Survey of Jurisprudence On Termination Disputes

SURVEY OF JURISPRUDENCE ON TERMINATION DISPUTES AND SECURITY OF TENURE
CASE TITLE
PRINCIPLE
DOCTRINE (SC)
PROCESS CYCLE TIME
TREND OF
DECISION
2013
GAN vs. GALDERMA PHILS., INC.
G.R. No. 177167
17 January 2013
J. Peralta
Test of Constructive Dismissal;

Definition of Resignation
To begin with, constructive dismissal is defined as quitting

or cessation of work because continued employment is
rendered impossible, unreasonable or unlikely; when
there is a demotion in rank or diminution of pay and other
benefits. It exists if an act of clear discrimination,
insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it could
foreclose any choice by him except to forego his
continued employment. There is involuntary resignation
due to the harsh, hostile, and unfavourable conditions set
by the employer. The test of constructive dismissal is
whether a reasonable person in the employees position
would have felt compelled to give up his
employment/position under the circumstances.
On the other hand, resignation is the voluntary act of an
employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the
exigency of the service, and one has no other choice but
to dissociate oneself from employment. It is a formal
pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the
act of relinquishment. As the intent to relinquish must
concur with the overt act of relinquishment, the acts of
the employee before and after the alleged resignation
must be considered in determining whether he or she, in
fact, intended to sever his or her employment.
Since Gan submitted a resignation letter, it is incumbent
upon him to prove with clear, positive, and convincing
evidence that his resignation was not voluntary but was
actually a case of constructive dismissal; that it is a
25 July 2002 filed

complaint for illegal
constructive dismissal
LA dismissed
complaint
LA 21 April 2003
NLRC affirmed LA
NLRC
CA affirmed NLRC
decision
CA 21 March 2007
SC affirmed CA
PHILIPPINE PLAZA HOLINGS,

INC. vs. EPISCOPE
Loss of trust and confidence as a

ground for termination
G.R. No. 192826

27 February 2013
J. Bersamin
Classes of Positions of trust
Quantum of proof required in case of

Survey of Jurisprudence on Termination and Security of Tenure
product of coercion or intimidation. He has to prove his

allegations with particularity. Gan could not have been
coerced. Coercion exists when there is a reasonable or
well-grounded fear of an imminent evil upon a person or
his property or upon the person or property of his spouse,
descendants or ascendants.
Among the just causes for termination is the employers
loss of trust and confidence in its employee. Article 296
(c) [formerly Article 282 (c)] of the Labor Code provides
that an employer may terminate the services of an
employee for fraud or wilful breach of the trust reposed in
him. But in order for the said cause to be properly
invoked, certain requirements must be complied with
namely, (1) the employee concerned must be holding a
position of trust and confidence and (2) there must be an
act that would justify the loss of trust and confidence.
It is noteworthy to mention that there are two classes
positions of trust: on the one hand, there are managerial
employees whose primary duty consists of the
management of the establishment in which they are
employed or of a department or a subdivision thereof,
and to other officers or members of the managerial staff;
on the other hand, there are fiduciary rank-and-file
employees, such as cashiers, auditors, property
custodians, or thos who, in the normal exercise of their
functions, regularly handle significant amounts of money
or property. These employees, though rank-and-file, are
routinely charged with the care and custody of the
employers money or property, and are thus classified as
occupying positions of trust and confidence.
LA 20 October 2005
NLRC 30 May 2007; 14
November 2007 (MR)
CA 26 March 2010; 05
July 2010 (MR)
LA dismissed
complaint for
illegal dismissal
NLRC affirmed LA
decision; denied MR
of PPHI
CA reversed NLRC
decision
SC reversed the
conclusions and
findings of CA
Primarily, it is apt to point out that proof beyond

reasonable doubt is not required in dismissing an
employee on the ground of loss of trust and confidence; it
is sufficient that there lies some basis to believe that the
employee concerned is responsible for the misconduct
and that the nature of the employees participation
Page 2
LEOPARD SECURITY &

INVESTIGATION AGENCY vs.
QUITOY
dismissal due to loss of trust and

confidence
therein rendered him absolutely unworthy of trust and

confidence demanded by his position.
Temporary off-detail or floating

status
Applying Article 286 of the Labor Code of the Philippines

by analogy, this Court has repeatedly recognized that
security guards may be temporarily sidelined by their
security agency as their assignments primarily depend on
the contracts entered into by the latter with third parties.
Temporary "off-detail" or "floating status" is the period of
time when security guards are in between assignments or
when they are made to wait after being relieved from a
previous post until they are transferred to a new one. It
takes place when, as here, the security agencys clients
decide not to renew their contracts with the agency,
resulting in a situation where the available posts under its
existing contracts are less than the number of guards in
its roster. For as long as such temporary inactivity does
not continue for a period exceeding six months, it has
been ruled that placing an employee on temporary "offdetail" or "floating status" is not equivalent to dismissal.
G.R. No. 186344

10 February 2013
J. Perez
Award of Separation Pay ; Doctrine of

Strained Relations
Having correctly ruled out illegal dismissal of

respondents, the CA reversibly erred, however, when it
sustained the NLRCs award of separation pay on the
ground that the parties relationship had already been
strained. For one, liability for the payment of separation
pay is a legal consequence of illegal dismissal where
reinstatement is no longer viable or feasible. Under
Article 279 of the Labor Code, an illegally dismissed
employee is entitled to the twin reliefs of full backwages
and reinstatement without loss of seniority rights. Aside
from the instances provided under Articles 283 and 284 of
the Labor Code, separation pay is, however, granted when
reinstatement is no longer feasible because of strained
relations between the employer and the employee. In
cases of illegal dismissal, the accepted doctrine is that
separation pay is available in lieu of reinstatement when
03 May 2005 filed

dismissal
LA 06 April 2006
NLRC 20 March 2007
CA 26 September
2008
LA illegal
dismissal; awarded
separation pay in
lieu of
reinstatement;
th
proportionate 13
month pay and
service incentive
leave pay
NLRC modified LA
decision and ruled
there was no illegal
dismissal but
sustained the
awards given by LA
CA affirmed NLRC
decision including
the awards
SC - modified the
decision of CA and
directed the
reinstatement of
respondents in lieu
of the award of
separation pay and
to deduct the sum
of P1,025.00 from
the SILP
individually
awarded in favor of
Page 3
the latter recourse is no longer practical or in the best

interest of the parties.
respondents. The
rest is AFFIRMED.
As a relief granted in lieu of reinstatement, however, it

consequently goes without saying that an award of
separation pay is inconsistent with a finding that there
was no illegal dismissal. Standing alone, the doctrine of
strained relations will not justify an award of separation
pay, a relief granted in instances where the common
denominator is the fact that the employee was dismissed
by the employer. Even in cases of illegal dismissal, the
doctrine of strained relations is not applied
indiscriminately as to bar reinstatement, especially when
the employee has not indicated an aversion to returning
to work or does not occupy a position of trust and
confidence in or has no say in the operation of the
employers business. Although litigation may also
engender a certain degree of hostility, it has likewise
been ruled that the understandable strain in the parties
relations would not necessarily rule out reinstatement
which would, otherwise, become the rule rather than the
exception in illegal dismissal cases.
BAARES vs. TAWTRASCO
Reinstatement
G.R. No. 197353
11 April 2013
J. Velasco, Jr.
Reinstatement, as a labor law concept, means the

admission of an employee back to work prevailing prior
to his dismissal; restoration to a state or position from
which one had been removed or separated, which
presupposes that there shall be no demotion in rank
and/or diminution of salary, benefits and other privileges;
if the position previously occupied no longer exists, the
restoration shall be to a substantially equivalent position
in terms of salary, benefits and other privileges.
Managements prerogative to transfer an employee from
one office or station to another within the business
establishment, however, generally remains unaffected by
a reinstatement order, as long as there is no resulting
demotion or diminution of salary and other benefits
07 March 2006 filed

dismissal
LA 22 August 2006 (no
appeal was filed; LA
decision became final
and executor)
27 April 2007 filed with
LA complaint for nonpayment of wages and
withholding of privileges
with Manifestation with
LA illegal
dismissal; ordered
petitioners
immediate
reinstatement
without loss of
seniority rights and
benefits and
awarded full
backwages.
NLRC denied
appeal (assailing the
14 April 2008 LA
Page 4
and/or the action is not motivated by consideration less

than fair or effected as a punishment or to get back at the
reinstated employee.
Abandonment
Doctrine of Strained Relations; Award

of Separation Pay
For abandonment to exist, it is essential (1) that the

employee must have failed to report for work or must
have been absent without valid or justifiable reason; and
(2) that there must have been a clear intention to sever
the employer-employee relationship manifested by some
overt acts. These concurring elements of abandonment
are not present in the instant case.
Reinstatement is no longer viable where, among other
things, the relations between the employer and
employee have been so severely strained, that it is not in
the best interest of the parties, nor is it advisable or
practical to order reinstatement. Under the doctrine of
strained relations, payment of separation pay is
considered an acceptable alternative to reinstatement
when the latter option is no longer desirable or viable.
Indeed, separation pay is made an alternative relief in lieu
of reinstatement in certain circumstances, such as: (1)
when reinstatement can no longer be effected in view of
the passage of a long period of time or because of the
realities of the situation; (2) reinstatement is inimical to
the employers interest; (3) reinstatement is no longer
feasible; (4) reinstatement does not serve the best
interests of the parties involved; (5) the employer is
prejudiced by the workers continued employment; (6)
facts that make execution unjust or inequitable have
supervened; or (7) strained relations between the
employer and the employee.
application for the

issuance of Writ of
Execution (of the 22
August 2006 LA
decision)
LA - 14 April 2008; LA
issued the Writ of
Execution
NLRC 7 July 2009
CA 14 October 2010
decision)
CA set aside NLRC
decision and ruled
that petitioner was
fully reinstated
SC set aside CA
decision; NLRC July
7, 2009 Decision
and November 18,
2009 Resolution as
well as the April 14,
2008 Order of the
Labor Arbiter are
hereby
REINSTATED with
MODIFICATION in
that the Tabaco
Womens Transport
Service Cooperative
Is ORDERED to pay
petitioner
Alexander B.
Baares the
following:
(1) Backwages and
other emoluments
due to petitioner
from March 31, 2007
when petitioner did
not report for work
until finality of this
Decision with
interest thereon at
Page 5
12% per annum

from finality of this
Decision until paid;
(2) Separation pay
equivalent to one
(1) month salary for
every year of
service reckoned
from the time he
started his
employment with
TAWTRASCO until
the finality of this
Decision; and
(3) 10% attorney's
fees computed from
the total monetary
benefits.
The case is
REMANDED to the
RAB V of the NLRC
in Legaspi City for
the computation, as
expeditiously as
possible, of the
monetary awards
UNIVAC DEVELOPMENT INC., vs.
SORIANO
Right to security of tenure of

probationary employee
G.R. No. 182072

19 June 2013
J. Peralta
It is undisputed that respondent was hired as a

probationary employee.1wphi1 As such, he did not enjoy
a permanent status. Nevertheless, he is accorded the
constitutional protection of security of tenure which
means that he can only be dismissed from employment
for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made
known to him by the employer at the time of his
LA 29 July 2005
NLRC 28 April 2006; 31
July 2006 (MR)
CA 24 October 2007;
14 march 2008 (MR)
LA dismissed
complaint for
illegal dismissal
NLRC affirmed LA
decision in its
entirety
Page 6
engagement
Requirements for dismissal of
probationary employee based on
failure to meet probationary standards
It is primordial that at the start of the probationary

period, the standards for regularization be made known
to the probationary employee. x x x Equally important is
the requirement that in order to invoke "failure to meet
the probationary standards" as a justification for
dismissal, the employer must show how these standards
have been applied to the subject employee.
xxx
Indeed, the power of the employer to terminate a
probationary employee is subject to three limitations,
namely: (1) it must be exercised in accordance with the
specific requirements of the contract; (2) the
dissatisfaction on the part of the employer must be real
and in good faith, not feigned so as to circumvent the
contract or the law; and (3) there must be no unlawful
32
discrimination in the dismissal. In this case, not only did
petitioner fail to show that respondent was apprised of
the standards for regularization but it was likewise not
shown how these standards had been applied in his case.
Pursuant to well-settled doctrine, petitioners failure to
specify the reasonable standards by which respondents
alleged poor performance was evaluated as well as to
prove that such standards were made known to him at
the start of his employment, makes respondent a regular
employee. In other words, because of this omission on
the part of petitioner, respondent is deemed to have been
hired from day one as a regular employee.
CA nullified and
set aside NLRC
decision; found the
respondent illegally
dismissed
SC affirmed CA
decision with
Modification,
petitioner is
ordered to pay
respondent:
(1) backwages,
inclusive of
allowances and
other benefits, or
their monetary
equivalent,
computed from the
date of his dismissal
up to the finality of
this decision; (2)
separation pay in
lieu of
reinstatement
equivalent to at
least one month
pay, or one month
pay for every year
of service,
whichever is higher
(with a fraction of at
least six months
being considered as
one whole year),
computed from the
Page 7
time of his
employment or
engagement up to
the finality of the
decision; (3)
attorney's fees
equivalent to 10%
of the monetary
awards; and (4)
interest at 6% per
annum from date of
termination until
full payment
PASOS vs. PHILIPPINE NATIONAL
CONSTRUCTION CORPORATION
Project employee and Regular

Employee
G.R. No. 192394

03 July 2013
J. Villarama, Jr.
In the instant case, the appointments issued to petitioner

indicated that he was hired for specific projects. This
Court is convinced however that although he started as a
project employee, he eventually became a regular
employee of PNCC.
LA 28 March 2006
Under Article 280 of the Labor Code, as amended, a
project employee is one whose "employment has been
fixed for a specific project or undertaking the completion
or termination of which has been determined at the time
of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the
employment is for the duration of the season." Thus, the
principal test used to determine whether employees are
project employees is whether or not the employees were
assigned to carry out a specific project or undertaking,
the duration or scope of which was specified at the time
33
the employees were engaged for that project.
xxx
While for first three months, petitioner can be considered
a project employee of PNCC, his employment thereafter,
18 February 2003 filed

dismissal
NLRC - 31 October 2008

CA 26 March 2010; 26
May 2010 (MR)
LA illegal
dismissal; ruled
that petitioner
attained regular
employment;
awarded full
backwages and
separation pay in
lieu of
reinstatement
NLRC reversed
LA; dismissed the
complaint
CA dismissed
petition for lack of
merit
SC - reinstated LA
decision with
modifications:
Page 8
when his services were extended without any

specification of as to the duration, made him a regular
employee of PNCC. And his status as a regular employee
was not affected by the fact that he was assigned to
several other projects and there were intervals in
between said projects since he enjoys security of tenure.
1) respondent
PNCC is
DIRECTED to pay
petitioner Roy D.
Pasos full back
wages from the
time of his illegal
dismissal on
October 19, 2000
up to the finality
of this Decision,
with interest at
6% per annum,
and 12% legal
interest
thereafter until
fully paid;
2) respondent
PNCC is
ORDERED to
reinstate
petitioner Pasos
to his former
position or to a
substantially
equivalent one,
without loss of
seniority rights
and other benefits
attendant to the
position; and
3) respondent
PNCC is
DIRECTED to pay
petitioner Pasos
Page 9
attorney's fees
equivalent to 10%
of his total
monetary award.
DONGON vs. RAPID MOVERS
AND FORWARDERS CO., INC.
Willful disobedience as ground for

dismissal
G.R. No. 163431

28 August 2013
J. Bersamin
Management prerogative; right to

discipline employees
Willful disobedience to the lawful orders of an employer is

one of the valid grounds to terminate an employee under
Article 296 (formerly Article 282) of the Labor Code. For
willful disobedience to be a ground, it is required that: (a)
the conduct of the employee must be willful or
intentional; and (b) the order the employee violated must
have been reasonable, lawful, made known to the
employee, and must pertain to the duties that he had
been engaged to discharge. Willfulness must be attended
by a wrongful and perverse mental attitude rendering the
employees act inconsistent with proper subordination. In
any case, the conduct of the employee that is a valid
ground for dismissal under the Labor Code constitutes
harmful behavior against the business interest or person
of his employer. It is implied that in every act of willful
disobedience, the erring employee obtains undue
advantage detrimental to the business interest of the
employer.
01 June 2001 filed a

dismissal
LA dismissed
complaint for
illegal dismissal
LA - 10 September 2001
NLRC reversed LA
decision; awarded
backwages and
separation pay
NLRC 17 June 2002

CA 24 October 2003
CA reinstated LA
decision
SC reversed and
set aside CA
decision;
reinstated NLRC
decision;
It is true that an employer is given a wide latitude of

discretion in managing its own affairs. The broad
discretion includes the implementation of company rules
and regulations and the imposition of disciplinary
measures on its employees. But the exercise of a
management prerogative like this is not limitless, but
hemmed in by good faith and a due consideration of the
rights of the worker. In this light, the management
prerogative will be upheld for as long as it is not wielded
as an implement to circumvent the laws and oppress
labor.
To us, dismissal should only be a last resort, a penalty to
be meted only after all the relevant circumstances have
Page 10
been appreciated and evaluated with the goal of ensuring

that the ground for dismissal was not only serious but
true. The cause of termination, to be lawful, must be a
serious and grave malfeasance to justify the deprivation
of a means of livelihood. This requirement is in keeping
with the spirit of our Constitution and laws to lean over
backwards in favor of the working class, and with the
mandate that every doubt must be resolved in their favor.
Although we recognize the inherent right of the employer
to discipline its employees, we should still ensure that the
employer exercises the prerogative to discipline
humanely and considerately, and that the sanction
imposed is commensurate to the offense involved and to
the degree of the infraction. The discipline exacted by the
employer should further consider the employees length
of service and the number of infractions during his
employment. x x x
COLEGIO DEL SANTISIMO

ROSARIO vs. MOFADA
Probationary employment of Teachers
G.R. No. 170388

04 September 2013
J. Del Castillo
In Mercado v. AMA Computer College-Paraaque City,

Inc., we had occasion to rule that cases dealing with
employment on probationary status of teaching
personnel are not governed solely by the Labor Code as
the law is supplemented, with respect to the period of
probation, by special rules found in the Manual of
Regulations for Private Schools (the Manual).With regard
to the probationary period, Section 92 of the 1992
Manualprovides:
Section 92. Probationary Period. Subject in all
instances to compliance with the Department
and school requirements, the probationary
period for academic personnel shall not be
more than three (3) consecutive years of
satisfactory service for those in the elementary
and secondary levels, six (6) consecutive regular
13 July 1995 filed a

dismissal
LA - 07 October 2002
NLRC 31 July 2003
CA 31 August 2005; 10
November 2005 (MR)
LA ruled
respondent was
illegally dismissed;
petitioner ordered
to pay severance
th
compensation, 13
month pay, moral
and exemplary
damages and 10%
attorneys fees
NLRC affirmed
with modification
LA decision;
ordered
reinstatement of
Page 11
semesters of satisfactory service for those in the

tertiary level, and nine (9) consecutive
trimesters of satisfactory service for those in
the tertiary level where collegiate courses are
offered on a trimester basis. (Emphasis
supplied)
In this case, petitioners teachers who were on
probationary employment were made to enter into a
contract effective for one school year. Thereafter, it may
be renewed for another school year, and the probationary
employment continues. At the end of the second fixed
period of probationary employment, the contract may
again be renewed for the last time.
respondent to his
former position
without loss of
seniority rights and
full backwages
CA affirmed NLRC
decision
SC affirmed the
CA decision
Such employment for fixed terms during the teachers

probationary period is an accepted practice in the
teaching profession. In Magis Young Achievers Learning
Center v. Manalo, we noted that:
The common practice is for the employer and
the teacher to enter into a contract, effective
for one school year. At the end of the school
year, the employer has the option not to renew
the contract, particularly considering the
teachers performance. If the contract is not
renewed, the employment relationship
terminates. If the contract is renewed, usually
for another school year, the probationary
employment continues. Again, at the end of
that period, the parties may opt to renew or not
to renew the contract. If renewed, this second
renewal of the contract for another school year
would then be the last year since it would be
the third school year of probationary
employment. At the end of this third year, the
employer may now decide whether to extend a
permanent appointment to the employee,
Page 12
primarily on the basis of the employee having

met the reasonable standards of competence
and efficiency set by the employer. For the
entire duration of this three-year period, the
teacher remains under probation. Upon the
expiration of his contract of employment, being
simply on probation, he cannot automatically
claim security of tenure and compel the
employer to renew his employment contract. It
is when the yearly contract is renewed for the
third time that Section 93 of the Manual
becomes operative, and the teacher then is
entitled to regular or permanent employment
status. (Emphases supplied)
xxx
That teachers on probationary employment also enjoy
the protection afforded by Article 281 of the Labor Code
is supported by Section 93 of the 1992 Manual which
provides:
Sec. 93. Regular or Permanent Status. - Those
who have served the probationary period shall
be made regular or permanent. Full-time
teachers who have satisfactorily completed
their probationary period shall be considered
regular or permanent. (Emphasis supplied)
The above provision clearly provides that full-time
teachers become regular or permanent employees once
they have satisfactorily completed the probationary
37
period of three school years. The use of the term
satisfactorily necessarily connotes the requirement for
schools to set reasonable standards to be followed by
teachers on probationary employment. For how else can
one determine if probationary teachers have
satisfactorily completed the probationary period if
Page 13
standards therefor are not provided?

As such, "no vested right to a permanent appointment
shall accrue until the employee has completed the
prerequisite three-year period necessary for the
acquisition of a permanent status. [However, it must be
emphasized that] mere rendition of service for three
consecutive years does not automatically ripen into a
permanent appointment. It is also necessary that the
employee be a full-time teacher, and that the services he
rendered are satisfactory."
xxx
x x xthis Court has definitively pronounced that "in a
situation where the probationary status overlaps with a
fixed-term contract not specifically used for the fixed
term it offers, Article 281 should assume primacy and the
fixed-period character of the contract must give way.
An example given of a fixed-term contract specifically
used for the fixed term it offers is a replacement teacher
or a reliever contracted for a period of one year to
temporarily take the place of a permanent teacher who is
on leave. The expiration of the relievers fixed-term
contract does not have probationary status implications
as he or she was never employed on probationary basis.
This is because his or her employment is for a specific
purpose with particular focus on the term. There exists an
intent to end his or her employment with the school upon
expiration of this term.
However, for teachers on probationary employment, in
which case a fixed term contract is not specifically used
for the fixed term it offers, it is incumbent upon the
school to have not only set reasonable standards to be
followed by said teachers in determining qualification for
regular employment, the same must have also been
Page 14
communicated to the teachers at the start of the

probationary period, or at the very least, at the start of
the period when they were to be applied. These terms, in
addition to those expressly provided by the Labor Code,
would serve as the just cause for the termination of the
probationary contract. The specific details of this finding
of just cause must be communicated to the affected
teachers as a matter of due process. Corollarily, should
the teachers not have been apprised of such reasonable
standards at the time specified above, they shall be
deemed regular employees.
xxx
As a matter of due process, teachers on probationary
employment, just like all probationary employees, have
the right to know whether they have met the standards
against which their performance was evaluated. Should
they fail, they also have the right to know the reasons
therefor.
SME BANK INC. vs. DE GUZMAN
Validity of Resignation and Retirement
G.R. No. 184517

17 October 2014
C.J. Sereno
x x x While resignation letters containing words of

gratitude may indicate that the employees were not
coerced into resignation, this fact alone is not conclusive
proof that they intelligently, freely and voluntarily
resigned. To rule that resignation letters couched in terms
of gratitude are, by themselves, conclusive proof that the
employees intended to relinquish their posts would open
the floodgates to possible abuse. In order to withstand
the test of validity, resignations must be made voluntarily
and with the intention of relinquishing the office, coupled
with an act of relinquishment.41 Therefore, in order to
determine whether the employees truly intended to
resign from their respective posts, we cannot merely rely
LA 27 October 2004
NLRC 08 May 2006
CA 13 march 2008
LA respondents
were illegally
dismissed as it
appeared that they
had involuntarily
executed their
resignation letters.
NLRC affirmed LA
decision with
modification;
respondents were
Page 15
on the tenor of the resignation letters, but must take into

consideration the totality of circumstances in each
particular case.
xxx
Retirement, like resignation, should be an act completely
voluntary on the part of the employee. If the intent to
retire is not clearly established or if the retirement is
involuntary, it is to be treated as a discharge.
xxx
awarded
backwages,
separation pay and
moral and
exemplary damages
CA - affirmed NLRC
decision
SC respondents
were indeed illegally
dismissed;
In San Miguel Corporation v. NLRC, we have explained

that involuntary retirement is tantamount to dismissal, as
employees can only choose the means and methods of
terminating their employment, but are powerless as to
the status of their employment and have no choice but to
leave the company. This rule squarely applies to Eufemias
case. Indeed, she could only choose between resignation
and retirement, but was made to understand that she had
no choice but to leave SME Bank. Thus, we conclude that,
similar to her other co-employees, she was illegally
dismissed from employment.
xxx
Closure of Business as an authorized

cause to dismiss employee
The law permits an employer to dismiss its employees in

the event of closure of the business establishment.
However, the employer is required to serve written
notices on the worker and the Department of Labor at
least one month before the intended date of closure.
Moreover, the dismissed employees are entitled to
separation pay, except if the closure was due to serious
business losses or financial reverses. However, to be
exempt from making such payment, the employer must
justify the closure by presenting convincing evidence that
Page 16
it actually suffered serious financial reverses.

In this case, the records do not support the contention of
SME Bank that it intended to close the business
establishment.
xxx
Even assuming that the parties intended to close the
bank, the records do not show that the employees and
the Department of Labor were given written notices at
least one month before the dismissal took place.
Moreover, aside from their bare assertions, the parties
failed to substantiate their claim that SME Bank was
suffering from serious financial reverses.
xxx
There are two types of corporate acquisitions: asset sales
and stock sales. In asset sales, the corporate entity sells
all or substantially all of its assets to another entity. In
stock sales, the individual or corporate shareholders sell a
controlling block of stockto new or existing shareholders.
In asset sales, the rule is that the seller in good faith is
authorized to dismiss the affected employees, but is
liable for the payment of separation pay under the law.
The buyer in good faith, on the other hand, is not obliged
to absorb the employees affected by the sale, nor is it
liable for the payment of their claims. The most that it
may do, for reasons of public policy and social justice, is
to give preference to the qualified separated personnel of
the selling firm.
In contrast with asset sales, in which the assets of the
selling corporation are transferred to another entity, the
transaction in stock sales takes place at the shareholder
Page 17
level. Because the corporation possesses a personality

separate and distinct from that of its shareholders, a shift
in the composition of its shareholders will not affect its
existence and continuity. Thus, notwithstanding the
stock sale, the corporation continues to be the employer
of its people and continues to be liable for the payment of
their just claims. Furthermore, the corporation or its new
majority share holders are not entitled to lawfully dismiss
corporate employees absent a just or authorized cause.
xxx
Right to Security of tenure
The right to security of tenure guarantees the right of

employees to continue in their employment absent a just
or authorized cause for termination. This guarantee
proscribes a situation in which the corporation procures
the severance of the employment of its employees who
patently still desire to work for the corporation only
because new majority stockholders and a new
management have come into the picture. This situation is
a clear circumvention of the employees constitutionally
guaranteed right to security of tenure, an act that cannot
be countenanced by this Court.
It is thus erroneous on the part of the corporation to
consider the employees as terminated from their
employment when the sole reason for so doing is a
change of management by reason of the stock sale. The
conformity of the employees to the corporations act of
considering them as terminated and their subsequent
acceptance of separation pay does not remove the taint
of illegal dismissal. Acceptance of separation pay does
not bar the employees from subsequently contesting the
legality of their dismissal, nor does it estop them from
challenging the legality of their separation from the
service.
Page 18
We therefore see it fit to expressly reverse our ruling in

Manlimos insofar as it upheld that, in a stock sale, the
buyer in good faith has no obligation to retain the
employees of the selling corporation; and that the
dismissal of the affected employees is lawful, even absent
a just or authorized cause.
2012
MANSION PRINTING CENTER vs.
BITARA, JR.
Gross negligence
G.R. No. 168120

25 January 2012
J. Perez
On this score, Valiao v. Court of Appeals is instructive:

xxx It bears stressing that petitioners absences and
tardiness were not isolated incidents but manifested a
pattern of habituality. xxx The totality of infractions or
the number of violations committed during the period of
employment shall be considered in determining the
penalty to be imposed upon an erring employee. The
offenses committed by him should not be taken singly
and separately but in their totality. Fitness for continued
employment cannot be compartmentalized into tight
little cubicles of aspects of character, conduct, and ability
separate and independent of each other.
27 April 2000 filed a

dismissal
LA 21 December 2000
NLRC CA 18 March 2004; 10
May 2005 (MR)
LA dismissed
complaint for lack
of merit
NLRC 29 June
2001 affirmed LA
decision in toto
CA reversed
NLRC and LA
SC -
xxx
In Valiao, we defined gross negligence as want of care
in the performance of ones duties and habitual neglect
as repeated failure to perform ones duties for a period
of time, depending upon the circumstances.51 These are
not overly technical terms, which, in the first place, are
expressly sanctioned by the Labor Code of the
Philippines, to wit:
ART. 282. Termination by employer. - An
employer may terminate an employment for
any of the following causes:
Page 19
(a) xxx
(b) Gross and habitual neglect by the employee
of his duties;
xxx
Clearly, even in the absence of a written company rule
defining gross and habitual neglect of duties,
respondents omissions qualify as such warranting his
dismissal from the service.
xxx
Procedural due process
Procedural due process entails compliance with the twonotice rule in dismissing an employee, to wit: (1) the
employer must inform the employee of the specific acts
or omissions for which his dismissal is sought; and (2)
after the employee has been given the opportunity to be
heard, the employer must inform him of the decision to
terminate his employment.
xxx
In Bughaw v. Treasure Island Industrial Corporation, this
Court, in verifying the veracity of the allegation that
respondent refused to receive the Notice of Termination,
essentially looked for the following: (1) affidavit of service
stating the reason for failure to serve the notice upon the
recipient; and (2) a notation to that effect, which shall be
written on the notice itself. Thus:
xxx Bare and vague allegations as to the
manner of service and the circumstances
surrounding the same would not suffice. A mere
copy of the notice of termination allegedly sent
by respondent to petitioner, without proof of
receipt, or in the very least, actual service
Page 20
thereof upon petitioner, does not constitute

substantial evidence. It was unilaterally
prepared by the petitioner and, thus, evidently
self-serving and insufficient to convince even an
unreasonable mind.
YABUT vs. MANILA ELECTRIC
COMPANY
Termination of employment due to

Serious Misconduct
G.R. No. 190436

16 January 2012
J. Reyes
To reiterate, Article 282 (a) provides that an employer

may terminate an employment because of an employee's
serious misconduct, a cause that was present in this case
in view of the petitioner's violation of his employer's code
of conduct. Misconduct is defined as the transgression of
some established and definite rule of action, a forbidden
act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. For
serious misconduct to justify dismissal, the following
requisites must be present: (a) it must be serious; (b) it
must relate to the performance of the employee's duties;
and (c) it must show that the employee has become unfit
to continue working for the employer.
In reviewing the CAs Decision, we again consider the
petitioner's duties and powers as a Meralco employee.
And we conclude that he committed a serious
misconduct. Installation of shunting wires is without
doubt a serious wrong as it demonstrates an act that is
willful or deliberate, pursued solely to wrongfully obtain
electric power through unlawful means. The act clearly
relates to the petitioner's performance of his duties given
his position as branch field representative who is
equipped with knowledge on meter operations, and who
has the duty to test electric meters and handle customers'
violations of contract. Instead of protecting the
companys interest, the petitioner himself used his
knowledge to illegally obtain electric power from
Meralco. His involvement in this incident deems him no
longer fit to continue performing his functions for
respondent-company.
LA 28 December 2004
NLRC 31 March 2006;
28 August 2006 (MR)
CA 10 August 2009; 26
November 2009 (MR)
LA petitioner was
illegally dismissed
from service
NLRC denied
merit; denied MR
CA reversed NLRC;
petitioners
dismissal from
service is lawful;
right to due process
was not violated
SC dismissal of
petitioner was
based on just causes
under Art. 282 of
the Labor Code
Page 21
xxx
Termination also justified based on

loss of trust and confidence
The dismissal is also justified as the act imputed upon the

petitioner qualifies as fraud or willful breach by the
employee of the trust reposed in him by his employer or
duly authorized representative under Article 282 (c) of
the Labor Code. While the petitioner contests this ground
by denying that his position is one of trust and
confidence, it is undisputed that at the time of his
dismissal, he was holding a supervisory position after he
rose from the ranks since commencement of his
employment with Meralco. As a supervisor with duty and
power that included testing of service meters and
investigation of violations of contract of customers, his
position can be treated as one of trust and confidence,
requiring a high degree of honesty as compared with
ordinary rank-and-file employees. This Court declared in
The Coca-Cola Export Corporation v. Gacayan:
Law and jurisprudence have long recognized
the right of employers to dismiss employees by
reason of loss of trust and confidence. More so,
in the case of supervisors or personnel
occupying positions of responsibility, loss of
trust justifies termination. Loss of confidence as
a just cause for termination of employment is
premised from the fact that an employee
concerned holds a position of trust and
confidence. This situation holds where a person
is entrusted with confidence on delicate
matters, such as the custody, handling, or care
and protection of the employer's property. But,
in order to constitute a just cause for dismissal,
the act complained of must be work-related
such as would show the employee concerned to
be unfit to continue working for the employer.
(citations omitted)
Page 22
WUERTH PHILIPPINES, INC. vs.

YNSON
Disease as a ground for dismissal from

service
G.R. No. 175392

15 February 2012
J. Peralta
With regard to disease as a ground for termination, Article

284 of the Labor Code provides that an employer may
terminate the services of an employee who has been found
to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his
health, as well as to the health of his co-employees.
In order to validly terminate employment on this
ground, Section 8, Rule I, Book VI of the Omnibus Rules
Implementing the Labor Code requires that:
Section 8. Disease as a ground for
dismissal. Where the employee suffers
from a disease and his continued
employment is prohibited by law or
prejudicial to his health or to the health of
his co-employees, the employer shall not
terminate his employment unless there is
a certification by a competent public
health authority that the disease is of
such nature or at such a stage that it
cannot be cured within a period of six (6)
months even with proper medical
treatment. If the disease or ailment can
be cured within the period, the employer
shall not terminate the employee but shall
ask the employee to take a leave. The
employer shall reinstate such employee
to his former position immediately upon
the restoration of his normal health.
In Triple Eight Integrated Services, Inc. v. NLRC,
the Court held that the requirement for a medical
certificate under Article 284 of the Labor Code cannot be
dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the employer of
the gravity or extent of the employees illness and, thus,
defeat the public policy on the protection of labor. In the
05 September 2003 - for

illegal dismissal and
non-payment
of
allowances, with claim
for moral and exemplary
damages and attorneys
fees
LA 15 July 2004
NLRC 29 July 2005; 24
November 2005 (MR)
CA 13 July 2006; 6
December 2006 (MR)
LA - illegal
dismissal;
ordered
respondents
reinstatement to
his former
position without
loss of seniority
rights and
privileges; in
case of appeal,
ordered to
reinstate
complainant in
the payroll;
ordered
petitioner to pay
respondent full
backwages,
medical benefits,
th
13 month pay
for year 2003,
Moral and
Exemplary
Damages, and
10% of the total
award as
attorneys fees
NLRC affirmed
with
modification LA
decision;
reduced the
award for moral
and exemplary
damages,
Page 23
present case, there was no showing that prior to

terminating respondent's employment, petitioner
secured the required certification from a competent
public health authority that the disease he suffered was
of such nature or at such a stage that it cannot be cured
within six months despite proper medical treatment,
pursuant to Section 8, Rule I, Book VI of the Omnibus
Rules Implementing the Labor Code.
xxx
Despite the completion of his treatment, respondent
failed to attend the investigations set on July 25, 2003
and August 18, 2003. Thus, his unexplained absence in
the proceedings should be construed as waiver of his
right to be present therein in order to adduce evidence
that would have justified his continued absence from
work.
xxx
Clearly, since there is no more hindrance for him to return
to work and attend the investigations set by petitioner,
respondent's failure to do so was without any valid or
justifiable reason. Respondent's conduct shows his
indifference and utter disregard of his work and his
employer's interest, and displays his clear, deliberate, and
gross dereliction of duties.
xxx
Management prerogative to dismiss an

employee
It bears stressing that respondent was not an ordinary

rank-and-file employee. With the nature of his position,
he was reposed with managerial duties to oversee
petitioner's business in his assigned area. As a managerial
employee, respondent was tasked to perform important
and crucial functions and, thus, bound by more exacting
work ethic. He should have realized that such sensitive
including the
attorneys fees as
the same was
based on total
awards
- On MR, NLRC
further
reduced it
award for
moral and
exemplary
damages
CA partly
considered the
petition
meritorious;
petitioner had
the right to
terminate
respondent;
deleted the
awards for
backwages and
moral and
exemplary
damages; but
awarded
P1,225,000.00
(representing his
salary from
February 2003 to
August 29,
2003), medical
expenses of
P94,100.00,
temperate
Page 24
AWARD - a. The award of salary of

respondent Rodante Ynson from February
2003 to August 29, 2003, amounting to
P1,225,000.00, is deleted; however, he is
entitled to the payment of his salary,
chargeable against his accrued sick leave
benefits and other similar leave benefits, if
any, from January 24to June 4, 2003, as
may be provided by existing company
policy of petitioner Wuerth Philippines, Inc.;
b. The award of temperate
damages, in the amount of P100,000.00, is
reduced to P50,000.00;
th
c. While the award of 13 month
pay, in the amount of P175,000.00 is
deleted; however, respondent may still be
th
entitled to the 13 month pay, either full or
pro-rated amount, in consonance with
existing company policy of petitioner; and
d. The award of medical expenses
amounting to P94,100.00 and attorney's
fees of 10% of the total monetary award
are deleted.
position required the full trust and confidence of his

employer in every exercise of managerial discretion
insofar as the conduct of the latter's business is
concerned. The power to dismiss an employee is a
recognized prerogative inherent in the employer's right
to freely manage and regulate his business. The law, in
protecting the rights of the laborers, authorizes neither
oppression nor self-destruction of the employer. The
worker's right to security of tenure is not an absolute
right, for the law provides that he may be dismissed for
cause.As a general rule, employers are allowed wide
latitude of discretion in terminating the employment of
managerial personnel. The mere existence of a basis for
believing that such employee has breached the trust and
confidence of his employer would suffice for his dismissal.
Needless to say, an irresponsible employee like
respondent does not deserve a place in the workplace,
and it is petitioner's management prerogative to
terminate his employment. To be sure, an employer
cannot be compelled to continue with the employment of
workers when continued employment will prove inimical
to the employer's interest.
damages of
th
P100,000.00, 13
month pay of
P175,000.00, and
attorneys fees of
10% of the total
monetary award
SC modified
the decision of
CA; REMANDED
the case to the
NLRC Fifth
Division,
Cagayan de Oro
City for proper
computation of
awards which
respondent may
be entitled to.
To condone such conduct will certainly erode the

discipline that an employer should uniformly apply so
that it can expect compliance with the same rules and
regulations by its other employees. Otherwise, the rules
necessary and proper for the operation of its business
would be gradually rendered ineffectual, ignored, and
eventually become meaningless. As applied to the
present case, it would be the height of unfairness and
injustice if the employer would be left hanging in the dark
as to when respondent could report to work or be
available for the scheduled hearings, which becomes
detrimental to the orderly daily operations of petitioner's
business.
Page 25
JULIES BAKESHOP vs. ARNAIZ,

et.al.
Transfer/reassignment which
constitutes constructive dismissal
G.R. No. 173882

15 February 2012
J. Del Castillo
We have held that management is free to regulate,

according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working
methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers
and discipline and recall of workers. The exercise of
management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the
rights of labor.
In constructive dismissal cases, the employer has the
burden of proving that the transfer of an employee is for
just or valid ground, such as genuine business necessity.
The employer must demonstrate that the transfer does not
involve a demotion in rank or a diminution in salary and
other benefits. If the employer fails to overcome this
burden of proof, the employees transfer is tantamount to
unlawful constructive dismissal.
xxx
Petitioners failed to satisfy the burden of proving that the
transfer was based on just or valid ground. X x x What
appears to this Court is that respondents transfer was an
act of retaliation on the part of petitioners due to the
formers filing of complaints against them, and thus, was
clearly made in bad faith. In fact, petitioner Reyes even
admitted that he caused the reassignments due to the
pending complaints filed against him.
Demotion as constructive dismissal
Demotion involves a situation in which an employee is

relegated to a subordinate or less important position
constituting a reduction to a lower grade or rank, with a
corresponding decrease in duties and responsibilities, and
usually accompanied by a decrease in salary. When there is
a demotion in rank and/or a diminution in pay; when a clear
discrimination, insensibility or disdain by an employer
LA 25 August 2000
NLRC 18 December
2003; 19 April 2004 (MR)
CA 23 September 2005
LA dismissed the
complaint
NLRC overruled
LA decision and
REMANDED the
case for further
proceedings in its
17 January 2002
decision; In its 23
September 2003
Resolution, NLRC
vacated its
previous decision
and ruled that
respondents were
illegally dismissed;
ordered
respondents
reinstatement,
payment of
backwages, salary
differentials,
th
premium pay, 13
month pay, service
incentive leave
pay, and COLA
- On 18
December 2003,
upon MR filed
by petitioner,
NLRC ruled that
respondents
were not
illegally
dismissed
Page 26
- On 19 April
2004, denied
respondents
MR
becomes unbearable to the employee; or when continued

employment is rendered impossible, unreasonable or
unlikely, the transfer of an employee may constitute
constructive dismissal.
We agree with the CA in ruling that the transfer of
respondents amounted to a demotion. Although there was
no diminution in pay, there was undoubtedly a demotion in
titular rank. One cannot deny the disparity between the
duties and functions of a chief baker to that of a
utility/security personnel tasked to clean and manage the
orderliness of the outside premises of the bakeshop.
Respondents were even prohibited from entering the
bakeshop. The change in the nature of their work
undeniably resulted to a demeaning and humiliating work
condition.
CA reversed and
set aside NLRC
resolutions dated
18 December 2003
and 19 April 2004;
remanded the case
to the LA for
computation of
backwages
andother
monetary awards.
SC - affirmed CA
decision
C. ALCANTARA & SONS, INC. vs.

COURT OF APPEALS
G.R. No. 155109
14 March 2012
J. Peralta
Termination of employment of Union

officers/members due to participation
in or commission of illegal acts during
strike
Payment of separation pay
(Motion for Resonsideration of 29

September 2010 Decision)
The LA, the NLRC, the CA and the Court are one in saying
that the strike staged by the Union, participated in by the
Union officers and members, is illegal being in violation
of the no strike-no lockout provision of the CBA which
enjoined both the Union and the company from resorting
to the use of economic weapons available to them under
the law and to instead take recourse to voluntary
arbitration in settling their disputes.[22] We, therefore,
find no reason to depart from such conclusion.
Article 264 (a) of the Labor Code lays down the liabilities
of the Union officers and members participating in illegal
strikes and/or committing illegal acts, to wit:
ART. 264. PROHIBITED ACTIVITIES
(a) x x x
LA 29 June 1999
NLRC 08 November
1999
CA - 24 February 2005
SC 29 September 2010
(Decision)
LA declared
strike illegal ;
Union officers
deemed forfeited
their employment;
union members
were ordered
reinstated with
backwages; denied
Unions
counterclaim
NLRC affirmed LA
decision insofar as
declaring the strike
illegal, termination
of Union officers
Page 27
Any worker whose employment has been

terminated as a consequence of an unlawful
lockout shall be entitled to reinstatement with
full backwages. Any Union officer who
knowingly participates in an illegal strike and
any worker or Union officer who knowingly
participates in the commission of illegal acts
during a strike may be declared to have lost his
employment status: Provided, That mere
participation of a worker in a lawful strike shall
not constitute sufficient ground for termination
of his employment, even if a replacement had
been hired by the employer during such lawful
strike.
Thus, the above-quoted provision sanctions the dismissal

of a Union officer who knowingly participates in an illegal
strike or who knowingly participates in the commission
of illegal acts during a lawful strike.[23] In this case, the
Union officers were in clear breach of the above provision
of law when they knowingly participated in the illegal
strike.
As to the Union members, the same provision of law
provides that a member is liable when he knowingly
participates in the commission of illegal acts during a
strike. We find no reason to reverse the conclusion of the
Court that CASI presented substantial evidence to show
that the striking Union members committed the
following prohibited acts:
and directing them

to pay damages; but
modified it and
ruled that identified
union members
should likewise be
terminated from
service for
commission of
illegal and
prohibited acts
CA dismissed
petition and ruled
that resinstatement
of union members
pending appeal had
no basis
SC reversed and
set aside CA
decision and
reinstated NLRC
decision dated 08
November 1999;
On MR,
reconsidered its
previous decision
only insofar as the
award of
separation pay;
a.
They threatened, coerced, and
intimidated non-striking employees, officers,
suppliers and customers;
b. They obstructed the free ingress to and
egress from the company premises; and
c.
They resisted and defied the
Page 28
implementation of the writ of preliminary

injunction issued against the strikers.
The commission of the above prohibited acts by the
striking Union members warrants their dismissal from
employment.
Xxx
Finally, as regards the separation pay as a form of
financial assistance awarded by the Court, we find it
necessary to reconsider the same and delete the award
pursuant to prevailing jurisprudence.
Separation pay may be given as a form of financial
assistance when a worker is dismissed in cases such as
the installation of labor-saving devices, redundancy,
retrenchment to prevent losses, closing or cessation of
operation of the establishment, or in case the employee
was found to have been suffering from a disease such
that his continued employment is prohibited by law. It is
a statutory right defined as the amount that an employee
receives at the time of his severance from the service and
is designed to provide the employee with the
wherewithal during the period that he is looking for
another employment. It is oriented towards the
immediate future, the transitional period the dismissed
employee must undergo before locating a replacement
job. As a general rule, when just causes for terminating
the services of an employee exist, the employee is not
entitled to separation pay because lawbreakers should
not benefit from their illegal acts. The rule, however, is
subject to exceptions. The Court, in Philippine Long
Distance Telephone Co. v. NLRC,laid down the
guidelines when separation pay in the form of financial
assistance may be allowed, to wit:
We hold that henceforth separation pay shall
Page 29
be allowed as a measure of social justice only

in those instances where the employee is
validly dismissed for causes other than serious
misconduct or those reflecting on his moral
character. Where the reason for the valid
dismissal is, for example, habitual intoxication
or an offense involving moral turpitude, like
theft or illicit sexual relations with a fellow
worker, the employer may not be required to
give the dismissed employee separation pay,
or financial assistance, or whatever other
name it is called, on the ground of social
justice.
A contrary rule would, as the petitioner
correctly argues, have the effect, of rewarding
rather than punishing the erring employee for
his offense. And we do not agree that the
punishment is his dismissal only and that the
separation pay has nothing to do with the
wrong he has committed x x x.
xxx
However, in a number of cases cited in Toyota Motor
Phils. Corp. Workers Association (TMPCWA) v. National
Labor Relations Commission, we refrained from
awarding separation pay or financial assistance to Union
officers and members who were separated from service
due to their participation in or commission of illegal acts
during the strike.In Pilipino Telephone Corporation v.
Pilipino Telephone Employees Association (PILTEA), the
strike was found to be illegal because of procedural
infirmities and for defiance of the Secretary of Labors
assumption order. Hence, we upheld the Union officers
dismissal without granting financial assistance. In
Sukhotai Cuisine and Restaurant v. Court of Appeals,
and Manila Diamond Hotel and Resort, Inc. (Manila
Page 30
Diamond Hotel) v. Manila Diamond Hotel Employees

Union, the Union officers and members who participated
in and committed illegal acts during the illegal strike
were deemed to have lost their employment status and
were not awarded financial assistance.
In Telefunken Semiconductors Employees Union v.

Court of Appeals, the Court held that the strikers open
and willful defiance of the assumption order of the
Secretary of Labor constitute serious misconduct and
reflective of their moral character, hence, granting of
financial assistance to them cannot be justified. In Chua
v. National Labor Relations Commission,[57]we disallowed
the award of financial assistance to the dismissed
employees for their participation in the unlawful and
violent strike which resulted in multiple deaths and
extensive property damage because it constitutes serious
misconduct on their part.
Here, not only did the Court declare the strike illegal,
rather, it also found the Union officers to have knowingly
participated in the illegal strike. Worse, the Union
members committed prohibited acts during the strike.
Thus, as we concluded in Toyota, Telefunken, Chua and
the other cases cited above, we delete the award of
separation pay as a form of financial assistance.
BILLY REALDA vs. NEW AGE

GRAPHICS, INC. AND JULIAN I.
MIRASOL, JR.
Security of Tenure, not an absolute

right
G.R. NO. 192190

25 April 2012
J. Reyes
Security of tenure is indeed constitutionally guaranteed.

However, this should not be indiscriminately invoked to
deprive an employer of its management prerogatives and
right to shield itself from incompetence, inefficiency and
disobedience displayed by its employees. The procedure
laid down by Graphics, Inc. which the petitioner was
bound to observe does not appear to be unreasonable or
unnecessarily difficult. On the contrary, it is necessary
SC affirmed CA
decision
Page 31
and relevant to the achievement of Graphics, Inc.s

objectives. The petitioners non-compliance is therefore
hard to comprehend.
xxx
Totality of Infraction considered in

imposing penalty
While a penalty in the form of suspension had already

been imposed on the petitioner for his habitual tardiness
and repeated absenteeism, the principle of totality of
infractions sanctions the act of Graphics, Inc. of
considering such previous infractions in decreeing
dismissal as the proper penalty for his tardiness and
unauthorized absences incurred afterwards, in addition
to his refusal to render overtime work and conform to the
prescribed work standards. In Merin v. National Labor
Relations Commission, this Court expounded on the
principle of totality of infractions as follows:
The totality of infractions or the number of
violations committed during the period of
employment shall be considered in determining
the penalty to be imposed upon an erring
employee. The offenses committed by
petitioner should not be taken singly and
separately. Fitness for continued employment
cannot be compartmentalized into tight little
cubicles of aspects of character, conduct and
ability separate and independent of each other.
While it may be true that petitioner was
penalized for his previous infractions, this does
not and should not mean that his employment
record would be wiped clean of his infractions.
After all, the record of an employee is a relevant
consideration in determining the penalty that
should be meted out since an employee's past
misconduct and present behavior must be taken
together in determining the proper imposable
penalty[.] Despite the sanctions imposed upon
Page 32
petitioner, he continued to commit misconduct

and exhibit undesirable behavior on board.
Indeed, the employer cannot be compelled to
retain a misbehaving employee, or one who is
guilty of acts inimical to its interests. (Citations
omitted)
INTERNATIONAL MANAGEMENT
SERVICES vs. LOGARTA
Requisites of Retrenchment as a
valid excuse of management
prerogative
G.R. No. 163657

18 April 2012
J. Peralta
This Court cannot condone the petitioners attempt to

belittle his habitual tardiness and absenteeism as these
are manifestation of lack of initiative, diligence and
discipline that are adverse to Graphics, Inc.s interest. In
Challenge Socks Corporation v. Court of Appeals, this
Court said that it reflects an indifferent attitude to and
lack of motivation in work. It is inimical to the general
productivity and business of the employer. This is
especially true when it occurred frequently and
repeatedly within an extensive period of time and despite
several warnings.
Retrenchment is the reduction of work personnel usually
due to poor financial returns, aimed to cut down costs for
operation particularly on salaries and wages. It is one of
economic grounds to dismiss employees and is resorted
by an employer primariy to avoid or minimize business
losses
Xxx
Thus, retrenchment is a valid exercise of management
prerogative subject to the strict requirements set by
jurisprudence, to wit:
(1) That the retrenchment is reasonably
necessary and likely to prevent business losses
which, if already incurred, are not merely de
minimis, but substantial, serious, actual and
real, or if only expected, are reasonably
LA NLRC 29 October 1999

CA 08 January 2004;
12 May 2004 (MR)
LA ordered
petitioner to pay
respondent his
wages for the
unexpired portion
of his contract of
employment; all
other claims were
dismissed
NLRC affirmed LA
decision but
reduced the award
CA dismissed the
petition and
affirmed NLRC
Page 33
decision
imminent as perceived objectively and in good

faith by the employer;
SC denied petition;
affirmed with
modification the CA
decision; petitioner
was ordered to pay
the respondent one
month salary as
separation pay and
Php50,000.00 as
nomnal damages
(2) That the employer served written notice

both to the employees and to the Department
of Labor and Employment at least one month
prior to the intended date of retrenchment;
(3) That the employer pays the retrenched
employees separation pay equivalent to one
month pay or at least month pay for every
year of service, whichever is higher;
(4) That the employer exercises its
prerogative to retrench employees in good
faith for the advancement of its interest and
not to defeat or circumvent the employees'
right to security of tenure; and
(5) That the employer used fair and
reasonable criteria in ascertaining who would
be dismissed and who would be retained
among the employees, such as status, x x x
efficiency, seniority, physical fitness, age, and
financial hardship for certain worker
Applying the above-stated requisites for a valid
retrenchment in the case at bar, it is apparent that the
first, fourth and fifth requirements were complied with
by respondents employer. However, the second and
third requisites were absent when Petrocon terminated
the services of respondent
MORALES vs. METROBANK
Redundancy; Requisites for its valid

implementation
G.R. No. 182475

21 November 2012
One of the authorized causes for the dismissal of an

employee,redundancy exists when the service capability
of the workforce is in excess of what is reasonably
needed to meet the demands of the business
20 February 2004 filed

a complaint for illegal
dismissal
LA declared
petitoners dismissal
illegal; ordered his
Page 34
J. Perez
enterprise.A position is redundant when it is superfluous,

and superfluity of a position or positions could be the
result of a number of factors, such as the overhiring of
workers, a decrease in the volume of business or the
dropping of a particular line or service previously
manufactured or undertaken by the enterprise.Time and
again, it has been ruled that an employer has no legal
obligation to keep more employees than are necessary
for the operation of its business.For the implementation
of a redundancy program to be valid, however, the
employer must comply with the following requisites: (1)
written notice served on both the employees and the
DOLE at least one month prior to the intended date of
termination of employment; (2) payment of separation
pay equivalent to at least one month pay for every year
of service; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant
and accordingly abolished.
Xxx
In implementing a redundancy program, it has been ruled
that the employer is required to adopt a fair and
reasonable criteria, taking into consideration such factors
as (a) preferred status; (b) efficiency; and (c)
seniority,among others.
LA 11 November 2005
NLRC 20 July 2006
CA 20 September 2007
reinstatement,
backwages
assessed at
P390,005.00 at the
time of the
rendition of the
decision, 13th
month pay in the
sum of P32,500.50,
quarterly bonus in
the sum of
P130,002.00 and
CBA signing bonus
in the sum of
P120,000.00. On
the ground that
Morales dismissal
from service was
tainted with bad
faith and malice,
the Labor Arbiter
likewise held
Metrobank liable to
pay said employee
P100,000.00 in
moral damages,
P100,000.00 in
exemplary damages
and attorneys fees
at 10% of the total
award computed at
P87,250.65. From
the grand total of
P959,757.15 in
monetary awards,
the Labor Arbiter
decreed the
deduction of the
Page 35
sum of P158,496.95
which Morales had
acknowledged to
have received by
way of separation
benefits.
NLRC reversed
and set aside LA
decision
CA dismissed the
petition and upheld
validity of
petitioners
termination from
service
SC denied petition
for lack of merit
2011
2010
C. ALCANTARA & SONS, INC. vs.
COURT OF APPEALS
G.R. No. 155109
14 March 2012
J. Peralta
Termination of employment of
union officers and/or members due
to commission of prohibited or
illegal acts during strike
Since the Unions strike has been declared illegal, the

Union officers can, in accordance with law be terminated
from employment for their actions. This includes the
shop stewards. They cannot be shielded from the
coverage of Article 264 of the Labor Code since the
Union appointed them as such and placed them in
positions of leadership and power over the men in their
respective work units.
As regards the rank and file Union members, Article 264
of the Labor Code provides that termination from
employment is not warranted by the mere fact that a
union member has taken part in an illegal strike. It must
be shown that such a union member, clearly identified,
LA 29 June 1999
NLRC 08 November
1999
CA - 24 February 2005
LA declared
strike illegal ;
Union officers
deemed forfeited
their employment;
union members
were ordered
reinstated with
backwages; denied
Unions
counterclaim
NLRC affirmed LA
Page 36
performed an illegal act or acts during the strike.

xxx
The mere fact that the criminal complaints against the
terminated Union members were subsequently
dismissed for one reason or another does not extinguish
their liability under the Labor Code. Nor does such
dismissal bar the admission of the affidavits, documents,
and photos presented to establish their identity and guilt
during the hearing of the petition to declare the strike
illegal. The technical grounds that the Union interposed
for denying admission of the photos are also not binding
on the NLRC
decision insofar as
declaring the strike
illegal, termination
of Union officers
and directing them
to pay damages; but
modified it and
ruled that identified
union members
should likewise be
terminated from
service for
commission of
illegal and
prohibited acts
xxx
Reinstatement pending appeal
The CA denied reinstatement for the reason that the

reinstatement pending appeal provided under Article 223
of the Labor Code contemplated illegal dismissal or
termination cases and not cases under Article 264. But
this perceived distinction does not find support in the
provisions of the Labor Code.
CA dismissed
petition and ruled
that resinstatement
of union members
pending appeal had
no basis
The grounds for termination under Article 264 are based

on prohibited acts that employees could commit during a
strike. On the other hand, the grounds for termination
under Articles 282 to 284 are based on the employees
conduct in connection with his assigned work. Still,
Article 217, which defines the powers of Labor Arbiters,
vests in the latter jurisdiction over all termination cases,
whatever be the grounds given for the termination of
employment. Consequently, Article 223, which provides
that the decision of the Labor Arbiter reinstating a
dismissed employee shall immediately be executory
pending appeal, cannot but apply to all terminations
irrespective of the grounds on which they are based.
Page 37
xxx
Payment of Separation Pay for

validly dismissed employees
While it is true that generally the grant of separation pay

is not available to employees who are validly dismissed,
there are, in furtherance of the laws policy of
compassionate justice, certain circumstances that
warrant the grant of some relief in favor of the
terminated Union members based on equity.
Bitter labor disputes, especially strikes, always generate
a throng of odium and abhorrence that sometimes result
in
unpleasant,
although
unwanted,
consequences.[25] Considering this, the striking
employees breach of certain restrictions imposed on
their concerted actions at their employers doorsteps
cannot be regarded as so inherently wicked that the
employer can totally disregard their long years of service
prior to such breach. The records also fail to disclose any
past infractions committed by the dismissed Union
members. Taking these circumstances in consideration,
the Court regards the award of financial assistance to
these Union members in the form of one-half month
salary for every year of service to the company up to the
date of their termination as equitable and reasonable.
PICOP RESOURCES,
INCORPORATED (PRI) vs.
RICARDO DEQUILLA, et.al.
Termination of employment due to

violation of Union Security Clause
G.R. No. 172666

07 December 2011
J. Mendoza
There is no question that in the CBA entered into by the

parties, there is a union security clause. The clause
imposes upon the workers the obligation to join and
maintain membership in the companys recognized union
as a condition for employment.
"Union security" is a generic term, which is
applied to and comprehends "closed shop,"
"union shop," "maintenance of membership," or
any other form of agreement which imposes
upon employees the obligation to acquire or
retain union membership as a condition
Page 38
affecting employment. There is union shop

when all new regular employees are required to
join the union within a certain period as a
condition for their continued employment.
There is maintenance of membership shop
when employees, who are union members as of
the effective date of the agreement, or who
thereafter become members, must maintain
union membership as a condition for continued
employment until they are promoted or
transferred out of the bargaining unit, or the
agreement is terminated. A closed shop, on the
other hand, may be defined as an enterprise in
which, by agreement between the employer
and his employees or their representatives, no
person may be employed in any or certain
agreed departments of the enterprise unless he
or she is, becomes, and, for the duration of the
agreement, remains a member in good standing
of a union entirely comprised of or of which the
employees in interest are a part.
x x x It is basic in labor jurisprudence that the burden of
proof rests upon management to show that the
dismissal of its worker was based on a just cause. When
an employer exercises its power to terminate an
employee by enforcing the union security clause, it
needs to determine and prove the following: (1) the
union security clause is applicable; (2) the union is
requesting for the enforcement of the union security
provision in the CBA; and (3) there is sufficient evidence
to support the decision of the union to expel the
employee from the union.
xxx
Considering the peculiar circumstances, the Court is of
the view that the acts of private respondents are not
Page 39
enough proof of a violation of the Union Security Clause

which would warrant their dismissal. PICOP failed to
show in detail how private respondents campaigned and
supported FFW. Their mere act of signing an
authorization for a petition for certification election
before the freedom period does not necessarily
demonstrate union disloyalty. It is far from being within
the definition of acts of disloyalty as PICOP would want
the Court to believe. The act of signing an authorization
for a petition for certification election is not disloyalty to
the union per se considering that the petition for
certification election itself was filed during the freedom
period which started on March 22, 2000.
Moreover, as correctly ruled by the CA, the records are
bereft of proof of any contemporaneous acts of
resignation or withdrawal of union membership or nonpayment of union dues
xxx
Award
Considering that private respondents were illegally

dismissed, basic law provides that they shall be entitled
to the benefit of full backwages and reinstatement unless
the latter is no longer viable, in which case, a grant of
separation pay shall be awarded equivalent to one month
salary for every year of service.
Private respondents are also entitled to an award of
attorneys fees equivalent to 10% of the total monetary
award as they were compelled to litigate in order to seek
redress for their illegal dismissal.
2009
LA ROSA vs AMBASSADOR
HOTEL
Constructive dismissal
G.R. 177059
Case law holds that constructive dismissal occurs when there is

cessation of work because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in
rank or diminution in pay or both; or when a clear discrimination,
17 April 2002 Filing of

complaint
LA 30 Sept 2003
LA illegal
dismissal,
separation pay at
month pay for
Page 40
13 March 2009
J. Carpio-Morales
insensibility, or disdain by an employer becomes unbearable to

the employee. Respondents sudden, arbitrary and unfounded
adoption of the two-day work scheme which greatly reduced
petitioners salaries renders it liable for constructive dismissal.
NLRC 08 September
2005
every year of
service with full
backwages and 10%
Atty.s fees.
CA 12 December 2006
Absence must be accompanied by overt acts unerringly
pointing to the fact that the employee simply does not
want to work anymore. And the burden of proof to show
that there was unjustified refusal to go back to work
rests on the employer.
SC- 13 March 2009
CA reversed NLRC
and ruled that there
was no constructive
dismissal
xxx
MENDROS vs. MITSUBISHI PHIL.
Abandonment
Requisites of valid Retrenchment
G.R. 169780
16 February 2009
J. Velasco, Jr.
Abandonment is a matter of intention and cannot lightly

be inferred or legally presumed from certain equivocal
acts. For abandonment to exist, two requisites must
concur: first, the employee must have failed to report for
work or must have been absent without valid or
justifiable reason; and second, there must have been a
clear intention on the part of the employee to sever the
employer-employee relationship as manifested by some
overt acts. The second element is the more
determinative factor. Abandonment as a just ground for
dismissal thus requires clear, willful, deliberate, and
unjustified refusal of the employee to resume
employment. Mere absence or failure to report for work,
even after notice to return, is not tantamount to
abandonment. (Emphasis and underscoring supplied)
The right of management to retrench or to lay-off
workers to meet clear and continuing economic threats or
during periods of economic recession to prevent losses is
recognized by Article 283 of the Labor Code, as amended
NLRC affirmed LA
decision with
modification
SC reinstated LAs
decision
September 2009 filing

of complaint (for illegal
temporary layoff/retrenchment)
xxx
LA - 27 February 2001
Decisional law teaches that the requirements for a valid

retrenchment are: (1) that the retrenchment is reasonably
NLRC 23 September
2002; 30 January 2004
LA dismissed
complaint
NLRC reversed
LA ; denied MR
CA reversed and
set aside NLRC
decision; reinstated
Page 41
MOTOROLA PHILS vs. AMBROCIO

G.R. 173279
30 March 2009
J. Carpio-Morales
Entitlement to separation pay in

case of termination due to
redundancy
necessary and likely to prevent business losses which, if

already incurred, are not merely de minimis, but
substantial, serious, and real, or only if expected, are
reasonably imminent as perceived objectively and in good
faith by the employer; (2) that the employer serves
written notice both to the employees concerned and the
DOLE at least a month before the intended date of
retrenchment; (3) that the employer pays the retrenched
employee separation pay in an amount prescribed by the
Code; (4) that the employer exercises its prerogative to
retrench in good faith; and (5) that it uses fair and
reasonable criteria in ascertaining who would be
retrenched or retained.
Technicality aside, on the merits, respondents have no
cause of action as against petitioners with respect to
their claim for additional retirement benefits. Article 283
of the Labor Code, as amended, provides:
ART. 283. Closure of establishment and
reduction of personnel. The employer may also
terminate the employment of any employee
due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or
the closing or cessation of operation of the
establishment or undertaking unless the closing
is for the purpose of circumventing the
provisions of this Title, by serving a written
notice on the workers and the [Department] of
Labor and Employment at least one (1) month
before the intended date thereof. In case of
termination due to the installation of laborsaving devices or redundancy, the worker
affected thereby shall be entitled to a
separation pay equivalent to at least his one
(1) month pay or to at least one (1) month pay
for every year of service, whichever is higher.
In case of retrenchment to prevent losses and in
(MR)
CA 18 November 2004
LA decision
SC affirmed CA
decision
LA-16 December 2002
LA granted
retirement pay
NLRC 13 December
2004
NLRC did not

grant retirement
pay as the
respondents were
actually dismissed
due to redundancy
CA 01 March 2006; 27
June 2006
SC 30 March 2009
CA dismissed the
petition on
technicalities (non
submission of
certificate of nonforum shopping and
no apparent
authorization) 27
June 2006 decision
reinstated the
petition
Page 42
cases of closures or cessation of operations of

establishment or undertaking not due to serious
business losses or financial reverses, the
separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A
fraction of at least six (6) months shall be
considered one (1) whole year." (Emphasis
supplied)
Separation pay has been defined as the amount that an

employee receives at the time of his severance and is
designed to provide the employee with the wherewithal
during the period he is looking for another employment,
and is recoverable only in the instances enumerated
under Articles 283 and 284 of the Labor Code, as
amended, or in illegal dismissal cases when
reinstatement is no longer possible.
Distinction between Separation

pay and Retirement pay
Retirement pay, on the other hand, presupposes that the

employee entitled to it has reached the compulsory
retirement age or has rendered the required number of
years as provided for in the collective bargaining
agreement (CBA), the employment contract or company
policy, or in the absence thereof, in Republic Act No. 7641
or the Retirement Law.
2008
PRICE vs. INNODATA PHILS., INC.
G.R. No. 178505
30 September 2008
J. Chico-Nazario
Kinds of Employees Regular or

Fixed-term - petitioners being
regular employees of Innodata
Phils, are entitled to Security of
Tenure
The applicable test to determine whether an

employment should be considered regular or nonregular is the reasonable connection between the
activity performed by the employee in relation to the
usual business of the trade of the employer. However,
it is also true that while certain forms of employment
require the performance of usual or desirable functions
and exceed 1 year, these do not necessarily result in
regular employment.
Under the Civil Code, fixed-term contracts are not
Date of Filing: 22 May

2000
Date of Decision Labor
Arbiter: 17 October 2000
Date of Decision
NLRC: 14 December
2001
Labor Arbiter
rendered
declaring
complainants
dismissal illegal
and ordering
respondent
INNODATA
PHILS.
INC./INNODAT
Page 43
Burden of proof in Illegal Dismissal

cases
Awards - separation pay, in lieu of

reinstatement, equivalent to one
month pay for every year of service,
to be computed from the
commencement of their
employment up to the date
respondent Innodata Philippines,
limited as they are under the present Labor Code to

those by nature seasonal or for specific projects with
pre-determined dates of completion; they also include
those to which the parties by free choice have assigned
a specific date of termination.
While this Court has recognized the validity of fixedterm employment contracts, it has consistently held
that this is the exemption rather than the general rule.
In Brent (181 SCRA 714 [1990]), the Court identified
circumstances wherein a fixed-term is an essential and
natural appurtenance:
o Overseas employment contracts
o Appointments to positions of dean, assistant
dean, college secretary, principal and other
administrative offices in educational
institutions
o Certain company officials providing that these
officials may lose hteir jobs as president,
executive vice-president or vice president etc.
because the stockholders or board of directors
for one reason or another did not re-elect
them.
Date of Decision CA:

25 September 2006
Date of Decision SC:
30 September 2008
The Court reiterates the rule that all doubts,

uncertainties, ambiguities and insufficiencies should be
resolved in favor of labor. It is a well-entrenched doctrine
that in illegal dismissal cases, the employer has the
burden of proof.
An illegally dismissed employee is entitled to
reinstatement without loss of seniority rights and other
privileges, with full backwages computed to the time of
dismissal up to the time of actual reinstatement.
Considering that Innodata has ceased its operations in
June 2002 due to business losses, the proper award is
separation pay equivalent to 1 month per year of service,
to be computed from the commencement of their
employment up to the closure of Innodata.
A
CORPORATIO
N to reinstate
them to their
former or
equivalent
position
without loss of
seniority rights
and benefits.
NLRC: reversed
the Labor
Arbiters
Decision dated
17 October
2000, and
absolved
INNODATA of
the charge of
illegal
dismissal. The
NLRC found
that petitioners
were not
regular
employees, but
were fixedterm
employees as
stipulated in
their respective
contracts of
employment.
Court of
Appeals
promulgated its
Decision
sustaining the
Page 44
Inc./Innodata Corporation ceased

operations; Full backwages,
computed from the time petitioners
compensation was withheld from
them up to the time respondent
Innodata Philippines, Inc./Innodata
Corporation ceased operations; 10%
of the total monetary award as
attorneys fees. Costs against
respondent Innodata Philippines,
Inc./Innodata Corporation.
ASTORGA V. SMART
COMMUNICATIONS
Illegal Dismissal and return of

vehicle issued as part of
employment package
G.R. No. 148132

28 January 2008
J. Nachura
SMARTs demand for payment of the market value of

the car or, in the alternative, the surrender of the car, is
not a labor, but a civil, dispute. It involves the
relationship of debtor and creditor rather than
employee-employer relations. As such, the dispute falls
within the jurisdiction of the regular courts.
Astorga was terminated due to redundancy, which is
one of the authorized causes for the dismissal of an
employee. The nature of redundancy as an authorized
cause for dismissal is explained in the leading case of
Wiltshire File Co., Inc. v. National Labor Relations
Commission
The characterization of an employees services as
superfluous or no longer necessary and, therefore,
properly terminable, is an exercise of business
judgment on the part of the employer. The wisdom
and soundness of such characterization or decision is
not subject to discretionary review provided, of course,
that a violation of law or arbitrary or malicious action is
not shown.
Date of Filing

Arbiter: 20 August 1998
Date of Decision
NLRC: 27 September
1999

11 June 2001

28 January 2008
ruling of the
NLRC that
petitioners
were not
illegally
dismissed.
SC reversed CA
decision and
uphold the
decision of the
Labor Arbiter
Labor Arbiter
declared
Astorgas
dismissal from
employment
illegal.
NLRC sustained
Astorgas
dismissal
reversing the
Labor Arbiter
CA affirmed
NLRC decision
SC affirmed CA
decision with
modification to
the awards
However, as aptly found by the CA, SMART failed to

comply with the mandated one (1) month notice prior
Page 45
to termination. The record is clear that Astorga

received the notice of termination only on March 16,
1998[39] or less than a month prior to its effectivity on
April 3, 1998. Likewise, the Department of Labor and
Employment was notified of the redundancy program
only on March 6, 1998. Be that as it may, this
procedural infirmity would not render the termination
of Astorgas employment illegal. The validity of
termination can exist independently of the procedural
infirmity of the dismissal.
However, we find the need to modify, by increasing,
the indemnity awarded by the CA to Astorga, as a
sanction on SMART for non-compliance with the onemonth mandatory notice requirement, in light of our
ruling in Jaka Food Processing Corporation v. Pacot
YRASEGUI V. PHILIPPINE
AIRLINES, INC.
Awards - SMART is ordered to pay

Astorga P50,000.00 as indemnity
for its non-compliance with
procedural due process;
separation pay equivalent to one
(1) month pay, and her salary
from February 15, 1998 until the
effective date of her termination
on April 3, 1998; The award of
backwages is DELETED for lack of
basis.
Illegal Dismissal Obesity as a
Ground for Dismissal under
analogous causes
G.R. No. 168081

17 October 2008
J. RT Reyes
The standards violated in this case were not mere

orders of the employer; they were the prescribed
weights that a cabin crew must maintain in order to
qualify for and keep his or her position in the company.
In other words, they were standards that establish
continuing qualifications for an employees position. In
Date of Filing:

Arbiter Valentin C.
Reyes: 18 November
1998
Labor Arbiter
ruled that
petitioner was
illegally
dismissed
NLRC affirmed
Page 46
this sense, the failure to maintain these standards does

not fall under Article 282(a) whose express terms
require the element of willfulness in order to be a
ground for dismissal. The failure to meet the
employers qualifying standards is in fact a ground that
does not squarely fall under grounds (a) to (d) and is
therefore one that falls under Article 282(e) the
other causes analogous to the foregoing.
MERIN V. NATIONAL LABOR

RELATIONS COMMISSION
G.R. No. 171790
17 October 2008
J. Tinga
Awards - petitioner was granted

separation pay equivalent to
months pay per year of service. It
should include regular allowances
which he might have been
receiving
Principle of Totality of Infractions

Illegal Dismissal - Employer has
the right to dismiss an employee
as a measure of self-protection
The totality of infractions or the number of violations

committed during the period of employment shall be
considered in determining the penalty to be imposed
upon an erring employee. The offenses committed by
petitioner should not be taken singly and separately.
Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects
of character, conduct and ability separate and
independent of each other. While it may be true that
petitioner was penalized for his previous infractions,
this does not and should not mean that his
employment record would be wiped clean of his
infractions. After all, the record of an employee is a
relevant consideration in determining the penalty that
should be meted out since an employees past
misconduct and present behavior must be taken
together in determining the proper imposable penalty.
Despite the sanctions imposed upon by the petitioner,
he continued to commit misconduct and exhibit
Date of Decision NLRC

: 23 January 2000
31 August 2004
Date of Decision SC: 17
October 2008
Date of Filing:

Arbiter Antonio A. Cea:
28 August 2003
Date of Decision
NLRC: 29 December
2004

30 November 2005
Date of Decision SC: 17
October 2008
decision of
Labor Arbiter
CA reversed
decision of
NLRC
SC affirmed
decision of CA
with
modification
regarding
entitlement to
separation pay
Labor Arbiter
ruled that
repatriation is
illegal
NLRC reversed
Labor Arbiters
decision
CA affirmed
NLRC decision
SC affirmed CA
decision with
modification on
the payment of
nominal
damages
Page 47
undesirable behavior on-board. Indeed, the employer

cannot be compelled to retain a misbehaving
employee or one who is guilty of acts inimical to his
interests. It has a right to dismiss such an employee if
only as a measure of self-protection.
WOODRIDGE SCHOOL V. PE
BENITO
Award - Great Southern Maritime

Services Corporation is ordered to
pay petitioner the amount of
Thirty Thousand Pesos
(P30,000.00) as nominal damages
for non-compliance with
statutory due process.
Kinds of Employee - Enjoyment of
security of tenure by probationary
employees
G.R. No. 160240

29 October 2008
J. Nachura
Probationary employees enjoy security of tenure in a

sense that during their probationary employment, they
cannot be dismissed except for cause or when he fails to
qualify as a regular employee. However, upon expiration
of their contract of employment, probationary employees
cannot claim security of tenure and compel their
employers to renew their employment contracts. In fact,
the services of an employee hired on probationary basis
may be terminated when he fails to comply as a regular
employee in accordance with reasonable standards made
known by the employer to the employee once the
employer finds that the employee is qualified for regular
employment even before the expiration of the probation
period. Conversely, if the purpose sought by the
employer is neither attained nor attainable within the
said period, the law does not preclude the employer from
terminating the probationary employment on justifiable
ground.
Date of Filing: 28
February 2001

Arbiter Vicente R.
Layawen: 29 November
2001
Date of Decision
NLRC: 28 June 2002
30 June 2003

29 October 2008
Labor Arbiter
ruled that the
termination of
the
respondents
probationary
employment
was justified
because of
their failure to
submit vital
teaching
documents
NLRC affirmed
Labor Arbiters
decision
CA reversed
NLRC decision
SC affirmed CA
decision
Awards - both petitioners
Page 48
SAGALES V. RUSTANS
COMMERCIAL CORP
[respondents herein] are entitled

to the award of moral and
exemplary damages
Kinds of employee Managerial
Employee; trust and confidence
rule
G.R. No. 166554

27 November 2008
J. Reyes
Illegal Dismissal - petitioner

deserves compassion more than
condemnation
The nature of the job of an employee becomes relevant

in termination of employment by the employer
because the rules on termination of managerial and
supervisory employees are different from those in the
rank-and-file. Managerial employees are tasked to
perform key and sensitive functions, and thus are
bound by more exacting work ethics. As a
consequence, managerial employees are covered by
the trust and confidence rule. The same holds true for
supervisory employees occupying positions of
responsibility.
Security of tenure is a paramount right of every
employee as is held by the Constitution. The reason for
this is that labor is deemed to be property within the
meaning of constitutional guarantees. Indeed, as it is
the policy of the State to guarantee the right of every
worker to security of tenure as an act of social justice,
such right should not be denied on mere speculation of
any similar or unclear nebulous basis. Indeed the right
of every person to security of tenure is all the more
secured by the Labor Code by providing that the
employer shall not terminate the services of an
employee except for a just cause or when authorized
by law. Otherwise, an employee who is illegally
dismissed shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed
from the time his compensation was withheld from
him up to the time of his actual reinstatement.
Date of Filing

Arbiter: 24 July 2002
Date of Decision
NLRC: 10 April 2003

12 July 2004

27 November 2008
Labor Arbiter
ruled that the
petition for
illegal dismissal
is dismissed for
lack of merit
NLRC reversed
the decision of
the Labor
Arbiter
CA reversed the
decision of
NLRC
SC reversed the
decision of CA
The quantum of proof required for the application of

the loss of trust and confidence rule is not proof
Page 49
beyond reasonable doubt.

It is a hornbook doctrine that infractions committed by
an employee should merit only the corresponding
penalty demanded by the circumstance. The penalty
must be commensurate with the act, conduct or
omission imputed to the employee and must be
imposed in connection with the disciplinary authority
of the employer.
We do not condone dishonesty. After all, honesty is the
best policy. However, punishment should be
commensurate with the offense committed. The
supreme penalty of dismissal is the death penalty to a
working man. Thus, care should be exercised by
employers in imposing dismissal to erring employees.
The penalty of dismissal should be availed of as a last
resort.
AKLAN ET AL V. SAN MIGUEL

CORP.
Awards - petitioner is granted

separation pay and backwages in
lieu of reinstatement
Labor-Only Contracting distinguished
from permissible job contracting
G.R. No. 168537

11 December 2008
J. Reyes
A finding that a contractor is a labor-only

contractor, as opposed to permissible job contracting,
is equivalent to declaring that there is an employeremployee relationship between the principal and the
employees of the supposed contractor, and the laboronly contractor is considered as a mere agent of the
principal, the real employer.
In its ruling, the NLRC considered the following
elements to determine the existence of an employeremployee relationship: (1) the selection and
engagement of the workers; (2) power of dismissal; (3)
the payment of wages by whatever means; and (4) the
Date of Filing: 17
September 2001

Arbiter Veneranda C.
Guerrero:
Date of Decision
NLRC: 19 December
2003
Labor Arbiter
ruled that
respondent
(BMA) is liable
for illegal
dismissal and
ordered the
reinstatement
of the
petitioners
NLRC reversed
the decision of
Page 50
Illegal Dismissal -Just and Authorized

Causes
Petitioners alleged that they were

illegally dismissed after filing a
complaint for underpayment of wages
and non-payment of benefits before
the DOLE; they were terminated after
staging a peaceful picket to protest
the non-payment of their claims.
power to control the workers conduct. All four

elements were found by the NLRC to be vested in
BMA.
The employer-employee relationship between BMA
and petitioners is not tarnished by the absence of
registration with DOLE as an independent job
contractor on the part of BMA. The absence of
registration only gives rise to the presumption that the
contractor is engaged in labor-only contracting, a
presumption that respondent BMA ably refuted. Thus,
We find no grave abuse of discretion in the CA
observation that respondent BMA is the true employer
of petitioners who should be held directly liable for
their claims. Likewise, no grave abuse of discretion can
be ascribed to the CA when it ruled that illegal
dismissal was absent.
15 April 2005

11 December 2008
Labor Arbiter
CA affirmed
NLRC decision
SC affirmed CA
decision
Unless there is a showing that the employee signed

involuntarily or under duress, quitclaims and releases
are upheld by this Court as the law between the parties
As correctly observed by the NLRC, the language
employed by the above quitclaims and releases
indicates in no uncertain terms that petitioners
voluntarily and freely acknowledged receipt of full
satisfaction of all claims against respondents. Thus,
the quitclaims effectively barred petitioners from
questioning their dismissal.
2007
VICTORY LINER vs. RACE
G.R. No. 164820
28 March 2007
J.Chico-Nazario
EE/ER Relationship
Causes of termination
Abandonment
Procedural compliance with the
Twin Notice Rule
Reinstatement
There are four elements in determining EE/ER

relationship; the Control Test is the most crucial and
determinative indicator of the presence or absence of
EE/ER relationship; respondent is entitled to backwages
computed from the time his compensation was withheld
from him until his actual reinstatement, without loss of
seniority rights
LA decided the case

2001; SC 2007
NLRC reversed
LA; CA affirmed
NLRC; SC
affirmed CA
Page 51
EE/ER
Loss of trust and confidence
Misappropriation of company
funds
CENTRAL PANGASINAN
ELECTRIC CORP vs NLRC
G.R. 163561
24 July 2007
J. Quisumbing
THELMA DUMPIT-MURILLO vs.
COURT OF APPEALS, ASSOCIATED
BROADCASTING COMPANY, JOSE
JAVIER AND EDWARD TAN
ER-EE
Just cause- violation of companys
code of conduct
Gross misconduct and acts of
dishonesty
Talent contracts
CAEDA vs PAL
G.R. No. 152232
26 February 2007
J. Corona
G.R. No. 164652

08 June 2007
J. Quisumbing
LA-April 14, 1998;

CA Feb 26, 2007
LA- illegal
dismissaal
NLRC reversed
Ca reinstate LA
SC- dismissal is
legal.
Violations of company rule, and certain acts tantamount

to serious misconduct
LA 14 Jan 2000Sc 24 July 2007
LA-dismissed
SC -affirmed
x x x The Court of Appeals committed reversible error when

it held that petitioner was a fixed-term employee.
Petitioner was a regular employee under contemplation of
law. The practice of having fixed-term contracts in the
industry does not automatically make all talent contracts
valid and compliant with labor law. The assertion that a
talent contract exists does not necessarily prevent a regular
employment status.
20 December 1999
Filed complaint
LA dismissed
complaint
LA 29 March 2000
NLRC reversed
LA; held that an
employer-employee
relationship existed
between petitioner
and ABC; that the
subject talent
contract was void;
that the petitioner
was a regular
employee illegally
dismissed; and that
she was entitled to
reinstatement and
backwages or
separation pay, aside
th
from 13 month pay
and service incentive
leave pay, moral and
exemplary damages
and attorneys fees.
It is immaterial that a person holding a position of trust

and confidence did not misappropriate company funds. It
is enough that such employee incurred shortage in the
fund entrusted to him
xxx
Existence of ER-EE relationship
In Manila Water Company, Inc. v. Pena, we said that the

elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the
employee, (b) the payment of wages, (c) the power of
dismissal, and (d) the employers power to control. The most
important element is the employers control of the
employees conduct, not only as to the result of the work to
be done, but also as to the means and methods to
accomplish it.
xxx
Concerning regular employment, the law provides for two
NLRC 30 August 2000

CA 30 January 2004
Page 52
Regular employment
kinds of employees, namely: (1) those who are engaged to

perform activities which are usually necessary or desirable
in the usual business or trade of the employer; and (2)
those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity
in which they are employed.In other words, regular status
arises from either the nature of work of the employee or
the duration of his employment.
xxx
Fixed-term employment
The contention of the appellate court that the contract was

characterized by a valid fixed-period employment is
untenable. For such contract to be valid, it should be shown
that the fixed period was knowingly and voluntarily agreed
upon by the parties. There should have been no force, duress
or improper pressure brought to bear upon the employee;
neither should there be any other circumstance that vitiates
the employees consent.. It should satisfactorily appear that
the employer and the employee dealt with each other on
more or less equal terms with no moral dominance being
exercised by the employer over the employee. Moreover,
fixed-term employment will not be considered valid where,
from the circumstances, it is apparent that periods have
been imposed to preclude acquisition of tenurial security by
the employee.
CA - reversed the
NLRC; ruled that
petitioner is a fixedterm EE
SC - reversed and
set aside CA;
affirmed NLRC
decision; ruled
petitioner as regular
employee
x xx
Security of tenure
While this Court has recognized the validity of fixed-term

employment contracts in a number of cases, it has
consistently emphasized that when the circumstances of
a case show that the periods were imposed to block the
acquisition of security of tenure, they should be struck
down for being contrary to law, morals, good customs,
public order or public policy.
As a regular employee, petitioner isentitled to security of
Page 53
tenure and can be dismissed only for just cause and after due
compliance with procedural due process. Since private
respondents did not observe due process in constructively
dismissing the petitioner, we hold that there was an illegal
dismissal.
2006
RENATO S. GATBONTON vs.
NATIONAL LABOR RELATIONS
COMMISSION, MAPUA INSTITUTE
OF TECHNOLOGY and JOSE
CALDERON
Illegal suspension
G.R. NO. 146779

23 January 2006
J. Austria-Martinez
Preventive suspension is a disciplinary measure for the

protection of the companys property pending
investigation of any alleged malfeasance or misfeasance
committed by the employee. The employer may place
the worker concerned under preventive suspension if his
continued employment poses a serious and imminent
threat to the life or property of the employer or of his coworkers. However, when it is determined that there is no
sufficient basis to justify an employees preventive
suspension, the latter is entitled to the payment of
salaries during the time of preventive suspension.
1999-Complaint for
illegal suspension
18 June 1999 LA
30 September 1999
NLRC
13 December 1999
NLRC (MR)
10 November 2000
CA
Claim for damages
While petitioners preventive suspension may have been

unjustified, this does not automatically mean that he is
entitled to moral or other damages. x xx
The records of this case are bereft of any evidence
showing that respondent MIT acted in bad faith or in a
wanton or fraudulent manner in preventively suspending
petitioner, thus, the Labor Arbiter was correct in not
awarding any damages in favor of petitioner.
16 January 2001 CA
(MR)
23 January 2006 - SC
LA declared
suspension illegal
& directed
respondent MIT
to pay backwages
but dismissed
claim for damages
NLRC granted
respondent MIT
appeal and set
aside LA decision;
denied
petitioners MR
CA affirmed NLRC
decision; denied
petitioners MR
SC reinstated LAs
decision
Page 54
INDUSTRIAL
TIMBER
CORPORATION, ET AL. VS.
VIRGILIO ABABON, ET AL.
Dismissal due to authorized cause

closure or cessation of business
G.R. No. 164518

25 January 2006
J. Ynares-Santiago
The right to close the operation of an establishment or

undertaking is one of the authorized causes in terminating
employment of workers, the only limitation being that the
closure must not be for the purpose of circumventing the
provisions on termination of employment embodied in the
Labor Code.
1990 -filed complaint

for illegal dismissal,
unfair labor practice
and damages
x xx
20 May 1993 NLRC
A partial or total closure or cessation of operations of

establishment or undertaking may either be due to serious
business losses or financial reverses or otherwise. Under
the first kind, the employer must sufficiently and
convincingly prove its allegation of substantial losses,
while under the second kind, the employer can lawfully
close shop anytime as long as cessation of or withdrawal
from business operations was bona fide in character and
not impelled by a motive to defeat or circumvent the
tenurial rights of employees, and as long as he pays his
employees their termination pay in the amount
corresponding to their length of service.
21 October 2002
CA
While an employer is under no obligation to conduct

hearings before effecting termination of employment
due to authorized cause, however, the law requires that it
must notify the DOLE and its employees at least one
month before the intended date of closure.
x xx
Non-compliance with the notice

requirement
Where the dismissal is based on an authorized cause

under Article 283 of the Labor Code but the employer
failed to comply with the notice requirement, the
sanction should be stiff as the dismissal process was
initiated by the employers exercise of his management
prerogative, as opposed to a dismissal based on a just
cause under Article 282 with the same procedural
infirmity where the sanction to be imposed upon the
employer should be tempered as the dismissal process
20 January 1992 - LA
25 January 2006 - SC
LA upheld the
validity of the
closure; ordered
petitioner to pay
separation pay of
month for every
year of service
NLRC set aside
LA decision of the
Labor Arbiter;
ordered
reinstatement of
EEs to former
positions, and the
payment of full
back wages,
damages and
attorneys fees
CA affirmed the
20 May 1993
NLRC decision
SC affirmed the
LA decision with
modification;
petitioner was
ordered to pay
separation pay
equivalent to one
month pay or to
at least one-half
month pay for
every year of
service,
whichever is
higher, and
Page 55
was, in effect, initiated by an act imputable to the

employee.
P50,000.00 as
nominal damages
to each
employee.
In light of the factual circumstances of the cases at bar,

we deem it wise and reasonable to award P50,000.00 to
each employee as nominal damages.
PREMIER
BANKvs.ELSIE
MANTAL
DEVELOPMENT
ESCUDERO
Illegal dismissal
Just cause for termination; gross
negligence; misconduct; loss of
trust and confidence
G.R. No. 167716

23 March 2006
J. Ynares-Santiago
Gross negligence means an absence of that diligence that

a reasonably prudent man would use in his own affairs. To
constitute a just cause for termination of employment, the
neglect of duties must not only be gross by habitual as
well. The single or isolated act of negligence does not
constitute just cause for the dismissal of the employee. x
xx
2000-2001 filing of
suspension,
dismissal, unpaid
th
salary and 13 month
pay, moral and
exemplary damages
Habitual neglect implies repeated failure to perform ones

duties for a period of time, depending upon the
circumstances. Fraud and willful neglect of duties imply
bad faith of the employee in failing to perform his job to
the detriment of the employer and the latters business. x
xx
04 September 2002 LA rendered decision
LA there is illegal
suspension
and
illegal
dismissal;
ordered
respondents
reinstatement
to
her former position,
with
full
backwages,
half
month salary and
th
half month 13
month pay, and
attorneys fees.
Page 56
NLRC reversed LA
On the other hand, misconduct is improper or wrongful
conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of
duty, willful in character, and implies wrongful intent and
not mere error in judgment. Under Article 282 of the
Labor Code, the misconduct, to be a just cause for
termination, must be of such grave and aggravated
character, not merely of a trivial or unimportant nature.
For serious misconduct to warrant the dismissal of an
employee, it (1) must be serious; (2) must relate to the
performance of the employees duty; and (3) must show
that the employee has become unfit to continue working
for the employer. x xx
An employer may terminate an employee for fraud or
willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative.
However, the right of an employer to terminate an
employee based on loss of confidence must not be
exercised arbitrarily and without just cause. To be a valid
reason for dismissal, loss of confidence must be genuine.
Uncorroborated assertions and accusations by the
employer will not suffice, otherwise it will jeopardize the
constitutional guarantee of security of tenure
of the employee.
x xx
Award in case of unjust dismissal
CA reinstated LA
decision
SC affirmed CA;
ordering
the
reinstatement
of
respondent to her
former
position,
with
full
backwages,
inclusive
of
allowances and to
the other benefits
or their monetary
equivalent from the
time
her
compensation was
withheld up to her
actual
reinstatement, plus
attorneys fees
Under Article 279 of the Labor Code, an employee who is

unjustly dismissed from work shall be entitled to
privileges, inclusive of allowances, and other benefits or
their monetary equivalent from the time the
compensation was withheld up to the time of actual
reinstatement. In addition, recovery of attorneys fees is
reasonable under the circumstances. It is settled that in
actions for recovery of wages or where an employee was
forced to litigate and incur expenses to protect his rights
Page 57
and interest, he is entitled to an award of attorneys fees
BIG AA MANUFACTURER
EUTIQUIO ANTONIO ET. AL.
VS.
Kinds of EEs
G.R. No. 160854

March 3, 2006
J. Quisumbing
We are constrained to agree with the unanimous ruling of

the Court of Appeals, NLRC and Labor Arbiter that
respondents
are
petitionersregular
employees.
Respondents were employed for more than one year and
their work as carpenters was necessary or desirable in
petitioners usual trade or business of manufacturing office
furniture. Under Article 280 of the Labor Code, the
applicable test to determine whether an employment
should be considered regular or non-regular is the
reasonable connection between the particular activity
performed by the employee in relation to the usual business
or trade of the employer
(Magsalin v. National Organization of Working Men, G.R. No.
148492, 9 May 2003, 403 SCRA 199, 204).
True, certain forms of employment require the
performance of usual or desirable functions and exceed one
year but do not necessarily result to regular employment
under Article 280 of the Labor Code (Millares v. National
Labor Relations Commission, G.R. No. 110524, 29 July 2002,
434 Phil. 524, 538).
Some specific exceptions include project or seasonal
employment. Yet, in this case, respondents cannot be
considered project employees. Petitioner had neither
shown that respondents were hired for a specific project
the duration of which was determined at the time of their
hiring nor identified the specific project or phase thereof for
which respondents were hired.
Illegal dismissal
The consistent rule is that the employer must affirmatively

show rationally adequate evidence that the dismissal was
for a justifiable cause, failing in which would make the
termination illegal, as in this case (Hantex Trading Co., Inc.
v. Court of Appeals, G.R. No. 148241, 27 September 2002,
13 January 2000 filed

illegal lay-off and illegal
deductions
1 June2000 LA rendered decision
11 April 2003 CA
3 March 2006
SC decision
LA - rendered a
decision ordering
Big-Aa
Manufacturers II, et.
al.
to
pay
respondents
its
separation pay, and
backwages.
The LA further held
that
respondents
were constructively
dismissed when the
Implementing
Guidelines changed
their status from
regular employees
to
project
employees.
NLRC - modified
LA decision
It ordered petitioner
to
reinstate
respondents to their
former positions or
to
pay
them
separation pay in
case reinstatement
was
no
longer
feasible, with full
backwages in either
case.NLRC
ruled
that
respondents
were
regular
Page 58
438 Phil. 737, 747).

Abandonment
For accusing respondents of abandonment, petitioner must

present evidence (1) not only of respondents failure to
report for work or absence without valid reason, but (2) also
of respondents clear intention to sever employeremployee relations as manifested by some overt acts. The
second element is the more determinative factor.
Here, petitioners argument in support of its abandonment
charge was that respondents may have resented its
issuance of the Implementing Guidelines. This, in our view,
fails to establish respondents intention to abandon their
jobs. On the contrary, by filing the complaint for illegal
dismissal within two days of their dismissal on January 11,
2000 and by seeking reinstatement in their position paper,
respondents manifested their intention against severing
their employment relationship with petitioner and
abandoning their jobs. It is settled that an employee who
forthwith protests his layoff cannot be said to have
abandoned his work (Stamford Marketing Corp. v. Julian,
G.R. No. 145496, 24 February 2004, 423 SCRA 633, 649).
Award in case of unjust dismissal
Finally, Article 279 of the Labor Code, provides that a

regular employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement. If reinstatement is no longer feasible,
separation pay equivalent to one month salary for every
year of service should be awarded as an alternative.
employees
not
independent
contractors.
It
further held that
petitioner failed to
justify its reason for
terminating
respondents and its
failure to comply
with
the
due
process
requirements.
CA affirmed NLRC
decision
SC
denied
Petition.
NLRC is ordered to
recomputed
the
respondents
backwages
and
separation pay, as
aforementioned,
and execute the
payments
to
respondents.
Page 59
DOMINADOR S. PEREZ AND

CELINE CAMPOS VS.
THE
MEDICAL
CITY
GENERALHOSPITAL ET. AL.
Dismissal; Power of dismissal
G.R. No. 150198

March 6, 2006
J. Azcuna
Reinstatement
The power to dismiss an employee is a recognized

prerogative that is inherent in the employers right to freely
manage and regulate his business. An employer cannot be
expected to retain an employee whose lack of morals,
respect and loyalty to his employer or regard for his
employers rules and appreciation of the dignity and
responsibility of his office has so plainly and completely
been bared. An employer may not be compelled to
continue to employ a person whose continuance in service
will patently be inimical to his interest. The dismissal of an
employee, in a way, is a measure of self-protection.
Nevertheless, whatever acknowledged right the employer
has to discipline his employee; it is still subject to
reasonable regulation by the State in the exercise of its
police power (Philippine-Singapore Transport Services, Inc. v.
NLRC, G.R. No. 95449, August 18, 1997, 277 SCRA
506).Thus, it is within the power of this Court not only to
scrutinize the basis for dismissal but also to determine if
the penalty is commensurate to the offense,
notwithstanding the company rules.
The reinstatement of petitioners is in line with the social
justice mandate of the Constitution. Nevertheless, the
Court does not countenance the wrongful act of pilferage
but simply maintains that the extreme penalty of
dismissal is not justified and a lesser penalty would
suffice. Under the facts of this case, suspension would be
adequate. Without making any doctrinal pronouncement
on the length of the suspension in cases similar to this, the
Court holds that considering petitioners non-employment
since January 2000, they may be deemed to have already
served their period of suspension. Consequently, the Labor
Arbiters order of reinstatement is upheld, with the deletion
of the award of backwages, so as not to put a premium on
acts of dishonesty.
19January 2000
filed a complaint for
illegal dismissal
29 August 2000
LA rendered decision
7 August 2001 CA
decision
6 March 2006
SC decision
LA
found
respondents guilty
of illegal dismissal
and ordered the
reinstatement
of
petitioners
with
backwages
and
without loss of
seniority rights.
NLRC - reversed LA
decision and the
complaint
was
dismissed.
CA affirmed the
NLRC decision.
SC- Petition is
PARTIALLY
GRANTED and the
assailed
Decision
dated August 7,
2001 rendered by
the CA is SET
ASIDE. Petitioners
Perez and Campos
are
ordered
reinstated without
backwages
but
without loss of
seniority.
Page 60
MERCURY DRUG CORPORATION

VS. ZENAIDA G. SERRANO
Dismissal; loss of trust and

confidence;
G.R. No. 160509

March 10, 2006
J. Carpio
Dishonesty
Loss of trust and confidence is premised on the fact that

the employee holds a position whose functions may only be
performed by someone who has the confidence of
management. Such employee has a greater duty to
management than ordinary workers. The betrayal of this
trust is the essence of the offense which is a ground for the
employees termination (See Caingat v. National Labor
Relations Commission, G.R. No. 154308, 10 March 2005, 453
SCRA 142).
Serranos act of pocketing the payment and handing it to
the cashier only after the customer returned to the branch
gave Mercury reasonable ground to believe, if not entertain
the moral conviction, that Serrano is guilty of dishonesty.
This made her unworthy of the trust and confidence
reposed on her by Mercury.
Further, the evidence for the qualified theft charge,
establishing probable cause after the preliminary
investigation, constitutes just cause for Serranos
termination based on loss of trust and confidence. While
the trial court eventually dismissed the theft case against
Serrano for the prosecutions failure to prove her guilt
beyond reasonable doubt, the evidence against Serrano
substantially proved her culpability warranting her
dismissal from employment. Serranos act of dishonesty did
not require criminal conviction. That Serrano eventually
remitted the payment to the cashier did not obliterate or
mitigate her wrongdoing.
Two Notice Rule
In dismissing an employee, the employer must serve the

employee two notices: (1) the first to inform the employee
of the particular acts or omissions for which the employer
seeks his dismissal, and (2) the second to inform the
employee of his employers decision to terminate him. The
first notice must state that the employer seeks dismissal for
the act or omission charged against the employee,
otherwise, the notice does not comply with the rules.
25 March 1992
Filed
for
illegal
dismissal, unfair labor
practice
and
nonpayment of benefits.
31 August 1998
LA rendered decision
31January 2003
CA decision
10 March 2006
SC decision
LA Mercury Drug
Corporation, guilty
of
illegally
dismissing Serrano,
without
lawful
cause and due
process and thus
ordered to reinstate
her to her previous
position
without
loss of seniority
rights and other
privileges
with
payment of full
backwages.
The charge of unfair
labor practice was
dismissed for lack of
merit
NLRC- reversed LA
decision
and
dismissed
the
complaint.
CA reversed NLRC
decision and upheld
the findings of the
LA.
SC
PARTLY
GRANTS
the
petition. The Court
SETS ASIDE the 31
January
2003
Decision and the 21
October
2003
Resolution of the
Page 61
Court of Appeals in
CA-G.R. SP No.
59152. The Court
upholds respondent
Zenaida
G.
Serranos dismissal
from employment
by
petitioner
Mercury
Drug
Corporation on the
ground of loss of
trust
and
confidence.
However, the Court
ORDERS petitioner
Mercury
Drug
Corporation to pay
respondent Zenaida
G. Serrano the
amount of P30,000
as
nominal
damages for failure
to comply fully with
the
notice
requirement as part
of due process.
In Maquiling v. Philippine Tuberculosis Society, Inc.(G.R.

No. 143384, 4 February 2005, 450 SCRA 465), the Court held
that the first notice must inform outright the employee that
an investigation will be conducted on the charges specified
in such notice which, if proven, will result in the employees
dismissal.
In Agabon v. NLRC, the Court held that if the dismissal was
for cause, the lack of statutory due process should not
nullify the dismissal, or render it illegal or ineffectual.
However, Mercurys violation of Serranos right to statutory
due process warrants the payment of indemnity in the form
of nominal damages. The amount of such damages is
addressed to the sound discretion of the Court, taking into
account the relevant circumstances. Accordingly, the Court
deems the amount of P30,000 sufficient as nominal
damages, pursuant to prevailing jurisprudence.
RONALDO B. CASIMIRO et. al. vs

STERN
REAL
ESTATE
Causes of Termination
Article 283 of the Labor Code of the Philippines authorizes

retrenchment as one of the valid causes to dismiss
Filed a complaint for

illegaldismissal before
LA - ruled in favor
of the retrenched
Page 62
INC.REMBRANDT HOTEL and/or

GRACE KRISTIN MEEHAN (General
Manager), and ERIC
SINGSON (Owner)
G.R. No. 162233
March 10, 2006
J. Callejo, Sr.
(Authorized cause)
AGRIPINO V. MOLINA VS PACIFIC

PLANS, INC.
Retrenchment
Quitclaim
Just cause for termination

Dismissal; Serious misconduct
G.R. No. 165476

March 10, 2006
employees as a measure to avoid or minimize business

losses.
Retrenchment is the termination of employment initiated
by the employer through no fault of the employees and
without prejudice to the latter, resorted to by management
during periods of business recession, industrial depression,
or seasonal fluctuations, or during lulls occasioned by lack
of orders, shortage of materials, conversion of the plant for
a new production program or the introduction of new
methods or more efficient machinery, or of automation.
Simply put, it is a reduction in manpower, a measure
utilized by an employer to minimize losses incurred in the
operation of its business. It is a management prerogative
consistently recognized and affirmed by this Court.
the NLRC.
employees.
6 March 2000
LA decision
15 January 2001 - NLRC
decision
NLRC reversed LA
decision and
dismissed the
complaint for lack
of merit.
31 July 2003
CA decision
CA affirmed NLRC
decision
10 March 2006
SC decision
SC affirmed CA
decision
2001filed a complaint
for illegaldismissal and
illegal suspension with
claim for monetary
benefits.
LA-dismissed the
complaint and the
counterclaims for
lack of merit. There
was
a
lawful
The Court also finds that the quitclaims executed by the

individual petitioners in this case are valid and binding.
Indeed, quitclaims executed by employees are commonly
frowned upon as being contrary to public policy, and where
there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or where the terms of
settlement are unconscionable on their faces, the law will
step in to annul the questionable transactions. (Mindoro
Lumber and Hardware v. Bacay, G.R. No. 158753, June 8,
2005, 459 SCRA 714, 722, citing Bogo-Medellin Sugarcane
Planters Association, Inc. v. NLRC, 296 SCRA 108 (1998).
However, when such quitclaim was made voluntarily and
there is no evidence that the employer was guilty of fraud
or intimidation in obtaining such waiver, as in this case, the
validity of the quitclaim must be upheld.
Misconduct has been defined as improper or wrong
conduct; the transgression of some established and definite
rule of action; a forbidden act, a dereliction of duty,
unlawful in character and implies wrongful intent and not
mere error of judgment. The misconduct to be serious
Page 63
J. Callejo, Sr.
must be of such grave and aggravated character and not

merely trivial and unimportant. Such misconduct, however,
serious, must nevertheless, be in connection with the
employees work to constitute just cause for his
separation(Samson v. National Labor Relations Commission,
386 Phil. 669, 682 (2000).
The loss of trust and confidence, in turn, must be based on

the willful breach of the trust reposed in the employee by
his employer. Ordinary breach will not suffice. A breach of
trust is willful if it is done intentionally, knowingly and
purposely without justifiable excuse, as distinguished from
an act done carelessly, thoughtlessly, heedlessly or
inadvertently(Diamond Motors Corporation v. Court of
Appeals, supra note 65, at 50-51).
As a general rule, employers are allowed wide latitude of
discretion in terminating the employment of managerial
personnel. (Gonzales v. National Labor Relations
Commission, G.R. No. 131653, March 26, 2001, 355 SCRA
195, 208).The mere existence of a basis for believing that
such employee has breached the trust and confidence of his
employer would suffice for his dismissal (Asia Pacific
Chartering (Phils.), Inc. v. Farolan, 441 Phil. 776, 791).
Employees occupying a position of

trust and confidence owe a higher
duty than those performing lowlevel tasks. A slight assistance to a
direct competitor could constitute a
breach of the employees duty of
loyalty.
Loyalty of an employee to his employer consists of certain

very basic and common sense obligations. An employee
must not, while employed, act contrary to the employers
interest (Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285,
770 A.2d 1158 (2001). The scope of the duty of loyalty that
an employee owes to his employer may vary with the
nature of their relationship. Employees occupying a
position of trust and confidence owe a higher duty than
those performing low-level tasks. Assisting an employees
competitor can even constitute a breach of the employees
duty of loyalty. An employees self-dealing may breach
that duty (Platinum Management, Inc. v. Dahms, 285 N.J.
Super 276, 666 A.2d 1028 (1995).
dismissal.
18 November 2002 LA
decision
19 November 2003
NLRC affirmed LA
decision
13 August 2004
CA decision
10 March 2006
SC decision
NLRC reversed LA
decision and
ordered for
immediate
reinstatement
without demotionin
rank and salary; and
payment of
backwages.
CA reversed NLRC
decision and
reinstates the
decision of the LA.
SC - The August 13,
2004 Decision and
September 27, 2004
Resolution of the
Court of Appeals
are
REVERSED
AND SET ASIDE.
The decision and
resolution of the
NLRC
are
reinstated.
Page 64
EDNA ABAD ET AL VS.ROSELLE

CINEMA, ET AL.
Just cause for termination

Dismissal; Abandonment;
G.R. No. 141371

March 24, 2006
J. Austria-Martinez
Voluntarily terminated from their

work
However, when competition is indirect or minimal, the

employer may be required to show that the employee
received substantial assistance from the competitor. If an
employee usurped a corporate opportunity or secretly
profited from a competitive activity, the employer may
receive the value of the lost opportunity or the secret profit.
Abandonment, involves termination of an employee by the
employer (Peoples Security, Inc. v. National Labor Relations
Commission, G.R. No. 96451, September 8, 1993, 226 SCRA
146, 154). The truth of the matter is that before respondent
could dismiss petitioners on ground of abandonment,
petitioners filed with the LA their complaint for illegal
dismissal. In the present case, it must be stressed that
there is no evidence showing that respondents were
actually dismissed by petitioners, let alone, on ground of
abandonment. Neither is there a showing that petitioners
formally resigned from work. What is actually involved
herein is the informal voluntary termination of employment
by the petitioners employees.
Given that petitioners were not illegally dismissed, but
voluntarily terminated their work, therefore, they are not
entitled to an award of separation pay and
backwages(Sentinel Security Agency, Inc. v. National Labor
Relations Commission, 356 Phil. 434, 447 (1998).
Also, petitioners Escanillas and Martinez are not entitled to
any salary from January 16-31, 1997 since they have already
left respondents employ by then. With regard to petitioner
Abad, the Court sustains the NLRCs award of her salary for
said period in the amount of P1,710.19, as it was shown that
she resigned only on January 31, 1997.
Filed complaints for

illegal dismissal,
underpayment,
nonpayment of overtime
pay,
premium
for
holiday, premium pay
for rest day, holiday pay,
service incentive leave,
night shift differentials,
separation
pay,
damages,
and
attorneys fees.
17 April 1998
LA decision
24 December 1998 NLRC decision
30 September 1999 CA
decision
24 March 2006
SC decision
LAruled
that
petitioners
were
not
illegally
dismissed.
LA
denied their money
claims.
NLRC reversed LA
decision
CA reversed NLRC
decision and
reinstated LA
decision.
SC petition is
PARTIALLY
GRANTED.
The
Court of Appeals
Decision
dated
September 30, 1999
is
AFFIRMED
insofar only as it
reinstated
the
Labor
Arbiters
finding that there
was
no
illegal
dismissal.
However,
the
NLRCs
Decision
dated
December
Page 65
24, 1998 granting

monetary awards to
petitioners
Edna
Abad,
Joseph
Martinez,
and
EliseoEscanillas, Jr.,
is AFFIRMED but
MODIFIED.
MARICALUM
MINING
CORPORATION
VSANTONIO DECORION
Preventive suspension
G.R. No. 158637

April 12, 2006
J. Tinga
STAR PAPER CORPORATION ET.

AL. VS RONALDO D. SIMBOL
ET. AL.
The employer may place the worker concerned under

preventive suspension if his continued employment poses a
serious and imminent threat to the life or property of the
employer or his co-workers.
No preventive suspension shall last longer than thirty (30)
days. The employer shall thereafter reinstate the worker in
his former or in a substantially equivalent position or the
employer may extend the period of suspension provided
that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker
shall not be bound to reimburse the amount paid to him
during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.
Dismissal due to violation of

company policy marriage with coworker ;Occupational qualification
In this case, Decorion was suspended only because he failed

to attend a meeting called by his supervisor. There is no
evidence to indicate that his failure to attend the meeting
prejudiced his employer or that his presence in the
companys premises posed a serious threat to his employer
and co-workers. The preventive suspension was clearly
unjustified (Rural Bank of Baao, Inc. v. NLRC, G.R. No.
90527, March 23, 1992, 207 SCRA 444).Decorions
suspension persisted beyond the 30-day period allowed by
the Implementing Rules.
These courts also find the no-spouse employment policy
invalid for failure of the employer to present any evidence
of business necessity other than the general perception
23 July 1996 filed

complaints for illegal
dismissal
and
paymentfor moral and
exemplary damages and
atty.s fees.
26 November 1998 LA decision
12 April 2006
SC decision
LA-finding
Decorions dismissal
illegal and ordering
his reinstatement
with payment of
backwages
and
attorneys fees.
NLRC reversedLA
decision and
dismissed the
complaint.
CA reinstated LA
decision.
SC affirmed CA
decision
Filed constructive
dismissal against the
employer.
LA-dismissed
the
complaint for lack of
merit.
Page 66
requirements
G.R. No. 164774
April 12, 2006
J. Puno
that spouses in the same workplace might adversely affect

the business. They hold that the absence of such a bona
fide occupational qualification invalidates a rule denying
employment to one spouse due to the current employment
of the other spouse in the same office. Thus, they rule that
unless the employer can prove that the reasonable
demands of the business require a distinction based on
marital status and there is no better available or acceptable
policy which would better accomplish the business purpose,
an employer may not discriminate against an employee
based on the identity of the employees spouse. This is
known as the bona fide occupational qualification
exception.
31 May 2002
LA decision.
11 January 2002 NLRC decision
NLRC affirmed LA
decision
CA reversing
NLRCs decision
SC Affirmed CA
decision.
3 August 2004
CA decision
12 April 2006 SC decision
There must be a compelling business necessity for which no

alternative exists other than the discriminatory practice. To
justify a bona fide occupational qualification, the employer
must prove two factors: (1) that the employment
qualification is reasonably related to the essential operation
of the job involved; and, (2) that there is a factual basis for
believing that all or substantially all persons meeting the
qualification would be unable to properly perform the
duties of the job.
It is significant to note that in the case at bar, respondents
were hired after they were found fit for the job, but were
asked to resign when they married a co-employee.
Petitioners failed to show how the marriage of Simbol, then
a Sheeting Machine Operator, to Alma Dayrit, then an
employee of the Repacking Section, could be detrimental
to its business operations. Neither did petitioners explain
how this detriment will happen in the case of
WilfredaComia, then a Production Helper in the Selecting
Department, who married Howard Comia, then a helper in
the cutter-machine. The policy is premised on the mere fear
that employees married to each other will be less efficient.
If we uphold the questioned rule without valid justification,
the employer can create policies based on an unproven
Page 67
TOWER INDUSTRIAL SALES AND

JOHN KENNETH OCAMPOVS
COURT OF APPEALS, NATIONAL
LABOR RELATIONS COMMISSION
(NLRC, THIRD DIVISION) AND
RUFOPAMALO, JR.
Illegal dismissal
G.R. No. 165727

April 19, 2006
J. Chico-Nazario
presumption of a perceived danger at the expense of an

employees right to security of tenure.
It is well-encrypted in our jurisprudence that the employer
has the burden of proving that the dismissal is for just
cause, and failure to do so would necessarily mean that the
dismissal was unjustified and, therefore, illegal. It is the
employer who must prove its validity, and not the
employee who must prove its invalidity. To allow an
employer to dismiss an employee based on mere
allegations and generalities would place the employee in a
dangerous situation. He would be at the mercy of his
employer and the right to security of tenure, which this
Court is bound to protect, would be unduly emasculated
(Sanyo Travel Corporation v. National Labor Relations
Commission, 345 Phil. 346, 357 (1997).
12 February 2002,
private respondent filed
a Complaint with the
Labor Arbiter for unfair
labor practice and
claimed overtime pay,
premium for holiday
pay and service
incentive leave pay.
18 April 2002, he filed an
Amended Complaint for
Illegal Dismissal on 9
March 2002 and claimed
for overtime pay,
premium for holiday pay
and separation pay. In
his position paper, he
prayed for 13th month
pay, service incentive
leave pay, overtime pay
and legal holiday pay in
addition to the charge of
illegal dismissal.
29 November 2002 LA
decision
BERNABE FALCO, et al. vs.

MERCURY FREIGHT INT'L INC., et
al.
Just cause for termination Serious

misconduct; willful disobedience by
the employee of the lawful orders of
his employer
In Philippine Airlines, Inc. v. National Labor Relations

th
Commission (4 Division), we ruled that pilferage by an
employee is a serious offense and a valid ground for
dismissal.
28 November2003 NLRC decision

19April 2006
SC decision
1999 filed a
complaint for
illegal suspension/
dismissal,
LA rendered a
decision
that
Pamalowas validly
dismissed.
NLRC - reversed the
Decision of the
Labor Arbiter.
Respondent Tower
Industries Sales is
ordered to reinstate
the complainant
and to pay him full
backwages
computed from his
date of dismissal on
March 14, 2002 up
to his
reinstatement.
CA affirmed
NLRCs decision.
SC affirmedCA
decision.
LA valid
dismissal; ordered
respondent
company to pay
Page 68
G.R. No. 153824

9 August 2006
J. Sandoval-Gutierrez
SALVADOR BUNAGAN vs.

SENTINELWATCHMAN&
PROTECTIVE AGENCY, INC.
xxx
In Manila Trading & Supply Co. v. Zulueta, we ruled that an
employer cannot legally be compelled to continue with
the employment of a person who is guilty of misfeasance
or malfeasance towards his employer and whose
continuance in employment is patently inimical to the
latters interests. For the law, in protecting the rights of
labor, authorizes neither the oppression nor the selfdestruction of the employer.
Appeal from the Decision of the

Labor Arbiter
Reinstatement
G.R. No. 144376

September 13, 2006
J. Puno
ASIAN
INTERNATIONAL
MANPOWER SERVICES, INC.
(AIMS) vs. COURT OF APPEALS
and ANICETA LACERNA
Causes for termination
Under the law, an appeal from the decision of the

Labor Arbiter is perfected upon filing of a
memorandum of appeal and payment of the
appeal fee within ten (10) calendar days from
receipt of the questioned decision, award or order
of the Labor Arbiter. In case of a judgment
involving a monetary award, the appellant is also
required to post a cash or surety bond in the
amount equivalent to the monetary award in the
judgment appealed from.The Rules of Procedure
of the NLRC prohibits the filing of a motion for
extension of time to perfect the appeal, and the
filing of a notice of appeal without the
memorandum of appeal will not stall the running
of the period to appeal.
Under the law, an illegally dismissed employee is
entitled to reinstatement and backwages, and if
reinstatement is no longer possible, he may be
given separation pay in lieu of reinstatement.
In termination cases involving Filipino workers
recruited for overseas employment, the burden of
proving just or authorized cause for termination
rests with the foreign based employer/principal
and the local based entity which recruited the
underpayment and
nonpayment of
th
wages and 13
month pay
20 February 2000LA
NLRC affirmed LA
decision
25 March 2002
CA affirmed NLRC
decision
LA decided the case

October 1995; NLRC
February 1996; NLRC
decided MR July 1996;
CA (undated); SC
September 2006
LA decided the case

June 2001; NLRC June
2002; CA May 2005;
SC October 2006
petitioners unpaid
salaries
NLRC affirmed
LA decision
CA affirmed
NLRC
SC affirmed CA
decision in toto
NLRC
reversed
LA; CA set aside
and
annulled
NLRC;
SC
reversed CA
NLRC
affirmed
LA; CA reversed
NLRC;
SC
affirmed CA
Page 69
G.R. No. 169652

October 9, 2006
J. YNARES-SANTIAGO
worker both being solidarily liable for liabilities

arising from the illegal dismissal of the worker.
PEARANDA vs. BAGANGA

PLYWOOD CORP.
Managerial Employees
G.R. 159577
03 May 2006
CJ. Panganiban
In case of termination of overseas employment

without just, valid or authorized cause as defined
by law or contract, the worker shall be entitled to
the full reimbursement of his placement fee with
interest at twelve percent (12%) per annum, plus
his salaries for the unexpired portion of the
employment contract or for three (3) months for
every year of the unexpired term, whichever is
less.
Article 82 of the Labor Code exempts managerial

employees from the coverage of labor standards. Labor
standards provide the working conditions of the
employees, including entitlement to overtime pay and
premium pay for working on rest days. Under this provision,
managerial employees are those whose primary duty
consists of the management ofthe establishment in which
they are employed or of a department or subdivision.
The Implementing Rules of the Labor Code state that the
managerial employees are those who meet the following
conditions:
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department
or subdivision thereof;
(2) They customarily and regularly direct the work of two or
more employees therein;
(3) They have the authority to hire or fire other employees of
lower rank; or their suggestions and recommendations as to
the hiring and firing and as to the promotion or any other
change of status of other employees are given particular
weight.
The Court disagrees with the NLRCs finding that petitioner
Date of Filing: May 2001
Labor Arbiter
ruled there was
no illegal
dismissal;
petitioner
entitled to
overtime pay,
premium pay
for working on
rest days and
attorneys fees.
NLRC reversed
the Labor
Arbiters
decision
awarding
overtime pay
and premium
pay, petitioner
not entitled
thereto being a
managerial
employee.

Arbiter:
Date of Decision
NLRC: 08 May 2002
04 July 2003
03 May 2006
Page 70
EASTERN
TELECOMMUNICATIONS PHILS.
INC vs DIAMSE
G.R. 169299
16 June 2006
J. Ynares-Santiago
Managerial staff Petitioner was

found not a managerial employee
but a member of the managerial
staff
Illegal Dismissal burden of

proof.
was a managerial employee. However, petitioner was a

member of the managerial staff, which also takes him out
of the coverage of labor standards. Like managerial
employees, officers and members of the managerial staff
are not entitled ot the provisions of law on labor standards.
The Implementing Rules of the Labor Code define
members of a managerial staff as those with the following
duties and responsibilities:
(1) The primary duty consists of the performance of work
directly related to management policies of the employer;
(2) Customarily and regularly exercise discretion and
independenet judgment;
(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists of the
management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under
general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2), and (3) above.
Time honored is the rule that in dismissal cases, the burden
of proof is on the employer to show that the employee was
dismissed for a valid and just cause.
Date of Filing:
However, to be a valid ground for dismissal, the loss of trust

and confidence must be based on a wilful breach
and founded on clearly established facts. A breach is willful
if it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. Loss
of trust and confidence must rest on substantial grounds
and not on the employers arbitrariness, whims, caprices or
suspicion, otherwise, the employee would eternally remain
Date of Decision
NLRC: 24 July 2003
CA affirmed
the Decision of
the NLRC.
SC affirmed the
CA Decision.
Labor Arbiter
found ETPI
liable for illegal
dismissal.
NLRC reversed
the Decision of
the Labor
Arbiter.
CA reversed
the Decision of
the NLRC.
SC affirmed the
Decision of the


as a valid ground for dismissal
must be based on wilful
breach and founded on clearly
established facts; employer
has burden of proof.

31 May 2005
10 August 2005 (MR)

16 June 2006
Page 71
at the mercy of the employer. The employer, thus, carries

the burden of clearly and convincingly establishing the facts
upon which loss of confidence in the employee may be
made to rest.
Mere delay in liquidation of

cash advance cannot sustain
a finding of loss of trust and
confidence.
Violation of right to security

of tenure presume
employee misappropriated
funds without established
proof.
Illegal Dismissal
reinstatement; strained
relations rule.
The mere delay in the liquidation of the cash advance

cannot sustain a finding of loss of trust and
confidence. ETPI merely suspected, without supporting
proof, that Diamse misappropriated the funds. This
certainly does not meet the requirement that loss of trust
and confidence must be based on a willful breach and
founded on clearly established facts. By itself, the delay in
the liquidation of the cash advance does not clearly and
convincingly establish that it was sought intentionally,
knowingly and purposely, without justifiable excuse in
order to provide a reasonable basis with which to conclude
that the balance of the cash advance was misappropriated.
CA with
modification
that the case be
remanded to
the LA for the
computation of
backwages,
inclusive of
allowances and
other benefits
or their
monetary
equivalent; and
separation pay
in lieu of
reinstatement.
Undoubtedly, it cannot be presumed that Diamse

misappropriated the funds because to do so would do
violence to her right to security of tenure and the wellsettled rule that the burden of proof is on the employer to
establish the ground for dismissal. Suspicion has never
been a valid ground for dismissal and the employees fate
cannot, in justice, be hinged upon conjectures and
surmises.
An employee who is illegally dismissed is entitled to
privileges, and to full backwages, inclusive of allowances,
and other benefits or their monetary equivalent, computed
from the time the employees compensation was withheld
up to the time of the employees actual
reinstatement. However, the filing of this labor case and
the attendant litigation has caused strained relations
between Diamse and ETPI. The latter should, thus, not be
compelled to reinstate Diamse who is tasked to handle
delicate matters concerning the property and money of
Page 72
ETPI. Besides, Diamse has impliedly agreed to the

payment of separation pay in lieu of reinstatement when
she did not take issue with the ruling of the Court of
Appeals that this case has caused strained relations
between the parties. In fact, she moved for the execution
of the Decision of the Court of Appeals dated May 31, 2005.
PETROLEUM SHIPPING LIMITED
vs NATIONAL LABOR RELATIONS
COMMISSION
G.R. 148130
16 June 2006
J. Carpio
Employer-employee
relationship - Seafarers are
contractual employees;
employment of seafarers are
for a fixed period only
The Court squarely passed upon the issue in Millares v.

NLRC where one of the issues raised was whether seafarers
are regular or contractual employees whose employment
are terminated everytime their contracts of employment
expire. The Court explained:
[I]t is clear that seafarers are considered contractual

employees. They can not be considered as regular employees
under Article 280 of the Labor Code. Their employment is
governed by the contracts they sign everytime they are
rehired and their employment is terminated when the
contract expires. Their employment is contractually fixed for
a certain period of time. They fall under the exception of
Article 280 whose employment has been fixed for a specific
project or undertaking the completion or termination of which
has been determined at the time of engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of
the season. We need not depart from the rulings of the Court
in the two aforementioned cases which indeed
constitute stare decisis with respect to the employment
status of seafarers.
In this jurisdiction and as clearly stated in
the Coyoca case, Filipino seamen are governed by the Rules
and Regulations of the POEA. The Standard Employment
Contract governing the employment of All Filipino Seamen on
Board Ocean-Going Vessels of the POEA, particularly in Part
I, Sec. C specifically provides that the contract of seamen
shall be for a fixed period. And in no case should the contract
Page 73
of seamen be longer than 12 months. It reads:

Section C. Duration of Contract
The period of employment shall be for a fixed period but
in no case to exceed 12 months and shall be stated in the
Crew Contract. Any extension of the Contract period shall be
subject to the mutual consent of the parties.
Moreover, it is an accepted maritime industry practice
that employment of seafarers are for a fixed period
only. Constrained by the nature of their employment which is
quite peculiar and unique initself, it is for the mutual interest
of both the seafarer and the employer why the employment
status must be contractual only or for a certain period of
time. Seafarers spend most of their time at sea and
understandably, they can not stay for a long and an indefinite
period of time at sea. Limited access to shore society during
the employment will have an adverse impact on the
seafarer. The national, cultural and lingual diversity among
the crew during the COE is a reality that necessitates the
limitation of its period.
The Court reiterated the Millares ruling in Gu-Miro v.
Adorable where it held that a radio officer on board a vessel
cannot be considered as a regular employee
notwithstanding that the work he performs is necessary
and desirable in the business of the company.
Cannot be considered as a
regular employee
notwithstanding work
performed is necessary and
desirable.
PD 851 (13 Month Pay Law)

does not apply to seafarers.
th
PD 851 does not apply to seafarers. The WHEREAS clauses

of PD 851 provides:
WHEREAS, it is necessary to further protect the level of
real wages from ravages of world-wide inflation;
WHEREAS, there has been no increase in the legal
minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune time
for society to show its concern for the plight of the working
masses so they may properly celebrate Christmas and New
Page 74
Year.
PD 851 contemplates the situation of land-based workers,
and not of seafarers who generally earn more than
domestic land-based workers.
Contract of Enlistment must

th
provide for 13 Month Pay;
Separation Pay
Tanchicos employment is governed by his Contract of

Enlistment (Contract). The Contract has been approved
by the POEA in accordance with Title I,
Book One of the Labor Code and the POEA Rules
Governing Employment. The coverage of the Contract
includes Compensation, Overtime, Sundays and Holidays,
Vacations, Living Allowance, Sickness, Injury and Death,
Transportation and Travel Expense, Subsistence and Living
Quarters. It does not provide for the payment of
th
13 month pay. The Contract of Employment, which is the
standard employment contract of the POEA, likewise does
th
not provide for the payment of 13 month pay.
In Coyoca v. NLRC which involves a claim for separation
pay, this Court held:
Furthermore, petitioners contract did not provide for
separation benefits. In this connection, it is important to note
that neither does POEA standard employment contract for
Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the
Rules and Regulations Governing Overseas Employment and
the said Rules do not provide for separation or termination
pay. x x x
PHILIPPINE DIAMOND HOTEL AND

RESORT, INC. vs MANILA
DIAMOND HOTEL EMPLOYEES
UNION
Dismissal of union officers for

staging and participating in
illegal strike.
Hence, in the absence of any provision in his Contract

th
governing the payment of 13 month pay, Tanchico is not
entitled to the benefit.
As the appellate court correctly held, the
union officers should be dismissed for staging and
participating in the illegal strike, following paragraph 3,
Article 264(a) of the Labor Code which provides that . .
.[a]ny union officer who knowingly participates in an illegal
Page 75
G.R. 158075
30 June 2006
J. Carpio Morales
strike and any worker or union officer who knowingly

participates in the commission of illegal acts during
strike may be declared to have lost his employment status .
. .
Ordinary striking worker

cannot be dismissed for mere
participation in an illegal
strike.
Award of backwages in
cases of ULP strikes, rests on
courts discretion and only in
exceptional cases.
No backwages rule;
Exceptions
An ordinary striking worker cannot, thus be dismissed for

mere participation in an illegal strike. There must be proof
that he committed illegal acts during a strike, unlike a union
officer who may be dismissed by mere knowingly
participating in an illegal strike and/or committing an illegal
act during a strike.
Thus, J.P. Heilbronn Co. v. National Labor
Union, instructs: When in case of strikes, and according to
the C[ourt of] I[ndustrial] R[elations] even if the strike is
legal, strikers may not collect their wages during the
days they did not go to work, for the same reasons if not
more, laborers who voluntarily absent themselves from
work to attend the hearing of a case in which they seek to
prove and establish their demands against the company,
the legality and propriety of which demands is not yet
known, should lose their pay during the period of such
absence from work. The age-old rule governing the
relation between labor and capital or management and
employee is that of a fair days wage for a fair days
labor. If there is no work performed by the employee
there can be no wage or pay, unless of course, the laborer
was able, willing and ready to work but was illegally locked
out, dismissed or suspended. It is hardly fair or just for an
employee or laborer to fight or litigate against his employer
on the employers time. (Emphasis and underscoring
supplied)
Jurisprudential law, however, recognizes several exceptions
to the no backwages rule, to wit: when the employees
were illegally locked to thus compel them to stage a
strike; when the employer is guilty of the grossest form of
ULP; when the employer committed discrimination in the
rehiring of strikers refusing to readmit those against whom
Page 76
GENUINO ICE COMPANY, INC vs

MAGPANTAY
G.R. 147790
27 June 2006
J. Austria-Martinez
Termination of employment
by employer Art. 282 Just
Causes; Burden of proof rests
on the employer.
Neglect of duty as ground for

dismissal.
Willful disobedience or
there were pending criminal cases while admitting

nonstrikers who were also criminally charged in
court; or when the workers who staged a voluntary ULP
strike offered to return to work unconditionally but the
employer refused to reinstate them
Under Article 282 of the Labor Code, as amended, an
employer may terminate an employment for any of the
following causes: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) gross and habitual neglect by the employee of his
duties; (c) fraud or willful breach by the employee of the
trust reposed in him by his employer or duly authorized
representative; (d) commission of a crime or offense by the
employee against the person of his employer or any
immediate member of his family or his duly authorized
representative; and, (e) other causes analogous to the
foregoing. The employer has the burden of proving that the
dismissal was for a just cause; failure to show this would
necessarily mean that the dismissal was unjustified and,
therefore, illegal.
Neglect of duty, to be a ground for dismissal, must be both
gross and habitual. Gross negligence connotes want of care
in the performance of ones duties. Habitual neglect
implies repeated failure to perform ones duties for a period
of time, depending upon the circumstances. On the other
hand, fraud and willful neglect of duties imply bad faith on
the part of the employee in failing to perform his job to the
detriment of the employer and the latters business. Thus,
the single or isolated act of negligence does not constitute
a just cause for the dismissal of the employee.
Date of Filing: 18
November 1996

Date of Decision
NLRC: 30 June 1999
31 August 1999 (MR)

03 August 2000
16 March 2001 (MR)
27 June 2006
Labor Arbiter
found there is
valid cause to
dismiss
complainant.
NLRC affirmed
the Decision of
LA.
CA reversed
the Decision of
the NLRC and
found there is
illegal
dismissal;
ordered to pay
separation pay
and full
backwages;
remanded to
LA for
computation.
SC reversed the
CA Decision
and reinstated
the NLRC
Decision.
Willful disobedience, or insubordination as otherwise

branded in this case, as a just cause for dismissal of an
employee, necessitates the concurrence of at least two
requisites: (1) the employee's assailed conduct must have
Page 77
insubordination as just cause

for dismissal
Management Prerogative.
Transfer of employee.
been willful, that is, characterized by a wrongful and

perverse attitude; and (2) the order violated must have
been reasonable, lawful, made known to the employee and
must pertain to the duties which he had been engaged to
discharge.
In Coca-Cola Bottlers, Phils. Inc v. Kapisanan ng Malayang
Manngagawa sa Coca-Cola-FFW, it was held that an
employer enjoys a wide latitude of discretion in the
promulgation of policies, rules and regulations on workrelated activities of the employees so long as they are
exercised in good faith for the advancement of the
employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special
laws or under valid agreements. Company policies and
regulations are generally valid and binding on the parties
and must be complied with until finally revised or amended,
unilaterally or preferably through negotiation, by
competent authority. For misconduct or improper behavior
to be a just cause for dismissal, the same must be related to
the performance of the employees duties and must show
that he has become unfit to continue working for the
employer.
The rule is that the transfer of an employee ordinarily lies
within the ambit of the employers prerogatives. The
employer exercises the prerogative to transfer an employee
for valid reasons and according to the requirement of its
business, provided the transfer does not result in demotion
in rank or diminution of the employees salary, benefits and
other privileges.
Section 2 (d), Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code provides for the standards of
due process, which shall be substantially observed, to wit:
Termination; Twin Notice
For termination of employment based on just causes as

defined in Article 282 of the Labor Code:
Page 78
Rule; Due Process

(i)
A written notice served on the employee specifying
the ground or grounds of termination, and giving said
employee reasonable opportunity within which to explain
his side.
(ii)
A hearing or conference during which the employee
concerned, with the assistance of counsel if he so desires is
given opportunity to respond to the charge, present his
evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the
employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his
termination.
DR. DANILO T. TING and MRS.

ELENA TING, doing business under
the name and style of GST FISHING
ENTERPRISES vs. HON. COURT OF
APPEALS and PILARDO ISMAEL
Termination
G.R. No. 146174

12 July 2006
CHICO-NAZARIO, J.
Simply stated, the employer must furnish the employee a

written notice containing a statement of the cause for
termination and to afford said employee ample opportunity
to be heard and defend himself with the assistance of his
representative, if he so desires, and the employee must be
notified in writing of the decision dismissing him, stating
clearly the reasons therefor.
Termination must comply foremost with the substantive
[
aspect prescribed by the law. Article 279 of the Labor
Code makes it clear that, in cases of regular employment,
the employer shall not terminate the services of an
employee except for a just cause or when authorized by
law.
We have said that, in an illegal dismissal case, the onus
probandi rests on the employer to prove that its dismissal
of an employee is for a valid cause.
Due process
The cardinal rule is that an employee sought to be

dismissed must be served two written notices before
termination of his employment. The first notice is to
apprise the employee of the particular acts or omissions
15 February 1999 Executive

Labor
Arbiter
20 May 1999 National
Labor
Relations
Commission (NLRC)
31 August 1999 NLRC
denied MR
5 June 2000 - Court
of Appeals
17 November 2000 Court of Appeals
Resolution denying
LA declared
dismissal illegal &
directed
respondent to pay
separation and
backwages, as
well as unpaid
wages and
commissions
NLRC declared
that dismissal was
for just cause
Page 79
by reason of which his dismissal has been decided upon;

and the second notice is to inform the employee of the
employers decision to dismiss him.
MR
12 July 2006 - SC
We do not think that management prerogative can ever

be used as a cloak to render nugatory the constitutional
mandate of security of tenure. Management prerogative
cannot be so exercised with arbitrariness and in defiance
of the due process of the law.
hence no basis for

separation pay
and/or
backwages, but
only to an
indemnity for
violating due
process of law
The CA found that
private
respondents
dismissal was
without
observance of due
process of law,
denied
petitioners MR
SC affirmed CAs
decision
FELIX M. CRUZ, JR., vs. COURT OF

APPEALS, NATIONAL LABOR
RELATIONS COMMISSION AND
CITYTRUST BANKING
CORPORATION
Dismissal
G.R. NO. 148544

12July 2006
J. AUSTRIA-MARTINEZ
Loss of confidence must not be indiscriminately used as a

shield by the employer against a claim that the dismissal
of an employee was arbitrary. And, in order to constitute
a just cause for dismissal, the act complained of must be
work-related and shows that the employee concerned is
unfit to continue working for the employer. In addition,
loss of confidence as a just cause for termination of
employment is premised on the fact that the employee
concerned holds a position of responsibility, trust and
confidenceor that the employee concerned is entrusted
with confidence with respect to delicate matters, such as
the handling or care and protection of the property and
assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is
27 January 1998
NLRC , denied MR
27 April 2001 CA,
denied MR
12 July 2006 - SC
LA ordered
reinstatement to
former position
without loss of
seniority rights with
full backwages.
NLRC set aside LA
decision and went
on dismissing the
case for lack of
merit
CA sustained the
Page 80
penalized.
Due process
NLRC and held that

the act constituted
a willful breach of
his employers trust
and confidence
which justifies his
termination from
employment; that
petitioners
dismissal from
employment was
the result of a
thorough
investigation and
hearing where he
was given the
opportunity to
explain his side.
It is well settled that the basic requirement of notice and

hearing in termination cases is for the employer to inform
the employee of the specific charges against him and to
hear his side and defenses. This does not, however, mean
a full adversarial proceeding.
As to the requirement of notice, the Labor Code provides
that before an employee can be validly dismissed, the
employer is required to furnish the employee with two (2)
written notices: (a) a written notice containing a
statement of the cause for termination to afford the
employee ample opportunity to be heard and defend
himself with the assistance of his representative, if he so
desires; and, (b) if the employer decides to terminate the
services of the employee, the employer must notify him
in writing of the decision to dismiss him, stating clearly
the reasons therefor.
SKIPPERS UNITED PACIFIC, INC. vs.

NATIONAL LABOR
RELATIONS
COMMISSION,
GERVACIO
ROSAROSO,
and COURT OF APPEALS,
Illegal Dismissal
G.R. NO. 148893

12July 2006
J. AUSTRIA-MARTINEZ
L.C. ORDOEZ CONSTRUCTION,

A.C. ORDOEZ CONSTRUCTION,
Illegal dismissal
The rule in labor cases is that the employer has the burden
of proving that the dismissal was for a just cause; failure to
show this would necessarily mean that the dismissal was
[17]
unjustified and, therefore, illegal. The two-fold
requirements for a valid dismissal are as follows: (1)
dismissal must be for a cause provided for in the Labor
Code, which is substantive; and (2) the observance of notice
and hearing prior to the employees dismissal, which is
procedural.
The respondents immediate filing of a complaint for illegal

dismissal unambiguously shows that respondents had no
18 August 1997 Complaint for illegal

dismissal and
monetary claims
11 August 1998 LA
26 February 1999
NLRC, denied MR
7 May 2001 - CA,
denied MR
5 February 1993 Complaint for illegal
SC dismissed
merit.
LA found that
respondent was
illegally dismissed
NLRC affirmed the
LAs Decision
CA dismissed the
petition and
affirmed in toto the
NLRC Decision
SC affirmed CA
LA ruled that
petitioners were
Page 81
L.C. ORDOEZ GRAVEL and SAND

and TRUCKING, and/or LAMBERTO
ORDOEZ vs. IMELDA NICDAO,
RODRIGO SICAT and ROMEO
BAUTISTA
intention
whatsoever
to
abandon
their
employment. Human experience tells us that no employee
in his right mind would go through the trouble of filing a
case unless the employer had indeed terminated the
services of the employee. The Court reiterated the longstanding rule that the filing of the complaint for illegal
dismissal negates the allegation of abandonment.
G.R. No. 149669

27 July 2006
J. AUSTRIA-MARTINEZ
GSP
MANUFACTURING
CORPORATION
and
CHARO
APACIBLE vs. PAULINA CABANBAN
Illegal Dismissal
G.R. No. 150454

July 14, 2006
CORONA, J.
It is a settled doctrine that the filing of a complaint for

illegal dismissal is inconsistent with abandonment of
employment. An employee who takes steps to protest his
dismissal cannot logically be said to have abandoned his
work. The filing of such complaint is proof enough of his
desire to return to work, thus negating any suggestion of
abandonment.
dismissal
21 June1994 LA
15 June1995 NLRC,
denied MR
13 March 2001 CA,
denied MR
27 July 2006 SC
16 June 1992 Ccomplaint illegal

dismissal
7 May 1993 LA
decision
10 August 1995 NLRC
illegally dismissed
NLRC reversed and
set aside the LAs
decision
CA reinstated LA
decision with
modification
SC affirmed CA
decision with
modification
LA found
respondents guilty
of illegal dismissal
NLRC issued a
resolution
affirming in toto the
decision of the LA
CA affirmed LA
Decision
MARIO SUAN, ET AL. vs.COURT OF
APPEALS, PASCUAL LINER, INC., MANUEL

PASCUAL, JR., RODOLFO
PASCUAL, ROLANDO PASCUAL, ERLINDA
SORIANO, and MELY BAUTISTA
Illegal Dismissal
And if they were dismissed for a just cause such as

abandonment of work, there should be a definitive ruling
that the procedural safeguards have been complied
with. Specifically, there should be a showing that
G.R. No. 150819

July 27, 2006
TINGA, J.
petitioners were furnished the required two (2) written
8 March 1999
Complaint for illegal
dismissal
24 October 2000
NLRC denied MR
27 july 2006 - SC
SC affirmed CA
LA and NLRC ruled
that there was no
illegal dismissal
SC REMANDED to
the CA for further
proceedings
notices at their last known addresses, which could have

apprised them of the particular acts or omissions for which
their dismissal is sought and informed them of PASVILs
Page 82
decision to dismiss them. This requirement is not a mere

formality that may be dispensed with at will. Its disregard is
a matter of serious concern since it constitutes a safeguard
of the highest order in response to mans innate sense of
justice.
On the other hand, if their termination was for an
authorized cause such as the cessation of PASVILs
operations, as the NLRC has also seemingly held, the
burden of proving that such cessation is bona fide falls upon
PASVIL. In addition, the requirements that it (a) serve a
written notice on the workers and on the Department of
Labor and Employment at least one (1) month before the
effective date of the closure, and (b) pay its dismissed
employees separation pay equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of
service, whichever is higher, with a fraction of at least six (6)
months to be considered one (1) whole year, should also be
shown to have been complied with.
INTERCONTINENTAL
BROADCASTING CORPORATION
vs.
REYNALDO
BENEDICTO,
deceased, substituted by his
surviving spouse LOURDES V.
BENEDICTO, and children, namely:
REYNALDO
V.
BENEDICTO,
SHIRLEY V. BENEDICTO-TAN,
EDGAR
V.
BENEDICTO
and
LILIBETH V. BENEDICTO-DE LA
Illegal Dismissal
These factual findings of the NLRC, confirmed by

the CA, are binding on us since they are supported by
substantial evidence. Petitioner, aside from merely stating
[36]
that Benedictos appointment was unauthorized, did not
extensively deal with the issue of whether Benedicto was in
fact its employee. Besides, it is estopped from denying such
fact considering its admission that its former President,
Tomas Gomez III, wrote him a letter of termination on
October 11, 1994. Petitioner, furthermore, never contested
the finding of illegal dismissal. Accordingly, there are no
3 December 1996 Compliant for illegal

dismissal and
damages
17 August 1998 LA
Decision
5 March 1999 NLRC
decision
20 Juky 2006 - SC
LA found that there

was indeed illegally
dismissal
NLRC dismissed the
appeal
CA affirmed the
NLRCs decision.
Page 83
VICTORIA
strong reasons for us to again delve into the facts.
SC reversed and
remanded to the LA
for re-computation
of backwages and
commissions
G.R. No. 152843

July 20, 2006
CORONA, J.
C.F. SHARP & CO., INC., vs.
RENATO ZIALCITA
Illegal Dismissal
G.R. No. 157619

July 17, 2006
QUISUMBING, J.
As Assistant Crewing Manager, the respondent occupied a

position
of
responsibility,
imbued
with
trust
and
confidence. To be a valid ground for dismissal, however,

loss of trust and confidence must be based on a willful
breach of trust and founded on clearly established facts. A
breach is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from
February 22, 1996

LA decision
October 30, 1996
NLRC decision to
remand
September 29, 2000 NLRC reversed the
LAs decision
LA ordered for
reinstatement
NLRC vacated the
decision to be
remand to LA
LA dismissed for
lack of merit
an act done carelessly, thoughtlessly, heedlessly or

inadvertently. It must rest on substantial grounds and not
on the employers arbitrariness, whims, caprices or
suspicion. Further, the act complained of must be workrelated and shows that the employee concerned is unfit to
NLRC reversed the

LAs decision
CA affirmed the
NLRC
continue working for the employer. It must be premised on

the fact that the employee concerned is invested with
SC affirmed
delicate matters, such as the handling or care and

protection of the property and assets of the employer.
It bears stressing that in termination cases, the employer
bears the onus of proving that the dismissal was for just
cause. Indeed, a condemnation of dishonesty and disloyalty
cannot arise from suspicions spawned by speculative
inferences. Because of its subjective nature, this Court has
been strictly scrutinizing the allegations and the evidence in
cases of dismissal based on loss of trust and confidence
because they can easily be concocted by an abusive
employer. Thus, when the breach of trust or loss of
confidence alleged is not borne by clearly established facts,
Page 84
as in this case, such dismissal on the cited grounds cannot

be allowed. The fact that respondent is a managerial
employee does not by itself exclude him from the
protection of the constitutional guarantee of security of
tenure.
2005
PNOC-EDC, ET.AL. vs. ABELLA
Reinstatement
G.R. No. 153904

17 January 2005
J. Chico-Nazario
Waiver/Compromise Agreement
Reinstatement presupposes that the previous position

from which one had been removed still exists, or that
there is an unfilled position more or less of a similar
nature as that previously occupied by the employee.
An employee who is separated from his employment on
a false or nonexistent cause is entitled to be reinstated to
his former position because the separation is illegal. If
the position is no longer available for any other valid and
justifiable reason, however, the reinstatement of the
illegally dismissed employee to his former position
would neither be fair nor just. The law itself can not exact
compliance with what is impossible. Ad imposible
tenetur. The employers reedy is to reinstate the
employee to a substantially equivalent position without
loss of seniority rights.
The waiver, executed by the private respondent and the
petitioner company in which mutual concessions were
given and mutual benefits were derived, was approved
and considered by the NLRC in dismissing the appeal of
the petitioners. Conformably, the Compromise
Agreement approved by the proper authority became
the decision in the instant case.
If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the
parties and may not later be disowned or conveniently
forgotten, simply because of a change of mind. It is only
where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person, or the terms of
settlement are unconscionable on its face, that the law
PNOC-EDC, ET.AL. vs.

ABELLA
Reinstatement
G.R. No. 153904

17 January 2005
J. Chico-Nazario
Waiver/Compromi
se Agreement
Page 85
will step in to annul the questionable transaction. But

where it is shown that the person making the waiver did
so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible
and reasonable, the transaction must be recognized as a
valid and binding undertaking.
Management Prerogative.
Management has wide latitude to regulate, according to

his own discretion and judgment, all aspects of
employment, to the requirements of its business. The
scope and limits of the exercise of management
prerogative, however, should attain a state of
equilibrium when pitted against the constitutional right
of labor to security of tenure.
Management
Prerogative.
Of relevant significance in the case at bar is the right of

the employer to transfer employees in their work
station. We have previously held that it is the employers
prerogative, based on its assessment and perception of
its employees qualifications, aptitudes and competence,
to move them around in the various areas of its business
operations in order to ascertain where they will function
with maximum benefit for the company. This right flows
from ownership and from the established rule that labor
(laws) do not authorize the substitution of judgment of
the employer in the conduct of his business, unless it is
shown to be contrary to law, morals, or public policy.
The rationale behind this rule is that an employees right
to security of tenure does not give him such a vested
right in his position as would deprive the company of its
prerogative to change his assignment or transfer him
where he will be most useful.
The Philippine Constitution, while inexorably committed
towards the protection of the working class from
exploitation and unfair treatment, nevertheless
Page 86
JAKA FOOD PROCESSING

CORPORATION vs. DARWIN
PACOT, et. al.
Dismissal due to authorized cause

Retrenchment
G.R. No. 151378

28 March 2005
J. Garcia
Non-compliance with procedural

requirements in case of
termination of EEs due to
authorized causes
mandates the policy of social justice so as to strike a

balance between an avowed predilection for labor, on
the one hand, and the maintenance of the legal rights of
capital, the proverbial hen that lays the golden egg, on
the other. Indeed, we should not be unmindful of the
legal norm that justice is in every case for the deserving,
to be dispensed with in the light of established facts, the
applicable law, and existing jurisprudence.
Adismissal for an authorized cause under Article 283
does not necessarily imply delinquency or culpability on
the part of the employee. Instead, the dismissal process is
initiated by the employers exercise of his management
prerogative, i.e. when the employer opts to install labor
saving devices, when he decides to cease business
operations or when, as in this case, he undertakes to
implement a retrenchment program.
Accordingly, it is wise to hold that: (1) if the dismissal is

based on a just cause under Article 282 but the employer
failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered
because the dismissal process was, in effect, initiated by
an act imputable to the employee; and (2) if the dismissal
is based on an authorized cause under Article 283 but the
employer failed to comply with the notice requirement,
the sanction should be stiffer because the dismissal
process was initiated by the employers exercise of his
management prerogative.
LA
NLRC 30 August 1999;
28 January 2000 (on MR)
CA-16 November 2000
LA- declared
termination illegal
and ordered
reinstatement with
full backwages and
separation pay if
reinstatement is
not possible
NLRC affirmed
in toto the LA (30
August 1999); on
MR, modified its
earlier decision,
reversing and
setting aside the
awards of
backwages,
service incentive
leave pay.
Respondents
entitled to a
separation pay
equivalent to one
month plus
P2,000.00 as
indemnification
for its failure to
observe due
process in
Page 87
effecting the
retrenchment.
CA reversed the
NLRC 28 January
2000 decision;
ordered petitioner
to pay
respondents
equivalent to one
(1) month salary,
the proportionate
th
13 month pay
and, in addition,
full backwages
from the time
their employment
was terminated
on August 29,
1997 up to the
finality of
Decision
SC fixed the
amount of
indemnity to
P50,000.00
ME-SHURN CORP. AND SAMMY
CHOU vs. ME-SHURN WORKERS
UNION-FSM AND ROSALINA
CRUZ
Business Closure constituting Unfair

Labor Practice.
G.R. No. 156292

11 January 2005
J. Panganiban
To justify the closure of a business and the termination

of the services of the concerned employees, the law
requires the employer to prove that it suffered
substantial actual losses. The cessation of a companys
operation shortly after the organization of a labor union,
as well as the resumption of business barely a month
after, gives credence to the employees claim that the
closure was meant to discourage union membership and
to interfere in union activities. These acts constitute
Page 88
unfair labor practices.

Concededly, the determination to cease operations is a
management prerogative that the State does not usually
interfere in. Indeed, no business can be required to
continue operating at a loss, simply to maintain the
workers in employment. That would be a taking of
property without due process of law. But where it is
manifest that the closure is motivated not by a desire to
avoid further losses, but to discourage the workers from
organizing themselves into a union for more effective
negotiations with management, the State is bound to
intervene.
Notice to DOLE of business closure is

mandatory; Security of Tenure
F.F. MARINE CORPORATION

ND
and/or MR. ERIC A. CRUZ vs. 2
DIV, NLRC and RICARDO M.
MAGNO
Retrenchment
G.R. No. 152039

8 April 2005
J. Tinga
Notice to the DOLE is mandatory to enable the proper

authorities to ascertain whether the closure and/or
dismissals were being done in good faith and not just a
pretext for evading compliance with the employers just
obligations to the affected employees. This requirement
is intended to protect the workers right to security of
tenure. The absence of such requirement taints the
dismissal.
Retrenchment is the termination of employment initiated
by the employer through no fault of the employees and
without prejudice to the latter, resorted to by
management during periods of business recession,
industrial depression, or seasonal fluctuations or during
lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or
the introduction of new methods or more efficient
machinery, or of automation. Retrenchment is a valid
management prerogative. It is, however, subject to
faithful compliance with the substantive and procedural
requirements laid down by law and jurisprudence.
Filed complaint for

illegal dismissal, moral &
exemplary damages 12
January 1999
LA upheld the
retrenchment
program
NLRC reversed
LA - 06 August 199
CA affirmed NLRC
NLRC 11 October 2000
SC - affirmed CA
CA 31 January 2002
There are three (3) basic requisites for a valid

retrenchment to exist, to wit: (a) the retrenchment is
Page 89
necessary to prevent losses and such losses are proven;

(b) written notice to the employees and to the DOLE at
least one (1) month prior to the intended date of
retrenchment; and (c) payment of separation pay
equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher.
Jurisprudential standards to justify retrenchment have
been reiterated by this Court in a long line of cases to
forestall management abuse of this prerogative, viz:
. . . . Firstly, the losses expected should be
substantial and not merely de minimis in extent.
If the loss purportedly sought to be forestalled by
retrenchment is clearly shown to be insubstantial
and inconsequential in character, the bonafide
nature of the retrenchment would appear to be
seriously in question. Secondly, the substantial
loss apprehended must be reasonably imminent,
as such imminence can be perceived objectively
and in good faith by the employer. There should,
in other words, be a certain degree of urgency for
the retrenchment, which is after all a drastic
recourse with serious consequences for the
livelihood of the employees retired or otherwise
laid-off. Because of the consequential nature of
retrenchment, it must, thirdly, be reasonably
necessary and likely to effectively prevent the
expected losses. The employer should have
taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other
costs than labor costs. An employer who, for
instance, lays off substantial numbers of workers
while continuing to dispense fat executive
bonuses and perquisites or so-called golden
parachutes, can scarcely claim to be retrenching
in good faith to avoid losses. To impart
operational meaning to the constitutional policy
Page 90
of providing full protection to labor, the

employers prerogative to bring down labor
costs by retrenching must be exercised
essentially as a measure of last resort, after
less drastic meanse.g., reduction of both
management and rank-and-file bonuses and
salaries, going on reduced time, improving
manufacturing
efficiencies,
trimming
of
marketing and advertising costs, etc.have been
tried and found wanting.
Lastly, but certainly not the least
important, alleged losses if already realized,
and the expected imminent losses sought to be
forestalled, must be proved by sufficient and
convincing evidence. The reason for requiring
this quantum of proof is readily apparent: any
less exacting standard of proof would render too
easy the abuse of this ground for termination of
services of employees. (emphasis supplied)
Retrenchment is one of the economic grounds to dismiss
employees. It is resorted to by an employer primarily to
avoid or minimize business losses. The law recognizes this
under Article 283 of the Labor Code. However, the
employer bears the burden to prove his allegation of
economic or business reverses. The employers failure to
prove it necessarily means that the employees dismissal
was not justified.
Considering that the ground for retrenchment availed of
by petitioners was not sufficiently and convincingly
established, the retrenchment is hereby declared illegal
and of no effect. The quitclaims executed by retrenched
employees in favor of petitioners were therefore not
voluntarily entered into by them. Their consent was
similarly vitiated by mistake or fraud.
Page 91
xxx
Validity of Quitclaims executed by

retrenched Ees
As a rule, deeds of release or quitclaim cannot bar

employees from demanding benefits to which they are
legally entitled or from contesting the legality of their
dismissal. The acceptance of those benefits would not
amount to estoppel. The amounts already received by the
retrenched employees as consideration for signing the
quitclaims should, however, be deducted from their
respective monetary awards. Sad to say, among the
retrenched employees, only Magno filed an action for
illegal dismissal.
It is well-settled that when a person is illegally dismissed,
he is entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages. In
the event, however, that reinstatement is no longer
feasible, or if the employee decides not to be reinstated,
the employer shall pay him separation pay in lieu of
reinstatement. Such a rule is likewise observed in the
case of a strained employer-employee relationship or
when the work or position formerly held by the dismissed
employee no longer exists. In sum, an illegally dismissed
employee is entitled to: (1) either reinstatement if viable
or separation pay if reinstatement is no longer viable, and
(2) backwages.
Award in case EE declared illegally

dismissed
As to the amount of separation pay, this Court has ruled

that separation pay may be computed at one (1) month
pay, or one (1/2) month pay for every year of service,
whichever is higher. It is noteworthy that the separation
pay being awarded in the instant case is due to illegal
dismissal; hence, it is different from the amount of
separation pay provided for in Article 283 in case of
retrenchment to prevent losses or in case of closure or
cessation of the employers business, in either of which
the separation pay is equivalent to at least one (1) month
or one-half (1/2) month pay for every year of service,
Page 92
whichever is higher.
ABERDEEN COURT, INC. and

RICHARD NG vs. MATEO C.
AGUSTING, JR.
Probationary employment
G.R. No. 149371

13 April 2005
J. Azcuna
It can be gleaned from Article 281 of the Labor Code that

there are two grounds to legally terminate a probationary
employee. It may be done either: a) for a just cause or b)
when employee fails to qualify as a regular employee in
accordance with reasonable standards made known by
the employer to the employee at the start of the
employment.
XXxx
[15]
In Servidad v. NLRC et al.,

where effectively the
probationary period was for one year, the Court stated:
If the nature of the job did actually necessitate at
least one year for the employee to acquire the
requisite training and experience, still, the same
could not be a valid probationary employment as
it falls short of the requirement of Article 281 of
the Labor Code. It was not brought to light that
the petitioner was duly informed at the start of
his employment, of the reasonable standards
under which he could qualify as a regular
employee. The rudiments of due process
demand that an employee should be apprised
beforehand of the conditions of his employment
and the basis for his advancement.
LA undated decision
NLRC - 29 February
2000
CA -
LA EE illegally
dismissed
NLRC reversed LA
CA reinstated LA
decision
SC modified CA
decision;
respondent was
dismissed for a just
cause but petitioner
was ordered to pay
nominal damages in
the amount of
P30,000.00
[16]
Similarly, in Secon Philippines Ltd. v. NLRC,

the
dismissal of the employee was declared illegal by the
Court because the employer did not prove that the
employee was properly apprised of the standards of the
job at the time of his engagement and, naturally, the
employer could not show that the employee failed to
meet such standards.
Page 93
The Implementing Rules of the Labor Code in Book VI,

Rule I, Section 6, also provides:
Probationary employment. -- There is
probationary employment where the employee,
upon his engagement, is made to undergo a trial
period during which the employer determines his
fitness to qualify for regular employment, based
on reasonable standards made known to him at
the time of engagement.
Probationary employment
shall be
governed by the following rules:
...
(c) The services of an employee who has
been engaged on probationary basis may be
terminated only for a just cause, when he fails to
qualify as a regular employee in accordance with
the reasonable standards prescribed by the
employer.
(d) In all cases of probationary employment,
the employer shall make known to the employee
the standards under which he will qualify as a
regular employee at the time of his engagement.
Where no standards are made known to the
employee at that time, he shall be deemed a
regular employee.
The above rule, however, should not be used to exculpate
a probationary employee who acts in a manner contrary
to basic knowledge and common sense, in regard to
which there is no need to spell out a policy or standard to
be met.
Nevertheless, it appears that petitioners violated due

process in the dismissal of respondent, by not affording
him the required notice. As this Court held in Agabon, et
al. v. NLRC, et al., an employer who dismisses an
Page 94
HACIENDA BINO/HORTENCIA
STARKE, INC./HORTENCIA L.
STARKE vs. CANDIDO CUENCA,
et.al.
Non-Compliance with procedural

requirement in termination of EE
for just cause
Regular EE vs. Seasonal EE
G.R. No. 150478

15 April 2005
J. Callejo, Sr.
employee for just cause but does so without notice, is

liable for nominal damages in the amount of P30,000.
The primary standard for determining regular

employment is the reasonable connection between the
particular activity performed by the employee in relation
to the usual trade or business of the employer. There is
no doubt that the respondents were performing work
necessary and desirable in the usual trade or business of
an employer. Hence, they can properly be classified as
regular employees.
LA 06 October 1997
NLRC 24 July 1998
CA 31 July 2001; 24
September 2001 (MR)
For respondents to be excluded from those classified as

regular employees, it is not enough that they perform
work or services that are seasonal in nature. They
must have been employed only for the duration of one
season. While the records sufficiently show that the
respondents work in the hacienda was seasonal in
nature, there was, however, no proof that they were
hired for the duration of one season only. In fact, the
payrolls, submitted in evidence by the petitioners, show
that they availed the services of the respondents since
1991. Absent any proof to the contrary, the general rule
of regular employment should, therefore, stand. It bears
stressing that the employer has the burden of proving
the lawfulness of his employees dismissal.
ANVIL ENSEMBLES GARMENT vs.
CA
Negligence as a ground for

termination of employment
G.R. No. 155037

29 April 2005
J. Callejo, Sr.
Thus, under the Labor Code, to be a valid ground for

dismissal, the negligence must be gross and habitual.
Gross negligence has been defined as the want or
absence of even slight care or diligence as to amount to a
reckless disregard of the safety of the person or property.
It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them. Put differently,
gross negligence is characterized by want of even slight
LA illegal
dismissal
NLRC LA decision
was affirmed with
modification ;
ordered payment of
holiday pay
CA deleted award
for payment of
holiday pay and
premium pay on
holiday
SC - affirmed CA
Filed complaint for

illegal dismissal 03
September 1998
LA EE was
illegally dismissed
LA 31 July 1998
NLRC affirmed in
toto LA
NLRC 23 November
1999
CA - dismissed the
petition and
Page 95
care, acting or omitting to act in a situation where there is

a duty to act, not inadvertently, but willfully and
intentionally with a conscious indifference to
consequences insofar as other persons may be affected.
In this case, contrary to its claim, the petitioner utterly
failed to show that the respondent committed gross
negligence as to warrant his dismissal.
CAPITOL MEDICAL CENTER, INC.,

ET.AL. vs. MERIS
Right to security of tenure of

probationary employee
Award LA granted full
backwages and attorneys fees
Closure of establishments.
G.R. No. 155098

16 September 2005
J. Carpio-Morales
Management Prerogatives.
affirmed NLRC
CA - 18 January 2002
SC affirmed CA
decision in toto
While the respondent is only a probationary employee

and does not enjoy permanent status, nonetheless, he is
entitled to constitutional protection of security of tenure.
His employment may only be terminated for a valid and
just cause or if he fails to qualify as a regular employee in
accordance with the reasonable standards made known
to him by the employer at the time of engagement and
after due process. Since neither circumstance attended
the petitioners termination of the respondents
employment, the appellate court correctly affirmed the
decision of the NLRC finding the petitioner guilty of
illegal dismissal.
The right to close an establishment or undertaking is
explicitly recognized under the Labor Code as one of the
authorized causes in terminating employment of
workers, the only limitation being that the closure must
not be for the purpose of circumventing the provisions on
termination of employment embodied in the Labor Code.
Case filed in 1992

LA decided the case in
1998
SC in 2005.
Total 13 years.
NLRC affirmed LA;

CA reversed NLRC;
SC affirmed CA.
Employers are also accorded rights and privileges to

assure their self-determination and independence and
reasonable return of capital. This mass of privileges
comprises the so-called management prerogatives.
Although they may be broad and unlimited in scope, the
State has the right to determine whether an employers
privilege is exercised in a manner that complies with the
legal requirements and does not offend the protected
rights of Labor.
Page 96
Closure of Establishments.
Reinstatements.
Award of Damages.
It would indeed be stretching the intent and spirit of the

law if a court were to unjustly interfere in managements
prerogative to close or cease its business operations just
because said business operation or undertaking is not
suffering from any loss. As long as the companys
exercise of the same is in good faith to advance its
interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a
valid agreement, such exercise will be upheld.
The right to close an establishment or undertaking may
be justified on grounds other than business losses but it
cannot be an unbridled prerogative to suit the whims of
the employer. The ultimate test of the validity of closure
or cessation of establishment or undertaking is that it
must be bona fide in character.
Reinstatement is not feasible in case of a strained
employer-employee relationship or when the work or
position formerly held by the dismissed employee no
longer exists.
The award of damages cannot be sustained solely on the
premise that the employer fired his employee without
just cause or due process additional facts must be
pleaded and proven to warrant the grant of moral
damages under the Civil Code, such as:
1. That the act of dismissal was attended by bad faith
or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or
public policy; and
2. That social humiliation, wounded feelings, grave
anxiety, etc., resulted therefrom.
2004
TEXON MANUFACTURING, ET
Prescriptive Period: Illegal
Ones employment or profession is a property right and
LA decided the case
NLRC affirmed LA;

Page 97
dismissal with money claims
AL. vs. GRACE MILLENA, ET AL.

G.R. No. 141380 14 April 2004
J. Sandoval-Gutierrez
PHILIPS
SEMICONDUCTORS
(PHILS.), INC. vs. ELOISA
FADRIQUELA
G.R. No. 141717 14 April 2004
J. Callejo, Sr.
Kinds of EEs: Regular and

Contractual Employee
Security of Tenure
Power to Dismiss, Management
Prerogative
Procedural Due Process: Notice
and Hearing
Reinstatement
the wrongful interference therewith is an actionable wrong.

The right is considered to be property within the protection
of the constitutional guarantee of due process of law.
Clearly then, when one is arbitrarily and unjustly deprived
of his job or means of livelihood, the action instituted to
contest the legality of ones dismissal from employment
constitutes, in essence, an action predicated upon an injury
to the rights of the plaintiff, as contemplated under Article
1146 of the New Civil Code, which must be brought within 4
years.
The two kinds of regular employees under the law are (1)
those engaged to perform activities which are necessary or
desirable in the usual business or trade of the employer;
and (2) those casual employees who have rendered at least
one year of service, whether continuous or broken, with
respect to the activities in which they are employed. The
primary standard to determine a regular employment is the
reasonable connection between the particular activity
performed by the employee in relation to the business or
trade of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade
of the employer. If the employee has been performing the
job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability
of that activity to the business of the employer. Hence, the
employment is also considered regular, but only with
respect to such activity and while such activity exists. The
law does not provide the qualification that the employee
must first be issued a regular appointment or must be
declared as such before he can acquire a regular employee
status; In this case, the respondent was employed by the
petitioner on May 8, 1992 as production operator. She was
assigned to wirebuilding at the transistor division. There is
no dispute that the work of the respondent was necessary
or desirable in the business or trade of the petitioner. She
remained under the employ of the petitioner without any
1996; NLRC 1997; CA

1999; SC 2004
CA affirmed NLRC;
SC affirmed CA
LA decided the case

1997; NLRC 1998; CA
1999; SC 2004
NLRC affirmed LA;

CA reversed NLRC;
SC affirmed CA
Page 98
interruption since May 8, 1992 to June 4, 1993 or for one (1)

year and twenty-eight (28) days. The original contract of
employment had been extended or renewed for four times,
to the same position, with the same chores. Such a
continuing need for the services of the respondent is
sufficient evidence of the necessity and indispensability of
her services to the petitioners business. By operation of
law, then, the respondent had attained the regular status of
her employment with the petitioner, and is thus entitled to
security of tenure as provided for in Article 279 of the Labor
Code; The respondents re-employment under contracts
ranging from two to three months over a period of one year
and twenty-eight days, with an express statement that she
may be reassigned at the discretion of the petitioner and
that her employment may be terminated at any time upon
notice, was but a catch-all excuse to prevent her
regularization. Such statement is contrary to the letter and
spirit of Articles 279 and 280 of the Labor Code
Under Section 3, Article XVI of the Constitution, it is the
policy of the State to assure the workers of security of
tenure and free them from the bondage of uncertainty of
tenure woven by some employers into their contracts of
employment. The guarantee is an act of social justice.
When a person has no property, his job may possibly be his
only possession or means of livelihood and those of his
dependents. When a person loses his job, his dependents
suffer as well. The worker should therefor be protected and
insulated against any arbitrary deprivation of his job.
The power to dismiss is a formal prerogative of the
employer. However, this is not without limitations. The
employer is bound to exercise caution in terminating the
services of his employees. Dismissals must not be arbitrary
and capricious. Due process must be observed in
dismissing an employee because it affects not only his
position but also his means of livelihood. Employers should
Page 99
respect and protect the rights of their employees which

include the right to labor. To rule that the mere dialogue
between private respondent and petitioner sufficiently
complied with the demands of due process is to disregard
the strict mandate of the law. A conference is not a
substitute for the actual observance of notice and hearing.
The failure of private respondent to give petitioner the
benefit of a hearing before she was dismissed constitutes
an infringement on her constitutional right to due process
of law and not to be denied the equal protection of the
laws. The right of a person to his labor is deemed to be his
property within the meaning of the constitutional
guarantee. This is his means of livelihood. He cannot be
deprived of his labor or work without due process of law;
respondent is entitled to reinstatement and payment of full
backwages.
EMCO
PLYWOOD
CORPORATION, ET AL. vs.
PERFERIO ABELGAS, ET AL.
G.R. No. 148532 14 April 2004
J. Panganiban
Causes of TerminationRetrenchment
Separation Pay
Retrenchment is one of the authorized causes for the

dismissal of employees.
The Court has laid down the following standards that a
company must meet to justify retrenchment and to guard
against abuse:
Firstly, the losses expected should be substantial
and not merely de minimis in extent. Secondly, the
substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived
objectively and in good faith by the employer.
Because of the consequential nature of
retrenchment, it must, thirdly, be reasonably
necessary and likely to effectively prevent the
expected losses. The employer should have taken
other measures prior or parallel to retrenchment to
forestall losses, i.e., cut other costs other than labor
costs. An employer who, for instance, lays off
substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or
so-called golden parachutes, can scarcely claim to
be retrenching in good faith to avoid losses. To
LA decided the case

1996; NLRC 1997; CA
2001; SC 2004
NLRC affirmed LA;

CA reversed NLRC;
SC affirmed CA
Page 100
impart operational meaning to the constitutional

policy of providing full protection to labor, the
employers prerogative to bring down labor costs
by retrenching must be exercised essentially as a
measure of last resort, after less drastic means
e.g., reduction of both management and rank-andfile bonuses and salaries, going on reduced time,
improving manufacturing efficiencies, trimming of
marketing and advertising costs, etc. have been
tried and found wanting.
Lastly, but certainly not the least important,
alleged losses if already realized, and the expected
imminent losses sought to be forestalled, must be
proved by sufficient and convincing evidence.
Not every loss incurred or expected to be incurred by a
company will justify retrenchment. The losses must be
substantial and the retrenchment must be reasonably
necessary to avert such losses. The employer bears the
burden of proving the existence or the imminence of
substantial losses with clear and satisfactory evidence that
there are legitimate business reasons justifying a
retrenchment. Should the employer fail to do so, the
dismissal shall be deemed unjustified.
PHILIPPINE JOURNALISTS, INC.,

petitioner,
vs.
Illegal dismissal and payment of

backwages
For a valid termination due to retrenchment, the law

requires that written notices of the intended retrenchment
be served by the employer on the worker and on the
Department of Labor and Employment at least one (1)
month before the actual date of the retrenchment. The
purpose of this requirement is to give employees some time
to prepare for the eventual loss of their jobs, as well as to
give DOLE theopportunity to ascertain the verity of the
alleged cause of termination.
Under Art. 279 of the Labor Code, an employee who is
unjustly dismissed is entitled to reinstatement, without loss
of seniority rights and other privileges, and to the payment
of his full backwages, inclusive of allowances, and other
LA - 10 June 1993
NLRC- 20 March 1996
LA-held
that
respondent and the
other
five
employees
were
Page 101
MICHAEL MOSQUEDA, respondent.
G.R. No. 141430

07 May 2004
J. SANDOVAL-GUTIERREZ
benefits or their monetary equivalent, computed from the

time his compensation was withheld from him (which, as a
rule, is from the time of his illegal dismissal) up to the time
of his actual reinstatement.
Similarly, under R.A. 6715, employees who are illegally
dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent,
computed from the time their actual compensation was
withheld from them up to the time of their actual
reinstatement. If reinstatement is no longer possible, the
backwages shall be computed from the time of their illegal
termination up to the finality of the decision.
This Court does not see any reason to depart from the
foregoing rule in the case of herein respondent who, as held
by three (3) independent bodies, was illegally dismissed,
and thus, rightfully entitled to an award of full backwages,
inclusive of allowances and other benefits or their monetary
equivalent, computed from March 10, 1992, the date of his
illegal dismissal (and not from March 11, 1992 as
erroneously held by the Court of Appeals) up to the time of
his actual reinstatement.
CA-23 August 1999

SC 07 May 2004
illegally dismissed
from employment
and
ordering
petitioner (1) to
reinstate them to
their
former
positions and (2) to
pay
their
backwages
and
moral
and
exemplary damages
and attorneys fees
equivalent to 10%
of the monetary
awards.
NLRC- rendered a
Decision
dated
affirming
the
Arbiters Decision
with modification in
the sense that the
award
of
backwages,
damages
and
attorneys fees was
deleted.
CACourt
of
Appeals granted the
petition
and
reinstated
the
Arbiters award of
backwages.
SC- AFFIRMED
with
MODIFICATION in
Page 102
R TRANSPORT CORPORATION,
Petitioner,
vs.
ER-EE
Just cause
Abandonment
Procedural Due Process
ROGELIO EJANDRA, Respondent.

G.R. NO. 148508 :
May 20, 2004
J. CORONA
Petitioner is barred to negate the existence of an employeremployee relationship. In its petition filed before this
Court, petitioner invoked our rulings on the right of an
employer to dismiss an employee for just cause. Petitioner
maintained that private respondent was justifiably
dismissed due to abandonment of work. By adopting said
rulings, petitioner impliedly admitted that it was in fact the
employer of private respondent. According to the control
test, the power to dismiss an employee is one of the
indications of an employer-employee relationship.
Petitioners claim that private respondent was legally
dismissed for abandonment was in fact a negative
pregnant: an acknowledgement that there was no mutual
termination of the alleged contract of lease and that private
respondent was its employee. The fact that petitioner paid
private respondent on commission basis did not rule out
the presence of an employee-employer relationship.
Article 97(f) of the Labor Code clearly provides that an
employees wages can be in the form of commissions.
To constitute abandonment, two elements must concur: (1)
the failure to report for work or absence without valid or
justifiable reason and (2) a clear intention to sever the
LA- 23February1997
NLRC-30 May 1997
CA-22December 2000
SC-20 May 2004
the sense that

respondent is
awarded his full
backwages, other
privileges and
benefits, or their
monetary
equivalent
corresponding to
the period of his
dismissal from
March 10, 1992 up
to his actual
reinstatement
LAfound
the
dismissal of Rogelio
Ejandra
to
be
without just cause
and,
therefore,
illegal
and
ORDERING
RTransport
to
REINSTATE him to
his former position
without loss of
seniority and other
benefits and to pay
him
backwages
from the time of his
dismissal
until
actual
reinstatement.
NLRC rendered a
decision affirming
the decision of the
Labor Arbiter.
Page 103
employer-employee relationship. Of the two, the second

element is the more determinative factor and should be
manifested by some overt acts. Mere absence is not
sufficient. It is the employer who has the burden of proof to
show a deliberate and unjustified refusal of the employee
to resume his employment without any intention of
returning.
CA denied the
merit and affirmed
LA and NLRC.
SC denied the
merit and affirmed
LA, NLRC and CA.
In addition to the fact that petitioner had no valid cause to

terminate private respondent from work, it violated the
latters right to procedural due process by not giving him
the required notice and hearing. Section 2, Rule XXIII, Book
V of Department Order No. 9 provides for the procedure for
dismissal for just or authorized cause.
EMPERMACO B. ABANTE, JR.,

petitioner,
vs.
LAMADRID BEARING & PARTS
CORP. and JOSE LAMADRID,
President, respondents.
ER-EE
Kinds of Employees Regular or
Casual
for
purposes
of
determining their rights to certain
benefits, such as to join or form a
union, or to security of tenure.
Payment by commission/s.
G.R. No. 159890

May 28, 2004
J. YNARES-SANTIAGO
Well-entrenched is the doctrine that the existence of an

employer-employee relationship is ultimately a question of
fact and that the findings thereon by the Labor Arbiter and
the National Labor Relations Commission shall be accorded
not only respect but even finality when supported by
substantial evidence. The decisive factor in such finality is
the presence of substantial evidence to support said
finding, otherwise, such factual findings cannot be
12
accorded finality by this Court. Considering the conflicting
findings of fact by the Labor Arbiter and the NLRC as well
as the Court of Appeals, there is a need to reexamine the
records to determine with certainty which of the
propositions espoused by the contending parties is
LA- 29 November 2001

NLRC- 05 April 2002
CA- 07 March 2003
SC- 28 May 2004
LA
rendered
declaring
respondents to pay
jointly and severally
complainant
his
awarded separation
pay, back wages
(partial)
unpaid
commissions,
refund
of
deductions,
damages
and
attorneys fees.
NLRC reversed the
Page 104
supported by substantial evidence.

To ascertain the existence of an employer-employee
relationship, jurisprudence has invariably applied the fourfold test, namely: (1) the manner of selection and
engagement; (2) the payment of wages; (3) the presence or
absence of the power of dismissal; and (4) the presence or
absence of the power of control. Of these four, the last one
13
is the most important. The so-called "control test" is
commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employeremployee relationship. Under the control test, an
employer-employee relationship exists where the person
for whom the services areperformed reserves the right to
control not only the end achieved, but also the manner and
means to be used in reaching that end.
decision of the
Labor Arbiter and
dismissed
the
instant case for lack
of cause of action.
CA denied
petition.
the
SC affirmed the CA
decision
denying
petitioners appeal.
In Encyclopedia Britannica (Philippines), Inc. v. NLRC, it was

ruled that there could be no employer-employee
relationship where the element of control is absent. Where
a person who works for another does so more or less at his
own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to
the result of his efforts and not the amount thereof, no
relationship of employer-employee exists.
Article 280 is not a crucial factor in determining the
existence of an employment relationship. It merely
distinguishes between two kinds of employees, i.e., regular
employees and casual employees, for purposes of
determining their rights to certain benefits, such as to join
or form a union, or to security of tenure. Article 280 does
not apply where the existence of an employment
relationship is in dispute.
There is no categorical pronouncement that the payment of
compensation on commission basis is conclusive proof of
Page 105
the existence of an employer-employee relationship. After

all, commission, as a form of remuneration, may be availed
of by both an employee or a non-employee.
SAN JUAN DE DIOS

EDUCATIONAL FOUNDATION
EMPLOYEES UNION-ALLIANCE
OF FILIPINO WORKERS;
MA. CONSUELO MAQUILING,
LEONARDO MARTINEZ, ANDRES
AYALA, VIRGINIA ARLANTE,
ROGELIO BELMONTE, MA. ELENA
GARCIA and RODOLFO CALUCIN,
JR., petitioners,
vs.
SAN JUAN DE DIOS
EDUCATIONAL FOUNDATION,
INC. (HOSPITAL) and NATIONAL
LABOR RELATIONS
COMMISSION, respondents.
Illegal dismissal
G.R. No. 143341

May 28, 2004
J . CALLEJO, SR.
Despite the receipt of an order from then SOLE to return to

their respective jobs, the Union officers and members
refused to do so and defied the same. Consequently, then,
the strike staged by the Union is a prohibited activity under
Article 264 of the Labor Code. Hence, the dismissal of its
43
officers is in order. The respondent Foundation was, thus,
justified in terminating the employment of the petitioner
Unions officers.
The records of this case do not show any hint that Calucins
[Jr.s] dismissal is due to his trade union activities. On the
other hand, per findings of the public respondent, the
Foundation was able to support with documents how
Calucin [Jr.] declared himself irrelevant in the Foundation
through his tardiness and shallow excuses such as fetching
the water, cooking breakfast, seeing to it that his kids took
breakfast before going to school, preparing packed lunch
for himself and even the diversions from the usual route of
jeepneys that he rode in on these days that he was absent
are all lame excuses that amount to lack of interest in his
work. His lackluster work attitude reached his highest point
when he filed for a leave of absence of three months to join
his brothers business venture. Furthermore, it is not true
that his attendance improved in 1993 because the records
show that in 1993, his tardiness worsened to the point that
his repeated tardiness went beyond the maximum
contemplated in the Foundations Code of Discipline.
For the foregoing reasons, Calucin, Jr.s dismissal is valid.
NLRC-09 February 1999

CA-25 November1999
SC-28 May 2004
NLRC dismissed the

claim of unfair labor
practice
arising
from the illegal
dismissal of Rogelio
Calucin, Jr. It ruled
that Calucin, Jr.s
dismissal was based
on his continued
tardiness for the
year 1992 to 1993,
which affected his
efficiency
as
reflected by his
performance rating
and,
therefore,
sanctioned
by
Article 282(b) of the
Labor Code.
As regards the
Foundations refusal
to pay the money
claims
of
the
twenty-seven
employees,
the
NLRC ruled that the
same
was
sanctioned by law,
considering that the
aforesaid
employees refused
Page 106
to return to work
even after the SOLE
already issued a
RTWO
effective
August 31, 1994.
CA partially granted
the petition in the
sense that the
complaint for the
payment of the
money claims of the
27 employees are
granted and private
respondent
is
hereby ordered to
pay the money
claims
of
the
twenty-seven (27)
employees
while
the rest of the
assailed decision is
affirmed in all other
respects.
FERNANDO GOvs.
COURT OF APPEALS and MOLDEX
PRODUCTS, INC.,
G.R. No. 158922

May 28, 2004
J. Ynares-Santiago
Constructive dismissal exists where there is a cessation of

work because continued employment is rendered
impossible, unreasonable or unlikely. It is present when an
employee's functions, which were originally supervisory in
nature, were reduced, and such reduction is not grounded
on valid grounds such as genuine business necessity.
It should be remembered that the petitioner has submitted
NLRC-30April 2001 and

31 May 2002
CA-30 June 2003
SC- 28 May 2004
SC
denied
the
petition
and
affirmed the CA
decision.
NLRC found the
dismissal of the
complainant to be
illegal
ordered
respondent to pay
complainant
his
backwages and his
separation pay and
10% of the total
Page 107
a letter of resignation. It is thus incumbent upon him to

substantiate his claim that his resignation was not
voluntary but in truth was actually a constructive dismissal.
The failure of the petitioner to fully substantiate his claim
that the respondent stripped him of his duties and
functions is fatal to his present petition. Except for the
sworn statements previously discussed, which we have
found to be lacking in probative value, petitioner did not
present any other proof of the alleged stripping of his
functions by the respondent. Petitioner's bare allegations
of constructive dismissal, when uncorroborated by the
evidence on record, cannot be given credence.
The totality of the evidence indubitably shows that
petitioner resigned from employment without any coercion
or compulsion from respondent. His resignation was
voluntary. As such, he shall only be entitled to his 13th
month pay and leave pay benefits. These, however, have
already been paid to him by respondent.
award as attorneys
fees.
NLRC modified its
decision in a later
resolution
which
deleted the award
of attorney's fees
for lack of factual
basis but affirmed
the rest of the
Labor
Arbiter's
award.
CA set aside and
annulled the twin
resolutions of the
NLRC.
SC
denied
the
petition
and
affirmed the CA
decision.
Page 108
RADIN C. ALCIRA, petitioner,

vs.
NATIONAL LABOR RELATIONS
COMMISSION,
MIDDLEBY
PHILIPPINES
CORPORATION/FRANK THOMAS,
XAVIER G. PEA and TRIFONA F.
MAMARADLO, respondents
Illegal Dismissal
Probationary Employees
G.R. No. 149859

09June 2004
J. CORONA
It is settled that even if probationary employees do not

enjoy permanent status, they are accorded the
constitutional protection of security of tenure. This means
they may only be terminated for just cause or when they
otherwise fail to qualify as regular employees in accordance
with reasonable standards made known to them by the
employer at the time of their engagement.
In Manlimos, et. al. vs. National Labor Relations Commission,
this constitutional protection ends on the expiration of the
probationary period. On that date, the parties are free to
either renew or terminate their contract of employment.
Manlimos concluded that "(t)his development has rendered
moot the question of whether there was a just cause for the
dismissal of the petitioners xxx." In the case at bar,
respondent Middleby exercised its option not to renew the
contract when it informed petitioner on the last day of his
probationary employment that it did not intend to grant
him a regular status.
Although we can regard petitioners severance from work
as dismissal, the same cannot be deemed illegal. As found
by the labor arbiter, the NLRC and the Court of Appeals,
petitioner (1) incurred ten absences (2) was tardy several
times (3) failed to wear the proper uniform many times and
(4) showed inferior supervisory skills. Petitioner failed to
satisfactorily refute these substantiated allegations. Taking
all this in its entirety, respondent Middleby was clearly
justified to end its employment relationship with petitioner.
LA- 19 May 1998

NLRC- 23 March 1999
CA- 22June2001
SC- 09 June 2004
LA dismissed the
complaint on the
ground that: (1)
respondents were
able to prove that
petitioner
was
apprised of the
standards
for
becoming a regular
employee;
(2)
respondent
Mamaradlos
affidavit
showed
that petitioner "did
not perform well in
his assigned work
and his attitude was
below
par
compared to the
companys standard
required of him"
and (3) petitioners
dismissal
on
November 20, 1996
was before his
"regularization,"
considering
that,
counting from May
20, 1996, the sixmonth probationary
period ended on
November
20,
1996..
NLRC affirmed LA.
Page 109
CA affirmed NLRC.
SC
denied
petition
affirmed CA.
JOSE Y. SONZA, petitioner,

vs.
ABS-CBN
BROADCASTING
CORPORATION, respondent.
ER-EE
INDEPENDENT CONTRACTOR
SECURITY OF TENURE
GR No. 138051
10 June 2004
J. CARPIO
The existence of an employer-employee relationship is a

question of fact. Appellate courts accord the factual
findings of the Labor Arbiter and the NLRC not only respect
but also finality when supported by substantial evidence.
Substantial evidence means such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion. A party cannot prove the absence of substantial
evidence by simply pointing out that there is contrary
evidence on record, direct or circumstantial. The Court does
not substitute its own judgment for that of the tribunal in
determining where the weight of evidence lies or what
evidence is credible.
Applying the control test to the present case, we find that
SONZA is not an employee but an independent contractor.
The control test is the most important test our courts apply
in distinguishing an employee from an independent
contractor. This test is based on the extent of control the
hirer exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well the
LA-8 July 1997

NLRC-24February 1998
CA- 26 March 1999
the
and
LA dismissed the
complaint for lack
of jurisdiction.
NLRC affirmed the
LA decision.
SC-10 June 2004

CA dismissed the
petition
for
certiorari
and
affirmed NLRC.
SC affirmed CA.
Page 110
less control the hirer exercises, the more likely the worker is
considered an independent contractor.
ABS-CBN was not involved in the actual performance that
33
produced the finished product of SONZAs work. ABSCBN did not instruct SONZA how to perform his job. ABSCBN merely reserved the right to modify the program
format and airtime schedule "for more effective
34
programming." ABS-CBNs sole concern was the quality
of the shows and their standing in the ratings. Clearly, ABSCBN did not exercise control over the means and methods
of performance of SONZAs work.
Not every form of control that a party reserves to himself
over the conduct of the other party in relation to the
services being rendered may be accorded the effect of
establishing an employer-employee relationship. The facts
of this case fall squarely with the case of Insular Life
Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules
that merely serve as guidelines towards the
achievement of the mutually desired result
without dictating the means or methods to be
employed in attaining it, and those that control or
fix the methodology and bind or restrict the party
hired to the use of such means. The first, which
aim only to promote the result, create no
employer-employee relationship unlike the
second, which address both the result and the
means used to achieve it.
The right of labor to security of tenure as guaranteed in the
Constitution arises only if there is an employer-employee
relationship under labor laws. Not every performance of
services for a fee creates an employer-employee
relationship. To hold that every person who renders
Page 111
services to another for a fee is an employee - to give

meaning to the security of tenure clause - will lead to
absurd results.
Individuals with special skills, expertise or talent enjoy the
freedom to offer their services as independent contractors.
The right to life and livelihood guarantees this freedom to
contract as independent contractors. The right of labor to
security of tenure cannot operate to deprive an individual,
possessed with special skills, expertise and talent, of his
right to contract as an independent contractor. An
individual like an artist or talent has a right to render his
services without any one controlling the means and
methods by which he performs his art or craft. This Court
will not interpret the right of labor to security of tenure to
compel artists and talents to render their services only as
employees. If radio and television program hosts can render
their services only as employees, the station owners and
managers can dictate to the radio and television hosts what
they say in their shows. This is not conducive to freedom of
the press.
CHARLES JOSEPH U. RAMOS,

petitioner,
vs.
HONORABLE COURT OF APPEALS
and UNION BANK OF THE
PHILIPPINES, respondents.
Just Cause of Termination-Loss of

Trust and Confidence
G.R. No. 145405

29 June 2004
J. CORONA
The Supreme Court, on several occasions, upheld the

dismissal of bank employees for loss of trust and
confidence and gross neglect of responsibilities. In
view of the nature of its business, banks have every
reason to demand that the conduct of their
employees holding sensitive positions be fully
deserving of their trust. If bank employees will be
allowed to do their work without the exercise of due
diligence, no bank will survive.
To validly dismiss an employee on the ground of loss
of trust and confidence, the following guidelines must
*Nothing is mentioned
about the dates of
promulgation of the
decisions of the LA,
NLRC and CA.
SC- 29 June 2004
LA
ruled
that
petitioner
was
illegally dismissed.
NLRC reversed the
findings of the LA
and dismissed the
complaint for lack
of merit.
CA upheld
NLRC.
the
SC dismissed the
Page 112
petition and upheld

the CA.
be followed:
1. the loss of confidence must not be
simulated;
2. it should not be used as a subterfuge for
causes which are illegal, improper or
unjustified;
3. it may not be arbitrarily asserted in the face
of overwhelming evidence to the contrary;
4. it must be genuine, not a mere
afterthought, to justify earlier action taken in
bad faith; and
5. the employee involved holds a position of
trust and confidence.
In the case at bar, petitioner held a position of trust
and confidence as the regular branch cashier and
acting branch manager of respondents J.P. Rizal
branch. Petitioner was utterly negligent in performing
his duties as acting branch manager. The scam
perpetrated by Paras could have been easily detected
had petitioner conscientiously done his job in carefully
overseeing the branchs operations. Respondent bank
therefore had reason to lose its trust and confidence
and to impose the penalty of dismissal on him.
MITSUBISHI
PHILIPPINES
petitioner,
MOTORS
CORPORATION,
Illegal Dismissal
Just/Authorized Causes
Reinstatement/backwages
An employee cannot be dismissed except for just or

authorized cause as found in the Labor Code and after due
33
process. The following grounds would justify the dismissal
VA-03November1997
CA-13September2000
Voluntary
Arbitrator
(VA)
rendered a decision
Page 113
vs.
CHRYSLER PHILIPPINES LABOR
UNION and NELSON PARAS,
respondents.
GR No. 148738
29 June 2004
J. CALLEJO SR.
of an employee:
(a) Serious misconduct or willful disobedience by
the employee of the lawful orders of the employer
or representative in connection with his work;
(b) Gross and habitual neglect by the employee of
his duties;
(c) Fraud or willful breach by the employee of the
trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the
employee against the person of his employer or of
any immediate member of his family or his duly
authorized representative; and
(e) Other causes analogous to the foregoing.
It is a settled doctrine that the employer has the burden of
proving the lawfulness of his employees dismissal. The
validity of the charge must be clearly established in a
manner consistent with dueprocess.
Under Article 282 of the Labor Code, an unsatisfactory
rating can be a just cause for dismissal only if it amounts to
gross and habitual neglect of duties. Gross negligence has
been defined to be the want or absence of even slight care
or diligence as to amount to a reckless disregard of the
safety of person or property. It evinces a thoughtless
disregard of consequences without exerting any effort to
avoid them.
Considering that respondent Paras was not dismissed for a
just or authorized cause, his dismissal from employment
was illegal. Furthermore, the petitioners failure to inform
him of any charges against him deprived him of due
process. Clearly, the termination of his employment based
on his alleged unsatisfactory performance rating was
effected merely to cover up and "deodorize" the illegality of
his dismissal.
SC-29June2004
finding
the
dismissal of Paras
valid for his failure
to
pass
the
probationary
standards
of
MMPC.
CA reversed the
ruling
of
the
Voluntary
Arbitrator holding
the dismissal of
Paras illegal and
ordered the latters
reinstatement and
payment
of
backwages.
SC affirmed the CA
decision
with
modifications. The
petitioner
was
ordered to pay
respondent Paras
separation
pay
equivalent to one
(1) month, or to at
least one-half (1/2)
month pay for every
year of service,
whichever is higher,
a fraction of at least
six (6) months to be
considered as one
Page 114
The normal consequences of illegal dismissal are

reinstatement without loss of seniority rights and the
payment of backwages computed from the time the
employees compensation was withheld from him. Since
respondent Paras dismissal from employment is illegal, he
is entitled tore instatement and to be paid backwages from
the time of his dismissal up to the time of his actual
reinstatement.
Business reverses or losses are recognized by law as an
authorized cause for termination of employment. Still, it is
an essential requirement that alleged losses in business
operations must be proven convincingly. Otherwise, such
ground for termination would be susceptible to abuse by
scheming employers, who might be merely feigning
business losses or reverses in their business ventures to
ease out employees. Retrenchment is an authorized cause
for termination of employment which the law accords an
employer who is not making good in its operations in order
to cut back on expenses for salaries and wages by laying off
some employees. The purpose of retrenchment is to save a
financially ailing business establishment from eventually
collapsing.
year; and to pay full

backwages,
computed from the
time of his dismissal
up to March 25,
1998. That portion
of the decision of
the
Court
of
Appeals directing
the reinstatement
of the Paras was
deleted.
The unfavorable financial conditions of the petitioner may

not justify reinstatement. However, it is not a sufficient
ground to deny backwages to respondent Paras who was
illegally dismissed. Considering that notices of
retrenchment were mailed on February 25, 1998 and made
effective one month therefrom, respondent Paras should
be paid full backwages from the date of his illegal dismissal
up to March 25, 1998. Pursuant to Article 283 of the Labor
Code, he should be paid separation pay equivalent to one
(1) month salary, or to at least one-half month pay for every
year of service, whichever is higher, a fraction of at least six
months to be considered as one (1) year.
Page 115
R.P.
DINGLASAN
CONSTRUCTION, INC., petitioner,
vs.
MARIANO
ATIENZA
and
SANTIAGO ASI, respondents.
Illegal Dismissal
Abandonment of Work
Constructive Dismissal
GR No. 156104
29 June 2004
J. PUNO
In an illegal dismissal case, the onus probandi rests on the

employer to prove that its dismissal of an employee is for a
11
valid cause. In the case at bar, petitioner failed to
discharge its burden. It failed to establish that private
respondents deliberately and unjustifiably refused to
resume their employment without any intention of
returning to work.
To constitute abandonment of work, two (2) requisites
must concur: first, the employee must have failed to report
for work or must have been absent without justifiable
reason; and second, there must have been a clear intention
on the part of the employee to sever the employeremployee relationship as manifested by overt acts.
Abandonment as a just ground for dismissal requires
deliberate, unjustified refusal of the employee to resume
his employment. Mere absence or failure to report for work,
after notice to return, is not enough to amount to
abandonment.
LA-03September 1998
NLRC Nothing is
mentioned regarding
the date of
promulgation.
LA
found
that
private respondents
were
illegally
dismissed
from
service and ordering
their reinstatement.
CA-17J anuary2001 and

30 October 2002
NLRC affirmed LA.
SC-29 January 2004
CA affirmed LA and
NLRC.
SC affirmed CA
Constructive dismissal is defined as quitting when

continued
employment
is
rendered
impossible,
unreasonable or unlikely as the offer of employment
involves a demotion in rank and diminution of pay. In the
case at bar, petitioner committed constructive dismissal
when it offered to reassign private respondents to another
company but with no guaranteed working hours and
payment of only the minimum wage. The terms of the
redeployment thus became unacceptable for private
respondents and foreclosed any choice but to reject
petitioners offer, involving as it does a demotion in status
and diminution in pay. Thereafter, for six (6) months,
private respondents were in a floating status. Interestingly,
it was only after private respondents filed a complaint with
the DOLE that petitioner backtracked in its position and
Page 116
offered to reinstate private respondents to their former job

in Shell Corporation with no diminution in salary.
Eventually, however, petitioner unilaterally withdrew its
offer of reinstatement, refused to meet with the private
respondents and instead decided to dismiss them from
service.
Electruck Asia Inc., vs. Meris, et. al.
illegal dismissal-onus probandi

compliance with the twin notice rule
G.R. No. 147031

27 July 2004
In illegal dismissal cases, the onus probandi lies on the

employer
LA-27 September 1996
LA-termination
valid
NLRC-28 May 1997

As for petitioners contention that the Serranoruling is not
applicable, the same is well-taken but not for the reason it
proffered. The Serrano doctrine which dispenses with the
twin requirement of notice and hearing does not apply
because, as already discussed, petitioner had not proved
that the termination of respondents was for a just or
authorized cause.
J. Carpio Morales
NLRC-upheld LA
CA-31 July 2000
SC-27 July 2004
CA-reversed
NLRC
SC-affirmed CA
Reinstatement is no longer feasible, due to companys

insolvency. In lieu thereof, payment to respondents of
separation pay equivalent to one (1) month pay for every
year of service is in order.
PENTAGON
INTERNATIONAL
SHIPPING INC., VS. WILLIAM B.
ADELANTAR
illegal dismissal with money claim
G. R. No. 157373
27 July 2004
Filipino seamen are governed by the Rules and

Regulations of the POEA. The Standard Employment
Contract governing the Employment of All Filipino
Seamen on Board Ocean-Going Vessels of the POEA,
particularly in Part I, Sec. C specifically provides that the
contract of seamen shall be for a fixed period. In no case
should the contract of seamen be longer than 12 months.
J. Ynares-Santiago
A seafarer, is not a regular employee as defined in Article
280 of the Labor Code. Hence, he is not entitled to full
backwages and separation pay in lieu of reinstatement as
provided in Article 279 of the Labor Code. As we held in
LA-1999
NLRC
CA-26 September 2002
LA-held
dismissal
illegal
that
was
NLRC-affirmed
LA
SC-27 July 2004

CA-modified
amount awarded
by LA and NLRC
SC-reversed
CA;
Page 117
Millares, Adelantar is a contractual employee whose rights

and obligations are governed primarily by Rules and
Regulations of the POEA and, more importantly, by R.A.
8042, or the Migrant Workers and Overseas Filipinos Act
of 1995.
RENE P. VALIAO vs. CA

G. R. NO. 146621
30 July 2004
J. Quisumbing
illegal dismissal
preventive suspension
causes of termination- serious

misconduct and gross habitual neglect of
duties, including habitual tardiness and
absenteeism
For an employees dismissal to be valid, (a) the dismissal

must be for a valid cause and (b) the employee must be
afforded due process.
Serious misconduct and habitual neglect of duties are
among the just causes for terminating an employee under
the Labor Code of the Philippines. Gross negligence
connotes want of care in the performance of ones duties.
Habitual neglect implies repeated failure to perform ones
duties for a period of time, depending upon the
circumstances.
Petitioners repeated acts of absences without leave and
his frequent tardiness reflect his indifferent attitude to and
lack of motivation in his work. More importantly, his
repeated and habitual infractions, committed despite
several warnings, constitute gross misconduct unexpected
from an employee of petitioners stature.
petitioner ordered
to pay unexpired
portion
of
contract plus 10%
of the award as
attorneys fees
LA-11 December 1998
NLRC-07 July 1999
CA-22 August 2000
LA-dismissal valid
but
preventive
suspension
without
basis;
award
of
attorneys fees
SC-30 July 2004

NLRC-affirmed
LA
CA-affirmed
NLRC
SC-affirmed CA
but
with
modification,
deleted award of
attorneys fees
Labor Arbiter found that petitioner is entitled to salary

differentials for the period of his preventive suspension, as
there is no sufficient basis shown to justify his preventive
suspension. During the pendency of the investigation, the
employer may place the worker concerned under
preventive suspension if his continued employment poses a
serious and imminent threat to life or property of the
employer or of his co-workers. But in this case, there is no
indication that petitioner posed a serious threat to the life
and property of the employer or his co-employees. Neither
was it shown that he was in such a position to unduly
influence the outcome of the investigation. Hence, his
Page 118
preventive suspension could not be justified, and the

payment of his salary differentials is in order.
Award of attorneys fees cannot be sustained, in view of our
findings that petitioner was validly dismissed from
employment.
GABUAY vs. OVERSEA PAPER
SUPPLY
G.R. No. 148837
13 August 2004
j. Callejo, Sr.
Abandonment
Illegal dismissal
Separation pay
Financial assistance
The factors considered for finding a valid abandonment

are present in the case at bar: the petitioners failure to
report for work or absence was without valid or justifiable
cause, and their refusal to report for work
notwithstanding their receipt of letters requiring them to
return to work, show their clear intention to sever the
employer-employee relationship
Separation pay is defined as the amount that an
employee receives at the time of his severance and is
designed to provide the employee with the wherewithal
during the period that he is looking for another
employment. Under the Labor Code, the award of
separation pay is sanctioned when termination was due
to an authorized cause, i.e., (a) installation of labor saving
device, redundancy, retrenchment to prevent losses,
closure or cessation of business operations not due to
serious business losses or financial reverses; and, (b)
disease prejudicial to the health of the employee and his
fellow employees. Separation pay is, likewise, awarded in
lieu of reinstatement if it can be shown that the
reinstatement of the employee is no longer feasible, as
when the relationship between employer and employee
has become strained. In some cases, it is awarded as a
measure of social justice.
LA- 18 November 1999

SC- 13 August 2004
LA No illegal
dismissal;
Complainants
abandoned their
jobs. Case
dismissed.
NLRC awarded
financial assistance;
CA- deleted award
of financial
assistance;
SC reinstated LAs
decision
In the present case, the petitioners were not dismissed,

either legally or illegally; the petitioners abandoned their
jobs. They failed to return to work despite the
respondents directive requiring them to do so. There is,
Page 119
thus, no room for the award of financial assistance in the

form of separation pay. To sustain the claim for
separation pay under the circumstances herein
established would be to reward the petitioners for
abandoning their work
PINERO vs. NLRC
Illegal strike
Illegal dismissal
G.R. 149610
20 August 2004
J. Ynares-SAntiago
Requisites for a valid strike are as follows: (a) a notice of

strike filed with the DOLE thirty days before the intended
date thereof or fifteen days in case of unfair labor
practice; (b) strike vote approved by a majority of the
total union membership in the bargaining unit concerned
obtained by secret ballot in a meeting called for that
purpose; (c) notice given to the DOLE of the results of the
voting at least seven days before the intended strike.
These requirements are mandatory and failure of a union
to comply therewith renders the strike illegal.
LA 28 October 1994
illegal strike, valid
dismissal
LA illegal strike,
valid dismissal
SC 20 August 2004
SC LA affirmed,
awarded financial
assistance to Pinero
on compassionate
justice
The strike was therefore correctly declared illegal, for

non-compliance with the procedural requirements of
Article 263 of the Labor Code, and Piero properly
dismissed from service.
Pursuant to Article 264 of the Labor Code, any union
officer who knowingly participates in an illegal strikeand
any worker or union officer who knowingly participates in
the commission of illegal acts during a strike may be
declared to have lost his employment status.
An employee who is dismissed for cause is generally not
entitled to any financial assistance. Equity considerations,
however, provide an exception. Equity has been defined
as justice outside law, being ethical rather than jural and
belonging to the sphere of morals than of law. It is
grounded on the precepts of conscience and not on any
sanction of positive law, for equity finds no room for
application where there is law. Under the circumstances,
social and compassionate justice dictate that petitioner
Piero be awarded financial assistance equivalent to oneSurvey of Jurisprudence on Termination and Security of Tenure
Page 120
half (1/2) months pay for every year of servicecomputed

from his date of employment up to October 28, 1994
when he was declared to have lost his employment status.
Indeed, equities of this case should be accorded due
weight because labor law determinations are not only
secundum rationem but also secundum caritatem.
CHIANG KAI SHEK COLLEGE vs.
CA
G.R. 152988
24 August 2004
CJ. Davide, Jr.
Illegal dismissal
Separation pay
Retirement pay
Under the Manual of Regulations for Private Schools, for a

private school teacher to acquire a permanent status of
employment and, therefore, be entitled to a security of
tenure, the following requisites must concur: (a) the
teacher is a full-time teacher; (b) the teacher must have
rendered three consecutive years of service; and (c) such
service must have been satisfactory. The fundamental
guarantees of security of tenure and due process dictate
that no worker shall be dismissed except for just and
authorized cause provided by law and after due notice
and hearing.
LA - 18 October 1995
LA dismissed
complaint
SC - 24 August 2008
SC LA decision
reversed.
Complainant was
constructively
dismissed; entitled
to reinstatement
and back wages.
Case law defines constructive dismissal as a cessation

from work because continued employment is rendered
impossible, unreasonable, or unlikely; when there is a
demotion in rank or a diminution in pay or both; or when a
clear discrimination, insensibility, or disdain by an
employer becomes unbearable to the employee.
LITTON MILLS, INC. vs .SALES

G.R. No. 151400
1 September 2004
J. CALLEJO, SR.
Illegal dismissal- the employer is

burdened to prove theft as just
cause for termination of
employee.
Complainant was unceremoniously and constructively

dismissed by the petitioners without just cause and
without observing the twin requirements of due process,
i.e., due notice and hearing, in violation of the tenets of
equity and fair play. Complainant is therefore entitled to
reinstatement and back wages.
In illegal dismissal cases, the employer is burdened to
prove just cause for terminating the employment of its
employee with clear and convincing evidence. The case of
the employer must stand or fall on its own merits and not
on the weakness of the employees defense. The alleged
Date of Decision:
LA -16 February 2000
CA-28 September 2001
SC -1 September 2004
LA- dismissed the

dismissal
NLRC- affirmed
Page 121
CIOCO, JR. vs. C. E.

CONSTRUCTION CORP.
G. R. No. 156748
08 September 2004
J. PUNO
Cause of termination- just cause

Awards- ordering the
reinstatement of the
respondent and remanding the
case to the Labor Arbiter for the
computation of the monetary
awards
Termination of employment of
Project employees.
Workers employed with the
company for several years on
various project did not
automatically make them regular
employees.
Cause of terminationcompletion of the project.
Substantive and Procedural

requirements of due process with
respect to the termination of
Project employees.
weakness of the defense of the employee cannot operate

to relieve nor discharge the employer of its burden in
termination cases. This principle is designed to give flesh
and blood to the guaranty of security of tenure granted by
the Constitution to employees under the Labor Code.
The fact that the WORKERS have been employed with the
COMPANY for several years on various projects, the
longest being nine (9) years, did not automatically make
them regular employees considering that the definition of
regular employment in Article 280 of the Labor Code,
makes specific exception with respect to project
employment. The re-hiring of petitioners on a project-toproject basis did not confer upon them regular employment
status. The practice was dictated by the practical
consideration that experienced construction workers are
more preferred. It did not change their status as project
employees.
The labor arbiter categorically found that the appropriate

notices to the WORKERS and the corresponding reports
were submitted by the COMPANY to the DOLE
Section 2 (III), Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code provides that no prior
notice of termination is required if the termination is
brought about by completion of the contract or phase
thereof for which the worker has been engaged. This is
because completion of the work or project automatically
terminates the employment, in which case, the employer is,
under the law, only obliged to render a report to the DOLE
CA- Reversed LA
and NLRC
SC- Affirmed CA
decision
Date of Decision:
LA- April 17, 2000
NLRC- 26 October 2001

CA- 28 August 2002
SC-08 September 2004
LA- rendered
decision dismissing
the complaint for
illegal dismissal.
NLRC- affirmed LA
decision.
CA- reversed LA
and NLRC decision.
Their dismissal as
project employees
declared as illegal.
SC- reversed CA
decision. The
termination of
employment of
project employees
is declared valid and
legal.
Page 122
on the termination of the employment.
COCA-COLA BOTTLERS
PHILIPPINES, INC vs. VITAL
G.R. No. 154384
September
13, 2004
Illegal dismissal- the dismissal of

respondent from the service on
the ground of wilful disobedience
or violation of company rules and
regulations is not justified
Cause of termination- just cause

Awards- separation pay plus full
back wages, and other privileges
and benefits, or their monetary
equivalent, during the period of
his dismissal up to his supposed
actual reinstatement.
There is no showing that respondents acts were inimical to

petitioners interest. Petitioner has not also shown that
previously, respondent violated any of its rules or
regulations. Certainly, respondents acts may be considered
as isolated incidents not amounting to a willful
disobedience or violation of petitioner companys rules and
regulations.
Date of Decision:
LA - 7 August 1998
NLRC - 17 March 1999
CA- 30 April 2002
SC- 13 September 2004
NLRC- reversed LA
decision
CA- Affirmed NLRC
Decision
Respondent who was illegally dismissed from work is

entitled to reinstatement without loss of seniority rights,
full backwages, inclusive of allowances, and other benefits
or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of
his actual reinstatement.
SC- AFFIRMED CA
with
MODIFICATION th
at in lieu of
reinstatement,
respondent is
awarded separation
pay plus full back
wages, and other
privileges and
benefits, or their
monetary
equivalent, during
the period of his
dismissal up to his
supposed actual
reinstatement.
However, the circumstances obtaining in this case do not

warrant the reinstatement of respondent. Antagonism
caused a severe strain in the relationship between him and
petitioner company. A more equitable disposition would be
an award of separation pay equivalent to at least one
month pay, or one month pay for every year of service,
whichever is higher, (with a fraction of at least six (6)
months being considered as one (1) whole year), in addition
to his full backwages, allowances and other benefits.
DUNCAN ASSOCIATION OF
Valid Management Policy-
Glaxo has a right to guard its trade secrets, manufacturing
LA- dismissed the

dismissal and
damages
Date of Decision:
NCMB- rendered
Page 123
DETAILMAN-PTGWO and TECSON

vs. GLAXO WELLCOME
PHILIPPINES, INC.
G.R. No. 162994
September
17, 2004
J. TINGA
Pharmaceutical Company
prohibiting its employees from
marrying employees of any
competitor company.
formulas, marketing strategies and other confidential

programs and information from competitors, especially so
that it and Astra are rival companies in the highly
competitive pharmaceutical industry.
The prohibition against personal or marital relationships

with employees of competitor companies upon Glaxos
employees is reasonable under the circumstances because
relationships of that nature might compromise the
interests of the company. In laying down the assailed
company policy, Glaxo only aims to protect its interests
against the possibility that a competitor company will gain
access to its secrets and procedures.
That Glaxo possesses the right to protect its economic
interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce
such a policy to protect its right to reasonable returns on
investments and to expansion and growth. Indeed, while
our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean
that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has
rights which are also entitled to respect and enforcement in
the interest of fair play.
Grievance Machinery- no
settlement
NCMB- for voluntary
Arbitration
CA- 19 May 2003
its Decision declarin

g as valid Glaxos
policy on
relationships
between its
employees and
persons employed
with competitor
companies, and
affirming Glaxos
right to transfer
Tecson to another
sales territory.
CA-Affirmed NCMB
decision as valid
exercise of
management
prerogative
SC- Affirmed CA
The Court finds no merit in petitioners contention that

Tescon was constructively dismissed when he was
transferred from the Camarines Norte-Camarines Sur sales
area to the Butuan City-Surigao City-Agusan del Sur sales
area, and when he was excluded from attending the
companys seminar on new products which were directly
competing with similar products manufactured by Astra.
Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued
employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in
Page 124
pay; or when a clear discrimination, insensibility or disdain

by an employer becomes unbearable to the
employee. None of these conditions are present in the
instant case. In this case, petitioners transfer to another
place of assignment was merely in keeping with the policy
of the company in avoidance of conflict of interest, and
thus valid.
In Abbott Laboratories (Phils.), Inc. v. National Labor
Relations Commission, which involved a complaint filed by a
medical representative against his employer drug company
for illegal dismissal for allegedly terminating his
employment when he refused to accept his reassignment
to a new area, the Court upheld the right of the drug
company to transfer or reassign its employee in accordance
with its operational demands and requirements. The ruling
of the Court therein, quoted hereunder, also finds
application in the instant case: By the very nature of his
employment, a drug salesman or medical representative is
expected to travel. He should anticipate reassignment
according to the demands of their business. It would be a
poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for
opening or expansion or to areas where the need for
pushing its products is great. More so if such reassignments
are part of the employment contract.
PLDT COMPANY VS. TOLENTINO

G.R. No. 143171
21 September 2004
J. CORONA
Termination of Managerial
employee- security of tenure
PLDTs basis for respondents dismissal was not enough to

defeat respondents security of tenure.
Date of Decision:
LA-30 April 1997
Cause of termination- Loss of trust

and confidence.
Doctrine of strained relationship

shall be strictly applied so as not to
deprive an illegally dismissed
Loss of trust and confidence justifies dismissal of

managerial employee on the reason that when an
employee accepts a promotion to a managerial position or
to an office requiring full trust and confidence; she gives up
some of the rigid guaranties available to ordinary workers.
Infractions which if committed by others would be
LA- illegal dismissal

orders
reinstatement w/
full backwages and
other benefits and
damages
NLRC- reversed L.A
decision
Page 125
employee of his right to

reinstatement.
Awards- Reinstatement with full
backwages and attorneys fees.
overlooked or condoned or penalties mitigated may be

visited with more severe disciplinary action. A companys
resort to acts of self-defense would be more easily justified.
CA- reinstated LA
decision
SC- Affirmed CA
However, the right of the management to dismiss must be

balanced against the managerial employees right to
security of tenure which is not one of the guaranties he
gives up. This Court has consistently ruled that managerial
employees enjoy security of tenure and, although the
standards for their dismissal are less stringent, the loss of
trust and confidence must be substantial and founded on
clearly established facts sufficient to warrant the
managerial
employees
separation
from
the
company. Substantial evidence is of critical importance and
the burden rests on the employer to prove it.
The petitioners dismissal was not founded on clearly
established facts sufficient to warrant separation from
employment. While dishonesty of an employee is not to be
condoned, neither should a condemnation on that ground
be tolerated based on suspicion spawned by speculative
inferences.
The alleged strained relationship of the employee and
management cannot be applied in this case to defeat
reinstatement. To protect labors security of tenure, we
emphasize that the doctrine of "strained relations" should
be strictly applied so as not to deprive an illegally dismissed
employee of his right to reinstatement. Every labor dispute
almost always results in "strained relations" and the phrase
cannot be given an overarching interpretation, otherwise,
an unjustly dismissed employee can never be reinstated.
BRISTOL MYERS SQUIBB,
Procedural compliance with the
An employer cannot be compelled to continue with the
Date of Decision:
NCMB- rendered
Page 126
(PHILS.), INC. vs. VILORIA

G.R. No. 148156
27 September 2004
J. CALLEJO, SR.
twin notice rule

Employee.
Cause of termination- violation of
the companys code of ethicsvalid dismissal
employment of workers guilty of acts of misfeasance or

malfeasance, and whose continuance in the service of the
employer is clearly inimical to the formers interest. The
law, in protecting the rights of workers, authorizes neither
oppression nor self-destruction of the employer (Bondoc
vs. NLRC, 276 SCRA 288).
Grievance Machinery- no
settlement
NCMB- for voluntary
Arbitration
CA- 19 May 2003
There is no denying that complainant Rogelio T. Viloria was

a regular employee of the respondent Bristol Myers Squibb
having been employed by the latter from 26 November
1984 until 24 December 1997 with the latest position of
Territory Manager. As such regular employee, he is entitled
to security of tenure and cannot be terminated from the
service except for a just cause or for an authorized cause
and after observance of procedural due process (Art. 279 in
relation to Art. 277 (b) of the Labor Code, as amended).
CA-Affirmed NCMB
decision as valid
exercise of
management
prerogative
The law is clear that before termination of employment can

be legally effected the employer must serve two (2) written
notices. The first notice informs the employee of the
particular act/s or omission/s for which his dismissal is being
sought and giving him an opportunity to present his
defense, and the second notice informs the employee of
the employers decision to terminate/or retain him in
service. On the basis of the documentary evidence
submitted, it has been established that respondent has
substantially complied with the twin requirements of
procedural due process. As a matter of fact, the companys
decision to terminate complainants employment was
arrived at only after receipt of complainants explanation.
GUSTILO vs. WYETH
Cause of termination- habitual
"It is the employer's prerogative to prescribe reasonable
its Decision declarin

g as valid Glaxos
policy on
relationships
between its
employees and
persons employed
with competitor
companies, and
affirming Glaxos
right to transfer
Tecson to another
sales territory.
SC- Affirmed CA
Date of Decision:
LA- rendered
Page 127
PHILIPPINES, INC.
G.R. No. 149629
04 October 2004
offender whose numerous

contraventions of company rules
constitute serious misconduct w/c
warrants dismissal.
G.R: Employee dismissed for

cause not entitled to separation
pay
Exception: separation pay shall

be allowed as a measure of social
justice only in those instances
where the employee is validly
dismissed for causes other than
serious misconduct or those
reflecting on his moral character
rules and regulations necessary or proper for the conduct of

its business or concern, to provide certain disciplinary
measures to implement said rules and to assure that the
same be complied with. At the same time, it is one of the
fundamental duties of the employee to yield obedience to
all reasonable rules, orders, and instructions of the
employer, and willful or intentional disobedience thereof,
as a general rule, justifies rescission of the contract of
service and the preemptory dismissal of the employee."
Records show the various violations of respondent
companys rules and regulations committed by petitioner.
His dismissal from the service is, therefore, in order. Indeed,
in Piedad vs. Lanao del Norte Electric Cooperative, Inc., we
ruled that a series of irregularities when put together may
constitute serious misconduct, which under Article 282 of
the Labor Code, as amended, is a just cause for dismissal.
The rule embodied in the Omnibus Rules Implementing the
Labor Code is that a person dismissed for cause as defined
7
therein is not entitled to separation pay. However, in PLDT
vs. NLRC and Abucay, we held:
LA- 05 March 1998

NLRC-13 August 1999
CA- 24 January 2001
SC- 04 October 2004
decision for illegal

dismissal w/
payment of
backwages,
separation pay
damages and attys
fees.
NLRC- affirmed LA
decision w/
modification of
reinstatement or in
lieu of
reinstatement,
payment of
separation pay.
CA- reversed LA
and NLRC decision
w/ separation pay.
SC- affirmed CA
decision but w/o
separation pay.
"x x x henceforth, separation pay shall be allowed

as a measure of social justice only in those
instances where the employee is validly
dismissed for causes other than serious
misconduct or those reflecting on his moral
character. Where the reason for the valid dismissal
is, x x x an offense involving moral turpitude x x x,
the employer may not be required to give the
dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on
the ground of social justice."
Page 128
In granting separation pay of legally dismissed employee,

may invoke social justice only if their hands are clean and
their motives blameless x x x." Here, petitioner failed to
measure up to such requirement.
NATIONAL FEDERATION OF
LABOR (NFL) vs. CA
G.R. No. 149464
19 October 2004
J. CALLEJO, SR.
Cause of termination- Just cause,

retrenchment
Payment of separation pay
Validity of quitclaims
Payment of wages in checks- valid
Article 283 of the Labor Code provides that employees

who are dismissed due to closures that are not due to
business insolvency should be paid separation pay
equivalent to one-month pay or to at least one-half
month pay for every year of service, whichever is higher.
A fraction of at least six months shall be considered one
whole year.
LA- dismiss the

dismissal
NLRC- Affirmed LA
decision
CA- Affirmed NLRC
decision
ART. 283. Closure of establishment and reduction of

personnel. The employer may also terminate the
employment of any employee due to installation of labor
saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to
installation of labor saving devices or redundancy, the
worker affected thereby shall be entitled to at least his one
(1) month pay or to at least (1) month pay for every year of
service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closure or cessation of
operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or to at least
one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months
Date of Decision:
LA-24 November 1998
NLRC-19 May 1999
CA- 07 May 2001
SC- 19 October 2004
SC- Affirmed CA
Decision
Page 129
shall be considered one (1) whole year.

Patently, in cases of closures or cessation of operations of
establishment or undertaking not due to serious business
losses or financial reverses, the separation pay of
employees shall be equivalent to one-month pay or to at
least one-half month pay for every year of service,
22
whichever is higher. In no case will an employee get less
than one-month separation pay if the separation from the
service is due to the above stated causes, provided that he
has already served for at least six months. Thus, if an
employee had been in the service for at least six months, he
is entitled to a full months pay as his termination pay if his
separation from the job is due to any of the causes
enumerated above. However, if he has to his credit ten
years of service, he is entitled to five months pay, this being
higher than one-month pay. Stated differently, the
computation of termination pay should be based on either
one-month or one-half month pay, whichever will yield to
the employees higher separation pay, taking into
23
consideration his length of service.
Not all waivers and quitclaims are invalid as against public
policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the
parties and may not be disowned simply because of a
change of mind. It is only where there is a clear proof that
the waiver was wangled from an unsuspecting or gullible
person, or the terms of the settlement are unconscionable
on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the
person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration
for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking.
We do not agree with the claim of the petitioners that the
Page 130
payment of separation pay and other benefits in check is in

violation of Article 102 of the Labor Code, which provides:
Art. 102. - Forms of Payment. No employers shall pay the
wages of an employee by means of promissory notes,
vouchers, coupons, tokens, tickets, chits or any object other
than legal tender, even when expressly requested by the
employee.
Payment of wages by check or money order shall be
allowed when such payment is customary on the date of
effectivity of this Code, or is necessary because of special
circumstances as specified in appropriate regulations to be
issued by the Secretary of Labor or a stipulation in a
collective bargaining agreement.
CHINA BANKING CORP. vs.

BORROMEO
G.R. No. 156515
19 October 2004
J. CALLEJO, SR.
employee.
Cause of termination-Resignation
Due process- conduct of

investigation no longer necessary
when there is already an
admission.
Labor Arbiter, are not bound by

the technical niceties of the law
and procedure and the rules
obtaining in courts of law
It is well recognized that company policies and regulations

are, unless shown to be grossly oppressive or contrary to
law, generally binding and valid on the parties and must be
complied with until finally revised or amended unilaterally
or preferably through negotiation or by competent
authority. Moreover, management has the prerogative to
discipline its employees and to impose appropriate
penalties on erring workers pursuant to company rules and
regulations. With more reason should these truisms apply
to the respondent, who, by reason of his position, was
required to act judiciously and to exercise his authority in
harmony with company policies.
Contrary to his protestations, the respondent was given the
opportunity to be heard and considering his admissions, it
became unnecessary to hold any formal investigation. More
particularly, it became unnecessary for the petitioner Bank
to conduct an investigation on whether the respondent had
committed an "infraction of Bank procedures in handling
any Bank transaction or work assignment which results in a
Date of Decision:
LA- 16 February 1999
NLRC-20 October 1999
CA- 19 July , 2002
SC-19 October 2004
LA- denied the

complaint for
payment of
separation pay,
mid-year bonus,
profit share and
damages against
the petitioner
Bank.
NLRC- affirmed LA
decision
CA- reversed LA
and NLRC decision
because of violation
of Due Process, and
remanding the case
to the LA for further
hearings.
Page 131
loss or probable loss" because the respondent already

admitted the same. All that was needed was to inform him
of the findings of the management and this was done by
way of the Memorandumdated May 23, 1997 addressed to
the respondent. His claim of denial of due process must
perforce fail.
SC-reversed and set

aside CA Order and
reinstated NLRC
decision.
Contrary to the respondents contention that the petitioner

Bank could not properly impose the accessory penalty of
restitution on him without imposing the principal penalty of
"Written Reprimand/Suspension," the latters Code of
Ethics
expressly
sanctions
the
imposition
of
restitution/forfeiture of benefits apart from or independent
of the other penalties. Obviously, in view of his voluntary
separation from the petitioner Bank, the imposition of the
penalty of reprimand or suspension would be futile. The
petitioner Bank was left with no other recourse but to
impose the ancillary penalty of restitution. It was certainly
within the petitioner Banks prerogative to impose on the
respondent what it considered the appropriate penalty
under the circumstances pursuant to its company rules and
regulations.
It bears stressing that the respondent was not just a rank
and file employee. At the time of his resignation, he was
the Assistant Vice- President, Branch Banking Group for the
Mindanao area of the petitioner Bank. His position carried
authority for the exercise of independent judgment and
discretion, characteristic of sensitive posts in corporate
hierarchy. As such, he was, as earlier intimated, required to
act judiciously and to exercise his authority in harmony with
company policies.
On the other hand, the petitioner Banks business is
essentially imbued with public interest and owes great
fidelity to the public it deals with. It is expected to exercise
the highest degree of diligence in the selection and
Page 132
supervision of their employees. As a corollary, and like all

other business enterprises, its prerogative to discipline its
employees and to impose appropriate penalties on erring
workers pursuant to company rules and regulations must
be respected. The law, in protecting the rights of labor,
authorized neither oppression nor self-destruction of an
employer company which itself is possessed of rights that
must be entitled to recognition and respect.
PHIL. AMERICAN LIFE AND

GENERAL INSURANCE CO. vs.
GRAMAJE
Management Prerogative in relation

to the employees right to security of
tenure
G.R. 156963
11 November 2004
J. Chico-Nazario
Valid transfer in relation to the

excise of management prerogative
Discrimination
We have held that the right and privilege of the

employer to exercise the so-called management
prerogative is recognized, and the courts will not
interfere with it. This privilege is inherent in the right of
employers to control and manage their enterprise
effectively. The right of employees to security of tenure
does not give them vested rights to their positions to
the extent of depriving management of its prerogative
to change their assignments or to transfer them.
Managerial prerogatives, however, are subject to
limitations provided by law, collective bargaining
agreements, and general principles of fair play and
justice.
In the pursuit of its legitimate business interests,
management has the prerogative to transfer or assign
employees from one office or area of operation to
another provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and
the action is not motivated by discrimination, made in
bad faith, or effected as a form of punishment or
demotion without sufficient cause.
The unequal treatment of employees, which is
proscribed as an unfair labor practice by Art. 248(e) of
the Labor Code. It is the failure to treat all persons
equally when no reasonable distinction can be found
Date of DecisionL.A.- 01 June 2000

N.L.R.C. 27 November
2000
C.A. 18 October 2002
MR- 20 January 2003
(denied)
SC- 11 November 2004
L.A-complainant
not illegally
dismissed
N.L.R.C- affirmed
the decision of L.A.
C.A. reversed the
decision of NLRC;
payment of
separation pay in
lieu of
reinstatement, full
backwages inclusive
of allowances and
other benefits or
monetary benefits;
case was remanded
to L.A. for the
determination of
monetary liabilities
of private
respondents;
Payment of
exemplary and
Page 133
between those favored and those not favoured.
Test of valid transfer
In the case of Blue Dairy Corporation v. NLRC, we

explained the test for determining the validity of the
transfer of employees, as follows:
But, like other rights, there are limits thereto. The
managerial prerogative to transfer personnel must
be exercised without grave abuse of discretion,
bearing in mind the basic elements of justice and
fair play. Having the right should not be confused
with the manner in which that right is exercised.
Thus, it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker.
In particular, the employer must be able to show
that the transfer is not unreasonable, inconvenient
or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries,
privileges and other benefits. Should the employer
fail to overcome this burden of proof, the
employee's transfer shall be tantamount to
constructive dismissal, which has been defined as a
quitting because continued employment is
rendered impossible, unreasonable or unlikely; as
an offer involving a demotion in rank and
diminution in pay.
moral damages due

to the findings of
constructive
dismissal.
SC- Affirmed CAs
decision; dismissed
the petition
Constructive dismissal exists when an act of clear

discrimination, insensibility or disdain by an employer
has become so unbearable to the employee leaving
him with no option but to forego with his continued
employment. The circumstances which prevailed in the
working environment of the respondent clearly
demonstrate this
It is no less than the Constitution which guarantees
Page 134
protection to the workers' security of tenure as a policy

of the State. This guarantee is an act of social justice.
Security of tenure-act of social
justice
for abandonment to exist, it is essential (1) that the

employee must have failed to report for work or must
have been absent without valid or justifiable reason;
and (2) that there must have been a clear intention to
sever the employer-employee relationship manifested
by some overt acts
Abandonment
AGABON VS. NLRC
Valid dismissal (procedural due

process)
G.R. 158693
17 November 2004
J. Ynares-Santiago
Just causes
To dismiss an employee, the law requires not only

the existence of a just and valid cause but also enjoins
the employer to give the employee the opportunity to
be heard and to defend himself.
Article 282 of the Labor Code enumerates the just

causes for termination by the employer: (a) serious
misconduct or willful disobedience by the employee
of the lawful orders of his employer or the latter's
representative in connection with the employee's
work; (b) gross and habitual neglect by the employee
of his duties; (c) fraud or willful breach by the
employee of the trust reposed in him by his employer
or his duly authorized representative; (d) commission
of a crime or offense by the employee against the
person of his employer or any immediate member of
his family or his duly authorized representative; and
(e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified

refusal of an employee to resume his employment. It
is a form of neglect of duty, hence, a just cause for
termination of employment by the employer. For a
valid finding of abandonment, these two factors
L.A. 28
December 1999
N.L.R.C.C.A.- 23 January
2003
SC 17
November 2004
L.A illegal
dismissal; payment
of backwages;
payment of
separation pay in
lieu of
reinstatement;
payment of holiday
pay and service
incentive pay as
well as premium
pay for holiday and
rest days;
NLRC reversed
the decision of LA;
petitioners
abandoned their
work, therefore not
entitled to
separation pay and
backwages; denial
of other monetary
claims for lack of
evidence
Page 135
should be present: (1) the failure to report for work or

absence without valid or justifiable reason; and (2) a
clear intention to sever employer-employee
relationship, with the second as the more
determinative factor which is manifested by overt
acts from which it may be deduced that the
employees has no more intention to work. The intent
to discontinue the employment must be shown by
clear proof that it was deliberate and unjustified.
Abandonment
The law imposes many obligations on the employer such

as providing just compensation to workers, observance of
the procedural requirements of notice and hearing in the
termination of employment. On the other hand, the law
also recognizes the right of the employer to expect from
its workers not only good performance, adequate work
and diligence, but also good conduct and loyalty. The
employer may not be compelled to continue to employ
such persons whose continuance in the service will
patently be inimical to his interests.
C.A.- no illegal
dismissal rather the
petitioners
abandoned their
employment; the
decision of NLRC
was reversed only
insofar as the
dismissal of money
claims.
SC- Affirmed with
Modification;
private respondent
was ordered to pay
nominal damages
for non compliance
with statutory due
process
The procedure for terminating an employee is found in

Book VI, Rule I, Section 2(d) of the Omnibus Rules
Implementing the Labor Code:
Procedure for terminating employee
Standards of due process: requirements of notice.

In all cases of termination of employment, the
following standards of due process shall be
substantially observed:
I. For termination of employment based on just
causes as defined in Article 282 of the Code:
(a) A written notice served on the employee
specifying the ground or grounds for termination,
and giving to said employee reasonable
Page 136
opportunity within which to explain his side;

(b) A hearing or conference during which the
employee concerned, with the assistance of
counsel if the employee so desires, is given
opportunity to respond to the charge, present his
evidence or rebut the evidence presented against
him; and
(c) A written notice of termination served on the
employee indicating that upon due consideration
of all the circumstances, grounds have been
established to justify his termination.
In case of termination, the foregoing notices shall
be served on the employee's last known address.
Dismissal based on just causes
Dismissals based on just causes contemplate acts or

omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate
employees. A termination for an authorized cause requires
payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full
backwages are mandated under Article 279. If
reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause
under Article 282, the employer must give the employee
two written notices and a hearing or opportunity to be
heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the
decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer
Page 137
must give the employee and the Department of Labor and

Employment written notices 30 days prior to the effectivity
of his separation.
From the foregoing rules four possible situations may be
derived: (1) the dismissal is for a just cause under Article
282 of the Labor Code, for an authorized cause under
Article 283, or for health reasons under Article 284, and due
process was observed; (2) the dismissal is without just or
authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was
no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.
In the first situation, the dismissal is undoubtedly valid and
the employer will not suffer any liability.
In the second and third situations where the dismissals are
illegal, Article 279 mandates that the employee is entitled
to reinstatement without loss of seniority rights and other
privileges and full backwages, inclusive of allowances, and
other benefits or their monetary equivalent computed from
the time the compensation was not paid up to the time of
actual reinstatement.
In the fourth situation, the dismissal should be upheld.
While the procedural infirmity cannot be cured, it should
not invalidate the dismissal. However, the employer should
be held liable for non-compliance with the procedural
requirements of due process.
The present case squarely falls under the fourth situation.
The dismissal should be upheld because it was established
that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not
follow the notice requirements and instead argued that
sending notices to the last known addresses would have
Page 138
been useless because they did not reside there anymore.

Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice
requirements to the employee's last known address. Thus,
it should be held liable for non-compliance with the
procedural requirements of due process.
Due process under the Labor Code, like Constitutional due
process, has two aspects: substantive, i.e., the valid and
authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal.
Procedural due process requirements for dismissal are
found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in
Book VI, Rule I, Sec. 2, as amended by Department Order
27
Nos. 9 and 10. Breaches of these due process requirements
violate the Labor Code. Therefore statutory due
process should be differentiated from failure to comply
with constitutional due process.
Constitutional due process protects the individual from the
government and assures him of his rights in criminal, civil or
administrative proceedings; while statutory due
process found in the Labor Code and Implementing Rules
protects employees from being unjustly terminated
without just cause after notice and hearing.
UNION MOTOR CORPORATION

vs. NATIONAL LABOR
RELATIONS COMMISSION
Dismissal
G.R. 159738
09 December 2004
J. Callejo, Sr.
Dismissal is the ultimate penalty that can be meted to an

employee. Thus, it must be based on just cause and must
be supported by clear and convincing evidence. To effect a
valid dismissal, the law requires not only that there be just
and valid cause for termination; it, likewise, enjoins the
employer to afford the employee the opportunity to be
heard and to defend himself. Article 282 of the Labor Code
enumerates the just causes for the termination of
Date of Filing:
(NLRC) 18 May 1999
-for illegal dismissal
Date of Decision:
LA- 19 October 2000
NLRC- 29 November
2001
LA- failure to report

to work for ten (10)
days without
approved leave of
absence was
equivalent to gross
neglect of duty
NLRC- decision of
Page 139
employment by the employer:

CA-10 April 2003
ART. 282. TERMINATION BY EMPLOYER
An employer may terminate an employment for
any of the following causes:
LA was set aside

and reversed;
reinstatement;
payment of full
backwages
CA: Affirmed
(a) Serious misconduct or willful disobedience by

the employee of the lawful orders of his employer
or representative in connection with his work;
SC: Affirmed
(b) Gross and habitual neglect by the employee of

his duties.
URBANES, JR. Vs. CA
Negligence as a ground for

dismissal
Right to transfer /reassign

employees
G.R. 138379
25 November 2004
J. Austria-Martinez
To warrant removal from service, the negligence should

not merely be gross but also habitual. Gross negligence
implies a want or absence of or failure to exercise slight
care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting
any effort to avoid them. The petitioner has not
sufficiently shown that the respondent had wilfully
disobeyed the company rules and regulation. The
petitioner also failed to prove that the respondent
abandoned his job. The bare fact that the respondent
incurred excusable and unavoidable absences does not
amount to an abandonment of his employment.
As a general rule, the right to transfer or reassign
employees is recognized as an employer's right and the
prerogative of management. As the exigency of the
business may require, an employer, in the exercise of
his prerogative may transfer an employee, provided
that said transfer does not result in a demotion in rank
or diminution in salary, benefits and other privileges of
the employee; or is not unreasonable, inconvenient or
prejudicial to the latter; or is not used as a subterfuge
by the employer to rid himself of an undesirable
Date of Filing:
(NLRC) 28 March 1995
Date of Decision:
LA- 31 October 1995
LA-payment of
separation pay;
refund of bond plus
10 % attorneys fees
NLRC- Affirmed
NLRC- 28 January 1998

CA- 11 February 1999
CA- Affirmed
Page 140
worker.
The management prerogative to transfer personnel must
be exercised without grave abuse of discretion and
putting to mind the basic elements of justice and fair play.
There must be no showing that it is unnecessary,
inconvenient and prejudicial to the displaced employee.
NASIPIT LUMBER COMPANY and

PILIPPINE WALLBOARD
CORPORATION vs. NOWM
Suspension of operation not

exceeding six (6) months
G.R. No. 146225

25 November 2004
J. Callejo, Sr.
It is clear that while petitioner has the prerogative to

transfer its guards pursuant to business exigencies, he has
the burden, however, to show that the exercise of such
prerogative was not done with grave abuse of discretion
or contrary to justice and fair play.
We agree with the contention of the petitioners that
under Article 286 of the Labor Code, an employer may
bona fide suspend the operation of its business for a
period of not exceeding six (6) months. In such a case,
there is no termination of the employment of the
employees, but only a temporary displacement. When
the suspension of the business operations exceeds six
(6) months, then the employment of the employees
would be deemed terminated. On the other hand, if the
operation of the business is resumed within six (6)
months from the bona fide suspension thereof, it shall
be the duty of the employer to reinstate his employees
to their former positions without loss of seniority
rights, if the latter would indicate their desire to resume
work within one (1) month from such resumption of
operations, conformably to Article 286 of the Labor
Code which reads:
Art. 286. When employment not deemed
terminated - The bona fide suspension of the
operations of a business or undertaking for a
period not exceeding six (6) months, or the
fulfilment by the employee of a military service or
-22 April 1999 (MR)

SC- 25 November 2004
SC- Affirmed with

modification;
reinstatement and
payment of
backwages;
remanded to NLRC
for computation of
backwages
Date of Filing:
Sub-Regional
Arbitration branch of
NLRC: 18 November
1996
Labor Arbiter :
Dismissed

Arbiter: 7 July 1997
Date of Decision
NLRC: 31 March 1998
16 August 2000
Resolution on MR: 28
November 2000
25 November 2004
NLRC: set aside

LAs decision;
awarded separation
pay
CA: Affirmed with
modification;
payment of
separation pay
equivalent to onehalf () month pay
for every year of
service
MR: denied
SC: Affirmed with
modification
Page 141
civic duty shall not terminate employment.

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

is, therefore, recognized as a valid exercise of management
prerogative. The determination to cease or suspend
operations is a prerogative of management, which the
State does not usually interfere with as no business or
undertaking is required to continue operating at a loss
simply because it has to maintain its workers in
employment. Such an act would be tantamount to a taking
of property without due process of law.
However, the burden of proving, with sufficient
and convincing evidence, that such closure or
suspension is bona fide falls upon the employer.
FELIX vs. NLRC
G.R. No. 148256

17 November 2004
J. Carpio Morales
Absence of proof of loss of

confidence- dismissal cannot be
sustained
Unlike in other cases where the complainant has the burden

of proof to discharge its allegations, the burden of
establishing facts as bases for an employer's loss of
confidence in an employee facts which reasonably
generate belief by the employer that the employee was
connected with some misconduct and the nature of his
participation therein is such as to render him unworthy of
trust and confidence demanded of his position is on the
employer. Should the employer fail in discharging this
onus, the dismissal of the employee cannot be sustained.
This is consonant with the constitutional guarantee of
security of tenure, as implemented in what is now Sec. 279
Date of Filing:
10 October 1994
(illegal dismissal)
Labor Arbiter:
Dismissed
NLRC: Affirmed
(MR) Denied
CA: Affirmed
SC: Granted;
decision of CA
was set aside;
the petitioner
was declared
Date of Decision:
LA:16 October 1996
NLRC: 20 March 1998
(MR) 07 May 1998
CA: 21 May 2001
(MR): 07 August 2002
Page 142
of the Labor Code, as amended.
Hearing in case of denial
Loss of confidence
illegally
dismissed;
payment of full
backwages and
separation pay.
It bears emphasis that the matter of determining whether

the cause for dismissing an employee is justified on the
ground of loss of confidence cannot be left entirely to the
employer. Impartial tribunals do not rely only on the
statement made by the employer that there is "loss of
confidence" unless duly proved or sufficiently
substantiated.
It is settled that where the employee denies the

charges against him, a hearing is necessary to thresh
out any doubt. The failure of the company to give
petitioner, who denied the charges against him, the
benefit of a hearing and an investigation before his
termination constitutes an infringement of his
constitutional right to due process.
SC:17 November 2004
While Article 282 of the Labor Code provides that an

employer may terminate an employee based on fraud
or willful breach of the trust reposed in him by his
employer or duly authorized representative, loss of
trust and confidence as a just cause for dismissal was
never intended to provide employers with a carte
blanche for terminating employees. Such a vague, allencompassing pretext as loss of confidence, if
unqualifiedly given imprimatur by this Court, could
readily reduce to barren the constitutional guarantee
of security of tenure.
Page 143

Survey of Jurisprudence On Termination Disputes

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SURVEY OF JURISPRUDENCE ON TERMINATION DISPUTES AND SECURITY OF TENURE

PROCESS CYCLE TIME

Test of Constructive Dismissal;

To begin with, constructive dismissal is defined as quitting

25 July 2002 filed

PHILIPPINE PLAZA HOLINGS,

Loss of trust and confidence as a

G.R. No. 192826

Classes of Positions of trust

Quantum of proof required in case of

product of coercion or intimidation. He has to prove his

Primarily, it is apt to point out that proof beyond

LEOPARD SECURITY &

dismissal due to loss of trust and

therein rendered him absolutely unworthy of trust and

Temporary off-detail or floating

Applying Article 286 of the Labor Code of the Philippines

G.R. No. 186344

Award of Separation Pay ; Doctrine of

Survey of Jurisprudence on Termination and Security of Tenure

Having correctly ruled out illegal dismissal of

03 May 2005 filed

the latter recourse is no longer practical or in the best

As a relief granted in lieu of reinstatement, however, it

Survey of Jurisprudence on Termination and Security of Tenure

Reinstatement, as a labor law concept, means the

07 March 2006 filed

and/or the action is not motivated by consideration less

Doctrine of Strained Relations; Award

Survey of Jurisprudence on Termination and Security of Tenure

For abandonment to exist, it is essential (1) that the

application for the

12% per annum

Right to security of tenure of

G.R. No. 182072

Survey of Jurisprudence on Termination and Security of Tenure

It is undisputed that respondent was hired as a

It is primordial that at the start of the probationary

Survey of Jurisprudence on Termination and Security of Tenure

Project employee and Regular

G.R. No. 192394

In the instant case, the appointments issued to petitioner

Survey of Jurisprudence on Termination and Security of Tenure

18 February 2003 filed

NLRC - 31 October 2008

when his services were extended without any

Survey of Jurisprudence on Termination and Security of Tenure

Willful disobedience as ground for

G.R. No. 163431

Management prerogative; right to

Willful disobedience to the lawful orders of an employer is

01 June 2001 filed a

NLRC 17 June 2002

It is true that an employer is given a wide latitude of

Survey of Jurisprudence on Termination and Security of Tenure

been appreciated and evaluated with the goal of ensuring

COLEGIO DEL SANTISIMO

Probationary employment of Teachers

G.R. No. 170388

In Mercado v. AMA Computer College-Paraaque City,

Survey of Jurisprudence on Termination and Security of Tenure

13 July 1995 filed a

semesters of satisfactory service for those in the