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DAY SIX

M. TERMINATION OF EMPLOYMENT
Articles 282 286, Labor Code; IRR, Book VI, R1 S1-14.
Dept. Order No. 9, Rule XXIII, Secs. 1-9

1. GENERALLY:

1.1 No termination without just cause and due process;


rationale behind principle (Dept. Order No. 9, R23, S1)

Employee not required to prove innocence of the charges leveled against him. - Phil.
Transmarine vs. Carilla, 525 SCRA 586 [2007]

Issue: WON Employee is required to prove innocence of the charges leveled against him.

Held: NO.

In termination cases, the burden of proof rests upon the employer to show that the dismissal
of the employee is for just cause and failure to do so would mean that the dismissal is not
justified. A dismissed employee is not required to prove his innocence of the charges leveled
against him by his employer. The determination of the existence and sufficiency of a just
cause must be exercised with fairness and in good faith and after observing due process.

1.2 Management prerogative; Company rules and regulations

2. SOME GROUNDS FOR TERMINATION, Art. 282-285, LC

JUST CAUSE FOR TERMINATION

BUT EMPLOYEE MUST PROVE FACT OF DISMISSAL FIRST:


Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo,G.R. No. 192558, 15 Feb
2012.

2.1 Serious misconduct

Fighting within company premises:


Northwest Airlines Vs. Concepcion Del Rosario, GR. 157633, 10 September 2014. J.
Bersamin

ISSUES: Whether the fight between Del Rosario and Gamboa merits the dismissal of Del
Rosario?

RULING: No. The Court has observed that the term fight was considered to be different
from the term argument. In People v. Asto, for instance, the Court characterized fight as not
just a merely verbal tussle but a physical combat between two opposing parties.

Based on the foregoing, the incident involving Del Rosario and Gamboa could not be justly
considered as akin to the fight contemplated by Northwest. In the eyes of the NLRC, Del
Rosario and Gamboa were arguing but not fighting. The understanding of fight as one that
required physical combat was absent during the incident. Moreover, the claim of Morales
that Del Rosario challenged Gamboa to a brawl (sabunutan) could not be given credence
by virtue of its being self-serving in favor of Northwest, and of its being an apparent
afterthought on the part of Morales during the investigation of the incident, without Del
Rosario having the opportunity to contest Morales' statement. In that context, the
investigation then served only as Northwest's means to establish that the grounds of a valid
dismissal based on serious misconduct really existed.

Moreover, even assuming arguendo that the incident was the kind of fight prohibited by
Northwest's Rules of Conduct, the same could not be considered as of such seriousness as
to warrant Del Rosario's dismissal from the service. The gravity of the fight, which was not
more than a verbal argument between them, was not enough to tarnish or diminish
Northwest's public image.

Attitude problem e.g., negative attitude:


Cathedral School of Technology vs. NLRC, 251 SCRA 554 [1992]
Citibank NA vs. NLRC, 544 SCRA [2008]
Issue:
Whether or not Rosita Tan Paragas may be terminated by Citibank NA for her
serious misconduct, willful disobedience, gross and habitual neglect of duties and
gross inefficiency.
Held:
Yes. The private respondent may be terminated by the petitioner for serious
misconduct even when the NLRC did not specifically rule on the part of the
misconduct proceedings. The basis of the NLRC to rule on the serious misconduct
was the documentary evidence presented which it clearly cite as a basis to prove her
work inefficient upon close examination it curtails serious misconduct and When an
employee, despite repeated warnings from the employer, obstinately refuses to
curtail a bellicose inclination such that it erodes the morale of co-employees, the
same may be a ground for dismissal for serious misconduct.
Serious misconduct by manager
Sim vs. NLRC, 534 SCRA 515 [2007]
Issue:
Whether or not the dismissal of petitioner Sim on the ground of loss of trust and
confidence is valid.
Held:
Yes. In a managerial position, full trust and confidence of the employer is
mandatory and required, so if the ground of termination is loss of trust and
confidence it would suffice. In the circumstance given, Respondent is a managerial
employee. Thus, loss of trust and confidence is a valid ground for her dismissal.
The mere existence of a basis for believing that a managerial employee has
breached the trust of the employer would suffice for his/her dismissal. 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 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.
Tirazona vs. Phil. Eds Techno-Service (PET INC.), G.R. No. 169712, 20 January 2009

Moonlighting:
CAPITOL WIRELESS, INC. vs BALAGOT [G.R. No. 169016. 31 January 2007. J.
Morales]

ISSUE: Whether Balagots taking double jobs (as a collector of Capitol Wireless and as a
messenger for China Bank) overlaps with the other in terms of time and/or poses a clear
case of conflict of interest as to the nature of business of complainants two employers.

RULING: Yes. Under the Rules on Evidence, specifically Section 3, Rule 131, the
presumptions that the ordinary course of business has been followed and that things
happened according to the ordinary course of nature and the ordinary habits of life, are
disputable presumptions that can only be overcome by clear and preponderant evidence.
In this connection, it is of general knowledge that the banking industry follows the ordinary
working hours of 8:00 AM to 5:00 PM. Accordingly, an employee of a bank is expected to
work from eight in the morning to five in the afternoon. And, logically, since the banking
industry deals with businesses which observe the same working hours, a bank has no use
for an employee who can only be of service to it after 5:00 oclock in the afternoon.

Balagots claim that he performed his tasks for CCI only after his office hours with Capwire
does not impress. Since it is presumed, until contradicted that, the ordinary course of
business has been followed, and things happened according to the ordinary course of
nature and the ordinary habits of life, it logically follows that petitioner performed his duties
with China Banking Corporation during office hours that is from 8:00 am to 5:00 pm. This
presumption can be overcome only by clear and preponderant evidence. However, the
records of the case will clearly show that respondent failed to present any proof to
contradict the same, hence, the presumption stands against him. Thus, it was a highly
erroneous conclusion for the Court of Appeals to have found that there was no convincing
evidence to prove that petitioner was using the company resources of petitioner in
rendering messengerial services for China Banking Corporation.

Verily, jurisprudence recognizes as a valid ground for dismissal of an employee


unauthorized use of company time, as Pepsi-Cola Distributors of the Philippines, Inc. v.
NLRC holds:

An employee cannot serve himself and his employer at the same time all at the expense
of the latter. It would be unfair to compensate private respondent who does not devote his
time and effort to his employer.

Drug abuse as serious misconduct:


See also: REQUIREMTS FOR VALID DRUG TEST under RA 9156.
Plantation Bay Resort and Spa vs. Dubrico, 04 Dec 2009

Committing offenses penalized with three suspensions within a twelve-month


period:

Samahan Ng Manggagawa Sa Hyatt-NUHWRAIN Vs. Magsalin, GR No. 164939, 06


June 2011

Issue: WON Committing offenses penalized with three suspensions within a twelve-month
period is considered serious misconduct that would result to a valid dismissal.

Held: YES.
Series of irregularities when put together may constitute serious misconduct, which under
Article 282 of the Labor Code is a just cause for dismissal.
Here, Caragdags dismissal was due to several instances of willful disobedience to the
reasonable rules and regulations prescribed by his employer. The Voluntary Arbitrator
pointed out that according to the hotels Code of Discipline, an employee who commits
three different acts of misconduct within a twelve (12)-month period commits serious
misconduct. He stressed that Caragdags infractions were not even spread in a period of
twelve (12) months, but rather in a period of a little over a month. Records show the various
violations of the hotels rules and regulations were committed by Caragdag. He was
suspended for violating the hotel policy on bag inspection and body frisking. He was
likewise suspended for threatening and intimidating a superior while the latter was
counseling his staff. He was again suspended for leaving his work assignment without
permission. Evidently, Caragdags acts constitute serious misconduct.

Caragdags dismissal being due to serious misconduct, it follows that he should not be
entitled to financial assistance. To rule otherwise would be to reward him for the grave
misconduct he committed. Social justice is extended only to those who deserve its
compassion.

Contra: When not serious misconduct

RCPI vs. NLRC, G.R. No. 114777, 05 July 1996 stapler case

ISSUE: Whether Villaflores committed serious misconduct, and thus making his termination
valid

HELD: No, there was only a minor misconduct and there was an illegal termination. (The
act committed by Villaflores was to attempt to throw a stapler to his subordinate when the
latter was questioning Villaflores decision not to allow posting in the company bulletin
board of the subordinates poster of invitation to a computer seminar. A co-employee
snatched the stapler from Villaflores and the latter instead took the poster and tore it to
pieces, throwing them to his subordinate. As the subordinate was leaving, Villaflores
shouted invectives like bullshit ka, baboy ka, and gago ka at him.

VH Manufacturing vs. NLRC, 322 SCRA 417 [2000] sleeping on the job; dismissal too
harsh a penalty
Issue: Is sleeping on the job proper ground for terminating the employee?
Holding: The reason cited for the dismissal of private respondent is sleeping on the job in
violation of Company Rule 15-b. Evidence on this score is material, in view of the gravity of
the penalty of separation, as provided by the Company Rules and Regulation. In
termination disputes, the burden of proof is always on the employer to prove that the
dismissal was for a just and valid cause. What is at stake here is not only the job itself of
the employee but also his regular income therefrom which is the means of livelihood of his
family.
Petitioners reliance on the authorities it cited that sleeping on the job is always a valid
ground for dismissal, is misplaced.
While an employer enjoys a wide latitude of discretion in the promulgation of policies, rules
and regulations on work-related activities of the employees, those directives, however,
must always be fair and reasonable, and the corresponding penalties, when prescribed,
must be commensurate to the offense involved and to the degree of the infraction. In the
case at bar, the dismissal meted out on private respondent for allegedly sleeping on the
job, under the attendant circumstances, appears to be too harsh a penalty.

Samson vs. NLRC, 330 SCRA 460 [2000] invectives at company xmas party;
Issue: Is misconduct a proper ground for termination by the employer?
Holding: Misconduct is improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. The misconduct to
be serious must be of such grave and aggravated character and not merely trivial and
unimportant. Such misconduct, however serious, must, nevertheless, be in connection with
the employees work to constitute just cause for his separation.
In this case, the alleged misconduct of petitioner, when viewed in its context, is not of such
serious and grave character as to warrant his dismissal.

Contra to Samson: Punzal vs. ESTI Technologies, 518 SCRA 66 [2007]


Issue: Is sending out an email message that questions a management decision a
proper ground for termination by the employer?
Holding: In petitioners case, her assailed conduct was related to her work. It reflects an
unwillingness to comply with reasonable management directives. While in Samson,
Samson was held to be merely expressing his dissatisfaction over a management decision,
in this case, as earlier shown, petitioners offensive remarks were directed against Geisert
(Company SVP).

2.2 Gross insubordination

EPacific Global Contact Center vs. Cabansay, 538 SCRA 498 [2007]

ISSUE: Whether Cabansay committed willful disobedience or gross insubordination making


her dismissal valid.

HELD: Yes, there was willful disobedience or gross insubordination.

Willful disobedience or insubordination necessitates the concurrence of at least two


requisites: (1) the employees assailed conduct must have 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 the case at bar, the reasonableness and lawfulness of the superiors order is not in
question, so is its relation to the duties of respondent. What is disputed herein is rather its
clarity. Cabansay contends that the directive was not clearly made known to her: her
superiors order was to postpone the implementation but not the presentation of the new
training process/module to the team leaders, which has no merit. What is involved in the
directive is the new training process, which logically cannot be implemented without being
presented or communicated to the team leaders of the company. As to the willfulness of her
conduct, the same is manifest in her e-mail reply, which, as it is written, is characterized by
abject aggressiveness and antagonism: the e-mail has a begrudging tone and is replete with
capitalized words eliciting her resolve to indeed contravene the superiors directive. Thus,
she categorically said, This is a very simple presentation and I WILL NOT POSTPONE it
today, its very easy to comprehend and as per YOUR INSTRUCTION we will be
implementing it next week, so when should we present this to the TLs? Lets not make
SIMPLE THINGS COMPLICATED. I will go on with the presentation this afternoon.

QUESTION: MAY A MANAGER BE TERMINATED FOR GROSS INSUBORDINATION IF


THE COMPLAINED ACT WAS WITHIN MANAGERS DISCRETIONARY POWER?

Answer: Yes. Although a managerial employee is clothed with discretion to determine what
was in the best of the company, said managerial discretion is not without limits. Its
parameters were contained the moment the discretion was exercised, and then opposed by
the immediate superior/officer for being against the policies and welfare of the company.
Hence, any action in pursuit of the discretion thus opposed had ceased to be discretionary
and could be considered as willful disobedience.

Hilton Heavy Equipment vs. Ananias Dy, G.R. No. 164860, 02 February 2010.

Issue: Whether there was a valid cause for Dys termination from employment.

Held: YES.
Under the Labor Code, an employer may terminate an employment for the 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. Here, Dy mauled Duke Echiverri, a co-employee, within the premises of
the principal office of the Corporation. Dy defied orders of Lim to stop mauling Duke Echiverri. Dy also
threatened to kill the latter, and uttered that if he will be given monetary consideration, he will cease
working in the company. Hence, the mauling incident was a valid ground to terminate complainants
services considering that the victim was a manager and therefore a duly authorized representative of
respondents.

Contra: Refusal to comply due to valid reason


Lores Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia, G.R. No.
171189, 09 March 2011.

Issue: Whether Pacias dismissal was valid considering that her initial refusal to prepare the
checks was because she wanted to protect the company from liability under the Bouncing Checks
Law.

Held: NO.
Under the Labor Code, an employer may terminate an employment for serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or representative in
connection with his work. The offense of willful disobedience requires the concurrence of two (2)
requisites: (1) the employees assailed conduct must have 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. Indeed, there is
nothing unlawful in the directive of Sumulong to Pacia to prepare checks in payment of the companys
obligations. Pacias initial reluctance to prepare the checks, however, which was seemingly an act of
disrespect and defiance, was for honest and well-intentioned reasons. Protecting LREI and Sumulong
from liability under the Bouncing Checks Law was foremost in her mind. It was not wrongful or willful.
Neither can it be considered an obstinate defiance of company authority. The Court takes into
consideration that Pacia, despite her initial reluctance, eventually did prepare the checks on the same day
she was tasked to do it.

2.3 Gross negligence/habitual neglect of duty

May gross and habitual neglect likewise be considered as serious misconduct?

Arsenio Quiambao vs. Manila Electric Company, GR No. 171023, 18 December 2009.

ISSUE: Whether petitioner was validly dismissed for gross and habitual neglect of duty in
incurring several unauthorized absences despite having been reprimanded and suspended
because of the same in the past.

Held: Yes. Petitioners unauthorized absences as well as tardiness are habitual despite
having been penalized for past infractions. A series of irregularities when put together may
constitute serious misconduct. We also held that gross neglect of duty becomes serious in
character due to frequency of instances. Serious misconduct is said to be a transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and indicative of wrongful intent and not mere error of judgment. Petitioners
intentional and willful violation of company rules shows his utter disregard of his work and
his employers interest. Indeed, there can be no good faith in intentionally and habitually
incurring unexcusable absences.

Single isolated act of negligence insufficient ground for termination

St. Lukes Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No.
152166, 20 October 2010

Issue: WON a Single isolated act of negligence is sufficient ground for termination
Held: NO.

Under Article 282 (b) of the Labor Code, an employer may terminate an employee for
gross and habitual neglect of duties. 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. A single or isolated act of negligence
does not constitute a just cause for the dismissal of the employee.
Under the prevailing circumstances, respondent exercised his best judgment in
monitoring the CCTV cameras so as to ensure the security within the hospital premises.
Verily, assuming arguendo that respondent was negligent, although this Court finds
otherwise, the lapse or inaction could only be regarded as a single or isolated act of
negligence that cannot be categorized as habitual and, hence, not a just cause for his
dismissal.

2.4 Abandonment

2.5 Fraud

N.B.: Concealment of pregnancy; dismissal too harsh


Lakpue Drug vs. Balga, G.R. 166379, 20 Oct 2005]

2.6 Loss of Confidence/Breach of Trust

Two kinds of positions of trust identified:

ABELARDO ABEL vs. PHILEX MINING [GR 178976, 31 July 2009. J. Morales]

ISSUE: Whether Abel was validly dismissed on the ground of fraud resulting in loss of trust
and confidence?

RULING: No. Article 282(c) of the Labor Code allows an employer to terminate the services
of an employee for loss of trust and confidence:

ART. 282. Termination by employer. - An employer may terminate an employment for any of
the following causes: x x x x

c) Fraud or willful breach by the employee of the trust reposed in him by his employer or his
duly authorized representative.
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be holding a position of trust and confidence. Verily, the Court
must first determine if petitioner holds such a position.

There are two classes of positions of trust. The first class consists of managerial employees.
They are defined as those vested with the powers or prerogatives to lay down management
policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions. The second class consists of
cashiers, auditors, property custodians, etc.. They are defined as those who, in the normal
and routine exercise of their functions, regularly handle significant amounts of money or
property.

In this case, petitioner was a Contract Claims Assistant at respondents Legal Department at
the time he allegedly committed the acts which led to its loss of trust and confidence. It is not
the job title but the actual work that the employee performs. It was part of petitioners
responsibilities to monitor the performance of respondents contractors in relation to the
scope of work contracted out to them.

Respondent relies on petitioners reports regarding his inspection of the work


accomplishment of such contractors. As a result of his monitoring the enforcement of
respondents contracts which involve large sums of money, petitioner may well be
considered an employee with a position of trust analogous to those falling under the second
class. A position where a person is entrusted with confidence on delicate matters, or with the
custody, handling or care and protection of the employers property is one of trust and
confidence.

The second requisite is that there must be an act that would justify the loss of trust and
confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based
on a willful breach of trust and founded on clearly established facts. The basis for the
dismissal must be clearly and convincingly established but proof beyond reasonable doubt is
not necessary. Respondents evidence against petitioner fails to meet this standard. Its lone
witness, Lupega, did not support his affidavit and testimony during the company
investigation with any piece of evidence at all. No other employee working at respondents
mine site attested to the truth of any of his statements. Standing alone, Lupegas account of
the subsidence area anomaly could hardly be considered substantial evidence. And while
there is no concrete showing of any ill motive on the part of Lupega to falsely accuse
petitioner, that Lupega himself was under investigation when he implicated petitioner in the
subsidence area anomaly makes his uncorroborated version suspect. Also, Labor Arbiter
correctly found that the alleged telephone conversations between petitioner and Didith
Caballero of ANSECA would not suffice to lay the basis for respondents loss of trust and
confidence in petitioner.

Carlos Valenzuela vs. Caltex, GR 169965-66, 15 Dec 2010

Difference in termination of confidential employees vs rank-and-file


Phil. Transmarine Carriers vs. Carilla, 535 SCRA 893 [2007]
Issue:
Whether or not the employee has the burden of proof in proving his innocence of the
charges leveled against him by his employer
Held:
No. In termination cases, the burden of proof rests upon the employer to show that
the dismissal of the employee is for just cause and failure to do so would mean that
the dismissal is not justified. A dismissed employee is not required to prove his
innoncence of the charges leveled against him by his employer. The determination of
the existence and sufficiency of a just cause must be exercised with fairness and in
good faith after observing due process.
Bago vs. NLRC, 520 SCRA 644`[2007]
Issue:
Whether or not a rank and file employee can be dismissed on the ground of loss of
trust and confidence.
Held:
Yes. An employee can be dismissed for loss of trust and confidence even a rank and
file employee due to the nature of his position which is highly confidential. The
petitioner of course incorrectly assumes that mere rank and file employees cannot be
dismissed on the ground of loss of confidence. Jurisprudence holds otherwise albeit
it requires a higher proof of involvement in the questioned acts. As a general rule,
employers are allowed a wide latitude of discretion in terminating the employment
of managerial personnel or those who, while not of similar rank, perform functions
which by their nature require the employers full trust and confidence. Proof beyond
reasonable doubt is not required. It is sufficient that there is some basis for loss of
confidence, such as when the employer has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct, and the nature of
his participation therein renders him unworthy of the trust and confidence demanded
by his position. This must be distinguished from the case of ordinary rank and file
employees, whose termination on the basis of these same grounds requires a higher
proof of involvement in the events in question; mere uncorroborated assertion and
accusations by the employer will not suffice. Hence, in this case the petitioner
admitted the charges against her and the nature of her work involves the trust and
confidence of her employer towards her.
Tirazona vs. CA, 548 SCRA 560 (2008)

May an employee be terminated even if he did not benefit from the fraud committed?
Eric Dela Cruz V. Coca-Cola Bottlers, G.R. 180465, 31 July 2009

2.7 Incompetence

Contra: Inefficiency of employee; condonation by employer --


Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security
Agency, Inc., and Angel Quizon, G.R. No. 182086, 24 November 2010

2.8 Commission of a crime

Torreda vs. Toshiba Info Equip., 515 SCRA 133 [2007]

Issue: WON petitioner was validly dismissed.

Held: YES
The false attribution by the petitioner of robbery (theft) against Sepulveda was made in
writing; patently then, petitioner committed libel.
There is abundant evidence on record showing that petitioner committed libel against his
immediate superior, Sepulveda, an act constituting serious misconduct which warrants the
dismissal from employment.
Petitioner maliciously and publicly imputed on Sepulveda the crime of robbery of 200.00.
As gleaned from his Complaint which he filed with the General Administration, he knew that
it was Delos Santos who opened his drawer and not Sepulveda. Thus, by his own
admission, petitioner was well aware that the robbery charge against Sepulveda was a
concoction, a mere fabrication with the sole purpose of retaliating against Sepulvedas
previous acts.

AUTHORIZED CAUSES OF TERMINATION

2.9 Redundancy
Sebuguero vs. NLRC, 248 SCRA 532 [1995]
Issue: Is it within management prerogative to lay-off its employees temporarily for a
period not exceeding six months to prevent losses due to lack of work or job orders from
abroad?
Holding: Redundancy exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. A position is redundant
where it is superfluous, and superfluity of a position or positions may be the outcome of a
number of factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the
termination of employment initiated by the employer through no fault of the employee's 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
an act of the employer of dismissing employees because of losses in the operation of a
business, lack of work, and considerable reduction on the volume of his business, a right
consistently recognized and affirmed by this Court.
The law requires two notices one to the employee/s concerned and another to the DOLE
not just one. The notice to the DOLE is essential because the right to retrench is not an
absolute prerogative of an employer but is subject to the requirement of law that
retrenchment be done to prevent losses. The DOLE is the agency that will determine
whether the planned retrenchment is justified and adequately supported by facts.

Alleged redundancy contradictory to voluntary retirement.

General Milling Corporation vs. Violeta L. Viajar. G.R. No. 181738, 30 January 2013.

ISSUE: Whether Viajar was validly terminated on the ground of redundancy.

HELD: No. While the petitioner had been harping that it was on a reduction mode of its
employees, it has not presented any evidence (such as new staffing pattern, feasibility
studies or proposal, viability of newly created positions, job description and the approval of
the management of the restructuring, audited financial documents like balance sheets,
annual income tax returns and others) which could readily show that the companys
declaration of redundant positions was justified. Such proofs, if presented, would suffice to
show the good faith on the part of the employer or that this business prerogative was not
whimsically exercised in terminating respondents employment on the ground of
redundancy.

The demand for her to sign the Application for Retirement and Benefits also contravenes
the fact that she was terminated due to redundancy. Indeed, there is a difference between
voluntary retirement of an employee and forced termination due to authorized causes.
Retirement from service is contractual (i.e. based on the bilateral agreement of the employer
and employee), while termination of employment is statutory (i.e. governed by the Labor
Code and other related laws as to its grounds, benefits and procedure). Voluntary retirement
cuts employment ties leaving no residual employer liability; involuntary retirement amounts
to a discharge, rendering the employer liable for termination without cause.

2.10 Retrenchment or business reverses

Contra: separation pay not necessary in case of bankruptcy

North Davao Mining vs. NLRC, 254 SCRA 721 [1996]


Issue: Is a company which is forced by huge business losses to close its business, legally
required to pay separation benefits to its employees at the time of its closure in an amount
equivalent to the separation pay paid to those who were separated when the company was still a
going concern?

Held: NO.
Under the Labor Code, in case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half () month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
The underscored portion of Art. 283 governs the grant of separation benefits in case of closures or
cessation of operation of business establishments NOT due to serious business losses or financial
reverses. Where, however, the closure was due to business losses - as in the instant case, in which the
aggregate losses amounted to over P20 billion - the Labor Code does not impose any obligation upon the
employer to pay separation benefits, for obvious reasons. The grant of a lesser amount of separation pay
to private respondent was done, not by reason of discrimination, but rather, out of sheer financial
bankruptcy - a fact that is not controlled by management prerogatives. Stated differently, the total
cessation of operation due to mind-boggling losses was a supervening fact that prevented the company
from continuing to grant the more generous amount of separation pay. The fact that North Davao at the
point of its forced closure voluntarily paid any separation benefits at all - although not required by law -
and 12.5-days worth at that, should have elicited admiration instead of condemnation. But to require it to
continue being generous when it is no longer in a position to do so would certainly be unduly oppressive,
unfair and most revolting to the conscience.

Financial statements as proof of serious business losses


Virgilio Anabe vs. AsiaKonstruct, GR 183233, 23 Dec 2009

Issue: WON theres a valid retrenchment

Held: NO.
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is
reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de
minimis, but substantial, serious, and real, or only if expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) the employer serves written notice both to the
employee/s concerned and the Department of Labor and Employment at least a month before the
intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in an
amount prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith; and
(5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained.

The losses must be supported by sufficient and convincing evidence, the normal method of discharging
which is the submission of financial statements duly audited by independent external auditors.
In the present case, Asiakonstrukt failed to submit its audited financial statements within the two years
that the case was pending before the Labor Arbiter. It submitted them only after it received the adverse
judgment of the Labor Arbiter.
.
For failure then of Asiakonstrukt to clearly and satisfactorily substantiate its financial losses, the dismissal
of petitioner on account of retrenchment is unjustified.

2.11 Closure
Capitol Medical Center vs. Meris, 470 SCRA 125 [2005]
When done in bad faith
PENAFRANCIA TOURS AND TRAVEL TRANSPORT vs. SARMIENTO [GR 178397, 20
Oct 2010. J. Nachura]

ISSUE: Whether respondents were legally terminated from employment by reason of the
sale of the business enterprise and the consequent change or transfer of
ownership/management

RULING: No. A change of ownership in a business concern is not proscribed by law. Lest
petitioner forget, however, we also held therein that the sale or disposition must be
motivated by good faith as a condition for exemption from liability. Thus, where the charge
of ownership is done in bad faith, or is used to defeat the rights of labor, the successor-
employer is deemed to have absorbed the employees and is held liable for the
transgressions of his or her predecessor. In this case, there is no successor-employer
because there was no actual change of ownership. We sustain the uniform factual finding
of both the NLRC and the CA that no actual sale transpired and, as such, there is no
closure or cessation of business that can serve as an authorized cause for the dismissal of
respondents.

If indeed there was sale and a consequent rescission thereof which transpired, why is it
that the ALPS Transportation did not give much a fight when the contract of sale was
unilaterally rescinded by Bonifacio Cu who signed as President/General Manager of
petitioner PTTTI. It is quite unconceivable for a company like ALPS Transportation which
had already parted a considerable sum not to question the rescission undertaken by
petitioner PTTTI. This only confirms that the sale was indeed a sham, designed to
circumvent the law on the rights of the workers. Further, the alleged second sale made by
petitioner PTTTI, this time in favor of Southern Comfort Bus Co., Inc. is also simulated
considering that the ten million pesos consideration is unbelievably too small for 35 aircon
buses including its franchise and facilities thereon. It is quite an illogical move for the
company to have allegedly rescinded the previous sale involving a higher consideration
60,000,000.00 made in favor of ALPS Transportation and to resell the same, this time
just for a measly amount of 10,000,000.00. Petitioner having failed to discharge its
burden of submitting sufficient and convincing evidence required by law, we hold that
respondents were illegally dismissed.

2.12 Disease - continued employment must be prejudicial


to own health and co-workers
Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc., et al. G.R. No. 199338, 21 January
2013.

2.13 Merger or consolidation with another company


Manlimos vs. NLRC, 242 SCRA 145 [1995]
Issue:
Whether or not the employer can merge and consolidate with other company
Held:
Yes. It is a principle well recognized, that it is within the employers legitimate sphere of
management control of the business to adopt economic policies or make some changes or
adjustments in their organization or operations that would insure profit to itself or protect the
investment of its stockholders. As in the exercise of such management prerogative, the
employer may merge or consolidate its business with another or sell or dispose all or
substantially all of its assets and properties which may bring about the dismissal or
termination of its employees in the process. Such dismissal or termination should not
however be interpreted in such a manner as to permit the employer to escape the payment of
termination pay. For such a situation is not envisioned in the law. It strikes at the very
concept of social justice.

3. SPECIAL CIRCUMSTANCES:

3.1 Preventive suspension

3.2 Suspension where allowed for more than one month

3.3 Constructive dismissal -

3.4 Floating status not to exceed 6 months -


Nippon Housing Phil. Inc., et. al., vs. Maia Angela Reyes, G.R. No. 177816, 03 August 2011.

Issue:
Whether or not off-detailing is already considered a dismissal.
Held:
No. The Supreme Court said that off-detailing is not equivalent to dismissal, so
long as such status does not continue beyond a reasonable time and that it is only
when such a floating status lasts for more than six months that the employee may
be considered to have been constructively dismissed.
The rule is well-settled, however, that off-detailing is not equivalent to dismissal,
so long as such status does not continue beyond a reasonable time and that it is only
when such a floating status last for more than 6 months that the employee may be
considered to have been constructively dismissed. A complaint for illegal dismissal
filed prior to the lapse of said 6 month and/or the actual dismissal of the employee is
generally considered as prematurely filed.
Constructive Dismissal exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving
a demotion in rank and a diminution in pay. There is said to be a constructive
dismissal when an act of clear discrimination, insensitivity or disdain on the part of
the employer has become so unbearable as to leave an employee with no choice but
to forego continued employment. Constructive dismissal exists where there is
cessation of work because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution
in pay.

3.5 Last-In First-Out (LIFO) rule -


Maya Farms Employees Org. vs. NLRC, 239 SCRA 508
3.6 Totality of infractions rule

3.7 Length of service

CITIBANK NA vs. GATCHALIAN [G.R. No. 111222. 18 January 1995. J. Puno]

ISSUE: Whether Llonillos length of service may mitigate her negligence?

RULING: No. respondent Llonillo's employment service for 22 years would not, by itself,
mitigate her negligence, especially in view of the substantial loss incurred by petitioner bank.
The Union's claim for compassionate justice on respondent Llonillo's 22 years of service and
as first offender merit scant consideration. The longer an employee stays in the service of the
company, the greater is his responsibility for knowledge and compliance with the norms of
conduct, and the code of discipline of the company.

PLDT vs. NLRC, cited in Villeno case

3.8 Demotion
Leonardo vs. NLRC, 333 SCRA 589 [2000]

3.9 Resignation instead of termination

N.B.: Signing of Release Waivers and Quitclaims


Goodrich Manfuacturing vs. Ativo et al., GR 188002, 01 Feb 2010

Telex is not equivalent to tender of resignation.


Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza,
et al., G.R. No. 175558. 08 February 2012

Issue: WON Telex is equivalent to tender of resignation.


Held: NO
In this case, there was no written notice furnished to De Gracia, et al. regarding the cause
of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local
manning agency, claiming that De Gracia, et al. were repatriated because the latter
voluntarily pre-terminated their contracts. This telex was given credibility and weight by the
Labor Arbiter and NLRC in deciding that there was pre-termination of the employment
contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the
CA, the telex message is "a biased and self-serving document that does not satisfy the
requirement of substantial evidence." If, indeed, De Gracia, et al. voluntarily pre-
terminated their contracts, then De Gracia, et al. should have submitted their written
resignations.

3.10 Immorality/Sexual Harassment


Republic Act No. 7877

Cheryll Leus Vs. St. Scholasticas Westgrove And Sr. Edna Quiambao, G.R. No.
187226, 28 Jan 2015
Issue: Whether the petitioners pregnancy out of wedlock constitutes a valid ground to terminate
her employment.

Held: NO.
The fact of the petitioners pregnancy out of wedlock, without more, is not enough to characterize the
petitioners conduct as disgraceful or immoral. There must be substantial evidence to establish that pre-
marital sexual relations and, consequently, pregnancy out of wedlock, are indeed considered disgraceful
or immoral. The determination of whether a conduct is disgraceful or immoral involves a two-step
process: first, a consideration of the totality of the circumstances surrounding the conduct; and second,
an assessment of the said circumstances vis--vis the prevailing norms of conduct, i.e., what the society
generally considers moral and respectable. For a particular conduct to constitute "disgraceful and
immoral" behavior under civil service laws, it must be regulated on account of the concerns of public and
secular morality. Here, the Court does not find any circumstance which would lead the Court to conclude
that the petitioner committed a disgraceful or immoral conduct. Petitioner and her boyfriend, at the time
they conceived a child, had no legal impediment to marry. Indeed, even prior to her dismissal, the
petitioner married her boyfriend, the father of her child. To stress, pre-marital sexual relations between
two consenting adults who have no impediment to marry each other, and, consequently, conceiving a
child out of wedlock, gauged from a purely public and secular view of morality, does not amount to a
disgraceful or immoral conduct. Accordingly, the labor tribunals erred in upholding the validity of the
petitioners dismissal.

Contra: when not Immorality Chua-Qua vs. Clave, 189 SCRA 117 [1990

Issue: Whether petitioner's contracting of marriage with her student serious misconduct, if not an
immoral act, a breach of trust and confidence reposed upon her and, thus, a valid and just ground
to terminate her services.

Held: NO.
To constitute immorality, the circumstances of each particular case must be holistically considered and
evaluated in the light of prevailing norms of conduct and the applicable law. With the finding that there is
no substantial evidence of the imputed immoral acts, it follows that the alleged violation of the Code of
Ethics governing school teachers would have no basis. Private respondent utterly failed to show that
petitioner took advantage of her position to court her student. If the two eventually fell in love, despite the
disparity in their ages and academic levels, this only lends substance to the truism that the heart has
reasons of its own which reason does not know. But, definitely, yielding to this gentle and universal
emotion is not to be so casually equated with immorality. The deviation of the circumstances of their
marriage from the usual societal pattern cannot be considered as a defiance of contemporary social
mores. The charge against petitioner not having been substantiated, we declare her dismissal as
unwarranted and illegal.

Contra on live-in relationships, Toledo vs. Toledo 544 SCRA 27

Issue: Whether respondent should be disbarred on the ground of abandonment of his wife and
immorality for cohabiting with another woman by whom he has a child.

Held: YES.
The respondent admits that he is married to the complainant. The fact that he is cohabiting with another
woman who had borne him a child has been established by the testimony of Marina Payot and Lino
Domingo, whose sincerity and truthfulness have been put to a severe and searching test by the
investigating Solicitor in the presence of the respondent who appeared in his own behalf and cross-
examined the witnesses during the investigation. Hence, the respondent, by abandoning his lawful wife
and cohabiting with another woman who had borne him a child, has failed to maintain the highest degree
of morality expected and required of a member of the Bar. Therefore, the respondent is disbarred from
the practice of law.

Lourdes Domingo Vs. Rogelio Rayala, G.R. No. 155831, 18 February 2008. J.
Nachura
ISSUE: WON Rayala is guilty of sexual harrassment
RULING: YES.
The CA, thus, correctly ruled that Rayalas culpability is not to be determined solely on the basis of
Section 3, RA 7877, because he is charged with the administrative offense, not the criminal infraction, of
sexual harassment. It should be enough that the CA, along with the Investigating Committee and the
Office of the President, found substantial evidence to support the administrative charge.

Yet, even if we were to test Rayalas acts strictly by the standards set in Section 3, RA 7877, he would still
be administratively liable. It is true that this provision calls for a demand, request or requirement of a
sexual favor. But it is not necessary that the demand, request or requirement of a sexual favor be
articulated in a categorical oral or written statement. It may be discerned, with equal certitude, from the
acts of the offender. Holding and squeezing Domingos shoulders, running his fingers across her neck and
tickling her ear, having inappropriate conversations with her, giving her money allegedly for school
expenses with a promise of future privileges, and making statements with unmistakable sexual overtones
all these acts of Rayala resound with deafening clarity the unspoken request for a sexual favor.

Likewise, contrary to Rayalas claim, it is not essential that the demand, request or requirement be made
as a condition for continued employment or for promotion to a higher position. It is enough that the
respondents acts result in creating an intimidating, hostile or offensive environment for the employee.
That the acts of Rayala generated an intimidating and hostile environment for Domingo is clearly shown
by the common factual finding of the Investigating Committee, the OP and the CA that Domingo reported
the matter to an officemate and, after the last incident, filed for a leave of absence and requested transfer
to another unit.

Next, Rayala alleges that the CA erred in holding that sexual harassment is an offense malum prohibitum.
He argues that intent is an essential element in sexual harassment, and since the acts imputed to him
were done allegedly without malice, he should be absolved of the charges against him.

We reiterate that what is before us is an administrative case for sexual harassment. Thus, whether the
crime of sexual harassment is malum in se or malum prohibitum is immaterial.

Contra: When not sexual harassment, Atty. Susan Aquino vs. Hon. Ernesto Acosta,
Presiding Judge of the Court of Tax Appeals, A.M. No. CTA 01-1, 02 April 2002
Issue: Did the Judge sexually harass the attorney by kissing her on the cheek
and greeting her on holidays?
Holding: Administrative complaints against members of the judiciary are viewed
by this Court with utmost care, for proceedings of this nature affect not only the reputation
of the respondents concerned, but the integrity of the entire judiciary as well.
We have reviewed carefully the records of this case and found no convincing evidence to
sustain complainants charges. What we perceive to have been committed by respondent
judge are casual gestures of friendship and camaraderie, nothing more, nothing less. In
kissing complainant, we find no indication that respondent was motivated by malice or
lewd design. Evidently, she misunderstood his actuations and construed them as work-
related sexual harassment under R.A. 7877.
From the records on hand, there is no showing that respondent judge demanded,
requested or required any sexual favor from complainant in exchange for favorable
compensation, terms, conditions, promotion or privileges specified under Section 3 of
R.A. 7877. Nor did he, by his actuations, violate the Canons of Judicial Ethics or the
Code of Professional Responsibility.

3.11 Termination instigated by Union on account


of Union Security Clause
Malayang Samahan sa M Greenfield, supra., 326 SCRA 428 [2000]
Issue: Was the act of disaffiliation and declaration of autonomy by the local union
reasonable ground to expel the officers from their work?
Holding: A local union has the right to disaffiliate from its mother union or declare
its autonomy. A local union, being a separate and voluntary association, is free to serve
the interests of all its members including the freedom to disaffiliate or declare its autonomy
from the federation to which it belongs when circumstances warrant, in accordance with
the constitutional guarantee of freedom of association. Thus, a local union which has
affiliated itself with a federation is free to sever such affiliation anytime and such
disaffiliation cannot be considered disloyalty. In the absence of specific provisions in the
federations constitution prohibiting disaffiliation or the declaration of autonomy of a local
union, a local may dissociate with its parent union.

Alabang Country Vs. NLRC, 545 SCRA 351 [2008].

ISSUE: Whether there was a valid termination of the respondent employees in conformity
with a CBA which mandates the employer to dismiss an employee for malversation of
union funds.

HELD: Yes. Termination of employment by virtue of a union security clause embodied in a


CBA is recognized and accepted in our jurisdiction. This practice strengthens the union
and prevents disunity in the bargaining unit within the duration of the CBA. By preventing
member disaffiliation with the threat of expulsion from the union and the consequent
termination of employment, the authorized bargaining representative gains more numbers
and strengthens its position as against other unions which may want to claim majority
representation.

In terminating the employment of an employee by enforcing the union security clause, the
employer needs only to determine and prove that: (1) the union security clause is
applicable; (2) the union is requesting for the enforcement of the union security provision
in the CBA; and (3) there is sufficient evidence to support the union's decision to expel the
employee from the union. These requisites constitute just cause for terminating an
employee based on the CBA's union security provision.

The three respondents were expelled from and by the Union after due investigation for
acts of dishonesty and malversation of Union funds. In accordance with the CBA, the
Union properly requested the Club, through a letter, to enforce the Union security
provision in their CBA and terminate said respondents. Then, in compliance with the
Union's request, the Club reviewed the documents submitted by the Union, requested said
respondents to submit written explanations, and thereafter afforded them reasonable
opportunity to present their side. After it had determined that there was sufficient evidence
that said respondents malversed Union funds, the Club dismissed them from their
employment conformably with Sec. 4(f) of the CBA. Thus, there is sufficient cause for the
three respondents' termination from employment.

Inguillio vs. First Phil. Scales, GR No. 165407, 05 June 2009

Issue: WON the dismissal from employment based on the Union Security Clause in the
CBA is valid.

Held: YES.
In terminating the employment of an employee by enforcing the Union Security Clause,
the employer needs only to determine and prove that: (1) the union security clause is
applicable; (2) the union is requesting for the enforcement of the union security provision
in the CBA; and (3) there is sufficient evidence to support the union's decision to expel the
employee from the union or company.
All the requisites have been sufficiently met and FPSI was justified in enforcing the Union
Security Clause, for the following reasons:

First. FPSI was justified in applying the Union Security Clause, as it was a valid provision
in the CBA, the existence and validity of which was not questioned by either party.
Moreover, petitioners were among the 93 employees who affixed their signatures to the
document that ratified the CBA. They cannot now turn their back and deny knowledge of
such provision.

Second. FPSILU acted on its prerogative to recommend to FPSI the dismissal of the
members who failed to maintain their membership with the Union. Aside from joining
another rival union, FPSILU cited other grounds committed by petitioners and the other
employees which tend to prejudice FPSIs interests, i.e., dereliction of duty - by failing to
call periodic membership meetings and to give financial reports; depositing union funds in
the names of Grutas and former Vice-President Yolanda Tapang, instead of in the name
of FPSILU care of the President; causing damage to FPSI by deliberately slowing down
production, preventing the Union from even attempting to ask for an increase in benefits
from the former; and poisoning the minds of the rest of the members of the Union so that
they would be enticed to join the rival union.

Third. FPSILU's decision to ask for the termination of the employees in the "Petisyon" was
justified and supported by the evidence on record. Bergante and Inguillo were
undisputably former members of FPSILU. In fact, Inguillo was the Secretary of Finance,
the underlying reason why his salary was garnished to satisfy the judgment of the Med-
Arbiter who ordered NLM-KATIPUNAN to return the Union dues it erroneously collected
from the employees. Their then affiliation with FPSILU was also clearly shown by their
signatures in the document which ratified the CBA. Without a doubt, they committed acts
of disloyalty to the Union when they failed not only to maintain their membership but also
disaffiliated from it. They abandoned FPSILU and even joined another union which works
against the former's interests. This is evident from the intra-union dispute filed by NLM-
KATIPUNAN against FPSILU. Once affiliated with NLM-KATIPUNAN, Bergante and
Inguillo proceeded to recruit other employees to disaffiliate from FPSILU and even
collected Union dues from them.

4. PROCEDURE TO TERMINATE EMPLOYMENT


Art. 282, Lc; B5 R14 S1-11, IRR; Dept. Order No. 9, Rule 23, Sec. 2-9)

4.1 General Rule: Twin requirements of notice and hearing must be complied with for
valid termination

Reasonable period to answer, interpreted as FIVE days:


King of Kings Transport vs. Mamac, 526 SCRA 116 [2007]

Requirements of Charge Sheet/Notice of Appraisal:

MAGRO PLACEMENT vs. HERNANDEZ [G.R. No. 156964. 4 July 2007. J. Austria-
Martinez]

ISSUE: Whether Hernandez was accorded procedural due process before his separation
from work.
RULING: No. In dismissing an employee, the employer has the burden of proving that the
dismissed worker has been served 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.

In Maquiling v. Philippine Tuberculosis Society, Inc., the Court held that the first notice must
inform the employee outright that an investigation will be conducted on the charges
specified in such notice which, if proven, will result in the employees dismissal. The Court
explained the rationale for this rule, thus:

This notice will afford the employee an opportunity to avail all defenses and exhaust all
remedies to refute the allegations hurled against him for what is at stake is his very life and
limb his employment. Otherwise, the employee may just disregard the notice as a warning
without any disastrous consequence to be anticipated. Absent such statement, the first
notice falls short of the requirement of due process. Ones work is everything, thus, it is not
too exacting to impose this strict requirement on the part of the employer before the
dismissal process be validly effected. This is in consonance with the rule that all doubts in
the implementation and interpretation of the provisions of the Labor Code, including its
implementing rules and regulations, shall be resolved in favor of labor.

In the present case, petitioner argues that the purpose of the written notice requirement
was achieved when respondent issued the three statements where he was given the
chance to air his side before his termination.

The Court disagrees. Al Yamama failed to satisfy the two-notice requirement. Without prior
notice or explanation, Al Yamama took respondent's passport and simply brought him to
petitioner's foreign principal, Orbit, and told the latter that respondent did not know his job
as electrician. Respondent heard his employer's complaint against him at that instance
only.

From these facts, it is clear that respondent's dismissal was effected without the notice
required by law.

Genuino vs. NLRC, 539 SCRA 342 [2007]

Genuino vs. National Labor Relations Commission


G.R. Nos. 142732-33. December 4, 2007.
VELASCO, JR., J.:

Facts: Citibank is an American banking corporation duly licensed to do business in the


Philippines. William Ferguson was the Manila Country Corporate Officer and Business
Head of the Global Finance Bank of Citibank while Aziz Rajkotwala was the International
Business Manager for the Global Consumer Bank of Citibank.

Genuino was employed by Citibank sometime in January 1992 as Treasury Sales Division
Head with the rank of Assistant Vice-President. She received a monthly compensation of
PhP 60,487.96, exclusive of benefits and privileges.

On August 23, 1993, Citibank sent Genuino a letter charging her with knowledge and/or
involvement in transactions which were irregular or even fraudulent. In the same letter,
Genuino was informed she was under preventive suspension.
After administrative investigation, Genuinos employment was terminated by Citibank on
grounds of (1) serious misconduct, (2) willful breach of the trust reposed upon her by the
bank, and (3) commission of a crime against the bank.

Issue: Whether the dismissal of Genuino is for a just cause and in accordance with due
process?

Held: No. The dismissal was for just cause but lacked due process. The Court affirm that
Genuino was dismissed for just cause but without the observance of due process.

The Implementing Rules and Regulations of the Labor Code provide that any employer
seeking to dismiss a worker shall furnish the latter a written notice stating the particular acts
or omissions constituting the grounds for dismissal. The purpose of this notice is to
sufficiently apprise the employee of the acts complained of and enable him/her to prepare
his/her defense.

In this case, the letters dated August 23, September 13 and 20, 1993 sent by Citibank did
not identify the particular acts or omissions allegedly committed by Genuino. The August
23, 1993 letter charged Genuino with having some knowledge and/or involvement in
some transactions which have the appearance of being irregular at the least and may even
be fraudulent. The September 13, 1993 letter, on the other hand, mentioned irregular
transactions involving Global Pacific and/or Citibank and 12 bank clients. Lastly, the
September 20, 1993 letter stated that Genuino and Mr. Dante Santos, using the facilities of
their family corporations (Torrance and Global) appear to have participated in the diversion
of bank clients funds from Citibank to, and investment thereof in, other companies and that
they made money in the process, in violation of the conflict of law rule [sic]. The extent of
Genuinos alleged knowledge and participation in the diversion of banks clients funds,
manner of diversion, and amounts involved; the acts attributed to Genuino that conflicted
with the banks interests; and the circumstances surrounding the alleged irregular
transactions, were not specified in the notices/letters.

The two-notice requirement of the Labor Code is an essential part of due process. The first
notice informing the employee of the charges should neither be pro forma nor vague. It
should set out clearly what the employee is being held liable for. The employee should be
afforded ample opportunity to be heard and not mere opportunity.

Since the notice of charges given to Genuino is inadequate, the dismissal could not be in
accordance with due process.

Is the employer required to inform the employee in the appraisal/charge sheet that
he may be terminated for the infraction?
Dolores T. Esguerra vs. Valle Verde Country Club et. al., G.R. No. 173012, 13 June 2012

Issue:
Whether or not the employee is required to be informed of his wrongdoings which
led to his/her dismissal
Held:
Yes. The Supreme Court ruled that under the labor code, the existence of an actual,
formal trial-type hearing, although preferred, is not absolutely necessary to satisfy
the employees right to be heard. Esguerra was able to present her defenses; and
only upon proper consideration of it did Valle Verde send the second memorandum
terminating her employment. Since Valle Verde complied with the two-notice
requirement, no procedural defect exists in Esguerras termination. Right to be
heard and the two-fold rule is absolute.
4.2 Exception: WENPHIL doctrine, as affirmed by the AGABON vs NLRC
case [17 Nov. 2004]; SERRANO ruling overturned

Wenphil vs. NLRC, 170 SCRA 69 [1989]


Issue:
Whether or not Constitutional due process to be heard is strictly observed in Labor
cases.
Held:
Yes. The Supreme Court ruled in the affirmative. Due process simply means giving
notice and opportunity to be heard before judgment is rendered. The failure of
petitioner to give private respondent the benefit of a hearing before he was
dismissed constitutes an infringement of his constitutional right to due process in
judicial as well as administrative proceedings have long been established. In its bare
minimum due process of law simply means giving notice and opportunity to be
heard before judgment is rendered.
Serrano vs. NLRC, 323 SCRA 445 [2000]
Agabon vs. NLRC, 442 SCRA 573 [17 Nov. 2004]
See: Section 5.2 on Illegality of the Manner of Dismissal

4.3 Administrative Hearing/investigation not required:


Perez vs. Philippine Telegraph and Telephone Company, 584 SCRA 110[2009], En Banc

PEREZ vs. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY [G.R. No. 152048. 7 April 2009. J.
Corona]

ISSUE: Whether a hearing (or conference) is mandatory in cases involving the dismissal of an employee.

RULING: No. There is no need for a hearing or conference.


Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must
be given "ample opportunity to be heard and to defend himself." Thus, the opportunity to be heard
afforded by law to the employee is qualified by the word "ample" which ordinarily means "considerably
more than adequate or sufficient." In this regard, the phrase "ample opportunity to be heard" can be
reasonably interpreted as extensive enough to cover actual hearing or conference.

Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be
taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance
with the due process requirement in termination of employment. The test for the fair procedure
guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation
between the employer and the employee. The "ample opportunity to be heard" standard is neither
synonymous nor similar to a formal hearing. To confine the employees right to be heard to a solitary form
narrows down that right. It deprives him of other equally effective forms of adducing evidence in his
defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The "very nature
of due process negates any concept of inflexible procedures universally applicable to every imaginable
situation."

The standard for the hearing requirement, ample opportunity, is couched in general language revealing
the legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given
situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit.
A hearing means that a party should be given a chance to adduce his evidence to support his side of the
case and that the evidence should be taken into account in the adjudication of the controversy.23 "To be
heard" does not mean verbal argumentation alone inasmuch as one may be heard just as effectively
through written explanations, submissions or pleadings.24 Therefore, while the phrase "ample opportunity
to be heard" may in fact include an actual hearing, it is not limited to a formal hearing only. In other words,
the existence of an actual, formal "trial-type" hearing, although preferred, is not absolutely necessary to
satisfy the employees right to be heard.

When employee has voluntarily admitted guilt


Bernardo vs. NLRC, 255 SCRA 108 [1996]

4.4 Right to counsel on the part of the employee is this mandatory and indispensable as
part of due process?

Lopez vs. Alturas Group, 11 April 2011,

Issue: WON Right to counsel on the part of the employee is a mandatory and indispensable
as part of due process.

Held: NO.
The right to counsel and the assistance of one in investigations involving termination cases
is neither indispensable nor mandatory, except when the employee himself requests for
one or that he manifests that he wants a formal hearing on the charges against him. In
petitioners case, there is no showing that he requested for a formal hearing to be
conducted or that he be assisted by counsel. Verily, since he was furnished a second
notice informing him of his dismissal and the grounds therefor, the twin-notice requirement
had been complied with.

4.5 Burden of proof rests upon employer to show just cause and due process

5. NORMAL CONSEQUENCES OF ILLEGAL DISMISSAL


Art. 279, LC; cf. Art. 223, LC effect of appeal

5.1 Illegality of the act of dismissal - Dismissal without just cause

a) Reinstatement plus full backwages, or separation pay,


in lieu of reinstatement

When reinstatement is not done in good faith; demotion


Banares vs. Tabaco Women Transport Services, G.R. No. 197353, 01 April 2013

ISSUE: Was there a proper and genuine reinstatement of petitioner to his former
position of General Manager of TAWTRASCO without loss of seniority rights and
privileges?

HELD: No.

Petitioner was tasked to discharge menial duties, such as maintaining a record of the
"in" and "out" of freight loaded on all TAWTRASCO buses and signing the trip
records of the buses going out daily. To be sure, these tasks cannot be classified as
pertaining to the office of a general manager, but that of a checker. TAWTRASCO
withheld petitioners customary boarding house privilege. What is more,
TAWTRASCO did not provide him with a formal office space. The office where he
was assigned in Virac, Catanduanes is not in good and tenantable condition. As
shown in complainants Annex "F" which is the photograph of the place, it is unsafe,
dilapidated and in a messy situation. Under Article 223 of the Labor Code, an
employee entitled to reinstatement "shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation x x x."
Verily, an illegally dismissed employee is entitled to reinstatement without loss of
seniority rights and to other established employment privileges, and to his full
backwages.

6.4 ON BACKWAGES - Mercury drug rule overturned by RA 6715

Cannot be reduced by earnings derived elsewhere:


Bustamante vs. NLRC, 265 SCRA 61 [1996]
Issue: Can the award of backwages be reducd by what the plaintiff has earned
elsewhere?
Holding: An illegally dismissed employee is entitled to his full backwages 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.
Conformably with the evident legislative intent as expressed in Rep. Act No. 6715,
above-quoted, backwages to be awarded to an illegally dismissed employee, should not,
as a general rule, be diminished or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal. The underlying reason for this ruling is that the
employee, while litigating the legality (illegality) of his dismissal, must still earn a living to
support himself and family, while full backwages have to be paid by the employer as part
of the price or penalty he has to pay for illegally dismissing his employee.

Conrado A. Lim Vs. HMR Philippines, Inc., Et Al; G.R. No. 201483, 04 August 2014-
Computation Of Backwages: Up To Promulgation Of Decision Or Until Actual
Reinstatement? Entitled To Salary Differentials? Entitled To Holiday Pay?

b) Moral and exemplary damges -

c) Attorneys fees

d) Liability of corporate officers

Carmen Dy-Dumalasa vs. Domingo Sabado S. Fernandez, et. al., G.R. No. 178760
[23 July 2009].

Issue:

Whether the Labor Arbiter acquired jurisdiction over the petitioner

Ruling:

Yes. The Labor Arbiter acquired jurisdiction over her person regardless of the fact that
there was allegedly no valid service of summons. It bears noting that, in quasi-judicial
proceedings, procedural rules governing service of summons are not strictly
construed. Substantial compliance therewith is sufficient. In the cases at bar,
petitioner, her husband and three other relatives, were all individually impleaded in the
complaint.

The Labor Arbiter furnished her with notices of the scheduled hearings and other
processes. It is undisputed that HELIOS, of which she and her therein co-respondents
in the subject cases were the stockholders and managers, was in fact heard, proof of
which is the attendance of her husband, President-General Manager of HELIOS,
together with counsel in one such scheduled hearing and the Labor Arbiters
consideration of their position paper in arriving at the Decision, albeit the same
position paper was belatedly filed.

Park Hotel, et al. vs. Manolo Soriano, et al., G.R. No. 171118, 10 September 2012.

Park Hotel, et al. vs. Manalo Soriano, et al.


GR No. 171118, September 10, 2012

Issue: Whether Percy and Harbutt, who are owners of Park Hotel and corporate
officers of Burgos, may be held liable for illegal dismissal and unfair labor practices
committed by Park Hotel and Burgos against Soriano, Gonzales and Badilla.

Ruling: YES. Although the corporate veil between Park Hotel and Burgos cannot be
pierced, it does not necessarily mean that Percy and Harbutt are exempt from liability
towards respondents. Verily, a corporation, being a juridical entity, may act only
through its directors, officers and employees. Obligations incurred by them, while
acting as corporate agents, are not their personal liability but the direct accountability
of the corporation they represent. However, corporate officers may be deemed
solidarily liable with the corporation for the termination of employees if they acted with
malice or bad faith. In the present case, the lower tribunals unanimously found that
Percy and Harbutt, in their capacity as corporate officers of Burgos, acted maliciously
in terminating the services of respondents without any valid ground and in order to
suppress their right to self-organization.

Section 31of the Corporation Code makes a director personally liable for corporate
debts if he willfully and knowingly votes for or assents to patently unlawful acts of the
corporation. It also makes a director personally liable if he is guilty of gross
negligence or bad faith in directing the affairs of the corporation. Thus, Percy and
Harbutt, having acted in bad faith in directing the affairs of Burgos, are jointly and
severally liable with the latter for respondents' dismissal.

5.2 Illegality in manner of dismissal - Dismissal without due process

a) SERRANO RULING (323 SCRA 445 [2000]) now overturned by AGABON VS. NLRC
CASE (17 NOV. 2004); see above
b) Wenphil doctrine to apply per AGABON case; employee to be awarded indemnity in the
amount of P30,000.00
c) To be governed exclusively by civil code principles
Aurora Land Projects vs. NLRC, 266 SCRA 48 [1997]
d) Mere failure to comply with notice requirement on closure or dismissal does not amount
to a patently illegal act. Carag vs. NLRC, 520 SCRA 28 [2007]

Carag vs. National Labor Relations Commission


G.R. No. 147590. April 2, 2007.

ISSUE: Whether the mere failure to comply with notice requirement on closure or
dismissal amounts to a patently illegal act as to hold a director personally liable.

HELD: NO. The rule is that a director is not personally liable for the debts of the
corporation, which has a separate legal personality of its own; Section 31 of the
Corporation Code makes a director personally liable for corporate debts if he willfully
and knowingly votes for or assents to patently unlawful acts of the corporation, or if he
is guilty of gross negligence or bad faith in directing the affairs of the corporation. To
hold a director personally liable for debts of the corporation, and thus pierce the veil of
corporate fiction, the bad faith or wrongdoing of the director must be established clearly
and convincingly. Bad faith is never presumed. Bad faith does not connote bad
judgment or negligence. Bad faith imports a dishonest purpose. Bad faith means
breach of a known duty through some ill motive or interest. Bad faith partakes of the
nature of fraud.

Neither does bad faith arise automatically just because a corporation fails to comply
with the notice requirement of labor laws on company closure or dismissal of
employees. The failure to give notice is not an unlawful act because the law does not
define such failure as unlawful. Such failure to give notice is a violation of procedural
due process but does not amount to an unlawful or criminal act. Such procedural defect
is called illegal dismissal because it fails to comply with mandatory procedural
requirements, but it is not illegal in the sense that it constitutes an unlawful or criminal
act.

For a wrongdoing to make a director personally liable for debts of the corporation, the
wrongdoing approved or assented to by the director must be a patently unlawful act.
Mere failure to comply with the notice requirement of labor laws on company closure or
dismissal of employees does not amount to a patently unlawful act. Patently unlawful
acts are those declared unlawful by law which imposes penalties for commission of
such unlawful acts. There must be a law declaring the act unlawful and penalizing the
act.

e) If dismissal is for authorized cause BUT without due process, then P50,000.00; if
dismissal is for just cause BUT without due process, the P30,000.00. -- Jaka Food
Processing v. Pacot, G.R. No. 151378, 28 March 2005

g) Factors to consider in determining nominal damages for failure to comply with


due process requirements. --

Industrial Timber Corp. v. Agabon, G.R. No. 164518, 30 March 2006

Issue: Won the modification of the nominal damages is proper.

Ruling: Yes. While it has been ruled that the sanction should be stiffer in a dismissal based
on authorized cause where the employer failed to comply with the notice requirement
than a dismissal based on just cause with the same procedural infirmity, in instances
where the execution becomes impossible, unjust, or too burdensome, modification of
the decision in order to harmonize the disposition with the prevailing circumstances is
proper. In the determination of the amount of nominal damages which is addressed to
the sound discretion of the court, several factors are taken into account: (1) the
authorized cause invoked, whether it was a retrenchment or a closure or cessation of
operation of the establishment due to serious business losses or financial reverses or
otherwise; (2) the number of employees to be awarded; (3) the capacity of the
employers to satisfy the awards, taken into account their prevailing financial status as
borne by the records; (4) the employers grant of other termination benefits in favour of
the employees; and (5) whether there was a bona fide attempt to comply with the
notice requirements as opposed to giving no notice at all.
Here, there was a valid authorized cause considering the closure of the ITCs business
which was done in good faith. Moreover ITC had ceased to generate any income since
its closure. It also appears that ITC had given its employees all benefits in accord with
the CBA upon their termination. Thus, modification of the nominal damages is proper,
for 50,000 each it must be reduced to 10,000 each.

6. RELIEFS UNDER THE LABOR CODE

6.1 On reinstatement and strained relations


Kunting vs. NLRC, 227 SCRA 571

CONSUELO B. KUNTING vs. NLRC [G.R. No. 101427. November 8, 1993]

ISSUE: Whether, in the case at bar, reinstatement may not be ordered due to strained
relations. NO.

RULING: Indeed, an illegally dismissed employees right to reinstatement is not absolute.


The Court has a long line of decisions concerning non-reinstatement of illegally dismissed
employees on various grounds. One of these grounds is when there is a finding that the
relationship between the parties has become so strained and ruptured as to preclude a
harmonious working relationship.

In the case at bar, however, the peculiar circumstances surrounding the dismissal of
petitioner simply do not show such kind of strained relationship as to warrant the
severance of the working relationship between the parties. The strained relations between
petitioner and private respondents was merely gathered from the latters evidence on the
formers less than ideal conduct and nothing more. There is no proof that such conduct
actually caused animosity between her and private respondents. Besides, there is no clear
showing that the perceived strained relations between the parties is of so serious a nature
or of such a degree as to justify petitioners dismissal.

Strained relations, must be of such a nature or degree as to preclude reinstatement. But,


where the differences between the parties are neither personal nor physical, nor serious, then
there is no reason why the illegally dismissed employee should not be reinstated rather than
simply given separation pay and back wages.

Congson vs. NLRC, 243 SCRA 260 [1995]


Aguilar vs. Burger Machine Holdings, 516 SCRA 609

6.2 On actual reinstatement vs. payroll reinstatement; effect where the original decision
finding for illegal termination was reversed on appeal
Genuino vs. NLRC, GR 142732-33, 04 Dec 2007
Contra, now prevailing rule: Garcia vs. Philippine Airlines, GR 164856, 20 Jan 2009

JUANITO A. GARCIA and ALBERTO J. DUMAGO, petitioners, vs. PHILIPPINE


AIRLINES, INC., respondent.
G.R. No. 164856. January 20, 2009.
CARPIO-MORALES, J.:

Facts: The case stemmed from the administrative charge filed by PAL against its
employees-herein petitioners after they were allegedly caught in the act of sniffing shabu
when a team of company security personnel and law enforcers raided the PAL Technical
Centers Toolroom Section on July 24, 1995.
After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL
Code of Discipline, prompting them to file a complaint for illegal dismissal and damages
which was, by Decision of January 11, 1999, resolved by the Labor Arbiter in their favor,
thus ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the
decision.

From the Labor Arbiters decision, respondent appealed to the NLRC which, by Resolution
of January 31, 2000, reversed said decision and dismissed petitioners complaint for lack of
merit.

Issue: Whether petitioners may collect their wages during the period between the Labor
Arbiters order of reinstatement pending appeal?

Held: Yes. The Courts attention is drawn to seemingly divergent decisions concerning
reinstatement pending appeal or, particularly, the option of payroll reinstatement. On the one
hand is the jurisprudential trend as expounded in a line of cases including Air Philippines
Corp. v. Zamora, while on the other is the recent case of Genuino v. National Labor
Relations Commission. At the core of the seeming divergence is the application of
paragraph 3 of Article 223 of the Labor Code which reads:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory,
pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein. (Emphasis and underscoring
supplied)

The view as maintained in a number of cases is that:

x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is


obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the other hand, if
the employee has been reinstated during the appeal period and such reinstatement order is
reversed with finality, the employee is not required to reimburse whatever salary he received
for he is entitled to such, more so if he actually rendered services during the period.
(Emphasis in the original; italics and underscoring supplied)

In other words, a dismissed employee whose case was favorably decided by the Labor
Arbiter is entitled to receive wages pending appeal upon reinstatement, which is immediately
executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement and it is mandatory on the employer to comply
therewith.

In playing down the stray posture in Genuino requiring the dismissed employee on payroll
reinstatement to refund the salaries in case a final decision upholds the validity of the
dismissal, the Court realigns the proper course of the prevailing doctrine on reinstatement
pending appeal vis--vis the effect of a reversal on appeal.

The Court reaffirms the prevailing principle that even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period of appeal until reversal by
the higher court. It settles the view that the Labor Arbiters order of reinstatement is
immediately executory and the employer has to either re-admit them to work under the same
terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll,
and that failing to exercise the options in the alternative, employer must pay the employees
salaries.

On Genuino case

The opposite view is articulated in Genuino which states:

If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries s/he received while the case was
pending appeal, or it can be deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her employer under existing laws, collective
bargaining agreement provisions, and company practices. However, if the em ployee was
reinstated to work during the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need of refund.

Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and
her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated
in item no. 3 of the fallo of the September 3, 1994 NLRC Decision. (Emphasis, italics and
underscoring supplied)

It has thus been advanced that there is no point in releasing the wages to petitioners since
their dismissal was found to be valid, and to do so would constitute unjust enrichment.

Prior to Genuino, there had been no known similar case containing a dispositive portion
where the employee was required to refund the salaries received on payroll reinstatement.
In fact, in a catena of cases, the Court did not order the refund of salaries garnished or
received by payroll-reinstated employees despite a subsequent reversal of the reinstatement
order.

The Genuino ruling not only disregards the social justice principles behind the
rule, but also institutes a scheme unduly favorable to management. Under such scheme, the
salaries dispensed pendente lite merely serve as a bond posted in installment by the
employer. For in the event of a reversal of the Labor Arbiters decision ordering
reinstatement, the employer gets back the same amount without having to spend ordinarily
for bond premiums. This circumvents, if not directly contradicts, the proscription that the
posting of a bond [even a cash bond] by the employer shall not stay the execution for
reinstatement.

6.3 Payment of separation pay not inconsistent with


payment of backwages;
Lim vs. NLRC, March 1989

Issue: Whether the employer Sweet Lines contention is correct that separation pay and back wages
are inconsistent with each other.

Ruling: No. Sweet Lines contention is incorrect.

Separation pay is granted where reinstatement is no longer advisable because of strained relations
between the employee and the employer. Back wages represent compensation that should have
been earned but were not collected because of the unjust dismissal. The bases for computing the two
are different, the first being usually the length of the employee service and the second the actual
period when he was unlawfully prevented from working.
7. General Rule: Employee who is lawfully dismissed is not
entitled to separation pay
Exception: DIREC (disease; installation of labor-saving devices;
redundancy; retrenchment; cessation of business)

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