipping Ltd. v. NLRC, [G.R. No. 65442, April 15, 1985, 135 SCRA 685].
173 Echeverria v. Venutek Medika, Inc., G.R. No. 169231, Feb. 15, 2007; Solid Development Corporation Workers Association (SDCWA-UWP) v. Solid Development Corporation, [G.R. No. 165995, August 14, 2007].
174 Golden Thread Knitting Industries v. NLRC, G.R. No. 119157, March 11, 1999.
175 Dimalanta v. Secretary of Labor, [G.R. No. 83854, May 24, 1989].
176 ABS-CBN Employees Union v. NLRC, G.R. No. 111211, July 24, 1997, 276 SCRA 123.
177 Elizalde International [Phils.], Inc. v. CA, G.R. No. L-40553, February 26, 1981, 103 SCRA 247.
178 Aboc v. Metropolitan Bank and Trust Company, [G.R. Nos. 170542-43, December 13, 2010].
179 PLDT v. NLRC, [G.R. No. 74562, July 31, 1987].
180 Lopez v. NLRC, [G.R. No. 167385, December 13, 2005, 477 SCRA 596, 602].
181 Panuncillo v. CAP Philippines, Inc., [G.R. No. 161305, February 9, 2007].
182 Sanyo Travel Corporation v. NLRC, G.R. No. 121449, Oct. 2, 1997; Club Filipino, Inc. v. Sebastian, G.R. No. 85490, July 23, 1992, 211 SCRA 717.
183 Padilla v. NLRC, G.R. No. 114764, June 13, 1997, 273 SCRA 457.
184 R.A. No. 7877 (Anti-Sexual Harassment Act); Villarama v. NLRC and Golden Donuts, Inc., G.R. No. 106341, Sept. 2, 1994, 236 SCRA 280.
185 First Dominion Resources Corp. v. Pearanda and Vidal, [G.R. No. 166616, January 27, 2006].
186 Tanduay Distillery Labor Union v. NLRC, G.R. No. 73352, Dec. 06, 1995.
187 Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) v. Keihin Philippines Corp., [G.R. No. 171115, August 9, 2010].
188 Villamor Golf Club v. Pehid, [G.R. No. 166152, October 4, 2005].
189 Ramoran v. Jardine CMG Life Insurance Co., Inc., [G.R. No. 131943, February 22, 2000].
190 San Miguel Corporation v. NLRC, [G.R. No. 82467, June 29, 1989].
191 Ibarrientos v. NLRC, [G.R. No. 75277, July 31, 1989].
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Lawfulordersoftheemployersareusuallyexpressedbywayofcompanyrulesandregulations(CRR).Inorder
thatinsubordinationorwillfuldisobediencebyanemployeeoftheorders,regulationsorinstructionsoftheemployer
mayconstituteajustcauseforterminatinghisemployment,saidorders,regulations,orinstructionsmustbe:
164
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5. Possessionoruseofshabuorotherdrugs,avalidgroundtoterminateemployment.164
6. Immorality,asageneralrule,isnotajustgroundtoterminateemployment.Theexceptioniswhensuch
immoralconductisprejudicialordetrimentaltotheinterestoftheemployer .165
7. Immoralactcommittedbeyondofficehoursisavalidgroundtoterminateemployment.166
8. Sexualintercourseinsidecompanypremisesconstitutesseriousmisconduct.167
9. Theactofa30yearoldladyteacherinfallinginlovewitha16yearoldstudent,notimmoral.168
10. Fighting is a ground for termination but only the instigator or aggressor and not the victim who was
constrainedtodefendhimselfshouldbedismissed.169
11. Filingofcriminalcasebyanemployeedoesnotindicatehisinnocence.170
12. Challengingsuperiorstoafight,ajustcausefortermination.171
13. Assaultinganotheremployee,ajustcausefortermination.172
14. Utteranceofobscene,insultingoroffensivewordsconstitutesseriousmisconduct.173
15. Disrespectfulconductisnotseriousmisconductifprovokedbysuperiororemployer.174
16. Gamblingwithincompanypremises,aseriousmisconduct.175
17. Renderingservicetobusinessrival,ajustcausetoterminateemployment.176
18. Sellingproductsofacompetitor,ajustcausefortermination.177
19. Organizingacreditunionbyemployeesinabank,aseriousmisconduct.178
20. Deceivingacustomerforpersonalgain,ajustcausefortermination.179
21. Contractingworkincompetitionwithemployerconstitutesseriousmisconduct.180
22. Employerneednotsufferanydamagesresultingfromaseriousmisconductcommittedbyanemployee
againstacustomer.181
23. Intoxicationwhichinterfereswiththeemployeesworkconstitutesseriousmisconduct.182
24. The act of a teacher in pressuring a colleague to change the failing grade of a student is serious
misconduct.183
25. Sexualharassmentisajustgroundtodismiss.184
26. Sleepingwhileondutyisagroundfortermination.185
27. Dismissalistooharshapenaltyforeatingwhileatwork.186
28. Pilferageortheftofcompanyownedpropertyisajustcausetoterminate.187
29. Theftoffundsorpropertynotownedbyemployer,notagroundtoterminate.188
30. Actoffalsification,avalidgroundtoterminateemployment.189
31. Punchinginoftimecardsofotheremployees,ajustcausefortermination.190
32. Circulatingfakemealtickets,ajustcausefortermination.191
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Relevant Provision: Article 282 [b], Labor Code
1.GROSSANDHABITUALNEGLECTOFDUTIES.
a.Requisites.
1. Thenegligencemustbegrossincharacterwhichmeansabsenceofthatdiligencethatanordinarilyprudent
203
manwoulduseinhisownaffairs.
2. Habituality may be disregarded if negligence is gross or the damage or loss is substantial. 204Habitual
negligence implies repeated failure to perform ones duties for a period of time, depending upon the
circumstances.205
b.Testtodeterminenegligence.
Thetesttodeterminetheexistenceofnegligenceisasfollows:Didtheemployee,indoingtheallegednegligent
act,usethatreasonablecareandcautionwhichanordinarilyprudentpersonwoulduseinthesamesituation?206
c.Someprinciplesongrossandhabitualneglectofduties.
1. Simplenegligenceisnotsufficienttoterminateemployment.207
2. Negligenceisaquestionoffact.208
3. Absenceofanyformofnegligence,dismissalisillegal.209
4. Actualdamage,lossorinjury,notanessentialrequisite.210
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Ace Promotion and Marketing Corp. v. Ursabia, G.R. No. 171703, Sept. 22, 2006; Genuino Ice Company, Inc. v. Magpantay, G.R. No. 147790, June 27, 2006.
Equitable PCI Bank v. Dompor, G.R. Nos. 163293 & 163297, Dec. 8, 2010; St. Lukes Medical Center, Incorporated v. Fadrigo, G.R. No. 185933, Nov. 25, 2009, 605 SCRA 728, 738.
Alcantara, Jr. v. CA, [G.R. No. 143397, August 6, 2002].
195 Petron Corp. v. NLRC, [G.R. No. 154532, October 27, 2006].
196 Ace Promotion and Marketing Corp. v. Ursabia, [G.R. No. 171703, September 22, 2006].
197 Id.
198 ePacific Global Contact Center, Inc. v. Cabansay, [G.R. No. 167345, November 23, 2007].
199 Llosa-Tan v. Silahis International Hotel, [G.R. No. 77457, February 5, 1990].
200 Santos v. San Miguel Corporation, [G.R. No. 149416, March 14, 2003].
201 R.B. Michael Press v. Galit, [G.R. No. 153510, February 13, 2008].
202 San Miguel Corp. v. Pontillas, G.R. No. 155178, May 7, 2008; Westin Philippine Plaza Hotel v. NLRC, G.R. No. 121621, May 3, 1999.
203 Chavez v. NLRC, G.R. No. 146530, Jan. 17, 2005; Union Motor Corporation v. NLRC, G.R. No. 159738, Dec. 9, 2004; Sec. 4343.01[2], Department of Labor Manual.
204 Fuentes v. NLRC, [G.R. No. 75955, October 28, 1988]; Associated Bank v. NLRC, [G.R. No. 86023, June 29, 1989].
205 Premiere Development Bank v. Mantal, G.R. No. 167716, March 23, 2006, 485 SCRA 234, 239.
206 Reyes v. Maxims Tea House, [G.R. No. 140853, February 27, 2003].
207 St. Lukes Medical Center, Inc. v. Notario, G.R. No. 152166, Oct. 20, 2010; Talidano v. Falcon Maritime & Allied Services, Inc., G.R. No. 172031, July 14, 2008.
208 School of the Holy Spirit of Quezon City v. Taguiam, G.R. No. 165565, July 14, 2008; Reyes v. Maxims Tea House, G.R. No. 140853, Feb. 27, 2003.
209 St. Lukes Medical Center, Inc. v. Notario, [supra].
210 Sec. 4343.01[2], Department of Labor Manual.
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1. lawfulandreasonable;
2. sufficientlyknowntotheemployee;and
3. inconnectionwiththedutiesforwhichtheemployeehasbeenengagedtodischarge.192
b.Insubordinationorwillfuldisobedience;requisites.
Inorderforthegroundofwillfuldisobediencetobeconsideredajustcausetoterminateemployment,the
followingrequisitesmustconcur:
1. Theemployeesassailedconductmusthavebeenwillfulorintentional,thewillfulnessbeingcharacterized
byawrongfulandperverseattitude;and
2. The order violated must have been reasonable and lawful and made known to the employee and must
pertaintothedutiesforwhichhehasbeenengagedtodischarge.193
c.Someprinciplesoninsubordination.
1. Filingofacasequestioningvalidityofrulesandpoliciesdoesnotpreventemployerfromenforcingthem.194
2. Makingfalseallegationsincomplaintdoesnotconstituteinsubordination.195
3. Failuretoanswermemotoexplainconstituteswillfuldisobedience.196
4. Anothernoticeisrequiredincaseofterminationonthegroundoffailuretoanswermemotoexplain.197
5. Willfulnessofconductmaybededucedfromthemannerthereplyiswritten.198
6. Refusaltoundergorandomdrugtestingconstitutesinsubordination.
7. Unauthorizedencashmentofcheckisajustcausetoterminate.199
8. Prolongedpractice,notanexcuseforcommissionofwrongfulacts.200
9. Refusaltorenderovertimetomeetproductiondeadlineconstitutesinsubordination.201
10.Refusaltocomplywithalawfultransferconstitutesinsubordination.202
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(a) Just Causes
(b) Gross and habitual neglect
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1.ARTICLE282[c]CONTEMPLATESTWO(2)SEPARATEGROUNDS.
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Article282[c]oftheLaborCodeprescribestwo(2)separateanddistinctgroundsforterminationof
employment,towit:
1. Fraud;or
2. Willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative.
Commissionoffraudbyanemployeeagainsttheemployerwillnecessarilyresultinthelatterslossoftrustand
confidenceintheformer.Ontheotherhand,thegroundofwillfulbreachbytheemployeeofthetrustandconfidence
reposedinhimbytheemployermaynotnecessarilyinvolvefraudbutsomeotheractsthatwouldsimilarlyresultinthe
lossofsuchtrustandconfidence.
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Thecircumstancesevidencingfraudandmisrepresentationareasvariedasthepeoplewhoperpetrateit,each
assumingdifferentshapesandformsandmaybecommittedinasmanydifferentways.Fraudandmisrepresentation
are,therefore,neverpresumed;itmustbeprovedbyclearandconvincingevidenceandnotmerepreponderanceof
evidence.221
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b.Someprinciplesonfraud.
1. Lackofdamageorlossesnotnecessaryinfraudcases.222
2. Restitutiondoesnothaveabsolutoryeffect.223
3. Failuretodepositcollectionconstitutesfraud.224
4. Lackofmisappropriationorshortageisimmaterialincaseofunauthorizedencashmentofpersonalchecks
bytellerandcashier.225
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Thefollowingrequisitesshouldconcurforthedoctrineoflossoftrustandconfidencetoapply:
1. Thelossofconfidencemustnotbesimulated;
2. Itshouldnotbeusedasasubterfugeforcauseswhichareillegal,improperorunjustified;
3. Itmaynotbearbitrarilyassertedinthefaceofoverwhelmingevidencetothecontrary;
4. Itmustbegenuine,notamereafterthought,tojustifyearlieractiontakeninbadfaith;and
5. Theemployeeinvolvedholdsapositionoftrustandconfidence.226
Dycoco, Jr. v. Equitable PCI Bank (now Banco de Oro), [G.R. No. 188271, August 16, 2010].
Id,
Oriental Mindoro Electric Cooperative, Inc. v. NLRC, G.R. No. 111905, July 31, 1995; Atlas Consolidated Mining and Development Corporation v. NLRC, G.R. No. 75751, Oct. 17, 1990, 190 SCRA 505.
214 Genuino Ice Company, Inc. v. Magpantay, [G.R. No. 147790, June 27, 2006].
215 Valiao v. Hon. CA, [GR. No. 146621, July 30, 2004, 435 SCRA 543]; Philippine Geothermal, Inc. v. NLRC, G.R. No. 106370, Sept. 8, 1994; Sajonas v. NLRC, G.R. No. 49286, March 15, 1990; Manila Electric Company v. NLRC, G.R. No. 114129, Oct. 24, 1996.
216 Quiambao v. Manila Electric Company, [G.R. No. 171023, December 18, 2009].
217 PLDT v. Teves, [G.R. No. 143511, November 15, 2010]; Navarro v. Coca-Cola Bottlers Phils., Inc., [G.R. No. 162583, June 8, 2007].
218 Erector Advertising Sign Group, Inc. v. NLRC, [G.R. No. 167218, July 2, 2010].
219 Union Motor Corporation v. NLRC, [G.R. No. 159738, December 9, 2004].
220 Miranda v. Carreon, G.R. No. 143540, April 11, 2003, 401 SCRA 303, 309.
221 Solidbank Corporation v. Mindanao Ferroalloy Corporation, G.R. No. 153535, July 28, 2005, 464 SCRA 409, 426.
222 Villanueva v. NLRC, G. R. No. 129413, July 27, 1998; Diamond Motors Corporation v. CA, [G.R. No. 151981, December 1, 2003].
223 Gonzales v. NLRC and Pepsi-Cola Products, Phils., Inc., [G.R. No. 131653, March 26, 2001].
224 Aldeguer & Co., Inc./Loalde Boutique v. Tomboc, [G.R. No. 147633, July 28, 2008].
225 Central Pangasinan Electric Cooperative, Inc. v. Macaraeg, [G.R. No. 145800, January 22, 2003].
226 The Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, Dec. 15, 2010; Equitable PCI Bank v. Dompor, G.R. Nos. 163293 & 163297, Dec. 8, 2010 ; Rubia v. NLRC, G.R. No. 178621, July 26, 2010.
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(a) Just Causes
(c) Fraud or willful breach of trust
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i. Requisites
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5. Higherdegreeofdiligenceinthebankingindustry.211
6. Grossnegligencemayresulttolossoftrustandconfidence.212
7. Absences,ifauthorized,cannotbecitedasagroundtoterminateemployment.213
8. Tardinessorabsenteeism,ifnothabitual,cannotbecitedasagroundtoterminateemployment.214
9. Tardinessorabsenteeism,ifhabitual,maybecitedasagroundtoterminateemployment.215
10. Tardinessorabsenteeism,ifhabitual,maybetantamounttoseriousmisconduct.216
11. Absencesortardinessduetoemergency,ailmentorfortuitouseventarejustified.217
12. Mereallegationonabsences/tardiness,notsufficient;burdenofproofisontheemployer.218
13. Unblemishedrecordbeliesallegationofgrossandhabitualneglect.219
14. Unsatisfactoryorpoorperformance,inefficiencyorincompetence,consideredajustcausefordismissal
onlyifitamountstogrossandhabitualneglectofduties.220
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b.Positionoftrustandconfidence,meaning.
Positionoftrustandconfidence.isonewhereapersonisentrustedwithconfidenceondelicatematters,
orwiththecustody,handling,orcareandprotectionoftheemployersproperty.227
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c.Two(2)classesofpositionsoftrustandconfidence.
1. Managerialpositions.
2. Nonmanagerialpositionswhoseholdersthereofregularlyhandlesignificantamountsofmoneyorproperty
inthenormalandroutineexerciseoftheirfunctions.228Somepositionssoclassifiedare:
a. Supervisor.229
b. Salesman.230
c. Teller.231
d. Cashier.232
e. Engineer.233
f. Securityguardorsecurityofficer.234
g. Roomboyorchambermaid.235
h. AssistantCookorChiefCook.236
i. ChiefPurser.237
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1. Breachmustbewillfulandwithoutjustifiableexcuse.241
2. Ordinarybreachoftrustwillnotsuffice.242
3. Breachmustbefoundedonclearlyestablishedfacts.243
4. Breachmustbeworkrelated.244
5. Lossofconfidencemustnotbeamereafterthought.245
6. Employeespositionmustbereposedwithtrustandconfidence.246
7. In termination for loss of trust and confidence, the fact that the employer did not suffer losses is of no
moment.247
8. Employerhasburdenofproof.248
9. There must be some basis for the loss of trust and confidence which means that there is reasonable
groundtobelieveifnottoentertainthemoralconvictionthattheconcernedemployeeisresponsiblefor
themisconductandthatthenatureofhisparticipationthereinrenderedhimabsolutelyunworthyoftrust
andconfidencedemandedbyhisposition.249
10. Dismissalduetofengshuimismatch,notvalidgroundtolosetrustandconfidence.250
11. Commandresponsibilityofmanagerialemployees,agroundtodismiss.251
12. Confidentialemployeemaybedismissedforlossoftrustandconfidence.252
13. Grantofpromotionsandbonusesnegateslossoftrustandconfidence.253
14. Long years of service, absence of derogatory record and small amount involved, when deemed
inconsequentialinsofaraslossoftrustandconfidenceisconcerned.254
15. Dropping of criminal charges or acquittal in a criminal case arising from the same act does not affect
validityofdismissalbasedonlossoftrustandconfidence.255
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Lepanto Consolidated Mining Co. v. CA, [G.R. No. L-15171, April 29, 1961, 1 SCRA 1251].
Bristol Myers Squibb [Phils.], Inc. v. Baban, [G.R. No. 167449, December 17, 2008]; See also Mabeza v. NLRC, G.R. No. 118506, April 18, 1997, 271 SCRA 670.
Coca-Cola Bottlers, Phils., Inc. v. Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW, G.R. No. 148205, Feb. 28, 2005; Tan vs. NLRC, G. R. No. 128290, Nov. 24, 1998, 299 SCRA 169, 183.
230 Coca-Cola Bottlers, Phils., Inc. vs. Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW, G. R. No. 148205, Feb. 28, 2005.
231 Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg, [G. R. No. 145800, January 22, 2003].
232 Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg [supra] and Metro Drug Corporation vs. NLRC, [G.R. No. 72248, July 22, 1986, 143 SCRA 132],
233 Almoite vs. Pacific Architects, G. R. No. 73680, July 10, 1986.
234 Nasipit Lumber Co., Inc. vs. NLRC, G. R. No. L-54424, Aug. 31, 1989; Caete vs. NLRC, G. R. No. 130425, Sept. 30, 1999.
235 Manila Midtown Commercial vs. NUWHRAIN [Ramada Chapter], G. R. No. L-57268, March 25, 1988.
236 Concorde Hotel vs. CA, G. R. No. 144089, Aug. 9, 2001.
237 Etcuban, Jr. vs. Sulpicio Lines, Inc., G. R. No. 148410, Jan. 17, 2005.
238 The Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, Dec. 15, 2010.
239 Lamsan Trading, Inc. v. Leogardo, G.R. No. 73245, Sept. 30, 1986; Metro Drug Corporation v. NLRC, G.R. No. 72248, July 22, 1986; Gonzales v. NLRC and Pepsi-Cola Products, Phils., Inc., G.R. No. 131653, March 26, 2001.
240 Alcantara v. The Philippine Commercial and Industrial Bank, G.R. No. 151349, Oct. 20, 2010; PLDT v. Buna, G.R. No. 143688, Aug. 17, 2007.
241 Baron v. NLRC, G.R. No. 182299, Feb. 22, 2010; St. Lukes Medical Center v. Fadrigo, G.R. No. 185933, Nov. 25, 2009.
242 Salas v. Aboitiz One, Inc., G.R. No. 178236, June 27, 2008, 556 SCRA 374, 388.
243 Asia Pacific Chartering [Phils.], Inc. v. Farolan, G.R. No. 151370, Dec. 4, 2002.
244 Alcantara v. The Philippine Commercial and Industrial Bank, G.R. No. 151349, Oct. 20, 2010.
245 Salas v. Aboitiz One, Inc., [G.R. No. 178236, June 27, 2008].
246 Panday v. NLRC, G.R. No. 67664, May 20, 1992, 209 SCRA 122, 125-126.
247 Ang v. Philippine National Bank, [G.R. No. 178762, June 16, 2010].
248 Felix v. NLRC, G.R. No. 148256, Nov. 17, 2004.
249 Central Pangasinan Electric Cooperative, Inc. v. Macaraeg, G.R. No. 145800, Jan. 22, 2003; See also Sagales v. Rustans Commercial Corp., G.R. No. 166554, Nov. 27, 2008.
250 Wensha Spa Center, Inc. v. Yung, [G.R. No. 185122, August 16, 2010].
251 Muaje-Tuazon v. Wenphil Corp., [G.R. No. 162447, December 27, 2006].
252 PLDT v. Buna, [G.R. No. 143688, August 17, 2007].
253 Easycall Communications Phils., Inc. v. King, [G.R. No. 145901, December 15, 2005].
254 Etcuban, Jr. v. Sulpicio Lines, Inc., [G.R. No. 148410, January 17, 2005].
255 Metro Transit Organization, Inc. v. CA, G.R. No. 142133, Nov. 19, 2002.
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d. Rulesonterminationofmanagerialandsupervisoryemployeesdifferentfromthoseapplicabletorank
andfileemployees.
Asageneralrule,thedoctrineoftrustandconfidenceisrestrictedtomanagerialemployees.238Thismeans
thattherulesonterminationofemploymentapplicabletomanagerialorfiduciaryemployeesaredifferentfromthose
involvingordinaryemployeesnotholdingpositionsoftrustandconfidence.Inthelattercase,mereaccusationsbythe
employerwillnotbesufficient.239Thus,withrespecttorankandfilepersonnel,lossoftrustandconfidenceasaground
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 be sufficient. But as regards a managerial employee, the mere
existence of a basis for believing that such employee has breached the trust of his employer would suffice for his
dismissal.240
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16. Fullrestitutiondoesnotabsolveemployeeofoffensewhichresultedinlossoftrustandconfidence.256
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(a) Just Causes
(d) Abandonment of employment;
Elements that must concur
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Relevant Provision: Article 282 [b], Labor Code

1.ABANDONMENTOFWORK.
b.Requisites.
Toconstituteabandonment,two(2)elementsmustconcur,namely:
1. Theemployeemusthavefailedtoreportforworkormusthavebeenabsentwithoutvalidorjustifiable
reason;and
2. There must have been a clear intention on the part of the employee to sever the employeremployee
relationshipmanifestedbysomeovertact.258
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c.Someprinciplesonabandonment.
1. Mereabsenceisnotenoughtoconstituteabandonment.259
2. Clearintentiontoseveremploymentrelationship,necessary.260
3. Anemployeewhostoppedworkingbecauseofhermistakenbeliefthatshehasbeendismissedisnotguilty
ofabandonment.261
4. Abandonmentisafactualissue.262
5. Employerhastheburdenofprooftoproveabandonment.263
6. Thereisnoabandonmentwhenitwastheemployerwhopreventedtheworkersfromreportingfor
work.264
7. Dueprocessinabandonmentcasesconsistsonlyoftheserviceof2noticestotheemployee,viz.:
a. Firstnoticedirectingtheemployeetoexplainwhyheshouldnotbedeclaredashavingabandonedhis
job;and
b. Secondnoticetoinformhimoftheemployersdecisiontodismisshimonthegroundofabandonment.
265
8. Nohearingisrequiredtovalidlydismissanemployeeforabandonment.266
9. Noticesinabandonmentcasesmustbesenttoemployeeslastknownaddress.267
10. Noticesofabandonmentofworkservedafterthesixmonthperiodoffloatingstatus,notvalid.268
11. Immediatefilingofacomplaintforillegaldismissalprayingforreinstatementnegatesabandonment.269
12. Lapseoftimebetweendismissalandfilingofacase,notmaterialindicationofabandonment.Hence,lapse
of2yearsand5months270or20months271or9months272or8months273beforefilingthecomplaintfor
illegal dismissal is not an indication of abandonment. Under the law, the employee has 4 years within
whichtoinstitutehisactionforillegaldismissal.274
13. Thefactthatanemployeefiledacomplaintforillegaldismissalisnotbyitselfsufficientindicatorthathe
hadnointentionofdesertinghisemploymentsincethetotalityofhisantecedentactspalpablydisplaythe
contrary.275
14. Filingofacasetopreemptinvestigationofcasetantamountstoabandonment.276
15. Whenwhatisprayedforinthecomplaintisseparationpayandnotreinstatement,thefilingofcomplaint
doesnotnegateabandonment.277
Santos v. San Miguel Corp., [G. R. No. 149416, March 14, 2003, 447 Phil. 264].
Forever Security & General Services v. Flores, G.R. No. 147961, Sept. 7, 2007; Remington Industrial Sales Corporation v. Castaneda, G.R. Nos. 169295-96, Nov. 20, 2006.
CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23, 2009; RBC Cable Master System v. Baluyot, G.R. No. 172670, Jan. 20, 2009, 576 SCRA 668.
259 New Ever Marketing, Inc. v. CA, G.R. No. 140555, July 14, 2005.
260 CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23, 2009.
261 Uniwide Sales Warehouse Club v. NLRC, [G.R. No. 154503, February 29, 2008].
262 Premiere Development Bank v. NLRC, G.R. No. 114695, July 23, 1998.
263 Northwest Tourism Corp. v. Former Special Third Division of the Hon. CA, G.R. No. 150591, June 27, 2005.
264 Pasig Cylinder Mfg., Corp. v. Rollo, [G.R. No. 173631, September 8, 2010].
265 Kingsize Manufacturing Corporation v. NLRC, G.R. Nos. 110452-54, Nov. 24, 1994; Cebu Royal Plant [San Miguel Corporation] v. Hon. Deputy Minister of Labor, G.R. No. 58639, Aug. 12, 1987, 153 SCRA 38 [1987].
266 Intertranz Container Lines, Inc. v. Bautista, [G.R. No. 187693, July 13, 2010].
268 Malig-on v. Equitable General Services, Inc., [G.R. No. 185269, June 29, 2010].
269 Pasig Cylinder Mfg., Corp. v. Rollo, G.R. No. 173631, Sept. 8, 2010; Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, Nov. 25, 2004; See also Cosmos Bottling Corp. v. Nagrama, Jr., G.R. No. 164403, March 4, 2008.
270 Reno Foods, Inc. v. NLRC, G.R. No. 116462, Oct. 18, 1995, 249 SCRA 379, 387.
271 Angeles v. Fernandez, G.R. No. 160213, Jan. 30, 2007.
272 NS Transport Services, Inc. v. Zeta, G.R. No. 158499, April 4, 2007.
273 Padilla Machine Shop v. Javilgas, G.R. No. 175960, Feb. 19, 2008.
274 Pare v. NLRC, G.R. No. 128957, Nov. 16, 1999,
275 Leopard Integrated Services, Inc. v. Macalinao, [G.R. No. 159808, September 30, 2008, 567 SCRA 192]; Philippine Rural Reconstruction Movement [PRRM] v. Pulgar, [G.R. No. 169227, July 5, 2010].
276 Intertranz Container Lines, Inc. and Tumibay v. Ma. Teresa Bautista, [G.R. No. 187693, July 13, 2010].
277 Jo v. NLRC, G.R. No. 121605, Feb. 2, 2000; Bombase v. NLRC, G.R. No. 110889, June 30, 1995, 245 SCRA 496, 500.
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Abandonmentisaformofneglectofduty;hence,ajustcauseforterminationofemploymentunderArticle282
[b]oftheLaborCode.257
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Relevant Provision: Article 248 [e], Labor Code

1.UNIONSECURITYCLAUSE.
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a.Natureofstipulation.
The union security clause is a stipulation in a CBA292 which allows the parties thereto to enter into an
agreementrequiringmembershipintheexclusivecollectivebargainingagentwhichsuccessfullynegotiatedsaidCBAasa
conditionforcontinuedemploymentwiththeexceptionofemployeeswhoarealreadymembersofanotherunionat
thetimeofthesigningoftheCBA.
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b.Effectsoftheapplicationoftheunionsecurityclause.
Thefollowingaretheeffects:
1. Members of the bargaining agent. They are not allowed to resign or terminate their membership
therefrom. Any member of the bargaining agent who resigns or is expelled therefrom may be
recommendedtotheemployerbythebargainingagentforterminationofhisemployment.
2. Nonmembersofthebargainingagentbutmembersoftheminorityunion/s.Theyarenotboundbythe
unionsecurityclauseiftheyaremembersoftheminorityorotherunionsatthetimeofthesigningofthe
CBA.Hence,theycannotbecompelledtoresignfromtheirunion/sinordertojointhebargainingagent.
3.Nonmembersofthebargainingagentnorofanyminorityunion/s.Ifnotamemberofthebargainingagent
oranyotherunionsinthebargainingunitatthetimeofthesigningoftheCBAbyreasonofthefactthathe
is excepted from the coverage of the bargaining unit, the employee cannot be compelled to join the
bargainingagent.
4. New employees hired after the signing of the CBA containing the union security clause. They can be
compelledtojointhebargainingagent.Iftheyrefuse,theycanberecommendedfortermination.
c.Exceptiontoapplicationoftheunionsecurityclause.
Calipay v. NLRC, [G.R. No. 166411, August 3, 2010].

Hda. Dapdap I v. NLRC, G.R. No. 120556, Jan. 26, 1998; NS Transport Services, Inc. v. Zeta, G.R. No. 158499, April 4, 2007.
Hantex Trading Co., Inc. v. CA, [G.R. No. 148241, September 27, 2002].
282 Metro Transit Organization, Inc. v. NLRC, [G.R. No. 119724, May 31, 1999].
283 Ramo v. Elefano, G.R. No. L-55629, July 39, 1981, 106 SCRA 221.
284 East Asiatic v. CIR, G.R. No. L-29068, Aug. 31, 1971, 40 SCRA 521.
285 Castillo v. CIR, G.R. No. L-26124 and L-32725, May 29, 1971, 39 SCRA 75.
286 Sandoval Shipyard v. Clave, G.R. No. L-49875, Nov. 21, 1979, 94 SCRA 472.
287 Magtoto v. NLRC, [G.R. No. 63370, November 18, 1985]; Pedroso v. Castro, [G.R. No. 70361, January 30, 1986].
288 Camua, Jr. v. NLRC, [G.R. No. 158731, January 25, 2007].
289 City Trucking, Inc. v. Balajadia, [G.R. No. 160769, August 9, 2006].
290 Romys Freight Service v. Castro, [G.R. No. 141637, June 8, 2006].
291 Agricultural and Industrial Supplies Corp. v. Siazar, [G.R. No. 177970, August 25, 2010].
292 Based on the second sentence of paragraph [e] of Article 248.
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16. It is abandonment when what is prayed for in the complaint is separation pay, and it was only in the
positionpaperthatreinstatementwasprayedfor.278
17.Employmentinanotherfirmcoincidingwiththefilingofcomplaintdoesnotindicateabandonment.279
18. Offer of reinstatement by employer during proceedings before Labor Arbiter and refusal by employee
doesnotindicateabandonmentbutmoreofasymptomofstrainedrelationsbetweentheparties.280
19. Subcontractingforanothercompanyindicatesabandonment.281
20. AnemployeemaybeabsolvedfromthechargeofabandonmentofworkbutadjudgedguiltyofAWOL.282
21. Anemployeewhofailedtoreportforworkaftertheexpirationofthedulyapprovedleaveofabsenceis
consideredtohaveabandonedhisjob.283
22. Anemployeewhofailedtocomplywiththeorderforhisreinstatementisdeemedtohaveabandonedhis
work.284
23. An employee who, after being transferred to a new assignment, did not report for work anymore is
deemedtohaveabandonedhisjob.285
24. Anemployeewhodeliberatelyabsentedfromworkwithoutleaveorpermissionfromhisemployerforthe
purposeoflookingforajobelsewhereisdeemedtohaveabandonedhiswork.286
25.Imprisonmentordetentionbymilitarydoesnotconstituteabandonment.287
26. Absencetoevadearrest,notavalidjustification.288
27. RequestingforaCertificateofEmployment,notevidenceofabandonment.289
28. Employers insistence on commission of wrongful acts by the employees negates the charge of
abandonment.290
29. Employerisliableifthechargeforabandonmentisnotprovedbysubstantialevidence.291
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(a) Just Causes
(e) Termination of employment
pursuant to a Union Security
Clause
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1.RELEVANCEOFEMPLOYEESRECORDOFPASTVIOLATIONSVISVISNEWINFRACTIONS.
a.Totalityofconductorinfractionsdoctrine.
Underthisdoctrine,theemployeeshistoricalrecordsofoffenses,malfeasanceormisfeasance,asageneral
rule,arerelevantintheconsiderationofthegravityofhispresentviolationsortransgressions.Intheactualimposition
bytheemployerofpenaltiesonerringemployees,dueconsiderationmustbegiventotheirlengthofserviceandthe
numberofviolationstheyhavecommittedduringtheiremploy.301
Thisdoctrinedictatesthattheoffensescommittedbyanemployeeshouldnotbetakensinglyandseparately
butintheirtotality.302
b.Someprinciplesonthisdoctrine.
1.Pastviolationsmayonlybeusedasjustificationtodismissanemployeeforsubsequentsimilarorrelated
offense. The previous infractions, in other words, may be used if they have a bearing to the proximate
offensewarrantingdismissal.303
2.Pastinfractionsforwhichtheemployeehasalreadyamplyexplainedbutwithouttheemployertakingany
actionthereoncannolongerbecitedasgroundstodismiss.304
3.Pastinfractionsforwhichemployeehasnotyetbeenpenalizedcanstillbecitedasbasisforadministrative
sanction.305
4.Employerhastoprovesubsequentoffensebysubstantialevidence.306
Victoriano v. Elizalde Rope Workers Union, [G.R. No. L-25246, September 12, 1974, 59 SCRA 54].
Picop Resources, Inc. v. Taeca, [G.R. No. 160828, August 9, 2010]; Alabang Country Club, Inc. v. NLRC, [G.R. No. 170287, February 14, 2008].
Malayang Samahan ng Manggagawa sa M. Greenfield v. Ramos, [G.R. No. 113907, February 28, 2000].
296 National Union of Workers in Hotels, Restaurants and Allied Industries Manila Hotel Pavilion Chapter v. NLRC, [G.R. No. 179402, September 30, 2008].
297 Cario v. NLRC, [G.R. No. 91086, May 8, 1990, 185 SCRA 177]; Del Monte Philippines, Inc. v. Saldivar and Timbal, [G.R. No. 158620, October 11, 2006].
298 Alabang Country Club [supra].
299 Del Monte Philippines, Inc. v. Saldivar, [G.R. No. 158620, October 11, 2006].
300 Id.
301 Agabon v. NLRC, G.R. No. 158693, Nov. 17, 2004; Cosmos Bottling Corp. v. NLRC, G.R. No. 111155, Oct. 23, 1997, 281 SCRA 146, 153-154.
302 Valiao v. Hon. CA, G.R. No. 146621, July 30, 2004.
303 La Carlota Planters Association, Inc. v. NLRC, [G.R. No. 126689, October 27, 1998]; See also PLDT Co., Inc. v. Balbastro, G.R. No. 157202, March 28, 2007; De Guzman v. NLRC, G.R. No. 130617, Aug. 11, 1999.
304 Felix v. NLRC, [G.R. No. 148256, November 17, 2004].
305 R.B. Michael Press v. Galit, [G.R. No. 153510, February 13, 2008].
306 (Coca-Cola Bottlers Phils., Inc. v. Daniel, G.R. No. 156893, June 21, 2005.
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Religion is the only ground that may effectively be invoked against the application of the union security
clause.293
2. OBSERVANCEOFDUEPROCESSREQUIREDINCASEOFDISMISSALBASEDONTHEUNIONSECURITYCLAUSE.
a.Requisitesforvalidterminationbasedonunionsecurityclause.
Thefollowingrequisitesshouldbecompliedwithbytheemployerpriortoterminatingtheemploymentofan
employeeonthegroundofviolationoftheunionsecurityclause:
(1) Theunionsecurityclauseisapplicable;
(2) TheunionisrequestingfortheenforcementoftheunionsecurityprovisionintheCBA;and
(3) Thereissufficientevidencetosupporttheunionsdecisiontoexpeltheemployeefromtheunion.
TheforegoingrequisitesconstituteajustcauseforterminatinganemployeebasedontheCBAsunionsecurity
provision.294
b.Someprinciplesondismissalbasedonviolationoftheunionsecurityclause.
1. Dismissaleffectedbytheemployerpursuanttoalaborunionsdemandinaccordancewithaunionsecurity
agreementdoesnotconstituteanunfairlaborpractice.295
2. Employerisobligatedtoactuponbeingdemandedbytheuniontoterminatetheemploymentofitserrant
members.296
3. Employershouldafforddueprocesstotheexpelledunionist.297
4. Theemployeesoughttobeterminatedshouldbeaffordedanindependentandseparatehearingwhich
meansthattheemployerisnotdutyboundtoimmediatelyimplementtherecommendationtoterminate
made by the union. It has to conduct its own hearing independent and separate from any hearing
conductedbytheunion.298
5. Employerhastheliabilityforreinstatement,fullbackwages,damagesandattorneysfeesinillegaldismissal
casesbasedontheunionsecurityclause.299
6. Theemployerhastherighttobereimbursedforpaymentofanyclaimsarisingoutofdismissalsmadeupon
demandoftheunionundertheunionsecurityclause.300
==================================
(a) Just Causes
(f) Totality of infractions doctrine
==================================
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1.AUTHORIZEDCAUSES.
a.Concept.
Asdistinguishedfromdismissalduetojustcauses,interminationduetoauthorizedcauses,theemployeehas
notcommittedanywrongfulact.Itisvalidbecausethelawitselfauthorizesthetermination.Sansanyprovisionoflaw
authorizingthetermination,itsvaliditymaybeproperlyquestioned.
b.Grounds.
TheauthorizedcausesareenumeratedunderArticles283asfollows:
1. Installationoflaborsavingdevices;
2. Redundancy;
3. Retrenchment;and
4. Closureorcessationofbusinessoperationsofanestablishmentoranundertaking.
5.Inaddition,Article284oftheLaborCodecitesdiseaseasanauthorizedground.
[NOTE:InstallationoflaborsavingdeviceisnotincludedIntheSyllabus].
c.Exclusivityofgrounds.
ThegroundsenumeratedasauthorizedcausesunderArticle283areexclusiveinnature.Noothergrounds
maybeinvokedbyanalogyorinlieuorinsubstitutionthereof.
2.PROCEDURALSTEPSREQUIRED.
Toeffectvalidredundancy,retrenchmentorclosure,thefollowingproceduralstepsshouldbetakenpriorto
termination:
1. Theemployermustfirsttakecostcuttingorcostreducingmeasuresandexhaustallotherlawfulmeans
shortofterminationoftheemployees.Inotherwords,thereshouldbenootheroptionavailabletothe
employerexcepttoterminateredundantemployees;
2. To subserved due process, a written notice of the termination should be served on both the affected
employees and the Department of Labor and Employment (DOLE) at least one (1) month prior to the
intendeddateoftermination;
3.REQUIREMENTSFORVALIDRETRENCHMENT/REDUNDANCY.
(NOTE:CLOSUREISNOTINCLUDEDINTHESYLLABUSBUTTHEREQUISITESTHEREFORAREINCLUDEDBELOW).
a.Requisitesforredundancy.
Thefollowingrequisitesmustbepresenttovalidlyinvokeredundancy:
1. Thereisgoodfaithinabolishingtheredundantpositions;
2. Thereisnootheroptionavailabletotheemployerexcepttoterminateredundantemployees;
3. WrittennoticeisservedonboththeaffectedemployeesandtheDepartmentofLaborandEmployment
atleastone(1)monthpriortotheintendeddateoftermination;
4. Separationpayispaidtotheaffectedemployeesinsuchamountequivalenttoatleasthisone(1)month
payortoatleastone(1)monthpayforeveryyearofservice,whicheverishigher,afractionofatleastsix
(6)monthsshallbeconsideredasone(1)wholeyear.IncasetheCBAorcompanypolicyprovidesfora
higherseparationpay,thesamemustbefollowedinsteadoftheoneprovidedinArticle283.
5. Fairandreasonablecriteriainascertainingwhatpositionsaretobedeclaredredundantandaccordingly
abolished.307
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(a) Redundancy, Retrenchment and Closure
i. Procedural steps required
ii. Requirements for valid retrenchment/redundancy
iii. Criteria in selecting employees for dismissal
iv. Standards to be followed
====================================================
Lopez Sugar Corporation v. Franco, G.R. No. 148195, May 16, 2005; See also Caltex [Phils.], Inc. v. NLRC, G.R. No. 159641, Oct. 15, 2007; Asian Alcohol Corporation v. NLRC, G.R. No. 131108, March 25, 1999.
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b.Requisitesforretrenchment.
Thefollowingaretherequisitesforavalidretrenchment:
(1) That the retrenchment is reasonably necessary and duly proved and likely to prevent business losses
which,ifalreadyincurred,arenotmerelydeminimisbutsubstantial,serious,actualandrealor,ifonly
expected,arereasonablyimminentasperceivedobjectivelyandingoodfaithbytheemployer;
(2) ThattheemployerservesawrittennoticebothtotheaffectedemployeesandtotheDepartmentofLabor
andEmploymentatleastone(1)monthpriortotheintendeddateofretrenchment;
(3) Thattheemployerpaystheretrenchedemployeesseparationpayequivalenttoone(1)monthpayorat
leastonehalf()monthpayforeveryyearofservice,whicheverishigher;
(4) Thattheemployerexercisesitsprerogativetoretrenchemployeesingoodfaithfortheadvancementofits
interestandnottodefeatorcircumventtheemployeesrighttosecurityoftenure;and
(5) That the employer uses fair and reasonable criteria in ascertaining who would be dismissed and who
wouldberetainedamongtheemployees,suchasstatus(i.e.,whethertheyaretemporary,casual,regular
or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.308
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In selecting who to terminate based on any of the authorized causes, there should be reasonable and fair
criteriatobefollowedsuchas:
1.natureofwork;
2.statusofemployment(whethercasual,temporaryorregular);
3.experience;
4.efficiency;
5.seniority,amongotherconsiderations;
6.dependability;
7.adaptability;
8.flexibility;
9.trainability;
10.jobperformance;
11.discipline;and
12.attitudetowardswork.310
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Failuretofollowfairandreasonablecriteriainselectionwouldrendertheterminationinvalid.311
5.REDUNDANCY,ADDITIONALNOTES.
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a.Whenredundancyexists.
Redundancyexistswheretheservicesofanemployeeareinexcessofwhatisreasonablydemandedbythe
actualrequirementsoftheenterprise.Apositionisredundantwhereitissuperfluous,andsuperfluityofapositionor
positionsmaybetheoutcomeofanumberoffactors,suchasoverhiringofworkers,decreasedvolumeofbusiness,
droppingofaparticularproductlineorserviceactivitypreviouslymanufacturedorundertakenbytheenterprise.An
employerhasnolegalobligationtokeeponthepayrollemployeesmorethanthenumberneededfortheoperationof
thebusiness.312
Flight Attendants and Stewards Association of the Philippines [FASAP] v. Philippine Airlines, Inc., [G.R. No. 178083, July 22, 2008]; See also Shimizu Phils. Contractors, Inc. v. Callanta, G.R. No. 165923, Sept. 29, 2010; Lambert Pawnbrokers and Jewelry Corp. v. Binamira, G.R. No.
170464, July 12, 2010.
Catatista v. NLRC, G.R. No. 102422, Aug. 03, 1995; AFP Mutual Benefit Association, Inc. v. AFP-MBAI-EU, G.R. Nos. 39140 and 39145, May 17, 1980, 97 SCRA 715.
310 Philippine Tuberculosis Society, Inc. v. NLRC, [G.R. No. 115414, August 25, 1998].
311 Lambert Pawnbrokers and Jewelry Corp. v. Binamira, G.R. No. 170464, July 12, 2010.
312 Dusit Hotel Nikko v. NUWHRAIN Dusit Hotel Nikko Chapter, G.R. No. 160391, Aug. 9, 2005.
308
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b.Requisitesforclosureorcessationofbusinessoperations.
Thefollowingaretherequisitesforavalidclosureorcessationofbusinessoperations:
1. Thedecisiontocloseorceaseoperationsshouldbemadeingoodfaith;
2. ThepurposeshouldnotbetocircumventtheprovisionsofTitleI(TerminationofEmployment)ofBookSix
(PostEmployment)oftheLaborCode;
3. Thereisnootheroptionavailabletotheemployerexcepttocloseorceaseitsbusinessoperations;
4. ThenoticerequirementunderArticle283shouldbecompliedwithbyservingacopythereoftotheaffected
employeesandtotheDepartmentofLaborandEmploymentatleastone(1)monthpriortotheeffectivity
of the termination. This requisite applies irrespective of whether or not the closure or cessation of
operationsisduetoseriousbusinesslossesorfinancialreverses;and
5. When the closure or cessation of business operations is not due to serious business losses or financial
reverses,theaffectedemployeesshouldbepaidaseparationpayequivalenttoone(1)monthpayorat
leastonehalf()monthpayforeveryyearofservice,whicheverishigher.Afractionofatleastsix(6)
monthsshallbeconsideredone(1)wholeyear.309
If the ground is serious business losses or financial reverses, there should be clear proof thereof since no
separationpaytotheemployeesisrequiredtobepaid.
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6.RETRENCHMENT,ADDITIONALNOTES.
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a.Retrenchment,meaning.
Retrenchmenthasbeendefinedastheterminationofemploymentinitiatedbytheemployerthroughnofault
oftheemployeesandwithoutprejudicetothelatter,resortedbymanagementduringperiodsofbusinessrecession,
industrialdepression,orseasonalfluctuations;orduringlullsoccasionedbylackofworkororders,shortageofmaterials;
or considerable reduction in the volume of the employers business, conversion of the plant for a new production
programortheintroductionofnewmethodsormoreefficientmachinery,orofautomation.329
RetrenchmentistheonlystatutorygroundinArticle283whichrequiresproofoflossesorpossiblelossesas
justificationforterminationofemployment.Theothergrounds,particularlyclosureorcessationofbusinessoperations,
mayberesortedtowithorwithoutlosses.330
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b.Standardstodeterminevalidityoflossesasjustificationforretrenchment.
Thegeneralstandardsintermsofwhichtheactofanemployerinretrenchingorreducingthenumberofits
employeesmustbeappraisedareasfollows:
Firstly,thelossesexpectedshouldbesubstantialandnotmerelydeminimisinextent.Ifthelosspurportedly
soughttobeforestalledbyretrenchmentisclearlyshowntobeinsubstantialandinconsequentialincharacter,thebona
fidenatureoftheretrenchmentwouldappeartobeseriouslyinquestion.
Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be
perceivedobjectivelyandingoodfaithbytheemployer.Thereshould,inotherwords,beacertaindegreeofurgency
fortheretrenchmentwhichis,afterall,adrasticrecoursewithseriousconsequencesforthelivelihoodoftheemployees
retrenchedorotherwiselaidoff.
Thirdly, retrenchment, because of its consequential nature, must be reasonably necessary and likely to
effectively prevent the expected losses. The employer should have taken other measures prior or parallel to
retrenchmenttoforestalllosses,i.e.,cutothercoststhanlaborcosts.
Lastly,butcertainlynottheleastimportant,theallegedlosses,ifalreadyrealized,andtheexpectedimminent
losses sought to be forestalled, must be provedby sufficient and convincing evidence. The reason for requiring this
quantumofproofisapparent;anylessexactingstandardofproofwouldrendertooeasytheabuseofthisgroundfor
terminationofservicesofemployees.331
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f.
Maya Farms Employees Organization v. NLRC, G.R. No. 106256, Dec. 28, 1994..
Smart Communications, Inc. v. Astorga, G.R. No. 148132, Jan. 28, 2008; Caltex [Phils.], Inc. v. NLRC, G.R. No. 159641, Oct. 15, 2007.
Coca-Cola Bottlers Philippines,Inc. v. Del Villar, [G.R. No. 163091, October 6, 2010].
316 Sebuguero v. NLRC, G.R. No. 115394, Sept. 27, 1995; Escareal v. NLRC, G.R. No. 99359, Sept. 2, 1992, 213 SCRA 472.
317 Dole Philippines, Inc. v. NLRC, [G.R. No. 120009, September 13, 2001].
318 Santos v. CA, [G.R. No. 141947, July 5, 2001].
319 De Ocampo v. NLRC, [G.R. No. 101539, September 4, 1992, 213 SCRA 652].
320 Soriano, Jr. v. NLRC and PLDT, [G.R. No. 165594, April 23, 2007].
321 San Miguel Corporation v. NLRC, G.R. No. 99266, March 2, 1999; Pantranco North Express, Inc. v. NLRC, G.R. No. 106516, Sept. 21, 1999.
322 International Harvester Macleod, Inc. v. IAC, 149 SCRA 641 [1987]; See also Dole Philippines, Inc. v. NLRC, G.R. No. 120009, Sept. 13, 2001.
323 Serrano v. NLRC, [G.R. No. 117040, January 27, 2000].
324 Dole Philippines, Inc. v. NLRC, [G.R. No. 120009, September 13, 2001].
325 Wiltshire File Co., Inc. v. NLRC, G.R. No. 82249, Feb. 7, 1991, 193 SCRA 665; See also Becton Dickinson Phils., Inc. v. NLRC, G.R. Nos. 159969 & 160116, Nov. 15, 2005, 475 SCRA 123.
326 Maya Farms Employees Organization v. NLRC, [G.R. No. 106256, December 28, 1994].
327 Asian Alcohol Corporation v. NLRC, G.R. No. 131108, March 25, 1999.
328 De la Salle University v. De la Salle University Employees Association, [G.R. No. 109002, April 12, 2000].
329 F. F. Marine Corporation v. The Hon. Second Division, NLRC, G.R. No. 152039, April 8, 2005; See also Anabe v. Asian Construction, G.R. No. 183233, Dec. 23, 2009.
330 Precision Electronics Corporation v. NLRC, G.R. No. 86657, Oct. 23, 1989.
331 Andrada v. NLRC, G.R. No. 173231, Dec. 28, 2007; Oriental Petroleum and Minerals Corp. v. Fuentes, G.R. No. 151818, Oct. 14, 2005; Clarion Printing House, Inc. v. NLRC, G.R. No. 148372, June 27, 2005.
313
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Redundancymayalsobevalidlyresortedtoasacostcuttingmeasureandtostreamlineoperationssoasto
make them more viable. Positions which overlapped each other, or which are in excess of the requirements of the
service,maybedeclaredredundant.313
b. Someprinciplesonredundancy.
1.The wisdom, soundness or characterization of service as redundant by the employer is not subject to
review. The only exception is when there is a showing that the same was done in violation of law or
attendedwitharbitraryandmaliciousaction.314
2.Burdenofproofinredundancyrestsontheemployer.315
3.Evidenceoflosses,notrequired.316
4. Elimination of undesirables, abusers and worst performers through redundancy, not an indication of bad
faith.317
5.Theactoftheemployerinhiringreplacementswasnotdeemedanindicationofbadfaithsincethepositions
havenosimilarjobdescriptions.318
6.Redundancytosaveonlaborcosts,heldvalid.319
7.Redundancyresultingfromuseofhightechnologyequipment,heldvalid.320
8.Abolitionofpositionsordepartments,heldvalid.321
9.Reorganizationthroughredundancyheldvalid.322
10.Contractingoutofabolishedpositionstoindependentcontractorsheldvalid.323
11.Hiringofcasualsorcontractualemployeesafterredundancy,heldvalid.324
12.Wheretwoormorepersonsareperformingthesameworkwhichmaybeeffectivelyaccomplishedbyonly
one,theemployermayterminatetheexcesspersonnelandretainonlyone.325
13. Evenifthereisaseniorityrule,suchastheLIFO(LastIn,FirstOut)rule,thenatureofworkandexperience
oftheemployeesshouldstillbetakenintoaccountbytheemployer.326
14. TheLIFOorFILO(FirstIn,LastOut)rulehasnobasisinlaw.327
15. LIFOruleisnotcontrollingasemployerhastheprerogativetochoosewhototerminate.328
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NDC-Guthrie Plantations, Inc. v. NLRC, G. R. No. 110740, Aug. 9, 2001.

Sentinel Integrated Services, Inc. v. Remo, [G.R. No. 188223, July 5, 2010].
Shimizu Phils. Contractors, Inc. v. Callanta, [G.R. No. 165923, September 29, 2010].
335 Id.
336 Central Azucarera de la Carlota v. NLRC, [G.R. No. 100092, December 29, 1995, 251 SCRA 589].
337 Sebuguero v. NLRC, [G.R. No. 115394, September 27, 1995].
338 Lambert Pawnbrokers and Jewelry Corp. v. Binamira, G.R. No. 170464, July 12, 2010.
339 Asian Alcohol Corporation v. NLRC, G.R. No. 131108, March 25, 1999, 305 SCRA 416; TPI Philippines Cement Corp. v. Cajucom VII, G.R. No. 149138, Feb. 28, 2006.
340 Emco Plywood Corporation v. Abelgas, G.R. No. 148532, April 14, 2004.
341 (Danzas Intercontinental, Inc. v. Daguman, G.R. No. 154368, April 15, 2005; Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, Aug. 8, 2007.
342 NDC-Guthrie Plantations, Inc. v. NLRC, [G.R. No. 110740, August 9, 2001].
343 Flight Attendants and Stewards Association of the Philippines [FASAP] v. Philippine Airlines, Inc., [G.R. No. 178083, July 22, 2008].
344 Casimiro v. Stern Real Estate, Inc., Rembrandt Hotel, G.R. No. 162233, March 10, 2006; Favila v. NLRC, G.R. No. 126768, June 16, 1999, 367 Phil. 584, 595.
345 Polymart Paper Industries, Inc. v. NLRC, G.R. No. 118973, Aug. 12, 1998.
346 Composite Enterprises, Inc. v. Caparoso, [G.R. No. 159919, August 8, 2007].
347 Clarion Printing House, Inc. v. NLRC, [G.R. No. 148372, June 27, 2005].
348 Flight Attendants and Stewards Association of the Philippines [FASAP] v. Philippine Airlines, Inc., [G.R. No. 178083, July 22, 2008].
349 Id.
350 Taggat Industries, Inc. v. NLRC, [G.R. No. 120971, March 10, 1999].
351 Manatad v. Philippine Telegraph and Telephone Corp., [G.R. No. 172363, March 7, 2008].
352 Lopez Sugar Corporation v. Federation of Free Workers, G.R. Nos. 75700-01, Aug. 30, 1990.
353 Korean Air Co., Ltd. v. Yuson, [G.R. No. 170369, June 16, 2010].
354 International Hardware, Inc. v. NLRC, G.R. No. 80770, Aug. 10, 1989; See also Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, Nov. 25, 2004.
355 Hernandez v. Philippine Blooming Mills Co., NLRC-NCR Case No. 3-1223-83, July 26, 1985.
356 Lambert Pawnbrokers and Jewelry Corp. v. Binamira, [G.R. No. 170464, July 12, 2010].
357 Central Azucarera de la Carlota v. NLRC, [G.R. No. 100092, December 29, 1995, 251 SCRA 589, 321 Phil. 989, 997].
358 Atlantic Gulf and Pacific Company of Manila, Inc. [AG & P], v. NLRC, [G.R. No. 127516, May 28, 1999].
359 Manatad v. Philippine Telegraph and Telephone Corp., [G.R. No. 172363, March 7, 2008].
360 Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc. Labor Union Super, G.R. No. 166760, Aug. 22, 2008; Espina v. CA, G.R. No. 164582, March 28, 2007.
332
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c.Someprinciplesonretrenchment.
1. Ifstandardsarepresent,wisdomtoretrenchcannotbequestioned.332
2. Theretrenchmentmustbedoneingoodfaith.333
3. Notorietyoftheemployee,avalidcriterion.334
4. Theprogressivemannerofimplementingthestreamliningofoperationsandcomplementsdownsizingbya
constructioncompany,heldvalid.335
5. Thefactthattherehasbeeneconomicorothercrisisbesettingaparticularsectororthecountryasawhole
isnotsufficientjustificationforretrenchment.336
6. Article283appliesonlytopermanentretrenchmentorlayoff.337
7. Costreductionorcostsavingmeasurespriortoretrenchment,required.338
8. The phrase retrenchment to prevent losses means that retrenchment must be undertaken by the
employerbeforethelossesanticipatedareactuallysustainedorrealized.Theemployerneednotkeepall
hisemployeesuntilafterhislossesshallhavematerialized.Otherwise,thelawcouldbevulnerabletoattack
asunduetakingofpropertyforthebenefitofanother.339
9. Employerbearstheburdenofprooftoshowbusinesslossesorfinancialreverses.340
10.Bestevidenceoflossesauditedfinancialstatements.341
11.BestevidenceoflossesinagovernmentcontrolledcorporationfinancialstatementsauditedbyCOA.342
12.Periodcoveredbyfinancialstatements,material.343
14.Incometaxreturns,selfservingdocuments.344
15.Mereaffidavitonallegedlosses,notsufficient.345
16.Merenoticeofintentiontoimplementaretrenchmentprogram,notsufficient.346
17. Rehabilitation receivership presupposes existence of losses.347 However, the fact that the employer is
undergoingrehabilitationreceivershipdoesnotbyitselfexcuseitfromsubmittingtothelaborauthorities
copiesofitsauditedfinancialstatementstoprovetheurgency,necessityandextent,ofitsretrenchment
program.348
18. AuditedfinancialstatementsshouldbepresentedbeforetheLaborArbiterortheNLRCbutnotbelatedly
beforetheCourtofAppealsorSupremeCourt.349
19. Retrenchmenteffectedlongafterbusinesslosses,notvalid.350
20. Profitableoperationsinthepastdoesnotaffectvalidityofretrenchment.351
21. Compulsoryretirementtopreventfurtherlosses,heldvalid.352
22. EarlyRetirementProgram(ERP)topreventfurtherlossesandimplementedpriortoretrenchment,held
valid.353
23. Rotationofworkmaybetantamounttoconstructivedismissalorretrenchment.354
24. Retrenchmentduetoliquidityproblem,notvalid.355
25. Sharpdropinincome,notagroundtojustifyretrenchment.Ameredeclineingrossincomecannotinany
mannerbeconsideredasseriousbusinesslosses.Itshouldbesubstantial,sustainedandreal.356
26.Litanyofwoes,intheabsenceofanysolidevidencethattheytranslatedintospecificandsubstantiallosses
thatwouldnecessitateretrenchmentwillnotsufficetojustifyretrenchment.357
27. Rehiringofretrenchedemployeesdoesnotnecessarilyindicateillegalityofretrenchment.358
28. Inanenterprisewhichhasseveralbranchesnationwide,profitableoperationsinsomeofthemwillnot
affectthevalidityoftheretrenchmentifoverall,thefinancialconditionthereofreflectslosses.359
7.CLOSUREORCESSATIONOFBUSINESSOPERATIONS,ADDITIONALNOTES.
a.Concept.
Closureorcessationofbusinessisthecomplete orpartialcessationoftheoperationsand/orshutdownofthe
establishmentoftheemployer.Itiscarriedouttoeitherstaveoffthefinancialruinorpromotethebusinessinterestof
theemployer.360
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1.DISEASEASAGROUNDFORTERMINATIONOFEMPLOYMENT.
a.Requisites.
Diseaseisoneoftheauthorizedcausestoterminateemployment.Thefollowingrequisitesmustbecomplied
withbeforeterminationofemploymentduetodiseasemaybejustified:
1. Theemployeeissufferingfromadisease;
2. Hiscontinuedemploymentiseither:
a. prohibitedbylaw;or
b. prejudicialtohishealth;or
c. prejudicialtothehealthofhiscoemployees;
3. Thereisacertificationbyacompetentpublichealthauthoritythatthediseaseisofsuchnatureoratsuch
stagethatitcannotbecuredwithinaperiodofsix(6)monthsevenwithpropermedicaltreatment;
4. NoticeofterminationbasedonthisgroundshouldbeservedbothtotheemployeeandtheDepartment
ofLaborandEmploymentatleastone(1)monthpriortotheeffectivityofthetermination;374and
5. Separationpayshouldbepaidtotheemployeeinanamountequivalenttoatleastone(1)monthsalary
ortoonehalf()monthsalaryforeveryyearofservice,whicheverisgreater,afractionofatleastsix(6)
monthsbeingconsideredasone(1)wholeyear.375
b.Someprincipleondisease.
1. Burdenofproofrestsontheemployer.376
2. Ifthediseaseorailmentcanbecuredwithintheperiodofsix(6)monthswithpropermedicaltreatment,
the employer should not terminate the employee but merely ask him to take a leave of absence. The
employer should reinstate him to his former position immediately upon the restoration of his normal
health.377
f.
Peafrancia Tours and Travel Transport, Inc. v. Sarmiento, G.R. No. 178397, Oct. 20, 2010.
Edge Apparel, Inc. v. NLRC, G.R. No. 121314, Feb. 12, 1998, 286 SCRA 302; Phil. Engineering Corp. v. CIR, G.R. No. L-27880, Sept. 30, 1971, 41 SCRA 89.
Association of Integrated Security Force of Bislig [AISFB] - ALU v. Hon. CA, and PICOP, [G.R. No. 140150, August 22, 2005].
364 Cheniver Deco Print Technics Corporation v. NLRC, [G.R. No. 122876, February 17, 2000].
365 J.A.T. General Services v. NLRC, G.R. No. 148340, Jan. 26, 2004; Industrial Timber Corporation v. NLRC, G. R. Nos. 107302-107306 & 108559-10860, June 10, 1997, 339 Phil. 395, 404.
366 Mac Adams Metal Engineering Workers Union-Independent v. Mac Adams Metal Engineering, G.R. No. 141625, 24 Oct. 2003, 414 SCRA 411.
367 St. John Colleges, Inc. v. St. John Academy Faculty and Employees Union, [G.R. No. 167892, October 27, 2006].
368 Cornista-Domingo v. NLRC, [G.R. No. 156761, October 17, 2006].
369 Espina v. Hon. CA, [G.R. No. 164582, March 28, 2007].
370 Danzas Intercontinental, Inc. v. Daguman, [G.R. No. 154368, April 15, 2005].
371 Me-Shurn Corporation v. Me-Shurn Workers Union - FSM, [G.R. No. 156292, January 11, 2005].
372 Sapitan v. JB Line Bicol Express, Inc., [G.R. No. 163775, October 19, 2007].
373 San Miguel Corp. v. Aballa, [G.R. No. 149011, June 28, 2005].
374 Per Agabon v. NLRC, [G.R. No. 158693, November 17, 2004].
375 See also Section 8, Rule I, Book VI, Rules to Implement the Labor Code.
376 Phil. Employ Services and Resources, Inc. v. Paramio, infra; Crayons Processing, Inc. v. Pula, G.R. No. 167727, July 30, 2007; ATCI Overseas Corporation v. CA, [G.R. No. 143949, August 9, 2001, 414 Phil. 883, 893.
377 Section 8, Rule I, Book VI, Rules to Implement the Labor Code; Sevillana v. I.T. [International] Corp., G.R. No. 99047, April 16, 2001.
361
362
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b.Someprinciplesonclosure.
1. Employermaycloseitsbusinesswhetheritissufferingfrombusinesslossesornot;courtcannotorder
employertocontinueitsbusiness.361
2. PrincipleofclosureunderArticle283appliesincasesofbothtotalandpartialclosureorcessationof
businessoperations.Managementmaychoosetocloseonlyabranch,adepartment,aplant,orashop.362
3. Closure of department or section and hiring of workers supplied by independent contractor as
replacements,heldvalid.363
4. Relocationofbusinessmayamounttocessationofoperations.364
5. The burden of proving that the closure or cessation of business operations is bonafide falls upon the
employer.365
6. Goodfaith,testofvalidityofclosureorcessationofbusinessoperations.366
7. Closure may constitutes anunfair labor practice act if it is resorted toas a ruseor scheme toget rid of
employeesonaccountoftheirunionactivities.367
8. Closurebyreasonofenactmentofalaw,heldvalid.368
9. Closureofbusinesstomergeorconsolidatewithanotherortosellordisposeallofitsassets,heldvalid.369
10.Auditedfinancialstatementsnecessaryonlyinclosureduetolosses.370
11.EvidenceoflossesinaclosurecaseshouldnotbepresentedforthefirsttimeonappealwiththeCourtof
AppealsorSupremeCourt.371
12.Forclosuretobeavalidbasis,itmustbeinvokedatthetimeofterminationandnotafter.372
13.Closureofadepartmentorsectionduetolossesamountstoretrenchment.373
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a.Proceduraldueprocessvariesdependingontheground/sinvoked.
Thereisnouniformproceduraldueprocessthatshouldbeappliedinallcases.Thekindofdueprocesswill
dependontheground/sinvokedinsupportofthetermination.Dueprocessforjustcauseterminationisdifferentfrom
authorizedcausetermination.
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a.Justcausetermination.
Injustcausetermination,thetwinrequirementsofnoticeandhearingapply.Moreparticularly,thefollowing
procedureshouldbefollowed:
1.Serviceoffirstwrittennotice;
2.Conductofhearing;and
3.Serviceofsecondwrittennotice.
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(1)Firstwrittennotice.
Thefirstwrittennoticetobeservedontheemployeeshould:
a.Containthespecificcausesorgroundsforterminationagainsthim;
b.Containadirectivethattheemployeeisgiventheopportunitytosubmithiswrittenexplanationwithinthe
reasonableperiodofFIVE(5)CALENDARDAYSfromreceiptofthenotice:
1.toenablehimtoprepareadequatelyforhisdefense;
2.tostudytheaccusationagainsthim;
3.toconsultaunionofficialorlawyer;
4.togatherdataandevidence;and
5.todecideonthedefenseshewillraiseagainstthecomplaint.
Gomez v. Central Vegetable Oil, G.R. No. L-22702, July 28, 1969, 28 SCRA 845.
Article 282[a], Labor Code.
Cebu Royal Plant [San Miguel Corporation] v. Hon. Deputy Minister of Labor, G.R. No. 58639, Aug. 12, 1987, 153 SCRA 38 [1987].
Manly Express, Inc. v. Payong, Jr. G.R. No. 167462, Oct. 25, 2005; Cruz v. NLRC, G.R. No. 116384, Feb. 7, 2000.
382 Union Motor Corporation v. NLRC, [G.R. No. 159738, December 9, 2004].
383 Tan v. NLRC, [G.R. No. 116807, April 14, 1997, 271 SCRA 216]; Duterte v. Kingswood Trading Co., Inc., [G.R. No. 160325, October 4, 2007].
384 ATCI Overseas Corporation v. CA, G.R. No. 143949, Aug. 9, 2001; Cebu Royal Plant [San Miguel Corporation] v. Hon. Deputy Minister of Labor, G.R. No. 58639, Aug. 12, 1987, 153 SCRA 38 [1987].
385 Cathay Pacific Airways, Ltd. v. NLRC, [G.R. No. 141702-03, August 2, 2001].
378
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380
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(1) Procedure to be observed in termination cases
(2) Guiding Principles in connection with the hearing
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(3) Agabon doctrine
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3.Incaseofdeath,Article284doesnotapply.378
4. In case the employee unreasonably refuses to submit to medical examination or treatment upon being
requestedtodoso,theemployermayterminatehisservicesonthegroundofinsubordinationorwillful
disobediencebytheemployeeofthelawfulorderofhisemployerorrepresentativeinconnectionwithhis
work.379
4. Companyphysicianisnotacompetentpublichealthauthority.
5. Amedicalcertificateissuedbyacompanysownphysicianisnotanacceptablecertificateforpurposesof
terminatinganemploymentbasedonArticle284,ithavingbeenissuednotbyacompetentpublichealth
authority,thepersonreferredtointhelaw.380
6.Acompetentpublichealthauthorityreferstoagovernmentdoctorwhosemedicalspecializationpertains
tothediseasebeingsufferedbytheemployee.Forinstance,anemployeewhoissickoftuberculosisshould
consult a governmentemployed pulmonologist who is competent to make an opinion thereon. If the
employeehascardiacsymptoms,thecompetentphysicianinthiscasewouldbeacardiologist.
7. Medicalcertificate,anindispensablerequisite.381
8. Medicalcertificateisthebestevidenceofillness.382
9.Themedicalcertificateshouldbeprocuredbytheemployer.383
10.Existenceofcertificate,burdenofproofisontheemployer.384
11.Employeedismissedwithoutthemedicalcertificateisentitledtomoralandexemplarydamages.385
12.NoticeofterminationtotheemployeeandtotheDOLE,necessary.386
13.Hearingisnotrequired,diseasebeinganauthorizedcause.
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(2)Hearingrequired,
Afterservingthefirstnotice,theemployershouldscheduleandconductahearingorconferencewhereinthe
employeewillbegiventheopportunityto:
1.explainandclarifyhisdefensestothecharge/sagainsthim;
2.presentevidenceinsupportofhisdefenses;and
3.rebuttheevidencepresentedagainsthimbythemanagement.
During the hearing or conference, the employee is given the chance to defend himself personally, with the
assistanceofarepresentativeorcounselofhischoice.Moreover,thisconferenceorhearingcouldbeusedbytheparties
asanopportunitytocometoanamicablesettlement.
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(3)Secondwrittennotice.
After determining that termination of employment is justified, the employers shall serve the employees a
writtennoticeofterminationindicatingthat:
1.allcircumstancesinvolvingthecharge/sagainsttheemployeehavebeenconsidered;and
2.groundshavebeenestablishedtojustifytheseveranceofhisemployment.387
b.Exceptionincaseofabandonment.
Abandonmentisajustcausetoterminateemployment.Itisconsideredaformofgrossneglectofdutiesunder
Article282[b]oftheLaborCode.However,theproceduraldueprocessisdifferentfromtheprocessdescribedabove.
Forobviousreason,dueprocessinabandonmentcasesdoesnotinvolvetheconductofhearing.Compliancewiththe
followingtwo(2)noticessuffices,viz.:
1. Firstnoticeaskingtheemployeetoexplainwhyheshouldnotbedeclaredashavingabandonedhisjob;and
2.Secondnoticetoinformhimoftheemployersdecisiontodismisshimonthegroundofabandonment.
1.2.PROCEDUREINAUTHORIZEDCAUSETERMINATION.
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Dueprocessisnotrequiredinterminationofthefollowing:
1.Projectemploymentwhichautomaticallyterminatesuponcompletionoftheproject;
2.Seasonalemploymentwhichautomaticallyterminatesupontheendoftheseason;
3.Casualemploymentwhichautomaticallyterminatesuponthelapseoftheagreedperiod.
4.Fixedtermemploymentwhichautomaticallyterminatesupontheexpirationofthefixedperiod.
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3.PROCEDUREINTERMINATIONOFPROBATIONARYEMPLOYMENT.
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Dueprocessisdeemedcompliedwithupontheseparateandsimultaneousserviceofawrittennoticeof
theintendedterminationtoboth:
(1)theemployeetobeterminated;and
(2)theappropriateDOLERegionalOffice,
atleastone(1)monthbeforetheintendeddateoftheterminationspecifyingtheground/sthereforandtheundertaking
topaytheseparationpayrequiredunderArticle283oftheLaborCode.
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Probationary employment may be terminated prior to the lapse of the probationary period fur just or
authorizedcause.Inwhichcase,theappropriate,applicableproceduraldueprocessshouldapply.
However,ifthegroundinvokedisthefailureoftheprobationaryemployeetoqualifyasaregularemployee
basedonthereasonablestandardsmadeknowntohimatthetimeofhisengagement,nodueprocessisrequired.itis
sufficientthatawrittennoticeofterminationisservedtotheprobationaryemployeewithinareasonabletimefromthe
effectivedatethereofsettingforththejustificationofsuchtermination.388
4.GUIDINGPRINCIPLESINCONNECTIONWITHTHEHEARINGREQUIREMENTINDISMISSALCASES.
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It must be stressed that hearing is a requisite only in just cause termination. It is not required in case of
authorizedcausetermination.
Ajustcausedismissalwithoutthebenefitofahearingpriortotheemployeesterminationviolateshisrightto
dueprocesswhichrequiresthatthepersonsoughttobedismissedmustbegivenachancetoanswerandbeheardon
thechargesagainsthimbeforeheisdismissed.389
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Dueprocessissatisfiedwhentheemployeeisaffordedfairandreasonableopportunitytoexplainhissideof
thecontroversyathand.390
King of Kings Transport, Inc. v. Mamac, [G.R. No. 166208, June 29, 2007]; See also Lima Land, Inc. v. Cuevas, G.R. No. 169523, June 16, 2010; Inguillo v. First Philippine Scales, Inc., G.R. No. 165407, June 5, 2009, 588 SCRA 471, 491.
Section 2, Rule I, Book VI, Rules to Implement the Labor Code, as amended by Article III, Department Order No. 10, Series of 1997.
Bondoc v. NLRC, G.R. No. 103209, July 28, 1997, 276 SCRA 288; See also Agullano v. Christian Publishing and Pizarro, G.R. No. 164850, Sept. 25, 2008.
390 Gana v. NLRC, G.R. No. 164640, June 13, 2008; Filipino v. Macabuhay, G.R. No. 158960, Nov. 24, 2006, 508 SCRA 50, 58.
387
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389
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c.Containadetailednarrationofthefactsandcircumstancesthatwillserveasbasisforthechargeagainstthe
employee. This is required in order to enable him to intelligently prepare his explanation and defenses. A general
descriptionofthechargewillnotsuffice.
d.Specificallymentionwhichcompanyrules,ifany,areviolatedand/orwhichamongthegroundsunderArticle
282isbeingchargedagainsttheemployees.

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Lima Land, Inc. v. Cuevas, G.R. No. 169523, June 16, 2010.
Valiao v. Hon. CA, G.R. No. 146621, July 30, 2004; See also Aboc v. Metropolitan Bank and Trust Company, G.R. Nos. 170542-43, Dec. 13, 2010; PLDT v. Honrado, G.R. No. 189366, Dec. 8, 2010; Equitable PCI Bank v. Dompor, G.R. Nos. 163293 & 163297, Dec. 8, 2010.
IBM Philippines, Inc. v. NLRC, G.R. No. 117221, April 13, 1999, 305 SCRA 592.
394 Pepsi-Cola Distributors of the Philippines, Inc. v. NLRC, G.R. No. 100686, Aug. 15, 1995; New Puerto Commercial v. Lopez, [G.R. No. 169999, July 26, 2010.
395 Hagonoy Rural Bank, Inc. v. NLRC, G.R. No. 122075, Jan. 28, 1998, 285 SCRA 297.
396 Robusta Agro Marine Products, Inc. v. Gorombalem, G.R. No. 80500, July 5, 1989.
397 Wenphil Corporation v. NLRC, G.R. No. 80587, Feb. 8, 1989.
398 Maneja v. NLRC, G. R. No. 124013, June 5, 1998.
399 Century Textile Mills, Inc. v. NLRC, [G.R. No. 77859, May 25, 1988].
400 Alcantara v. The Philippine Commercial and Industrial Bank, [G.R. No. 151349, October 20, 2010]; PLDT v. Honrado, [G.R. No. 189366, December 8, 2010].
401 Century Textile Mills, Inc. v. NLRC, G.R. No. 77859, May 25, 1988.
402 Pepsi-Cola Distributors of the Philippines, Inc. v. NLRC, G.R. No. 100686, Aug. 15, 1995.
391
392
Hellenic Philippine Shipping, Inc. v. Siete, G.R. No. 84082, March 13, 1991.
Philippine Daily Inquirer, Inc. v. Magtibay, Jr., G.R. No. 164532, July 24, 2007.
Wiltshire File Co. v. NLRC, G.R. No. 82249, Feb. 7, 1991.
Agabon v. NLRC, G.R. No. 158693, Nov. 17, 2004.
407 Sebuguero v. NLRC, GTI Sportswear Corporation, G.R. No. 115394, Sept. 27, 1995.
408 Hilado v. Leogardo, [G.R. No. L-65863, June 11, 1986].
409 Under Article 128 [c] of the Labor Code.
410 Section 5, Rule VIII-A, Book III, Rules to Implement the Labor Code, as amended by Article I, Department Order No. 10, Series of 1997 [30 May 1997].
411 Philippine Pizza, Inc. v. Bungabong, G. R. No. 154315, May 9, 2005; Roche [Philippines] v. NLRC, G.R. No. 83335, Oct. 5, 1989, 178 SCRA 386, 394.
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404
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406
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Theessenceofdueprocessissimplyanopportunitytobeheardor,asappliedtoadministrativeproceedings,
anopportunitytoexplainonessideoranopportunitytoseekareconsiderationoftheactionorrulingcomplainedof.391
Aformalortrialtypehearingisnotatalltimesandinallinstancesessential,asthedueprocessrequirements
aresatisfiedwherethepartiesareaffordedfairandreasonableopportunitytoexplaintheirsideofthecontroversyat
hand.392
Ampleopportunitymeanseverykindofassistancethattheemployermustaccordtotheemployeetoenable
himtoprepareadequatelyforhisdefense,includinglegalrepresentation.393
Due process, therefore, is not violated where a person is not heard because he has chosen, for whatever
reason,nottobeheard.Itshouldbeobviousthatifheoptstobesilentwherehehasarighttospeak,hecannotlaterbe
heardtocomplainthathewasundulysilenced.394
c.Someprinciplesonhearingrequirement.
1. Ifemployeedoesnotanswer,hearingshouldstillproceed.395
2. Outrightterminationviolatesdueprocess.396
3. Investigationstillrequiredevenifincidentwaswitnessedbymany.397
4. Meeting,dialogue,consultationorinterviewisnotthehearingrequiredbylaw.Itmaynotbeasubstitute
fortheactualholdingofahearing.398
5. Priorconsultationwithunion,notcompliancewithdueprocess.399
6. Crossexaminationorconfrontationofwitnesses,notnecessaryincompanyinvestigations.400
7. Coconspiratorsconfession,notsufficienttomeritdismissal.401
8. If a party was not initially given a chance to be heard at the company level, but later was given full
opportunity to submit position papers or present his case and arguments before the Labor Arbiter, this
defectiscured.402Butifthedismissalisnotjustified,thisprincipledoesnotapply.403
4.1.INSTANCESWHEREHEARINGISNOTREQUIRED.
Hearingisnotrequiredinthefollowingcases:
1. Terminationofproject,seasonal,casualorfixedtermemployments.
2. Terminationofprobationaryemploymentonthegroundoffailureoftheprobationaryemployeetoqualify
as a regular employee in accordance with reasonable standards made known to him at the start of the
employment,nonoticeandhearingarerequired.404
3. Terminationduetoabandonmentofwork.
4. Termination due to authorized causes under Article 283 (installation of laborsaving device, redundancy,
retrenchment or closure of business or cessation of operations). In such cases, there are no allegations
whichtheemployeesshouldrefuteanddefendthemselvesfrom.405
5. TerminationduetodiseaseunderArticle284.406
6. Terminationbytheemployee(resignation)underArticle285.
7. Terminationafter6monthsofbonafidesuspensionofoperationinArticle286.Forpurposesofsatisfying
dueprocess,whatisrequiredissimplythatthenoticesprovidedunderArticle283beservedtoboththe
affected employees and the Department of Labor and Employment at least one (1) month before the
terminationbecomeseffective.407
8. TerminationduetoretirementunderArticle287.
9.Terminationduetoexpirationoftenuremadecoterminouswithlease.408
10.Terminationduetoclosureorstoppageofworkbygovernmentauthoritieswhennoncompliancewiththe
laworimplementingrulesandregulationsposesgraveandimminentdangertothehealthandsafetyof
workersintheworkplace.409
11. Termination due to expiration of contractual employment in a legitimate contracting or subcontracting
arrangement.410
12.Terminationofemployeewhohasadmittedhisguiltfortheoffensecharged.411
5.SEVEN(7)STANDARDSITUATIONSINTERMINATIONDISPUTES.
TherulesonterminationofemploymentintheLaborCodeandpertinentjurisprudenceareapplicabletoseven
(7)differentsituations,namely:
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1.IfbasedonjustcauseP30,000.00(perAgabon).
2.IfbasedonauthorizedcauseP50,000.00(perJakaFoodProcessingCorporationv.Pacot,[G.R.151378,
March28,2005]).
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The indemnity is stiffer in case of authorized cause termination because, unlike in the case of just cause
terminationwheretheemployeehascommittedawrongfulact,anemployeedismissedbasedonauthorizedcausehas
notcommittedanyblameworthyactanddoesnotimplydelinquencyorculpabilityonhispart.Instead,thedismissal
processisinitiatedbytheemployersexerciseofhismanagementprerogative,i.e.whentheemployeroptstoinstall
laborsavingdevices,whenhedecidestoceasebusinessoperationsorwhen,asinthiscase,heundertakestoimplement
aretrenchmentprogram
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(1) Reinstatement aspect
(a) Immediately executory
i. Actual reinstatement
ii. Payroll reinstatement
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b.SomeprinciplesundertheAgabondoctrine.
1.Measureofpenaltyorindemnitynolongerfullbackwagesbutnominaldamages.
2.Awardofbackwagesmustbedeletedandreplacedbyawardofindemnity.420
3.Amountofnominaldamagesmaybereduced.421Thusfar,asurveyofSupremeCourtdecisionsindicates
thattherehasyetbeennodecisionincreasingtheindemnitybeyondwhathasbeenprescribedinAgabon
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1.VARIOUSFORMSOFREINSTATEMENTUNDERTHELABORCODE.
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a.ProvisionsoftheLaborCodeenunciatingtheremedyofreinstatement.
TheLaborCodegrantstheremedyofreinstatementinvariousformsandsituations.Itsprovisionsrecognizing
reinstatementasaremedyareasfollows:
1.Article223whichprovidesforreinstatementofanemployeewhosedismissalisdeclaredillegalbytheLabor
Arbiter.Thisformofreinstatementisselfexecutoryandmustbeimplementedevenduringthependencyoftheappeal
thatmaybeinstitutedbytheemployer.
Philippine Airlines, Inc. v. NLRC, G.R. No. 115785, Aug. 4, 2000.
ACD Investigation Security Agency, Inc. v. Daquera, G.R. No. 147473, March 30, 2004; Pioneer Texturizing Corporation v. NLRC, G.R. No. 118651, Oct. 16, 1997; Oania v. NLRC, G.R. Nos. 97162-64, June 1, 1995, 244 SCRA 668.
Lambert Pawnbrokers and Jewelry Corp. v. Binamira, G.R. No. 170464, July 12, 2010; JGB and Associates, Inc. v. NLRC, G.R. No. 109390, March 7, 1996.
416 Standard Electric Manufacturing Corporation v. Standard Electric Employees Union-NAFLU-KMU, G.R. No. 166111, August 25, 2005; Magtoto v. NLRC, G.R. No. 63370, Nov. 18, 1985; Pepito v. Secretary of Labor, G.R. No. L-49418, Feb. 29, 1980, 96 SCRA 454; Pedroso v. Castro,
G.R. No. 70361, January 30, 1986.
417 Ledesma, Jr. v. NLRC, [G.R. No. 174585, October 19, 2007].
418 St. Marys Academy of Dipolog City v. Palacio, [G.R. No. 164913, September 8, 2010]; St. Lukes Medical Center Employees Association-AFW and Santos v. NLRC, [G.R. No. 162053, March 7, 2007].
419 Per Serrano v. NLRC, [G.R. No. 117040, January 27, 2000].
420 Electro System Industries Corp. v. NLRC, G.R. No. 165282, Oct. 5, 2005.
421 Business Services of the Future Today, Inc. v. CA, [G.R. No. 157133, January 30, 2006]; Industrial Timber Corp. v. Ababon, [G.R. No. 164518, March 30, 2006].
412
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6.THEAGABONDOCTRINE.
a.Agabondoctrineapplieswhendismissalisforjustorauthorizedcausebutwithoutdueprocess.
TheAgabondoctrineisbasedonthecaseofAgabonv.NLRC,[G.R.No.158693,November17,2004],whereit
washeldthataterminationforajustorauthorizedcausebutwithoutaffordingtheemployeeproceduraldueprocess
shouldnolongerbeconsideredillegalorineffectual419butlegal.
Consequently, the employee will not be ordered reinstated but will be awarded an indemnity in the form of
nominaldamagestheamountofwhichwilldependonwhethertheterminationisgroundedonjustcauseorauthorized
cause,thus:
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1.ThedismissalwasforajustcauseunderArticle282,foranauthorizedcauseunderArticle283,orforhealth
reasonsunderArticle284,anddueprocesswasobservedThisterminationisLEGAL.412
2.ThedismissalwaswithoutajustorauthorizedcausebutdueprocesswasobservedThisterminationis
ILLEGAL.413
3.ThedismissalwaswithoutajustorauthorizedcauseanddueprocesswasnotobservedThisterminationis
ILLEGAL.414
4.The dismissal was for a just or authorized cause but due process was not observed This termination is
LEGAL.415
5.ThedismissalwasforanonexistentcauseThisterminationisILLEGAL.416
6.ThedismissalwasnotsupportedbyanyevidenceofterminationThisterminationisNEITHERLEGALNOR
ILLEGALasthereisnodismissaltospeakof.417
7.ThedismissalwasbroughtaboutbytheimplementationofalawThisterminationisLEGAL.418
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Composite Enterprises, Inc. v. Caparoso, G.R. No. 159919, Aug. 8, 2007; Pheschem Industrial Corporation v. Moldez, G.R. No. 161158, May 9, 2005, 458 SCRA 339, 346.
Aris (Phil.) Inc. v. NLRC, [G.R. No. 90501, August 5, 1991, 200 SCRA 246].
Philippine Airlines, Inc. v. NLRC, [G.R. No. 113827, July 5, 1996, 258 SCRA 243].
425 Article 223, Labor Code; Section 4 [d], NLRC Manual on Execution of Judgment; Pioneer Texturizing Corporation v. NLRC, G.R. No. 118651, Oct. 16, 1997, 280 SCRA 806.
426 Roquero v. Philippine Air Lines, Inc., G.R. No. 152329, April 22, 2003.
427 Pioneer Texturizing Corporation v. NLRC, [G.R. No. 118651, October 16, 1997, 280 SCRA 806].
428 Article 223, Labor Code; Zamboanga City Water District v. Buat, G.R. No. 104389, May 27, 1994, 232 SCRA 587.
429 Pioneer Texturizing [supra].
430 Garcia and Dumago v. Philippine Airlines, Inc., G.R. No. 164856, January 20, 2009 [En Banc].
431 Maranaw Hotel Resort Corporation [Century Park Sheraton Manila] v. NLRC, [G.R. No. 110027, November 16, 1994].
432 Christian Literature Crusade v. NLRC, G.R. No. 79106, April 10, 1989, 171 SCRA 712; See also Ocampo v. Hon. Carale, G.R. No. 110687, Dec. 15, 1993; Industrial and Transport Equipment, Inc. v. NLRC, G.R. No. 113592, Jan. 15, 1998.
433 Roquero v. Philippine Air Lines, Inc., [G.R. No. 152329, April 22, 2003]; Air Philippines Corp. v. Zamora, [G.R. No. 148247, August 7, 2006]; Torres, Jr. v. NLRC, [G.R. No. 172584, November 28, 2008].
434 C. Alcantara & Sons, Inc. v. CA, [G.R. No. 155109, September 29, 2010].
435 Lansangan v. Amkor Technology Philippines, Inc., [G.R. No. 177026, January 30, 2009].
436 Enunciated in Genuino v. NLRC, [G.R. Nos. 142732-33, December 4, 2007].
422
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2.Article263[g]whichprovidesforautomaticreturntoworkofallstrikingorlockedoutemployees,ifastrike
orlockouthasalreadytakenplace,upontheissuancebytheSecretaryofLaborandEmploymentofanassumptionor
certificationorder.Theemployerisrequiredtoimmediatelyresumeoperationsandreadmitallworkersunderthesame
termsandconditionsprevailingbeforethestrikeorlockout.
3. Article 277 [b] which empowers the Secretary of Labor and Employment to suspend the effects of
terminationpendingtheresolutionoftheterminationdisputeintheeventofaprimafaciefindingbytheappropriate
officialoftheDepartmentofLaborandEmploymentbeforewhomsuchdisputeispendingthattheterminationmay
causeaseriouslabordisputeorisinimplementationofamasslayoff.
4.Article279whichgrantsreinstatementasarelieftoanemployeewhosedismissalisdeclaredasillegalina
finalandexecutoryjudgment.
5.Article286whichinvolvesbonafidesuspensionofoperationforaperiodnotexceedingsix(6)monthsorthe
renditionbyanemployeeofmilitaryorcivicduty.Itisrequiredunderthisprovisionthattheemployershouldreinstate
itsemployeesuponresumptionofitsoperationwhichshouldbedonebeforethelapseofsaidsixmonthperiodofbona
fidesuspensionofoperationoraftertherenditionbytheemployeesofmilitaryorcivicduty.
[NOTE:ThereinstatementreferredtointheSyllabuspertainsonlytothereinstatementunder
Article223.Discussion,therefore,willfocusonthisrelief].
2.REINSTATEMENTASPECTOFLABORARBITERSDECISION,IMMEDIATELYEXECUTORYEVENPENDINGAPPEAL.
a.Conceptofreinstatementpendingappeal,immediatelyexecutory.
The concept of reinstatement under Article 223 is to restore the illegally dismissed employee to a state or
conditionfromwhichhehasbeenremovedorseparated.422
b.SomeprinciplesonreinstatementpendingappealunderArticle223.
1. ReinstatementpendingappealunderArticle2223isconstitutional.423
2. Reinstatementpendingappeal,similartoreturntoworkorder.424
3. Postingofabonddoesnotstaytheexecutionofimmediatereinstatement.425
4. Reinstatementpendingappeal,ministerialdutyofLaborArbiter.426
5. Awardofreinstatementpendingappealisselfexecutory,nowritofexecutionrequired.427
6.Theemployerhasonly2options:
a. Actualreinstatement,i.e.,theemployeeshouldbereinstatedtohispositionwhichheoccupiespriorto
hisillegaldismissalunderthesametermsandconditionsprevailingpriortohisdismissalorseparationor,
ifnolongeravailable,toasubstantiallyequivalentposition;or
b. Payroll reinstatement, i.e., reinstatement of the employee in the payroll of the company without
requiringhimtoreportbacktohiswork.428
7. Employerhastheobligationtonotifyemployeeofhischoiceofoption.429Underthe2005RevisedNLRC
RulesofProcedure[January7,2006],itisrequiredthattheemployershouldsubmitareportofcompliance
within ten (10) calendar days from receipt of the Labor Arbiters decision, disobedience to which clearly
denotesarefusaltoreinstate.
8. TheemployeeneednotfileamotionfortheissuanceofthewritofexecutionsincetheLaborArbitershall
thereaftermotuproprioissuethewrit.430
9. NLRCcannotexerciseoptionofemployerbychoosingpayrollreinstatementpendingappeal.431
10. Employermaybecitedforcontemptforhisrefusaltocomplywiththeorderofreinstatement.432
11. Employerisliabletopaythesalariesfortheperiodthattheemployeewasorderedreinstatedpending
appealevenifhisdismissalislaterfinallyfoundtobelegal.433
13. TheconceptofreinstatementpendingappealunderArticle223contemplatesallkindsofillegaldismissal
cases.434
13. However, the principle of reinstatement pending appeal as well as the Roquero doctrine (now Garcial
doctrine)applyonlyincasethereisafindingofillegalityofdismissalbytheLaborArbiter.Itdoesnotapply
incasethedismissalisfoundvalidandlegalbuttheLaborArbiterorderedreinstatementasameasureof
equitableandcompassionatereliefowingmainlytoemployeespriorunblemishedemploymentrecords,
show of remorse, harshness of the penalty and defective attendance monitoring system of the
employer.435
14. Therule436thatthepayrollreinstatedemployeeshouldrefundthesalarieshereceivedifhisdismissalis
finallyfoundlegalonappealnolongerapplies.Whetherreinstatedactuallyorinthepayroll,theemployee
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Garcia and Dumago v. Philippine Airlines, Inc., [G.R. No. 164856, January 20, 2009 (En Banc)].
Aboc v. Metropolitan Bank and Trust Company, [G.R. Nos. 170542-43, December 13, 2010], citing College of the Immaculate Conception v. NLRC & Atty. Marius F. Carlos, Ph.D., G.R. No. 167563, March 22, 2010.
Roquero v. Philippine Air Lines, Inc., [supra].
440 Genuino v. NLRC, [supra].
441 Garcia and Dumago v. Philippine Airlines, Inc., [supra].
442 Mt. Carmel College v. Resuena, [G.R. No. 173076, October 10, 2007]; Panuncillo v. CAP Philippines, Inc., [G.R. No. 161305, February 9, 2007].
444 Citing Garcia v. Philippine Airlines, Inc., G.R. No. 164856, Jan. 20, 2009, 576 SCRA 479, 489; See also Triad Security & Allied Services, Inc. v. Ortega, [G.R. No. 160871, February 6, 2006].
445 Triad Security & Allied Services, Inc. v. Ortega, [supra].
446 Buenviaje v. CA, [G.R. No. 147806, November 12, 2002].
447 Sevilla v. NLRC, [G.R. No. 108878, September 20, 1994].
448 Medina v. Consolidated Broadcasting System, G.R. Nos. 99054-56, May 28, 1993, 222 SCRA 707; Pedroso v. Castro, G.R. No. 70361, Jan. 30, 1986, 141 SCRA 252.
450 Equitable Banking Corporation v. NLRC, G.R. No. 102467, June 13, 1997, 273 SCRA 352, 370; Philippine Telegraph & Telephone Corporation v. NLRC, G.R. No. 109281, Dec. 7, 1995, 251 SCRA 21.
451 Filflex Industrial and Manufacturing Corporation v. NLRC, G.R. No. 115395, Feb. 12, 1998, 349 Phil. 913, 924-925; 286 SCRA 245.
437
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isnotrequiredtorefundwhathehasreceivedevenifthedecisionoftheLaborArbiterissubsequently
reversedonappeal.437
15. Entitlementtowagesandbenefitsduringtheperiodofpayrollreinstatementuntilreversedbythehigher
court includessalary increases andother benefitsgrantedduring thepayroll reinstatement period. The
factthatthedecisionoftheLaborArbiterwasreversedonappealhasnocontrollingsignificance.Therule
isthateveniftheorderofreinstatementoftheLaborArbiterisreversedonappeal,itisobligatoryonthe
part of the employer to reinstate and pay the wages of the dismissed employee during the period of
appealuntilfinalreversalbythehighercourt.438
16. The2003Roquero439and2007Genuino440doctrineshavealreadybeenmodifiedbythe2009Garcia441
doctrine.Thus,aftertheLaborArbitersdecisionisreversedbyahighertribunal,theemployeemaybe
barred from collecting the accrued wages (i.e., from the time he was ordered reinstated by the Labor
Arbiter until reversed on appeal), if it is shown that the delay in enforcing the reinstatement pending
appealwaswithoutfaultonthepartoftheemployer.
17.ThetestundertheGarciadoctrineis2fold:
(a) There must be actual delay or the fact that the order of reinstatement pending appeal was not
executedpriortoitsreversal;and
(b)Thedelaymustnotbeduetotheemployersunjustifiedactoromission.Ifthedelayisduetothe
employersunjustifiedrefusal,theemployermaystillberequiredtopaythesalariesnotwithstanding
thereversaloftheLaborArbitersdecision.
18. WhilewritofexecutionisnotrequiredincasereinstatementisorderedbytheLaborArbiter,itisnecessary
incasereinstatementisorderedbytheNLRConappeal.442
19. IfreinstatementisorderednotbytheLaborArbiterbutbytheNLRConappealanditwasnotexecuted
bywritandthefindingofillegaldismissalislaterreversed,employerisnotliabletopayanybackwages.443
20. EmployermaybeheldliableforbackwagesdespitethefactthattheLaborArbiterfailedtoissueanywrit
toimplementthereinstatementorderissuedbytheNLRConappeal.
C.Alcantara&Sons,Inc.v.CA,[G.R.No.155109,September29,2010].
TheLaborArbiterorderedthereinstatementoftheunionmemberswhoweredismissedbyreasonoftheir
particationintheillegalstrike.Amotionforexecutionoftheirreinstatementwasimmediatelyfiledbutthe
LaborArbiterfailedtoissueanywrittoenforcethesame.Later,theNLRCreversedtheLaborArbiters
findingofillegalityoftheirdismissalbutoncertioraribeforetheCourtofAppeals,theLaborArbiters
order of reinstatement was reinstated. Ruling in the affirmative on the issue of whether the striking
employeesareentitledtotheirbackwagesreckonedfromthetimetheywereorderedreinstatedbythe
LaborArbiteruntilthereversalthereofbytheNLRC,theSupremeCourtreasonedthatalthoughtheLabor
Arbiter failed to act on the terminated union members motion for reinstatement pending appeal, the
company had the duty under Article 223 to immediately reinstate the affected employees even if it
intendedtoappealfromthedecisionordainingsuchreinstatement.Thecompanysfailuretodosomade
itliableforaccruedbackwagesuntiltheeventualreversaloftheorderofreinstatementbytheNLRCon
November8,1999,aperiodoffour(4)monthsandnine(9)days.444
21. Employmentelsewheredoesnotaffectreinstatementorderandobligationtopaybackwages.445
22. Thefailureoftheillegallydismissedemployeewhowasorderedreinstatedtoreportbacktoworkdoes
notgivetheemployertherighttoremovehim,especiallywhenthereisareasonableexplanationforhis
failure.446
23. Incaseoftwosuccessivedismissals,theorderofreinstatementpendingappealunderArticle223issuedin
thefirstcaseshallapplyonlytothefirstcaseandshouldnotaffecttheseconddismissal.447
24. Ifpositionisalreadyfilledup,theemployeeorderedreinstatedunderArticle223shouldbeadmittedback
toworkinasubstantiallyequivalentposition.448
25. Reinstatementtoapositionlowerinrank,notproper.449
26.Noreinstatementpendingappealshouldbemadewhenantipathyandantagonismexist.450
27.IfreinstatementisnotstatedintheLaborArbitersdecision(neitherinthedispositiveportionnorinthe
textthereof),reinstatementisnotwarranted.451
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Relevant Provision: Not provided for in the Labor Code
1.SEPARATIONPAYINLIEUOFREINSTATEMENT.
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(2) Separation pay in lieu of
reinstatement
(a) Strained Relation rule
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c.Instanceswhereseparationpayinlieuofreinstatementisawarded.
Basedonjurisprudence,separationpayinlieuofreinstatementshouldbepaidinthefollowingcircumstances:
1. Incasestrainedrelationsexistsbetweentheemployerandtheemployee.458Absenceofstrainedrelations,
paymentofseparationpayinlieuofreinstatementisnotjustified.459
2. Wherethecompanyhasbeendeclaredinsolvent.460
3. Where the employees former position no longer exists at the time of reinstatement for reasons not
attributabletothefaultoftheemployer.461
4. Where the employee decides not to be reinstated as when he does not pray for reinstatement in his
complaintorpositionpaper.462
5. Wheretheemployeeexpresslyprayedfortheawardofseparationpayinsteadofreinstatementthereby
effectivelyforeclosingreinstatementasarelief.463
6. Incasetheestablishmentwheretheemployeeistobereinstatedhasclosedorceasedoperations.464
7. When,byreasonofcompassionatejusticeorlongyearsofserviceorlackofbadrecordsinthepast,an
employeeisgrantedbythecourtseparationpayinaccordancewithhisentitlementunderthelaw,orunder
the CBA or company rules or practice, whichever is higher, although there was a finding of legality of
dismissal.465
8. Whentherehasbeenlongpassageoftimeorduetocertainrealitiesofthesituation.466
9.Whenreinstatementprovesimpracticable,andhardlyinthebestinterestoftheparties.467
10. Whenreinstatementisrenderedmootandacademicduetosuperveningeventssuchasfire.468
11. Whenthereistakeoverofthebusinessoftheemployerbyanothercompanyandthereisnoagreement
regardingassumptionofliabilitybytheacquiringcompany.469
12. Whentheillegallydismissedemployeesareoveragedandtheirreinstatementwouldunjustlyprejudice
theiremployer.470
13. When the general sales agency contract between the employer and its client has been terminated and
reinstatementisnolongerfeasible.471
Capili v. NLRC, [G.R. No. 117378, March 26, 1997, 270 SCRA 488].
See also Kingsize Manufacturing Corporation v. NLRC, G.R. Nos. 110452-54, Nov. 24, 1994.
St. Lukes Medical Center, Inc. v. Notario, G.R. No. 152166, Oct. 20, 2010.
455 Section 4[b], Rule I, Book VI, Rules to Implement the Labor Code; St. Lukes Medical Center, Inc. v. Notario, G.R. No. 152166, Oct. 20, 2010; Agricultural and Industrial Supplies Corp. v. Siazar, G.R. No. 177970, Aug. 25, 2010.
456 Planters Products, Inc. v. NLRC, G.R. No. 78524, Jan. 20, 1989.
457 See Millares v. NLRC, G.R. No. 122827, March 29, 1999, 305 SCRA 500.
458 Century Canning Corp. v. Ramil, G.R. No. 171630, Aug. 8, 2010; Coca-Cola Bottlers Phils., Inc. v. Daniel, G.R. No. 156893, June 21, 2005.
459 Golden Donuts, Inc. v. NLRC, [G.R. Nos. 113666-68, January 19, 2000].
460 Electruck Asia, Inc. v. Meris, G.R. No. 147031, July 27, 2004.
461 Section 4[b], Rule I, Book VI, Rules to Implement the Labor Code.
462 Labor v. NLRC, G. R. No. 110388, Sept. 14, 1995; Gaco v. The Hon. NLRC, G.R. No. 104690, Feb. 23, 1994.
463 F. F. Marine Corporation v. The Hon. Second Division NLRC, G.R. No. 152039, April 8, 2005.
464 Section 4[b], Rule I, Book VI, Rules to Implement the Labor Code; Daughson Construction Co. Ltd. v. NLRC, G.R. No. 72945, May 29, 1986; Pizza Inn v. NLRC, G.R. No. 74531, June 28, 1988.
465 Firestone Tire and Rubber Co. of the Philippines v. Lariosa, G.R. No. L-70479, Feb. 27, 1987..
466 Esmalin v. NLRC, G.R. No. 67880, Sept. 15, 1989; See also Sari-Sari Group of Companies, Inc. v. Piglas Kamao [Sari-Sari Chapter], G.R. No. 164624, Aug. 11, 2008.
467 St. Lukes Medical Center, Inc. v. Notario, G.R. No. 152166, Oct. 20, 2010.
468 Bagong Bayan Corporation v. Ople, G.R. No. 73334, Dec. 8, 1986.
469 Callanta v. Carnation Philippines, G.R. No. 70615, Oct. 28, 1986.
470 Bustamante v. NLRC, G.R. No. 111651, Nov. 28, 1996; Sagales v. Rustans Commercial Corp., G.R. No. 166554, Nov. 27, 2008.
471 Asia Pacific Chartering [Phils.], Inc. v. Farolan, G.R. No. 151370, Dec. 4, 2002.
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TheamountofseparationpaythatshouldbepaidinlieuofreinstatementisnotprovidedundertheLabor
Code.Jurisprudence,however,dictatesthatthefollowingshouldbeincludedinitscomputation:
1. Theamountequivalenttoatleastone(1)monthsalaryortoone(1)monthsalaryforeveryyearofservice,
whicheverishigher,afractionofatleastsix(6)monthsbeingconsideredasone(1)wholeyear.455
2. Allowances that the employee has been receiving on a regular basis.456 The wellsettled rule is that
allowances that are regularly received by the employee should be included in the computation of the
separationpay.Ifnotregularlyreceived,thesamemaynotbesoincluded.457
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Article279 is unambiguous insofar as it mandatesthe reinstatement of the employee incasehe isunjustly
dismissed.Itdoesnot,however,provideforthepaymentofseparationpayinlieuofreinstatement.ThatArticle279is
thebasisforsuchanawardiswellsettled.452Itisawardedininstanceswheretherelationsbetweentheemployerand
theemployeehavebeensoseverelystrainedthatitisnolongeradvisabletoreinstatethelatter.Insuchevents,the
employerwillinsteadbeorderedtopayseparationpay.453
Itis,therefore,nowwellsettledthatifreinstatementisnolongerpossible,theemployerhasthealternativeof
payingtheemployeehisseparationpayinlieuofreinstatement.454
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a.Strainedrelationsorantagonismmayeffectivelybarreinstatement.
In a plethora of cases, the Supreme Court has been consistent in its holding that the existence of strained
relationsbetweentheemployerandtheillegallydismissedemployeemayeffectivelybarreinstatementofthelatter.481
b.Someprinciplesonstrainedrelations.
1. StrainedrelationsmustberaisedbeforetheLaborArbiter.Itmustbedemonstratedasafact.482
2. Litigation,byitself,doesnotgiverisetostrainedrelationsthatmayjustifynonreinstatement.Thefilingof
the complaint for illegal dismissal does not by itself justify the invocation of the doctrine of strained
relations.483
3. Nostrainedrelationsshouldarisefromavalidandlegalactofassertingonesright;otherwise,anemployee
whoassertshisrightcouldbeeasilyseparatedfromtheservicebymerelypayinghisseparationpayonthe
pretextthathisrelationshipwithhisemployerhadalreadybecomestrained.484
4. Indeed,ifthestrainedrelationsengenderedasaresultoflitigationaresufficienttoruleoutreinstatement,
thenreinstatementwouldbecometheexceptionratherthantheruleincasesofillegaldismissal.485
5. Natureofposition,materialindeterminingvalidityofstrainedrelations.Ifthenatureoftheposition
requiresthattrustandconfidencebereposedbytheemployerupontheemployeeoccupyingitaswould
make reinstatement adversely affect the efficiency, productivity and performance of the latter, strained
relationsmaybeinvokedinordertojustifynonreinstatement.Wheretheemployee,however,hasnosay
intheoperationofhisemployersbusiness,invocationofthisdoctrineisnotproper.486
6. Nonsettlementofdisputeafterlongperiodoftime,notindicativeofstrainedrelations.487
7. Refusalbytheemployeetobereinstatedindicatesstrainedrelations.
8. Therefusalofanemployeetobereinstatedisindicativeofstrainedrelations.488
9. Criminal prosecution confirms the existence of strained relations which would render the employees
reinstatementhighlyundesirable.489
10. Amanagerialemployeeshouldnotbereinstatedifstrainedrelationsexist.490
11. Incaseofnewowhershipoftheestablishment,reinstatementisproperifnostrainedrelationsexistwith
newowner.491
Colgate-Palmolive Philippines, Inc. v. Ople, G.R. No. L-73681, June 30, 1988.
Pheschem Industrial Corporation v. Moldez, G.R. No. 161158, May 9, 2005; Johnson & Johnson [Phils.], Inc. v. Johnson Office & Sales Union FFW, [G.R. No. 172799, July 6, 2007].
Arc-Men Food Industries Corporation v. NLRC, [G.R. No. 127086, August 22, 2002]; JPL Marketing Promotions v. CA, [G.R. No. 151966, July 8, 2005].
475 Masagana Concrete Products v. NLRC, G.R. No. 106916, Sept. 3, 1999; Jardine Davies, Inc. v. NLRC, G.R. No. 76272, July 28, 1999.
476 Soriano v. NLRC, G.R. No. L-75510, Oct. 27, 1987.
477 Songco v. NLRC, G.R. Nos. 50999-51000, March 23, 1990.
478 St. Lukes Medical Center, Inc. v. Notario, G.R. No. 152166, Oct. 20, 2010; Agricultural and Industrial Supplies Corp. v. Siazar, G.R. No. 177970, Aug. 25, 2010.
479 Pulp and Paper, Inc. v. NLRC, G.R. No. 116593, Sept. 24, 1997, 279 SCRA 408, 420.
480 Maxi Security and Detective Agency v. NLRC, [G.R. No. 162850, December 16, 2005].
481 Wensha Spa Center, Inc. v. Yung, G.R. No. 185122, Aug. 16, 2010; Century Canning Corp. v. Ramil, G.R. No. 171630, Aug. 8, 2010; CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23, 2009.
482 Paguio Transport Corporation v. NLRC, G. R. No. 119500, Aug. 28, 1998.
483 Id.; Capili v. NLRC, G.R. No. 117378, March 26, 1997, 270 SCRA 488, 495.
484 Globe-Mackay Cable and Radio Corporation v. NLRC, G.R. No. 82511, March 3, 1992, 206 SCRA 701, 709.
485 Procter and Gamble Philippines v. Bondesto, G.R. No. 139847, March 5, 2004.
486 Acesite Corporation v. NLRC, [G. R. No. 152308, January 26, 2005].
487 Palmeria v. NLRC, [G.R. Nos. 113290-91, August 3, 1995].
488 Sentinel Security Agency, Inc. v. NLRC, G.R. No. 122468, Sept. 3, 1998; Philippine American Life Insurance Company v. NLRC, G.R. No. 122716, Sept. 3, 1998.
489 RDS Trucking, v. NLRC, G.R. No. 123941, Aug. 27, 1998; Cabatulan v. Buat, [G.R. No. 147142, February 14, 2005].
490 Golden Donuts, Inc. et al. v. NLRC, [G.R. Nos. 105758-59, February 21, 1994]; See also Wensha Spa Center, Inc. v. Yung, G.R. No. 185122, Aug. 16, 2010.
491 PLDT v. Tolentino, [G.R. No. 143171, September 21, 2004],.
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d.Someprinciplesonseparationpayinlieuofreinstatement.
1. Separationpayasasubstituteremedyisonlyproperforreinstatementbutnotforbackwagesnorforboth
reinstatementandbackwages.472
2. Thelawintendedreinstatementtobethegeneralrule.Itisonlywhenreinstatementisnolongerfeasible
thatpaymentofseparationpayisawardedtoanillegallydismissedemployee.473
3. Noconstructive/illegaldismissal,noseparationpayrequired.474
4. Separationpayinlieuofreinstatementiscomputedfromthecommencementofemploymentuptothe
timeoftermination,includingtheimputedserviceforwhichtheemployeeisentitledtobackwages,with
thesalaryrateprevailingattheendoftheperiodofputativeservicebeingthebasisforcomputation.475
5. Commissionsmayormaynotbeincluded.Asageneralrule,commissionsshouldnotbeincludedinthe
computationofthebasefigureoftheseparationpaybecausethesameisdependentontheearningsofthe
employee through actual marketing transactions taken by him.476 But if commissions are earned from
actualtransactionsattributabletotheemployeeslikeinthecaseofsalesmen,thesameshouldbeincluded
inthemonthlysalaryforpurposesofcomputingtheseparationpay.Consequently,whatshouldbetaken
intoaccountasseparationpayistheaveragecommissionearnedduringtheirlastyearofemployment.477
6.Separationpayinlieuofreinstatementandbackwages,notinconsistentwitheachother.478
7.Theseparationpayinlieuofreinstatementofemployeeswhowereconstructivelydismissedisequivalentto
one(1)monthsalaryforeveryyearofservice.479
8.Death of employee during the pendency of the case forestalls award of separation pay in lieu of
reinstatement.480
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Thecomponentsofbackwagesareasfollows:
1. Salariesorwagescomputedonthebasisofthewageratelevelatthetimeoftheillegaldismissalandnotin
accordancewiththelatest,currentwageleveloftheemployeesposition.498
2. Allowancesandotherbenefitsregularlygrantedtoandreceivedbytheemployeeshouldbemadepartof
backwages.499Examples:
a. Emergencylivingallowancesand13thmonthpaymandatedunderthelaw.500
b. Fringebenefitsortheirmonetaryequivalent.501
c. Transportationandemergencyallowances.502
d. Holidaypay,vacationandsickleavesandserviceincentiveleaves.503
e. Justshareintheservicecharges.504
f. Gasoline,carandrepresentationallowances.505
g. Anyotherregularallowancesandbenefitsortheirmonetaryequivalent.506
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1. Thecomputationofsaidregularlypaidallowancesandbenefitsaspartofbackwagesshouldbemadeupto
the date of reinstatement as provided under Article 279 of the Labor Code or, if reinstatement be not
possible,uptothefinalityofthedecisiongrantingfullbackwages.507
2. Salary increases during period of unemployment, not included as component in the computation of
backwages.508
3. Dismissedemployeesabilitytoearn,irrelevantintheawardofbackwages.509
4. Thefailuretoclaimbackwagesinacomplaintforillegaldismissalisamereprocedurallapsewhichcannot
defeatarightgrantedundersubstantivelaw.Hence,theillegallydismissedemployeemaystillbeawarded
backwagesdespitesaidfailure.510
Philippine Journalists, Inc. v. Mosqueda, G.R. No. 141430, May 7, 2004; Rodriguez, Jr. v. NLRC, G.R. No. 153947, Dec. 5, 2002, 393 SCRA 511, 517.
PLDT v. NLRC, G.R. No. 106947, Feb. 11, 1999.
Buhain v. The Hon. CA, G.R. No. 143709, July 2, 2002.
495 Telefunken Semiconductors Employees Union-FFW v. Court of Appeals, [G.R. Nos. 143013-14, December 18, 2000, 348 SCRA 565, 590].
496 Earlier, there were two (2) rules on backwages. The first is the so-called Mercury Drug Rule refers to the rule first enunciated in the case of Mercury Drug Co., Inc. v. CIR, [G.R. No. L-23357, April 30, 1974, 56 SCRA 694, (1974)], which mandates that in case the illegal dismissal of
an employee has lasted for many years, he is entitled to backwages for a fixed period of three (3) years, without further qualifications or deductions, The Mercury Drug rule was superseded later by the Ferrer Doctrine laid down in the case of Ferrer v. NLRC, [G.R. No. 100898, July
5, 1993, 224 SCRA 410, 423], which granted backwages in full but the employer may deduct any amount which the employee may have earned elsewhere during the period of his illegal termination.
497 See also Kay Products, Inc. v. CA, G. R. No. 162472, July 28, 2005; Traders Royal Bank v. NLRC, G.R. No. 127864, Dec. 22, 1999.
498 See also PLDT v. NLRC, G.R. No. 106947, Feb. 11, 1999; General Baptist Bible Colleges v. NLRC, G.R. No. 85534, March 5, 1993, 219 SCRA 549
499 Evangelista v. NLRC, G.R. No. 93915, Oct. 11, 1995; Paramount Vinyl Products Corporation v. NLRC, G.R. No. 81200, Oct. 17, 1990.
500 Espejo v. NLRC, G.R. No. 112678, March 29, 1996, 325 Phil. 753, 760; General Baptist Bible Colleges v. NLRC, G.R. No. 85534, March 5, 1993, 219 SCRA 549.
501 Acesite Corporation v. NLRC, G.R. No. 152308, Jan. 26, 2005.
502 Santos v. NLRC, G.R. No. 76721, Sept. 21, 1987; Soriano v. NLRC, G.R. No. L-75510, Oct. 27, 1987.
503 St. Louise College of Tuguegarao v. NLRC, G.R. No. 74214, Aug. 31, 1989; On service incentive leave, see Fernandez v. NLRC, G.R. No. 105892, Jan. 28, 1998, 285 SCRA 149.
504 Maranaw Hotels & Resort Corporation v. NLRC, G.R. No. 123880, Feb. 23, 1999.
505 Consolidated Rural Bank [Cagayan Valley], Inc. v. NLRC, G.R. No. 123810, Jan. 20, 1999, 301 SCRA 223.
506 Blue Dairy Corporation v. NLRC, G.R. No. 129843, Sept. 14, 1999.
507 Fernandez v. NLRC, G.R. No. 105892, Jan. 28, 1998, 285 SCRA 149.
508 Equitable Banking Corp. v. Sadac, [G.R. No. 164772, June 8, 2006].
509 Tomas Claudio Memorial College, Inc. v. CA, [G.R. No. 152568, February 16, 2004].
510 Dela Cruz v. NLRC, G.R. No. 121288, Nov. 20, 1998, 299 SCRA 1, 12-13; L. T. Datu & Co., Inc. v. NLRC, G.R. No. 113162. Feb. 9, 1996, 253 SCRA 440, 453.
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b.TheBustamanterule[theprevailingdoctrine].
In1996,theSupremeCourtchangedtherule496onthereckoningofbackwages.Itannouncedanewdoctrinein
the case of Bustamante v. NLRC, [G.R. No. 111651, November 28, 1996, 265 SCRA 61],which is now known as the
Bustamante rule.Underthis rule,the termfullbackwages should meanexactlythat,i.e., withoutdeductingfrom
backwagestheearningsderivedelsewherebytheconcernedemployeeduringtheperiodofhisillegaldismissal.497
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a.Concept.
UnderArticle279,anemployeewhoisunjustlydismissedisentitlednotonlytoreinstatement,withoutlossof
seniorityrightsandotherprivileges,butalsotothepaymentofhisfullbackwages,inclusiveofallowancesandother
benefitsortheirmonetaryequivalent,computedfromthetimehiscompensationwaswithheldfromhim(which,asa
rule,isfromthetimeofhisillegaldismissal)uptothetimeofhisactualreinstatement.492
The raison d etre for the payment of backwages is equity. Backwages represent compensation that should
havebeenearnedbytheemployeebutwerelostbecauseoftheunjustorillegaldismissal.493
Simplystated,anemployeewhosedismissalisfoundtobeillegalisconsiderednottohavelefthisofficesothat
heisentitledtoalltherightsandprivilegesthataccruetohimbyvirtueoftheofficethatheheld.494
Butifthedismissalisnotillegal,anawardofbackwagesisnotproper.495
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[NOTE: CONSTRUCTIVE DISMISSAL is classified in the Syllabus under the topic of Reliefs for Illegal
Dismissal. It bears noting, however, that constructive dismissal is not a relief as this term is understood
within the context of Labor Law].
1. CONSTRUCTIVEDISMISSAL.
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a.Concept.
Constructivedismissalcontemplatesthefollowing:
1. Aninvoluntaryresignationresortedtowhencontinuedemploymentisrenderedimpossible,unreasonable
orunlikely;
f.
Aurora Land Projects Corporation v. NLRC, [G.R. No. 114733, January 2, 1997, 266 SCRA 48].
The Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, Dec. 15, 2010; Buenviaje v. CA, G.R. No. 147806, 12 Nov. 2002, 391 SCRA 440.
CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23, 2009; Gaco v. NLRC [G.R. No. 104690, 23 February 1994, 230 SCRA 260, 269].
514 Philippine-Singapore Transport Services, Inc. v. NLRC, G.R. No. 95449, Aug. 18, 1997; Orlando Farms Growers Association/Glicerio Anover v. NLRC, G.R. No. 129076, Nov. 25, 1998, 299 SCRA 364.
515 Espejo v. NLRC, G.R. No. 112678, March 29, 1996, 255 SCRA 430, 435.
516 St. Michaels Institute v. Santos, [G.R. No. 145280, December 4, 2001].
517517 See also Intercontinental Broadcasting Corp. v. Benedicto, [G.R. No. 152843, July 20, 2006].
518 RDS Trucking, v. NLRC, G.R. No. 123941, Aug. 27, 1998.
519 Chronicle Securities Corporation v. NLRC, [G.R. No. 157907, November 25, 2004]; See also Price v. Innodata Phils., Inc./Innodata Corp., [G.R. No. 178505, Sept. 30, 2008].
520 Mitsubishi Motors Philippines Corporation v. Chrysler Philippines Labor Union, [G.R. No. 148738, June 29, 2004].
521 Maxi Security and Detective Agency v. NLRC, [G.R. No. 162850, December 16, 2005].
522 Id., Metro Transit Organization, Inc. v. NLRC, [G.R. No. 119724, May 31, 1999]; PLDT v. Teves, [G.R. No. 143511, November 15, 2010].
523 Quiones v. NLRC, [G.R. No. 105763, July 14, 1995]; See also Visperas v. Inciong, 119 SCRA 476 [1982].
524 Buhain v. The Hon. CA, [G.R. No. 143709, July 2, 2002].
525 Condo Suite Club Travel, Inc. v. NLRC, [G.R. No. 125671, January 28, 2000].
526 Glory Philippines, Inc. v. Vergara, G.R. No. 176627, Aug. 24, 2007.
527 Medina v. Consolidated Broadcasting System, G.R. Nos. 99054-56, May 28, 1993, 222 SCRA 707.
511
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5. WhenLaborArbiterorNLRCfailedtoawardanybackwages,thesamemaybecorrectedonappealevenif
workerdidnotappeal.511
6. Incasereinstatementisordered,fullbackwagesshouldbereckonedfromthetimethecompensationwas
withheld(which,asarule,isfromthetimeofillegaldismissal)uptothetimeofreinstatement,whether
actualorinthepayroll.512
7. Ifseparationpayisorderedinlieuofreinstatement,fullbackwagesshouldbecomputedfromthetimeof
illegal dismissal until the finality of the decision. The justification is that along with the finality of the
SupremeCourtsdecision,theissueontheillegalityofthedismissalisfinallylaidtorest.513
8. Theruleisdifferentifemploymentisforadefiniteperiod.Theillegallydismissedfixedtermemployeeis
entitled only to the payment of his salaries corresponding to the unexpired portion of his fixedterm
employmentcontract.514
9. Iftheillegallydismissedemployeehasreached60yearsofage,hisbackwagesshouldonlycoverthetime
whenhewasillegallydismisseduptothetimewhenhereached60years.UnderArticle287,60yearsisthe
optionalretirementage.515
10. Iftheemployeehasreached65yearsofageorbeyond,hisfullbackwagesshouldbecomputedonlyupto
saidage.Thecontentionoftheemployerthatbackwagesshouldbereckonedonlyuptoage60cannotbe
sustained.516InJaculbev.SillimanUniversity,[G.R.No.156934,March16,2007],itwasdeclaredthat
sincepetitionerhasalreadyreachedseventyone(71)yearsofageatthetimethedecisionwasrendered
bytheSupremeCourtinthiscase,theawardofbackwagesinherfavormustbecomputedfromthetime
ofherillegaldismissaluptohercompulsoryretirementageofsixtyfive(65).517
11. Ifterminationwasmadeeffectiveimmediately,thebackwagesshouldbereckonedfromthedateofthe
terminationletterwheresuchwasstated.518
12. Ifemployerhasalreadyceasedoperations,fullbackwagesshouldbecomputedonlyuptothedateofthe
closure.Toallowthecomputationofthebackwagestobebasedonaperiodbeyondthatwouldbean
injusticetotheemployer.519
13. Ifvalidretrenchmentsupervenedduringthependencyofthecase,fullbackwagesshouldbecomputed
onlyuptotheeffectivitydateoftheretrenchment.520
14.Incasetheemployeediesduringpendencyofthecase,hisfullbackwagesshouldbecomputedfromthe
timeofhisdismissaluptothetimeofhisdeath.521
15.Theperiodofvalidsuspensionisdeductiblefrombackwages.522
16. Backwagesshouldbereckonedfromendofvalidsuspension.523
17.Backwagesshouldincludeperiodofpreventivesuspension.524
18.Employersoffertoreinstatedoesnotforestallpaymentoffullbackwages.525
19.Amountreceivedduringpayrollreinstatementdeductiblefrombackwages.526
20. The unjustified refusal of the employer to reinstate an illegally dismissed employee entitles him to
paymentofhissalarieseffectivefromthetimetheemployerfailedtoreinstatehimdespitetheissuanceof
awritofexecution.527
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(4) Constructive dismissal
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Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, Nov. 25, 2004; See also Formantes v. Duncan Pharmaceuticals, G.R. No. 170661, Dec. 4, 2009; Montederamos v. Tri-Union International Corp., G.R. No. 176700, Sept. 4, 2009, 598 SCRA 370, 376; Norkis Trading Co., Inc. v.
Gnilo, G.R. No. 159730, Feb. 11, 2008, 544 SCRA 279.
Nitto Enterprises v. NLRC, [G.R. No. 114337, September 29, 1995]; Phil. Employ Services and Resources, Inc. v. Paramio, [G.R. No. 144786, April 15, 2004]; Siemens Philippines, Inc. v. Domingo, [G.R. No. 150488, July 28, 2008]; SHS Perforated Materials, Inc. v.
Diaz, [G.R. No. 185814, October 13, 2010].
530 CRC Agricultural Trading v. NLRC, [G.R. No. 177664, December 23, 2009]; Aguilar v. Burger Machine Holdings Corporation, G.R. No. 172062, Oct. 30, 2006, 506 SCRA 266, 273; Globe Telecom, Inc. v. Florendo-Flores, G.R. No. 150092, Oct. 20, 2003, SC E-Library.
531 Mandapat v. Add Force Personnel Services, Inc., G.R. No. 180285, July 6, 2010].
532 Callanta v. NLRC, [G.R. No. 105083, August 20, 1993, 225 SCRA 526].
533 Belaunzaran v. NLRC, [G.R. No. 120038, December 23, 1996, 265 SCRA 800]; Mandapat v. Add Force Personnel Services, Inc., [G.R. No. 180285, July 6, 2010]; Cathay Pacific Airways, Ltd. v. Marin, [G.R. No. 148931, September 12, 2006].
534 Philippine Rural Reconstruction Movement [PRRM] v. Pulgar, [G.R. No. 169227, July 5, 2010].
535 Concrete Aggregates v. NLRC, G.R. No. 82458, Sept. 7, 1989.
528
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2. Ademotioninrankand/oradiminutioninpay;or
3. Acleardiscrimination,insensibilityordisdainbyanemployerwhichbecomesunbearabletotheemployee
thatitcouldforecloseanychoicebyhimexcepttoforegohiscontinuedemployment.528
b.Forcedresignation.
Constructivedismissalincludesforcedresignationwheretheemployeeismadetodoorperformaninvoluntary
actsubmissionortenderofresignationmeanttovalidatetheactionofmanagementininveigling,luringorinfluencing
or practically forcing the employee to effectuate the termination of employment, instead of doing the termination
himself.529
c.Testofconstructivedismissal.
Thetestofconstructivedismissaliswhetherareasonablepersonintheemployeespositionwouldhavefelt
compelledtogiveuphispositionunderthecircumstances.Itisanactamountingtodismissalbutmadetoappearasifit
were not. In fact, the employee who is constructively dismissed may be allowed to keep on coming to
work.Constructivedismissalis,therefore,adismissalindisguise.Thelawrecognizesandresolvesthissituationinfavor
oftheemployeesinordertoprotecttheirrightsandinterestsfromthecoerciveactsoftheemployer.530
d.Someprinciplesonconstructivedismissalorforcedresignation.
1.Mereallegationsofthreatorforcedonotconstituteevidencetosupportafindingofforcedresignationor
constructivedismissal.531
2. A threat to sue the employee is not unjust and will not amount to forced resignation or constructive
dismissal.Forinstance,athreattofileestafacase,notbeinganunjustact,butratheravalidandlegalactto
enforce a claim, cannot at all be considered as intimidation. A threat to enforce ones claim through
competentauthority,iftheclaimisjustorlegal,doesnotvitiateconsent.532
3. Givingtheemployeethechoiceoroptionbetweenresignationandinvestigationisnotillegal.533
4. Thefactsofthecaseshouldbeconsideredtodetermineifthereisconstructivedismissal.534
5. Voluntary resignation is different from constructive dismissal. An employee who tendered her voluntary
resignationandsignedthequitclaimafterreceivingallthebenefitsdueherforherseparationcannotclaim
thatshewasconstructivelydismissed.535
6. Anemployeemaybeconstructivelydismissedandatthesametimelegallydismissed.
Formantesv.DuncanPharmaceuticalsPhils.,Inc.,[G.R.No.170661,December4,2009].
Thisisquiteauniquecasewheretheemployeewasheldtohavebeenconstructivelydismissedbutatthesame
time,wasdeclaredtohavebeenlegallydismissed.Inthiscase,petitioner,whilestillemployedwiththerespondent,was
compelledtoresignandforcedtogoonleave.Afterbeingconfrontedwiththecomplaintforsexualabuselodgedbya
subordinatefemaleemployeeandbeforebeingrequiredtoexplainhisside,petitioner,theActingDistrictManagerof
respondent for the Ilocos District, was no longer allowed to participate in the activities of respondent company. His
salarywasnolongerremittedtohim.Hissubordinatesweredirectednottoreporttohimandthecompanydirected
oneofitsdistrictmanagerstotakeoverhispositionanddohisfunctionswithoutpriornoticetohim.Hewasrequiredto
explainhissideontheissueofsexualabuseaswellasthechargeofinsubordinationonlyafterthesethingshavealready
beendonetohim.
Inrulingthathewasalreadyconstructivelydismissed,theHighCourtobservedthatthesediscriminatoryacts
werecalculatedtomakepetitionerfeelthatheisnolongerwelcomenorneededinrespondentcompanyshortof
sending him an actual notice of termination. Despite this holding, however, the Supreme Court declared that his
dismissalwasvalidandlegaland,therefore,itisimpracticalandunjusttoreinstatehimastherewasajustcauseforhis
dismissalfromtheserviceconsistingofhissexualabuseofasubordinatefemaleemployeewhich,althoughnotcitedin
theNoticeofTerminationservedonhimwhenhewasterminated,wasdulyprovedduringthetrialofthecasebefore
theLaborArbiter.Itmustbenotedthatinthiscase,petitionerwasterminatednotonthegroundofsexualabusebut
due to insubordination for his failure to report to the office; failure to submit reports; and failure to file written
explanationsdespiterepeatedinstructionsandnotices.Furthermore,whilethedismissalwasadjudgedasvalid,itwas
found that there was noncompliance with the twin procedural requirements of notice and hearing for a lawful
dismissal.Itwasestablishedbyevidencethatthebarrageofletterssenttopetitioner,startingfromaletterdatedApril
22, 1994 until his termination on May 19, 1994, was belatedly made and apparently done in an effort to show that
petitionerwasaccordedthenoticesrequiredbylawindismissinganemployee.AsobservedbytheLaborArbiterinher
decision,priortotheseletters,petitionerwasalreadyconstructivelydismissed.Sincethedismissal,althoughforavalid
cause,wasdonewithoutdueprocessoflaw,theemployerwasorderedtoindemnifypetitionerwithnominaldamages
intheamountofP30,000.00.
e.Instancesofconstructivedismissalorforcedresignation.
Thefollowingareexamplesofconstructivedismissalorforcedresignation:
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Pasig Cylinder Mfg., Corp. v. Rollo, G.R. No. 173631, Sept. 8, 2010.
New Ever Marketing, Inc. v. CA, G.R. No. 140555, July 14, 2005.
Dynamic Signmaker Outdoor Advertising Services, Inc. v. Potongan, G.R. No. 156589, June 27, 2005.
539 Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, Nov. 25, 2004.
540 Oriental Mindoro Electric Cooperative, Inc. v. NLRC, G.R. No. 111905, July 31, 1995.
541 Garcia v. NLRC, G.R. No. 116568, Sept. 3, 1999; Oscar Ledesma & Company v. NLRC, G.R. No. 110930, July 13, 1995, 246 SCRA 47, 51.
542 Globe Telecoms, Inc. v. Florendo-Flores, G.R. No. 150092, Sept. 27, 2002, 390 SCRA 201.
543 C. Alcantara & Sons, Inc. v. NLRC, G.R. No. 73521, Jan. 5, 1994.
544 Zurbano, Sr. v. NLRC, G.R. No. 103679, Dec. 17, 1993.
545545545 Guatson International Travel and Tours, Inc. v. NLRC, G.R. No. 100322, March 9, 1994.
546 Rizal Memorial Colleges Faculty Union v. NLRC, G.R. No. 59012-13, Oct. 12, 1989.
547 Reyes v. NLRC, G.R. No. 78997, Aug. 31, 1989.
548 Sy v. NLRC, G.R. No. 85365, June 21, 1989.
549 R. P. Dinglasan Construction, Inc. v. Atienza, G.R. No. 156104, June 29, 2004.
550 Litonjua Group of Companies v. Vigan, G.R. No. 143723, June 28, 2001; See also Suldao v. Cimech System Construction, Inc., G.R. No. 171392, Oct. 30, 2006.
551 Norkis Trading Co., Inc. v. Gnilo, G.R. No. 159730, Feb. 11, 2008.
552 Sapitan v. JB Line Bicol Express, Inc., G.R. No. 163775, Oct. 19, 2007.
553 Star Paper Corp. v. Simbol, Comia and Estrella, G.R. No. 164774, April 12, 2006.
554 Westmont Pharmaceuticals, Inc. v. Samaniego, G.R. Nos. 146653-54, Feb. 20, 2006\.
536
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1. Denyingtotheworkersentrytotheirworkareaandplacingthemonshiftsnotbyweeksbutalmostby
monthbyreducingtheirworkweektothreedays.536
2. Barringtheemployeesfromenteringthepremiseswhenevertheywouldreportforworkinthemorning
withoutanyjustifiablereason,andtheyweremadetowaitforacertainemployeewhowouldarriveinthe
officeataroundnoon,aftertheyhadwaitedforalongtimeandhadleft.537
3. Instructingtheemployeetogoonindefiniteleaveandaskinghimtoreturntoworkonlyaftermorethan
three(3)yearsfromthetimehewasinstructedtogoonindefiniteleaveduringwhichperiodhissalaries
werewithheld.538
4. Implementingarotationplanforreasonsotherthanbusinessnecessity.539
5. Sendingtoanemployeeanoticeofindefinitesuspensionwhichistantamounttodismissal.540
6. Demotingaworkerorreassigninghiminvolvingademotioninrankordiminutionofsalaries,benefitsand
otherprivileges.541
7. Reducingtheemployeesfunctionswhichwereoriginallysupervisoryinnatureandsuchreductionisnot
groundedonvalidgroundssuchasgenuinebusinessnecessity.542
8. Imposingindefinitepreventivesuspensionwithoutactuallyconductinganyinvestigation.Itwasonlyafter
almostone(1)yearthattheemployermadeknownthefindingsinitsinvestigationwhichwasconductedex
parte.543
9. Threateningasicklyemployeewithdismissalifhewillnotretireandpromisingemploymenttohissonand
daughter.Theemployeeretiredandsignedtwo(2)quitclaimsentitledReceiptandReleaseinfavorofthe
company.544
10. Forcingtheemployeetoresignwiththreatthatifhewillnotresign,hewillfilechargesagainsthimthat
wouldadverselyaffecthischancesfornewemployment.545
11. Asking the employee to choose whether to continue as a faculty member or to withdraw as a lawyer
againstthemayorwithwhomtheformerowescertainfavors,makesthecessationfromemploymentof
said employee not voluntary. Such act is in the nature of a contrivance to effect a dismissal without
cause.546
12. Askingtheemployeetofilearesignationontheconditionorpromisethatshewouldbegivenpriorityfor
reemployment and in consideration of immediately paying her two (2) months vacation which she
desperatelyneededthenbecauseshewasill.Theemployersrefusalinbadfaithtoreemployherdespite
itspromisetodosoamountedtoillegaldismissal.547
13. Changingtheemployeesstatusfromregulartocasualconstitutesconstructivedismissal.548
14. Offermadebyalaborcontractortoreassignitsemployeestoanothercompanybutwithnoguaranteed
workinghoursandpaymentofonlytheminimumwage.Thetermsoftheredeploymentthusbecame
unacceptableforsaidemployeesandforeclosedanychoicebuttorejecttheemployersoffer,involvingas
itdoesademotioninstatusanddiminutioninpay.549
15. Preventingtheemployeefromreportingforworkbyorderingtheguardsnottoletherin.Thisisclear
noticeofdismissal.550
16. Transfer of respondent employee from Credit and Collection Manager to Marketing Assistant which
resulted in demotion as it reduced his duties and responsibilities although there was no corresponding
diminutioninhissalary.Inholdingthattherewasconstructivedismissal,thecourttooknoteofthefact
thattheformerpositionismanagerialwhilethelatterisclericalinnature.551
17. Reducing the number of trips of the drivers and shortening their workdays which resulted in the
diminutionoftheirpay.552
18. Forcingtheemployeetotenderherresignationletterinexchangeforher13thmonthpaythereasonbeing
thattheemployeewasfoundbytheemployertohaveviolateditsnoemploymentforrelativeswithin
thethirddegreepolicy,shehavingbeenimpregnatedbyamarriedcoemployee.553
19. Transferring unceremoniously the employee from Isabela to Metro Manila and upon his reassignment
and/or transfer to Metro Manila, he was placed on floating status, demoted in rank and directed to
performfunctionsnotrelatedtohissupervisoryposition.Thetransferwasheldtobeeconomicallyand
emotionally burdensome on his part.He was in fact constrained to maintain two residences one for
himselfinMetroManila,andtheotherforhisfamilyinTuguegaraoCity,Cagayan.554
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(5) Preventive Suspension
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[NOTE: PREVENTIVE SUSPENSION is classified in the Syllabus under the topic of Reliefs for Illegal
Dismissal. It bears stressing, however, that preventive suspension is not a relief as this term is understood
within the context of Labor Law].
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As amended by Article 1, Department Order No. 09, Series of 1997.

Sections 8 and 9, Rule XXIII, Book V, Rules; Artificio v. NLRC, [G.R. No. 172988, July 26, 2010]; Mandapat v. Add Force Personnel Services, Inc., G.R. No. 180285, July 6, 2010; Baez v. De La Salle University, G.R. No. 167177, Sept. 27, 2006.
Philippine National Bank v. Velasco, [G.R. No. 166096, September 11, 2008].
558 Valiao v. Hon. CA, G.R. No. 146621, July 30, 2004.
559 Woodridge School [now known as Woodridge College, Inc.] v. Benito, [G.R. No. 160240, October 29, 2008].
560 Maricalum Mining Corp. v. Decorion, [G.R. No. 158637, April 12, 2006].
561 R.B. Michael Press v. Galit, G.R. No. 153510, Feb. 13, 2008; Tanala v. NLRC, G.R. No. 116588, Jan. 24, 1996, 252 SCRA 314, 321.
562 Philippine Airlines, Inc. v. NLRC, [G.R. No. 114307, July 8, 1998, 292 SCRA 40].
563 See also Atlas Fertilizer Corporation v. NLRC, G.R. No. 120030, June 17, 1997, 273 SCRA 549.
564 Jo Cinema Corporation v. Abellana, G.R. No. 132837, June 28, 2001.
555
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1.PREVENTIVESUSPENSION.
a.Legalbasis.
The Labor Code does not contain any provision on preventive suspension. The legal basis for the valid
555
impositionthereofisfoundinSections8and9,RuleXXIII,BookVoftheRulestoImplementtheLaborCode.
b.Purposeandjustificationfortheimpositionofpreventivesuspension.
Preventivesuspensionmaybelegallyimposedagainstanerrantemployeeonlywhenhisallegedviolationisthe
subject of an investigation. This remedy may thus be resorted to only while the errant employee is undergoing an
investigationforcertainseriousoffenses.Consequently,itspurposeistopreventhimfromcausingharmorinjurytothe
companyaswellastohisfellowemployees.Itisjustifiedonlyincaseswheretheemployeescontinuedpresenceinthe
companypremisesduringtheinvestigationposesaseriousandimminentthreattothelifeorpropertyoftheemployer
oroftheemployeescoworkers.Withoutthisthreat,preventivesuspensionisnotproper.556
c.Someprinciplesonpreventivesuspension.
1. An employer has the right to preventively suspend the employee during the pendency of the
administrativecaseagainsthimasameasureofselfprotection.557
2. If the basis of the preventive suspension is the employees absences and tardiness, the imposition of
preventivesuspensiononhimisnotjustifiedashispresenceinthecompanypremisesdoesnotposeany
suchseriousorimminentthreattothelifeorpropertyoftheemployeroroftheemployeescoworkers
simplybyincurringrepeatedabsencesandtardiness.558
3. The grounds of violation of the school rules and regulations on the wearing of uniform, tardiness or
absence,andmaliciouslyspreadingfalseaccusationsagainsttheschool,donotjustifytheimpositionof
preventivesuspension.559
4. The failure by an employee to attend a meeting called by his supervisor will not justify his preventive
suspension.560
5. Preventivesuspensiondoesnotmeanthatdueprocessmaybedisregarded.561
6. Preventive suspension is not a penalty.562 Preventive suspension, by itself, does not signify that the
companyhasalreadyadjudgedtheemployeeguiltyofthechargesforwhichshewasaskedtoanswer
andexplain.563
7. Preventivesuspensionisnotequivalentnortantamounttodismissal.564
8. Periodofpreventivesuspensionshouldonlybeforamaximumperiodofthirty(30)days.Afterthelapse
of the 30day period, the employer is required to reinstate the worker to his former position or to a
substantiallyequivalentposition.
9. Extensionofperiodmustbejustified.Duringthe30dayperiodofpreventivesuspension,theemployeris
expected to conduct and finish the investigation of the employees administrative case. The period of
thirty (30) days may only be extended if the employer failed to complete the hearing or investigation
within said period due to justifiable grounds. No extension thereof can be made based on whimsical,
capriciousorunreasonablegrounds.
10. Ifpreventivesuspensionisextendedbeyond30days,employermustpaysalaryduringtheperiodof
extension.Duringthe30daypreventivesuspension,theworkerisnotentitledtohiswagesandother
benefits.However,iftheemployerdecides,forajustifiablereason,toextendtheperiodofpreventive
suspension beyond said 30day period, he is obligated to pay the wages and other benefits due the
workerduringsaidperiodofextension.Insuchacase,theworkerisnotboundtoreimbursetheamount
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[No provision on Preventive Suspension in the Labor Code]
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(6) Quitclaims
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Relevant Provisions: Articles 227 and 221, Labor Code
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1.COMPROMISEAGREEMENT/AMICABLESETTLEMENT.
Acompromiseagreementmaybeforgedatanystageoftheproceedings,evenafterafinaljudgmenthasbeen
renderedtherein.Thisruleholdstrueinalllaborproceedingsbeforeanylaborauthority.NeithertheLaborCodenorits
implementing rules as well as the NLRC Rules prohibit the amicable settlement of cases during the pendency of the
proceedingsorafterajudgmentisissuedthereupon.573
2.QUITCLAIMS.
a.Concept.
After a compromise agreement hasbeen entered into by the parties to a suit, the employee is required to
executeaseparatedocumentusuallydenominatedasQuitclaimandReleaseorWaiverorQuitclaim,Releaseand
Waiver setting forth the fact that he has received the amount of consideration contemplated in the compromise
agreementandthatasaconsequencethereof,hequits,waivesandreleasestheemployerfromanyclaimsthathemay
haveagainstthelatterbyreasonofhisemployment.
b.Requisitesforthevalidityofaquitclaim.
Therequisitesforavalidquitclaimasfollows:
(1) Therewasnofraudordeceitonthepartofanyoftheparties;
(2) Thequitclaimshouldbeexecutedfreelyandvoluntarilybytheemployee;
(3) Theconsiderationforthequitclaimiscredibleandreasonable;
(4) Thecontractisnotcontrarytolaw,publicorder,publicpolicy,moralsorgoodcustomsorprejudicialtoa
thirdpersonwitharightrecognizedbylaw.574
c.Standardsforthevalidityofaquitclaimandwaiver.
The standards for determining the validity of a quitclaim or waiver were enunciated in the leading case of
Periquetv.NLRC,[G.R.No.91298,June22,1990,186SCRA724,730731].Accordingly,notallwaiversandquitclaims
areperseinvalidasagainstpublicpolicy.Iftheagreementwasvoluntarilyenteredintoandrepresentsareasonable
settlement,itisbindingonthepartiesandmaynotlateronbedisownedsimplybecauseofachangeofmind.Itisonly:
(1) wherethereisaclearproofthatthewaiverwaswangledfromanunsuspectingorgullibleperson,or
(2) wherethetermsofthesettlementareunconscionableontheirface,
thatthelawwillstepintoannulthequestionabletransaction.Butwhereitisshownthatthepersonmakingthewaiver
didsovoluntarily,withfullunderstandingofwhathewasdoing,andtheconsiderationforthequitclaimiscredibleand
Section 9, Rule XXIII, Book V, Rules to Implement the Labor Code, as amended by Article 1, Department Order No. 09, Series of 1997 [21 June 1997]; See also Philippine Airlines, Inc. v. NLRC, G.R. No. 114307, July 8, 1998, 292 SCRA 40; Rural Bank of San Isidro [N.E.], Inc. v. Paez,
[G.R. No. 158707, November 27, 2006].
Hyatt Taxi Services, Inc. v. Catinoy, [G.R. No. 143204, June 26, 2001].
567 Pepsi-Cola Distributors of the Philippines, Inc. v. NLRC, G.R. No. 106831, May 6, 1997, 272 SCRA 267, 277; C. Pido v. NLRC, G.R. No. 169812, Feb. 23, 2007; Alcantara & Sons, Inc. v. NLRC, G.R. No. 73521, Jan. 5, 1994.
568 Mandapat v. Add Force Personnel Services, Inc., [G.R. No. 180285, July 6, 2010].
569 Progressive Development Corporation - Pizza Hut v. Sarmiento, [G.R. No. 157076, September 7, 2007].
570 Section 4, Department Order No. 19, Series of 1993.
571 Maricalum Mining Corp. v. Decorion, [G.R. No. 158637, April 12, 2006].
572 Pido v. NLRC, [G.R. No. 169812, February 23, 2007].
573 Loyola Security & Detective Agency v. NLRC, G.R. No. 113287, May 9, 1995, 313 Phil. 750, 754.
574 Danzas Intercontinental, Inc. v. Daguman, [G.R. No. 154368, April 15, 2005]l Sime Darby Pilipinas, Inc. v. Arguilla, G.R. No. 143542, June 8, 2006.
565
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[NOTE: The topic of QUITCLAIMS is classified in the Syllabus under the topic of Reliefs for Illegal
Dismissal. It bears underscoring, however, that quitclaims cannot be considered a relief as this term is
understood within the context of Labor Law].
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paid to himduring the extension if the employer decides to dismiss himafter thecompletion of the
investigation.565
11. Preventivesuspensionlastinglongerthan30days,withoutthebenefitofvalidextension,amountsto
constructivedismissal.566
12. Indefinitepreventivesuspensionamountstoconstructivedismissal.567
13. Failuretostatethedurationofthepreventivesuspensioninthenoticedoesnotmeanitisindefinite.568
14. Salariesshouldbepaidforimproperlyimposedpreventivesuspension.569
15. Periodofpreventivesuspensionofworkersintheconstructionindustry,only15days.570
16. PreventivesuspensiondifferentfromsuspensionofoperationunderArticle286oftheLaborCode.571
17. Preventivesuspensionisdifferentfromfloatingstatus.572
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(Mendoza, Jr. v. San Miguel Foods, Inc., G.R. No. 158684, May 16, 2005; See also Cadalin v. Hon. CA, G.R. No. 168923, Nov. 28, 2008; Espina v. Hon. CA, G.R. No. 164582, March 28, 2007.
Bogo-Medellin Sugarcane Planters Association, Inc. v. NLRC, G.R. No. 97846, Sept. 25, 1998; Galicia v. NLRC, G.R. No. 119649, July 28, 1997.
Magsalin & Coca-Cola Bottlers Phils., Inc. v. National Organization of Working Men [N.O.W.M.), [G.R. No. 148492, May 9, 2003].
578 Marcos v. NLRC, [G.R. No. 111744, September 08, 1995].
579 Philippine Carpet Employees Association v. Philippine Carpet Manufacturing Corporation, G.R. Nos. 140269-70, Sept. 14, 2000; Cadalin v. Hon. CA, G.R. No. 168923, Nov. 28, 2008.
580 Principe v. Philippine Singapore Transport Services, Inc., G.R. No. 80918, Aug. 16, 1989, 176 SCRA 514.
581 Malinao, v. NLRC, [G.R. No. 119492, November 24, 1999].
582 Unicane Workers Union-CLUP v. NLRC, [G.R. No. 107545, September 9, 1996, 261 SCRA 573, 585-586].
583 Mindoro Lumber and Hardware v. Bacay, [G.R. No. 158753, June 8, 2005].
584 Unicorn Safety Glass, Inc. v. Basarte, [G.R. No. 154689, November 25, 2004].
585 Arellano v. Powertech Corp., [G.R. No. 150861, January 22, 2008].
586 Galicia v. NLRC, [G.R. No. 119649, July 28, 1997, 276 SCRA 381].
575
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reasonable, the transaction must be recognized as a valid and binding undertaking.575 Invalid quitclaim and release
agreementsareregardedasineffectivetobartheworkersfromclaimingthefullmeasureoftheirlegalrights.576
d.RequisitesforthevalidityofquitclaimsofoverseasFilipinoworkers(OFWs).
The Supreme Court enunciated in the 2007 case of EDIStaffbuilders International, Inc. v. NLRC, [G.R. No.
14558,October26,2007],therequisitesinorderforthequitclaimsandwaiversexecutedbyoverseasFilipinoworkers
(OFWs) tobe validand for purposes of preventingdisputes on the validity and enforceability of suchquitclaimsand
waiversunderPhilippinelaws.Thus,acompromiseagreementsignedbyanOFWisrequiredtocontainthefollowing:
1. Afixedamountasfullandfinalcompromisesettlement;
2. ThebenefitsoftheOFW,ifpossible,withthecorrespondingamountswhichheisgivingupinconsideration
ofthefixedcompromiseamount;
3. AstatementthattheemployerhasclearlyexplainedtotheOFW,inEnglish,Filipino,orinthedialectknown
to him that by signing the waiver or quitclaim, he is forfeiting or relinquishing his right to receive the
benefitswhichareduehimunderthelaw;and
4. AstatementthattheOFWsignedandexecutedthedocumentvoluntarilyandthathehasfullyunderstood
thecontentsofthedocumentandthathisconsentwasfreelygivenwithoutanythreat,violence,duress,
intimidationorundueinfluenceexertedonhispersons.
It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the
employees.Thereshouldbetwo(2)witnessestotheexecutionofthequitclaimwhomustalsosignit.Thedocument
shouldbesubscribedandsworntounderoathpreferablybeforeanyadministeringofficialoftheDepartmentofLabor
and Employment or its regional office, the Bureau of Labor Relations, the NLRC or a Labor Attach in a foreign
country.Suchofficialshouldassistthepartiesregardingtheexecutionofthequitclaimandwaiver.Aftercomplyingwith
therequisites,thecompromisesettlementbecomesfinalandbindingunderArticle227oftheLaborCode.
Itshouldbemadeclear,however,thattheforegoingrulesonquitclaimorwaivershouldapplyonlytolabor
contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon to govern the
same.Otherwise,theforeignlawsshouldapply.
e.Someprinciplesonquitclaims.
1. Quitclaimsarevalidifemployeesreceivedfullmeasureofbenefits.577
2. Employerandemployeedonotstandonequalfooting,hence,quitclaimsarecommonlyfrowneduponas
contrarytopublicpolicy,andtheyareineffectivetobarclaimsforthefullmeasureoftheworkerslegal
rights.578
3. Whenthevoluntarinessoftheexecutionofthequitclaimisputatissue,theclaimoftheemployeemaystill
begivenduecourse.579
4. Aquitclaiminwhichtheconsiderationisscandalouslylowandinequitablecannotbeanobstacletothe
pursuitofaworkerslegitimateclaim.Itisnullandvoidforbeingcontrarytopublicpolicy.580Examples:
a. ThesettlementofP20,000.00insteadoftheLaborArbitersawardofP174,379.52washeldshockingto
themind,unconscionableandcontrarytopublicpolicy.581
b. ThecompromisesettlementofonlyP100,000.00fortheoverP2MillionawardgrantedbytheLabor
Arbiterisnullandvoid.582
c. TheprivaterespondentsindividualclaimsrangingfromP6,744.20toP242,626.90,weredeclaredtobe
grosslydisproportionatetowhateachofthemactuallyreceived(rangingfromP3,000.00toP6,000.00)
undertheSamasamangSalaysaysaPaguurongngSakdal.Theamountofthesettlementisindubitably
unconscionable; hence, ineffective to bar the workers from claiming the full measure of their legal
583
rights.
d. Theconsiderationsreceivedbytheemployeeswereheldgrosslyinadequateconsideringthelengthof
time thattheywere employed inpetitionercompany.Basarteworkedfor petitionercompanyfor21
years, that is, from 1976 to 1998, while Flores worked from 1991 to 1998. Basarte and Flores only
received P10,000.00 and P3,000.00, respectively. In contrast, Manongsong and Soltura, two workers
whooptedtosettletheirrespectivecasesearlieron,bothstartedin1993only,butwereabletotake
homeP16,434.00eachafterexecutingtheirwaivers.584
e. Thecompromise agreement was declared voidbecause the consideration of P150,000.00 was rather
measlywhentakeninthelightofthemorethanP2.5millionjudgment.585
f. ThecompromiseagreementwasinvalidatedbecauseitentitledtheworkertoreceiveP12,000.00inlieu
ofamonetaryjudgmentofP108,000.00.Theamountwasheldtobepalpablyinequitable.586
5. Direnecessity,economicdifficultiesorfinancialcrisesmayormaynotbeabasisfortheannulment
of a quitclaim and release. Dire necessity is not a valid and acceptable ground to annul a quitclaim,
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[NOTE: The topic of RESIGNATION (Termination of Employment by Employee) is classified in the Syllabus
under the topic of Reliefs for Illegal Dismissal. It bears noting, however, that resignation cannot be
considered a relief as this term is understood within the framework of Labor Law].
1.TERMINATIONOFEMPLOYMENTINITIATEDBYTHEEMPLOYEE(RESIGNATION).
Veloso v. Department of Labor and Employment, G.R. No. 87297, Aug. 5, 1991; Olaybar v. NLRC, G.R. No. 108713, Oct. 28, 1994, 237 SCRA 819; Sicangco v. NLRC, G.R. No. 110261, Aug. 4, 1994, 235 SCRA 96.
Villar v. NLRC, G.R. No. 130935, May 11, 2000, 387 Phil. 706, 717; Pascua v. NLRC, G.R. No. 123518, March 13, 1998, 287 SCRA 554.
Galicia v. NLRC, G.R. No. 119649, July 28, 1997, 276 SCRA 381.
590 Philippine Carpet Employees Association v. Philippine Carpet Manufacturing Corporation, [G.R. Nos. 140269-70, September 14, 2000].
591 Aklan v. San Miguel Corp., G.R. No. 168537, December 11, 2008.
592 Sari-Sari Group of Companies, Inc. v. Piglas Kamao [Sari-Sari Chapter], G.R. No. 164624, Aug. 11, 2008.
593 Sari-Sari Group of Companies, Inc. v. Piglas Kamao [Sari-Sari Chapter], G.R. No. 164624, Aug. 11, 2008.
594 Agustilo v. CA, [G.R. No. 142875, September 7, 2001].
595 Sicangco v. NLRC, [G.R. No. 110261, August 4, 1994, 235 SCRA 96].
596 Amkor Technology Philippines, Inc. v. Juangco, [G.R. No. 166507, January 23, 2007],
597 Becton Dickinson Phils., Inc. v. NLRC, [G.R. Nos. 159969 & 160116, November 15, 2005]; See also Universal Robina Sugar Milling Corporation [URSUMCO] vs. Caballeda, [G.R. No. 156644, July 28, 2008].
598 EMCO Plywood Corporation v. Abelgas, G.R. No. 148532, April 14, 2004, 427 SCRA 496, 514.
599 Section 30, Rule 132 of the Rules of Court Alabang Country Club, Inc. v. NLRC, [G.R. No. 157611, August 9, 2005].
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especiallywhenithasnotbeenshownthattheemployeesconcernedhavebeenforcedtoexecuteit.587But
dire necessity may be validly invoked in certain cases to annul a quitclaim if the acceptance of the
separation pay was brought about by the same. By then, such acceptance may not be said to have
amountedtoestoppelnorasawaiveroftheemployeesrighttodemandbenefitstowhichtheyarelegally
entitledortocontestthelegalityoftheirdismissal.588Thus,thevalidityoftheinvocationofthegroundof
direnecessitytoannulaquitclaimandreleaseshouldbeviewedinthelightofthepeculiarfactsofacase.
Themaindifferenceliesonwhethertherewasvoluntaryacceptanceoftheagreementandwhetherthe
consideration for the waiver was reasonable. For if the consideration is reasonable and the acceptance
thereof is voluntary, the quitclaim and waiver would be intrinsically valid and binding and the dire
necessityexcusewouldbeimmaterialandirrelevant.589
6. Quitclaimsarenotvalidwhereconsentwasvitiatedbymistakeorfraudorwhenthereisunduepressureor
duress.Themerefactthattheemployeewasnotphysicallycoercedorintimidateddoesnotnecessarily
implythathefreelyorvoluntarilyconsentedtothetermsofthequitclaim.590
7. Absentanyevidencethatvitiatesconsent,thequitclaimisvalidandbinding.591
8. Receiptofseparationpayisnotabartocontestthelegalityofdismissalandtheacceptancethereofwould
notamounttoestoppel.592
9. Aquitclaimisnotabartopursueclaimsarisingfromanunfairlaborpractice.593
10. Quitclaimsexecutedbypersonswhodonotneedspecialprotectionarevalid.Examples:
a. Apersonwhoholdsamastersdegreeinlibraryscienceandisaninstructorinpoliticalscienceata
universitycannotclaimthathewasmerelyforcedbynecessitytoaccepttheseparationbenefitsgiven
byhisemployerandthatthequitclaimheexecutedinfavorofhisemployerwasnotvoluntary.594
b. A lawyer could not renege on the quitclaim he executed since lawyers are not easily coerced into
signinglegaldocuments.595
c. ThequitclaimexecutedbytheemployeewhowastheExecutiveDirectorofpetitionercompanywhen
shewasallegedlymadetosignitcannotbenullifiedonthebasisofherclaimthatshesigneditunder
duress and intimidation. For signing it, she was paid P3,704,517.98 as her voluntary retirement
package. Further, she is a woman of high educational attainment and qualifications and is thus
expectedtoknowtheimportofeverythingsheexecutes.596
11. However,thereisnonexusbetweenintelligenceandpositionwhenitconcernspressureexertedbythe
employeruponthefreewilloftheemployee.Alowlyemployeeorasalesmanagerwhoisconfrontedwith
thesamedilemmaofwhethersigningaquitclaimandacceptingwhatthecompanyoffershim,orrefusing
tosignandwalkingoutwithoutreceivinganything,maydosuccumbtothesamepressure,beingverywell
awarethatitisgoingtotakequiteawhilebeforehecanrecoverwhateverheisentitledto,becauseitis
onlyafteraprotractedlegalbattlestartingfromtheLaborArbiterlevelallthewaytotheSupremeCourt
can he receive anything at all. Such a risk of not receiving anything whatsoever, coupled with the
probabilityofnotimmediatelygettinganygainfulemploymentormeansoflivelihoodinthemeantime,
constitutesenoughpressureuponanyonewhoisaskedtosignaquitclaiminexchangeforsomeamount
ofmoneywhichmaybewaybelowwhathemaybeentitledtobasedoncompanypracticeorpolicyorby
law.597
12.Burdenofproofonvoluntarinessofquitclaimslieswiththeemployer.598
13.Notarizationofquitclaimsisaprimafacieevidenceoftheirdueexecution.599
=============================
(7) Termination of employment
by employee
=============================
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Go v. CA, G.R. No. 158922, May 28, 2004.

Shie Jie Corporation v. National Federation of Labor, G.R. No. 153148, July 15, 2005.
Emco Plywood Corporation v. Abelgas, G.R. No. 148532, April 14, 2004; Cheniver Deco Print Technics Corporation v. NLRC, G.R. No. 122876, Feb. 17, 2000.
603 Article 285[a], Labor Code.
604 Phimco Industries, Inc. v. NLRC, G.R. No. 118041, June 11, 1997, 273 SCRA 286.
605 BMG Records [Phils.], Inc. v. Aparecio, G.R. No. 153290, Sept. 5, 2007; Reyes v. CA, G.R. No. 154448, Aug. 15, 2003.
606 Rase v. NLRC, G.R. No. 110637, Oct. 07, 1994.
607 Custodio v. Ministry of Labor and Employment, G.R. No. 64374, July 19, 1990; Philippines Today, Inc. v. NLRC, G.R. No. 112965, Jan. 30, 1997.
608 Intertrod Maritime, Inc. v. NLRC, G.R. No. 81087, June 19, 1991, 198 SCRA 318.
609 Mora v. Avesco Marketing Corporation, [G.R. No. 177414, November 14, 2008].
610 Villafuerte v. Commerce Advertising Corporation, NLRC Case No. AB-9-12298-81, Jan. 26, 1983.
611 Fortuny Garments v. Castro, G.R. No. 150668, Dec. 15, 2005, 478 SCRA 125, 130.
612 Philippines Today, Inc. v. NLRC, G.R. No. 112965, Jan. 30, 1997, 267 SCRA 202.
613 Great Southern Maritime Services Corporation v. Acua, [G.R. No. 140189, February 28, 2005].
600
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a.Concept.
Article285,inrecognitionoftheequalityofthepartiestoanemploymentrelationship,grantstoanemployee
therighttoterminatetheemploymentrelationshiphehaswithhisemployeratanytimehewishesandwithorwithout
justcause.UnderArticles282,283and284,theemployeristheonegrantedsuchright.
Resignation is the formal pronouncement of relinquishment of an office.600 It is the voluntary act of an
employeewhofindshimselfinasituationwherehebelievesthatpersonalreasonscannotbesacrificedinfavorofthe
exigencyoftheservicesomuchsothathehasnootherchoicebuttodissociatehimselffromhisemployment.601
Toconstitutearesignation,itmustbeunconditionalandwiththeintenttooperateassuch.Theremustbean
intentiontorelinquishanofficeaccompaniedbyanactofrelinquishmentorabandonment.602
b.Resignationanddismissal,distinguished.
Termination of employment by the employer is called dismissal. If done by the employee, it is called
resignation.
2.TERMINATIONOFEMPLOYMENTBYEMPLOYEEWITHOUTJUSTCAUSE.
a.Requisitesinterminationwithoutjustcause.
Incaseofterminationeffectedbytheemployeewithoutjustcause,thefollowingrequisitesmustconcur:
1. Awritten(notverbal)noticeofthetermination(commonlyknownasresignationletter);and
2. Serviceofsuchnoticetotheemployeratleastone(1)monthinadvance.603
Ifanyoftheaforementionedrequisitesisnotcompliedwith,theemployermayholdtheemployeeliablefor
damages. Thus, a resignation letter made effective immediately violates the law and may subject the resigning
employee to damages, if there exists no just cause to warrant the immediate termination of employment by the
employee.
b.Someprinciplesonresignationwithoutjustcause.
1. Therationalefortheonemonthpriornoticerequirementistoaffordtheemployertheopportunitytofind
replacement for the resigning employee at least within the 30day period. The purpose is to avoid any
unduedisruptionofwork.
2. Thelawaffordstheemployeetherighttoresignregardlessofwhethertheemployerhasfoundanableand
competentreplacementandwhethertheoperationofthecompanywouldbeaffectedprovidedheserves
awrittennoticetotheemployeratleastone(1)monthinadvance.604
3. Acceptancebytheemployeroftheresignationisnecessary.605However,suchacceptanceofaresignation
does not require the conformity of the resigning employee. Such conformity only indicates that the
employee was forced to resign for which reason her conformity was obtained to make it appear as
voluntaryorlegal.606
4. Aresignationtenderedbyanemployee,irrespectiveofwhetheritwasmaderevocableorirrevocable,may
stillbewithdrawnanytimebeforeitsacceptancebytheemployer.Onceaccepted,however,withdrawal
thereofcannolongerbemadebytheresigningemployee,exceptwiththeconsentoragreementofthe
employer.607
5. If after acceptance of his resignation, the employee changes his mind, he must ask for approval of the
withdrawalofhisresignationfromhisemployer,asifhewerereapplyingforthejob.Itwillthenbeupto
theemployertodeterminewhetherornothisserviceswouldbecontinued.608
6. Acceptanceofresignationshouldbeinwritingandmustbedulycommunicatedtoandserveduponthe
resigningemployeeinordertobindhim.Ifnotdulyinformedofsuchacceptance,theresigningemployee
may still validly withdraw his resignation anytime. Thus, the mere receipt by the employers personnel
departmentoftheemployeesresignationletterisnotequivalenttoacceptanceorapprovalthereof.609
7. Verbalresignation,onceaccepted,makesresignationeffective.610
8. Actsoftheemployeebeforeandafterhisresignationshouldbeconsideredtodetermineitsvalidity.611
9. Assumptionofnewjobbyemployeepriortoemployersacceptanceofresignationindicateshisintentto
relinquishhisposition.612
10. Employment elsewhere during the pendency of a case does not amount to resignation. It should be
expectedthattheemployeewouldseekothermeansofincometotidehimoverduringthetimethatthe
legalityofhisterminationisunderlitigation.Heshouldnotbefaultedforseekingemploymentelsewhere
forhiseconomicsurvival.613
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3.TERMINATIONOFEMPLOYMENTBYTHEEMPLOYEEFORJUSTCAUSES.
a.JustcausesforterminationofemploymentbyemployeeunderArticle285[b].
Anemployeemayputanendtotheemploymentrelationshipwithoutneedofservinganynoticeonthe
employerforanyofthefollowingjustcauses:
1. Seriousinsultbytheemployerorhisrepresentativeonthehonorandpersonoftheemployee;
2. Inhumanandunbearabletreatmentaccordedtheemployeebytheemployerorhisrepresentative;
3. Commissionofacrimeoroffensebytheemployerorhisrepresentativeagainstthepersonoftheemployee
oranyoftheimmediatemembersofhisfamily;and
4. Othercausesanalogoustoanyoftheforegoing.627
b.Writtennoticenotrequired.
Unlikeresignationwithoutjustcauseunderparagraph[a]ofArticle285wherethelawrequirespriorwritten
notice,theemployeemayterminatehisemploymentwithoutservinganynoticetotheemployerifsuchisoccasionedby
anyofthejustcausesmentionedinparagraph[b]ofArticle285.
3.1.SERIOUSINSULTONTHEHONORANDPERSONOFTHEEMPLOYEE.
a.Requisites.
Inorderforseriousinsulttobeconsideredajustcausetowarrantthevalidterminationofemploymentbythe
employeewithoutnotice,thefollowingrequisitesmustconcur:
1. Theinsultmustbeseriousincharacter;
2. Itmustbecommittedbytheemployerorhisrepresentativeagainsttheemployee;and
Philippines Today, Inc. v. NLRC, G.R. No. 112965, Jan. 30, 1997, 267 SCRA 202.
Philippine National Construction Corporation v. NLRC, G.R. No. 120961, Oct. 2, 1997, 280 SCRA 116; Talla v. NLRC, G.R. No. L-79913, July 19, 1989, 175 SCRA 479.
Almario v. Philippine Airlines, Inc., [G.R. No. 170928, September 11, 2007].
617 A Prime Security Services, Inc. v. NLRC, [G.R. No. 107320, January 19, 2000]; Mobile Protective & Detective Agency v. Ompad, [G.R. No. 159195, May 9, 2005].
618 Great Southern Maritime Services Corporation v. Acua, G.R. No. 140189, Feb. 28, 2005.
619 Willi Hahn Enterprises, v. Maghuyop, [G.R. No. 160348, December 17, 2004].
620 Malig-on v. Equitable General Services, Inc., [G.R. No. 185269, June 29, 2010]; Mobile Protective & Detective Agency v. Ompad, [G.R. No. 159195, May 9, 2005, 458 SCRA 308, 323].
621 Willi Hahn Enterprises v. Maghuyop, [supra]; See also Rufina Patis v. Alusitain, G.R. No. 146202, July 14, 2004.
622 (Cheniver Deco Print Technics Corporation v. NLRC, G.R. No. 122876, Feb. 17, 2000; See also Fungo v. Lourdes School of Mandaluyong, G.R. No. 152531, July 27, 2007; Kay Products, Inc. v. CA, G.R. No. 162472, July 28, 2005.
623 Carlos v. CA, [G.R. No. 168096, August 28, 2007]; Fortuny Garments v. Castro, G.R. No. 150668, Dec. 15, 2005; bile Protective & Detective Agency v. Ompad, G.R. No. 159195, May 9, 2005, 458 SCRA 308.
624 Talidano v. Falcon Maritime & Allied Services, Inc., [G.R. No. 172031, July 14, 2008]; See also Oriental Shipmanagement Co., Inc. v. CA, G.R. No. 153750, Jan. 25, 2006, 480 SCRA 100, 110.
625 St. Michael Academy v. NLRC, G.R. No. 119512, July 13, 1998, 292 SCRA 478.
626 Dole Philippines, Inc. v. NLRC, G.R. No. 120009, Sept. 13, 2001.
627 Article 285[b], Labor Code; Section 11, Rule I, Book VI, Rules to Implement the Labor Code.
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11. Aresignedemployeewhodesirestotakehisjobbackhastoreapplythereforandheshallhavethestatus
ofastrangerwhocannotunilaterallydemandanappointment.Hecannotarrogateuntohimselfthesame
positionwhichheearlierdecidedtoleave.614
12. Onceanemployeeresignsandexecutesaquitclaiminfavoroftheemployer,heistherebyestoppedfrom
filinganyfurthermoneyclaimsagainsttheemployerarisingfromhisemployment.Suchmoneyclaims
maybegivenduecourseonlywhenthevoluntarinessoftheexecutionofthequitclaimisputinissue,or
whenitisestablishedthatthereisanunwrittenagreementbetweentheemployerandemployeewhich
wouldentitletheemployeetootherremunerationorbenefitsuponhisorherresignation.615
13. Aresigningemployeehastheobligationtoreimbursetheemployerforthecostoftraininghimforhigher
positionifhehasnotcompliedwiththeconditionsimposedonsuchtrainingsuchastherenditionofa
certainnumberofyearsafterthetraining.616
14. Noweightshouldbegiventotheemployeesresignationletterwhichappearstohavebeenwrittenand
submittedattheinstanceoftheemployer.Itsformisofthecompanysanditswordingsaremoreofa
waiver and quitclaim. More so when the supposed resignation was not acknowledged before a notary
public.617
15. Resignationletterswhichwereallpreparedbytheemployerandweresubstantiallysimilarlywordedand
ofthesametenorarewaiversorquitclaimswhicharenotsufficienttoshowvalidseparationfromworkor
tobartheemployeesfromassailingtheirtermination.Theyalsoconstituteevidenceofforcedresignation
orthattheyweresummarilydismissedwithoutjustcause.618
16. Voluntarinessofresignationmaybeinferredfromitslanguage.619
17. Theburdentoprovevoluntarinessoftheresignationlieswiththeemployer.620
18. Theemployeewhoallegesthathewascoercedintoresigningshouldprovesuchclaim.621
19. Thegeneralruleisthatthefilingofacomplaintforillegaldismissalnegatesresignation.622However,this
ruledoesnotapplytoacasewherethefilingofanillegaldismissalcasebytheemployeewhoresigned
wasevidentlyamereafterthought.Itwasfilednotbecauseshewantedtoreturntoworkbuttoclaim
separationpayandbackwages.623
20. ThefilingofacomplaintisinconsistentwithvoluntaryrepatriationofOFW.624
22. Aresignationletterwhichcontainswordsofgratitudeandappreciationtotheemployercanhardlycome
fromemployeeswhoareforcedtoresign.625
23. Special Voluntary Resignation (SVR) Program, held valid. Employers may lawfully and effectively reduce
their personnel by offering resignation benefits through a Voluntary Resignation Program where
employeesareaffordedtherighttovoluntarilyterminatetheemploymentrelationship.Ifmadeingood
faith,suchaschemeshouldbeconsideredavalidformofterminatingemployment.626
43

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3. Retirement Pay Law
a. Coverage
b. Exclusions from coverage
c. Components of retirement pay
d. Retirement pay under RA 7641
vis--vis retirement benefits
under SSS and GSIS laws
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Relevant Provision: Article 287 of the Labor Code, as amended by R.A. No. 7641 [January 7, 1993] and
R.A. No. 8558 [February 26, 1998]
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[NOTE: The entire substantive provisions of R.A. No. 7641 (The Retirement Pay Law) and R.A. No. 7641 (on
undergroundmineworkers)arenowfoundinArticle287oftheLaborCode.Thus,thereisnoneedtoseparately
consulttheselawsinordertolearntheirprovisions.ReferencetoR.A.No.7641intheSyllabusmayresultin
confusionasitmaygivetheimpressiontotheuntrainedeyesthatR.A.No.7641isseparateanddistinctfrom
Article287oftheLaborCode].
1.COVERAGEOFTHERETIREMENTPAYLAW.
RetirementunderArticle287,asamended,appliesto:
1.Allemployeesintheprivatesector,regardlessoftheirposition,designationorstatusandirrespectiveofthe
methodbywhichtheirwagesarepaid;628
2. Parttimeemployees;
3. Employeesofserviceandotherjobcontractors;
4. Domestichelpersorpersonsinthepersonalserviceofanother;629
3. Undergroundmineworkers;630
4. Employees of governmentowned and/or controlled corporations organized under the Corporation Code
(withoutoriginalcharters).631
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3. Itmustinjurethehonorandpersonoftheemployee.
Conversely,iftheinsultisnotseriousoriscommittedbyacoemployeeorathirdpartylikeacustomer,evenif
injurioustothehonorandpersonoftheemployee,itisnotajustcauseunderArticle285[b].
3.2.INHUMANANDUNBEARABLETREATMENTOFTHEEMPLOYEE.
a.Requisites.
Thisgroundmaybeinvokedifthefollowingrequisitesconcur:
1. Thetreatmentisinhumanandunbearableinnature;and
2. Itisperpetratedbytheemployerorhisrepresentativeagainsttheemployee.
Anexampleofinhumantreatmentistheactoftheemployerinnotprovidingsafetygadgetssuchasgasmasks
orsafetyattireinhazardousjobsrequiringtheiruse.Anexampleofunbearabletreatmentiswhentheemployerdoes
notprovideanytoilet,necessitatingtheemployeestogooutoftheworkplacetolookfortoiletelsewheretoheedthe
callofnature.
3.3.COMMISSIONOFACRIMEOROFFENSEAGAINSTTHEEMPLOYEEORANYOFTHEIMMEDIATEMEMBERSOFHIS
FAMILY.
a.Requisites.
Therequisitesforthisgroundareasfollows:
1. Acrimeoroffenseiscommittedbytheemployerorhisrepresentative;and
2. Itwasperpetratedagainstthepersonoftheemployeeoranyoftheimmediatemembersofhisfamily.
SexualharassmentunderRepublicActNo.7877[AntiSexualHarassmentActof1995],isanexampleofacrime
oroffensewhichmaybecommittedbyanemployeragainsthisemployee.
3.4.OTHERANALOGOUSCAUSESCONSTRUCTIVEDISMISSALORINVOLUNTARYORFORCEDRESIGNATION.
[SeediscussiononthetopicofConstructiveDismissalabove].
Section 1, Rule II, Implementing Rules of the Retirement Pay Law; Labor Advisory on Retirement Pay Law dated Oct. 24, 1996, issued by Secretary Leonardo A. Quisumbing.
Labor Advisory on Retirement Pay Law dated Oct. 24, 1996. (Note: Under the original version of the Rules Implementing the New Retirement Pay Law (Republic Act No. 7641), domestic helpers and persons in the personal service of another were declared not covered thereby.
However, they were subsequently included in its coverage by virtue of Department Order No. 20, issued by Secretary Ma. Nieves Roldan Confesor on May 31, 1994. On October 24, 1996, Secretary Leonardo A. Quisumbing issued his Labor Advisory on the Retirement Pay Law
where they have been expressly and categorically included within the coverage of this law).
630 R.A. No. 8558.
631 Postigo, et al., v. Philippine Tuberculosis Society, Inc., [G.R. No. 155146, January 24, 2006]/
628
629
44

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Section 2, Rule II, Implementing Rules of the Retirement Pay Law; Labor Advisory on Retirement Pay Law dated Oct. 24, 1996.
Article 287, Labor Code; Section 5.1, Rule II, Implementing Rules of the Retirement Pay Law; Labor Advisory on Retirement Pay Law dated Oct. 24, 1996 issued by Secretary Leonardo A. Quisumbing.
Article 287, Labor Code; Section 5.2, Rule II, Implementing Rules of the Retirement Pay Law.
635 Labor Advisory on Retirement Pay Law dated Oct. 24, 1996, issued by Secretary Leonardo A. Quisumbing.
636 Section 5.3, Rule II, Ibid..
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2.EXCLUSIONSFROMCOVERAGE.
Article287,asamended,doesnotapplytothefollowingemployees:
1. Employeesofthenationalgovernmentanditspoliticalsubdivisions,includinggovernmentownedand/or
controlledcorporations,iftheyarecoveredbytheCivilServiceLawanditsregulations.
2. Employees of retail,service and agricultural establishments or operations regularly employing not more
thanten(10)employees.Thesetermsaredefinedasfollows:
a. Retail establishment is one principally engaged in the sale of goods to endusers for personal or
householduse.Itshallloseitsretailcharacterqualifiedforexemptionifitisengagedinbothretailand
wholesaleofgoods.
b. Serviceestablishmentisoneprincipallyengagedinthesaleofservicetoindividualsfortheirownor
householduseandisgenerallyrecognizedassuch.
c. Agriculturalestablishment/operation refers to anemployer which isengaged in agriculture. This
term refers to all farming activities in all branches and includes, among others, the cultivation and
tillage of soil, production, cultivation, growing and harvesting of any agricultural or horticultural
commodities,dairying,raisingoflivestockorpoultry,thecultureoffishandotheraquaticproductsin
farms or ponds, and any activities performed by a farmer or on a farm as an incident to, or in
conjunctionwith,suchfarmingoperations,butdoesnotincludethemanufactureand/orprocessingof
sugar,coconut,abaca,tobacco,pineapple,aquaticorotherfarmproducts.632
3.COMPONENTSOFRETIREMENTPAY.
a.Onehalf()monthsalary.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment,anemployee,uponreachingtheoptionalorcompulsoryretirementagespecifiedinArticle287,shallbe
entitledtoretirementpayequivalenttoatleastonehalf()monthsalaryforeveryyearofservice,afractionofatleast
six(6)monthsbeingconsideredasone(1)wholeyear.633
b.Componentsofonehalf()monthsalary.
ForpurposesofdeterminingtheminimumretirementpaydueanemployeeunderArticle287,thetermone
halfmonthsalaryshallincludeallofthefollowing:
(a) Fifteen(15)dayssalaryoftheemployeebasedonhislatestsalaryrate.Thetermsalaryincludesall
remunerationspaidbyanemployertohisemployeesforservicesrenderedduringnormalworkingdays
andhours,whethersuchpaymentsarefixedorascertainedonatime,task,pieceorcommissionbasis,or
othermethodofcalculatingthesame,andincludesthefairandreasonablevalue,asdeterminedbythe
Secretary of Labor and Employment, of food, lodging or other facilities customarily furnished by the
employertohisemployees.Thetermdoesnotincludecostoflivingallowances,profitsharingpayments,
andothermonetarybenefitswhicharenotconsideredaspartoforintegratedintotheregularsalaryof
theemployees;
(b) Thecashequivalentoffive(5)daysofserviceincentiveleave;
(c) Onetwelfth(1/12)ofthe13thmonthpayduetheemployee;and
(d) All other benefits that the employer and employee may agree upon that should be included in the
computationoftheemployeesretirementpay.634
c.Onehalf()monthsalarymeans22.5days.
Todispelanyfurtherconfusiononthemeaningofonehalf[]monthsalaryprovidedinArticle287,the
SupremeCourt,inthecaseofCapitolWireless,Inc.v.Confesor,[G.R.No.117174,November13,1996,264SCRA68,
77],simplifieditscomputationbydeclaringthatitmeansthetotalof22.5daysarrivedatafteradding15daysplus2.5
daysrepresentingonetwelfth[1/12]ofthe13thmonthpayplus5daysofserviceincentiveleave.
Evidently,thelawexpandedtheconceptofonehalfmonthsalaryfromtheusualonemonthsalarydivided
bytwo.635
d.Onehalfmonthsalaryofemployeeswhoarepaidbyresults.
For covered workers who are paid by results and do not have a fixed monthly rate, the basis for the
determinationofthesalaryforfifteen(15)daysshallbetheiraveragedailysalary(ADS).TheADSistheaveragesalaryfor
thelasttwelve(12)monthsreckonedfromthedateoftheirretirement,dividedbythenumberofactualworkingdaysin
thatparticularperiod.636
e.Five(5)daysofserviceincentiveleave,howreckoned.
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g.Distinctionbetweendriverspaidonboundarysystemandconductorspaidoncommissionbasis.
The said R & E Transport case should be distinguished from the 2010 case of Serrano v. Severino Santos
Transit,[G.R.No.187698,August9,2010],whichinvolvesabusconductor(petitioner)whoworkedfor14yearsfor
respondentbuscompanywhichdidnotadoptanyretirementscheme.Itwasheldhereinthatevenifpetitionerasbus
conductor was paid on commission basis, he falls within the coverage of R.A. 7641 and its implementing rules. This
meansthathisretirementpayshouldincludethecashequivalentofthe5daySILand 1/12ofthe13thmonthpayfora
totalof22.5days.TheaffirmancebytheCourtofAppealsofthereliancebytheNLRConR&ETransportcasewasheld
erroneous.For purposes of applying the law on service incentive leave (SIL), as well as on retirement, there is a
differencebetweendriverspaidundertheboundarysystemandconductorswhoarepaidoncommissionbasis.Thisis
sobecauseinpractice,taxidriversdonotreceivefixedwages.Theyretainonlythosesumsinexcessoftheboundary
orfeetheypaytotheownersoroperatorsofthevehicles.Conductors,ontheotherhand,arepaidacertainpercentage
ofthebusearningsfortheday.ItbearsemphasisthatunderP.D.851ortheSILLaw,theexclusionfromitscoverageof
workerswhoarepaidonapurelycommissionbasisisonlywithrespecttofieldpersonnel.ThemorerecentcaseofAuto
Bus Transport Systems, Inc., v. Bautista, [G.R. No. 156367, May 16, 2005, 458 SCRA 578, 587588], clarifies that an
employeewhoispaidonpurelycommissionbasisisentitledtoSIL.
h.Retirementofparttimeemployees.
Therecanbenoquestionthatparttimeworkersarealsoentitledtoretirementpayofonehalfmonthsalary
for every year of service under Article 287, as amended by Republic Act No. 7641, after satisfying the following
conditionsprecedentforoptionalretirement:(a)thereisnoretirementplanbetweentheemployerandemployee;(b)
theemployeeshouldhavereachedtheageofsixty(60)years;and(c)shouldhaverenderedatleastfive(5)yearsof
servicewiththeemployer.Meanwhile,thecompulsoryretirementageunderthelawissixtyfive(65)years.(Explanatory
BulletinonPartTimeEmploymentdatedJan.02,1996issuedbyActingDOLESecretaryJoseS.Brillantes).
Applying,therefore,theprinciplesunderRepublicActNo.7641,thecomponentsofretirementbenefitsofpart
timeworkersmaylikewisebecomputedatleastinproportiontothesalaryandrelatedbenefitsduethem.
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638
639
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a.SSSretirementpayisseparateanddistinctfromtheretirementpayundertheLaborCode,asamended.
The employees retirement pay under Article 287 of the Labor Code or under a unilaterally promulgated
retirementpolicyorplanoftheemployerorunderaCBA,isseparateanddistinctfromtheretirementbenefitsgranted
under Republic Act No. 8282, otherwise known as the Social Security Act of 1997 (formerly known as the Social
SecurityLaw[RepublicActNo.1161,asamended])whichprovides,thus:
Section12B. Retirementbenefits. (a) A member whohaspaidat least onehundred
twentymonthlycontributionspriortothesemesterofretirement;andwho(1)reachedtheageof
sixtyyearsandisalreadyseparatedfromemploymentorhasceasedtobeselfemployed;or(2)has
reachedtheageofsixtyfive(65)years,shallbeentitledforaslongashelivestothemonthlypension:
Provided,Thatheshallhavetheoptiontoreceivehisfirsteighteen(18)monthlypensionsinlump
sumdiscountedatapreferentialrateofinteresttobedeterminedbytheSSS.
(b)Acoveredmemberwhoissixty(60)yearsoldatretirementandwhodoesnotqualifyfor
pensionbenefitsunderparagraph(a)above,shallbeentitledtoalumpsumbenefitequaltothetotal
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Enriquez Security Services, Inc. v. Cabotaje, [G.R. No. 147993, July 21, 2006].
Granting the 13th Month Pay.
See also Article 82 of the Labor Code.
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f.1/12of13thmonthpayand5daysofserviceincentiveleave(SIL)shouldnotbeincludediftheemployee
wasnotentitledto13thmonthpayandSILduringhisemployment.
Supposingtheretiringemployee,byreasonofthenatureofhiswork,wasnotentitledto13thmonthpayorto
theserviceincentiveleavepaypursuanttotheexceptionsmentionedinthe13th MonthPayLawandtheLaborCode,
should he be paid upon retirement, in addition to the salary equivalent to fifteen (15) days, the additional 2.5 days
representingonetwelfth[1/12]ofthe13thmonthpayaswellasthefive(5)daysrepresentingtheserviceincentiveleave
foratotalof22.5days?
ThisquestionwasansweredinthenegativeinthecaseofR&ETransport,Inc.v.Latag,[G.R.No.155214,
February13,2004].TheSupremeCourtinthiscaseruledthatemployeeswhoarenotentitledto13thmonthpayand
serviceincentiveleavepaywhilestillworkingshouldnotbepaidtheentire22.5daysbutonlythefifteen(15)days
salary.Inotherwords,theadditional2.5daysrepresentingonetwelfth[1/12]ofthe13thmonthpayandthefive(5)
daysofserviceincentiveleaveshouldnotbeincludedaspartoftheretirementbenefits.
The employee in this case was a taxi driver who was being paid on the boundary system basis. It was
undisputedthathewasentitledtoretirementbenefitsafterworkingforfourteen(14)yearswithR&ETransport,Inc.
However,hewasnotentitledtothe13thmonthpaysinceSection3oftheRulesandRegulationsImplementingP.D.N.
851638exemptsfromitscoverageemployersofthosewhoarepaidonpurelyboundarybasis.Hewasalsonotentitledto
the5dayserviceincentiveleavepaypursuanttoSection1ofRuleV,BookIIIoftheRulestoImplementtheLaborCode
whichexpresslyexceptsfieldpersonnelandotheremployeeswhoseperformanceisunsupervisedbytheemployer.639
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Thefive(5)daysofserviceincentiveleaveprovidedunderArticle287aspartoftheretirementbenefitofone
half()monthsalaryforeveryyearofserviceshouldbepaidinfull.Itshouldnotbecomputedonthebasisof1/12of
the5dayserviceincentiveleave(SIL).637
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Section13.Retirementbenefits.(a)Retirementbenefitsshallbe:
(1)thelumpsumpaymentasdefinedinthisActpayableatthetimeofretirement
plus an oldage pension benefit equal to the basic monthly pension payable
monthlyforlife,startingupontheexpirationofthefiveyear(5)guaranteed
periodcoveredbythelumpsum;or
(2)cashpaymentequivalenttoeighteen(18)monthsofhisbasicmonthlypension
plus monthly pension for life payable immediately with no fiveyear (5)
guarantee.
(b) Unless the service is extended by appropriate authorities, retirement shall be
compulsoryforanemployeeofsixtyfive(65)yearsofagewithatleastfifteen(15)yearsofservice:
Provided,Thatifhehaslessthanfifteen(15)yearsofservice,hemaybeallowedtocontinueinthe
serviceinaccordancewithexistingcivilservicerulesandregulations.
Section13A.Conditionsforentitlement.Amemberwhoretiresfromtheserviceshallbe
entitledtotheretirementbenefitsenumeratedinparagraph(a)ofSection13hereof:Provided,That:
(1) hehasrenderedatleastfifteen(15)yearsofservice;
(2)heisatleastsixty(60)yearsofageatthetimeofretirement;and
(3) heisnotreceivingamonthlypensionbenefitfrompermanenttotaldisability.
Section14.Periodicpensionadjustment.Themonthlypensionofallpensionersincluding
all those receiving survivorship pension benefits shall be periodically adjusted as may be
recommended by the GSIS actuary and approved by the Board in accordance with the rules and
regulationsprescribedbytheGSIS.
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c.UniquecasewhereemployeescoveredbytheGSISlawarealsoentitledtoretirementpayunder
theLaborCode.
Postigov.PhilippineTuberculosisSociety,Inc.,[G.R.No.155146,January24,2006],presentsquiteaunique
case. The employees of respondent are covered by the GSIS Law. Upon retirement from the service, some of the
petitionerswhowerecompulsorymembersoftheGSISobtainedretirementbenefitsfromtheGSIS.Contendingthat
respondentisaprivatesectoremployer,theretiredemployeesalsoclaimedretirementbenefitsunderArticle287ofthe
Labor Code, as amended by Republic Act No. 7641. Respondent denied their claims on the ground that the
accommodationextendedbytheGSIStothepetitionersremovedthemfromthecoverageofthelaw.TheSupreme
Court,however,affirmedtheirentitlementtotheretirementbenefitsundertheLaborCodesincetherespondentwas
incorporatedunderthegeneralcorporationlawandnotunderaspecialcharter,thusmakingitaprivateandnotapublic
corporation. Further, respondent admitted that although its employees are compulsory members of the GSIS, said
employeesarenotgovernedbytheCivilServiceLawbutbytheLaborCode.TheaccommodationunderRepublicAct
No. 1820 extending GSIS coverage to respondents employees did not take away from petitioners the beneficial
coverageaffordedbyRepublicActNo.7641.Hence,theretirementpaypayableunderArticle287oftheLaborCodeas
amendedbyRepublicActNo.7641shouldbeconsideredapartfromtheretirementbenefitclaimablebythepetitioners
underthesocialsecuritylawor,asinthiscase,theGSISLaw.
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b.GSISretirementappliestogovernmentemployeesonly.
Forgovernmentemployees,RepublicActNo.8291,otherwiseknownastheGovernmentServiceInsurance
SystemActof1997[formerlyPresidentialDecreeNo.1146,otherwiseknownasTheRevisedGovernmentInsurance
Actof1977],providesforthefollowingretirementbenefits:
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END OF DISCUSSION ON
TOPIC D. TERMINATION OF EMPLOYMENT
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contributionspaidbyhimandonhisbehalf:Provided,Thatheisseparatedfromemploymentandis
notcontinuingpaymentofcontributionstotheSSSonhisown.
(c)Themonthlypensionshallbesuspendeduponthereemploymentorresumptionofself
employmentofaretiredmemberwhoislessthansixtyfiveyearsold.Heshallagainbesubjectto
SectionEighteenandhisemployertoSectionNineteenofthisAct.
(d)Uponthedeathoftheretiredmember,hisprimarybeneficiariesasofthedateofhis
retirement shall be entitled to receive the monthly pension: Provided, That if he has no primary
beneficiariesandhedieswithinsixty(60)monthsfromthestartofhismonthlypension,hissecondary
beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions
correspondingtothebalanceofthefiveyearguaranteedperiod,excludingthedependentspension.
(e)Themonthlypensionofamemberwhoretiresafterreachingagesixty(60)shallbethe
higherofeither:(1)themonthlypensioncomputedattheearliesttimehecouldhaveretiredhadhe
beenseparatedfromemploymentorceasedtobeselfemployedplusalladjustmentsthereto;or(2)
themonthlypensioncomputedatthetimewhenheactuallyretires.
oooooooooOoOooooooooo
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Termination of Employment

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ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

Prof. Joselito Guianan Chan

a. Substantive Due Process

(a) Just Causes

(b) Authorized Causes

b. Procedural Due Process

(a) Redundancy, Retrenchment and Closure

c. Reliefs for illegal dismissal

(1) Procedure to be observed in termination cases

TOPICS UNDER THE SYLLABUS

LABOR LAW: D. TERMINATION OF EMPLOYMENT

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

LABOR LAW: D. TERMINATION OF EMPLOYMENT

Followingthe rightofcontroltest,theSupreme Court hasfoundthat employment relationship exists inthe

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 281, Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 280, Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 280, Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 280, Labor Code

Tomas Lao Construction, v. NLRC, G.R. No. 116781, Sept. 5, 1997.

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 280, Labor Code

Relevant Provision: No Labor Code provision on fixed-term employment.94

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provisions: Articles 106 to 109, Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 282 [a], Labor Code

ChanRobles Internet Bar Review : ChanRobles Professional Review, Inc.

LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 282 [a], Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 282 [b], Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 282 [c], Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 282 [b], Labor Code

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LABOR LAW: D. TERMINATION OF EMPLOYMENT

Relevant Provision: Article 248 [e], Labor Code

Calipay v. NLRC, [G.R. No. 166411, August 3, 2010].

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