Materials for Final Exam - Part I

8/2/2019 Materials for Final Exam - Part I

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INTRODUCTION

Basic understanding of the management prerogatives as well as the constitutional and

statutory rights of the workers is a vital element to achieve industrial peace. Laws and

jurisprudence have already set some guidelines in the exercise of management prerogatives

without infringement of the basic rights of the workers. It must always be emphasized that the

claim of good faith is not at all times a valid justification for the commission of illegal acts.

Indeed, jurisprudence recognizes the right to exercise management prerogative. Labor laws also

discourage interference with an employer's judgment in the conduct of its business. For this

reason, even the Supreme Court often declines to interfere in legitimate business decisions of

employers. The law must protect not only the welfare of employees, but also the right of

employers. However, the exercise of management prerogative is not unlimited. Managerial

prerogatives are subject to limitations provided by law, collective bargaining agreements, and

general principles of fair play and justice. (Supreme Steel Corporation v. Nagkakaisang

Manggagawa Ng Supreme Independent Union (NMS IND APL), G.R. No. 185556, March 28,

2011)

The specific works are performed by managerial employees who are vested with

powers or prerogatives to lay down and execute management policies and to hire, transfer,

suspend, lay-off, recall, discharge, assign or discipline employees. Those who effectively

recommend managerial actions if the exercise of such authority is not merely routinary or

clerical in nature but requires the use of independent judgment are supervisory employees. All

employees not falling within any of the above definitions are considered rank-and-file

employees.

The term Labor is not limited to the work of manual laborers or of mechanics, but

comprises intellectual labor as well. This normally refers to work for wages as opposed to work

for profits; though the word is sometimes construed to mean service rendered or part played in

the production of wealth. To quote what has been aptly stated by former Governor General

Leonard Wood in his inaugural message before the 6th Philippine Legislature on October 27,

1922 labor is neither a chattel nor a commodity, but human and must be dealt with from the

standpoint of human interest.We do not treat our workers as merchandise and their right to

security of tenure cannot be valued in precise peso-and-centavo terms. It is a right which cannot

be allowed to be devalued by the purchasing power of employers who are only too willing to

bankroll the separation pay of their illegally dismissed employees to get rid of them. This right

will never be respected by the employer if we merely honor it with a price tag. The policy of

dismiss now and pay later favors moneyed employers and is a mockery of the right of

employees to social justice. (Bonifacio Asufrin, Jr. v. San Miguel Corporation, G.R. No. 156658,

March 10, 2004.)


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Labor contract is a contract between employer and employees (i.e. union) which

governs working conditions, wages, fringe benefits, and grievances. The term Labor-

management relations is used to describe broad spectrum of activities which concern

relationship of employees to employers both union and non-union.

THE CONSTITUTIONAL MANDATE

The State shall promote social justice in all phases of national development.

(Section 10, Article II). It is commonly believed that social justice is intended for the protection

of the poor and underprivileged as they are considered as having less in life and therefore they

should have more in law. It may not be amiss to stress that laws which have for their object the

preservation and maintenance of social justice are not only meant to favor the poor and

underprivileged. They apply with equal force to those who, notwithstanding their morecomfortable position in life, are equally deserving of protection from the courts. Social justice is

not a license to trample on the rights of the rich in the guise of defending the poor, where no act

of injustice or abuse is being committed against them. For in the eyes of the Constitution and

the statutes, equal justice under the law remains the bedrock principle by which our Republic

abides. (Emerson B. Bagongahasa et al. v. Johanna L. Romuladez, G.R. No. 179844, March 23,

2011) Social justice or any justice for that matter is for the deserving, whether he be a

millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt,

the Court is called upon to tilt the balance in favor of the poor to whom the Constitution fittingly

extends its sympathy and compassion. But never is it justified to give preference to the poor

simply because they are poor, or to reject the rich simply because they are rich, for justice mustalways be served for poor and rich alike, according to the mandate of the law. Vigilance over the

rights of the employers is equally important because social justice cannot be invoked to trample

on the rights of employers owners, who under our Constitution and laws are also entitled to

protection. ( Buklod Nang Magbubukid Sa Lupang Ramos v. E. M. Ramos and Sons, Inc., G.R. No.

131481, March 16, 2011).

The Constitution acknowledges the reality that capital and labor often do not deal on

equal grounds, requiring the state to protect labor from abuse. To level the playing field, the

framers of the Constitution incorporated two (2) provisions therein to safeguard the employee's

right to security of tenure and enhance protection to employees' rights and welfare.

The state affirms labor as a primary social economic force. It shall protect the rights of

workers and promote their welfare. (Section 18, Article II) Similarly, in first paragraph, Section 3,

Article XIII it is provided that the state shall afford protection to labor, local and overseas,

organized and unorganized. Protection of the rights of the workers includes the workers right

to security of tenure and due process. This right to due process is provided in Section 1, Article

III. It states that no person shall be deprived of life, liberty or property without due process of

law, nor shall any person be denied of the equal protection of laws. A workers employment is


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property in constitutional sense-he cannot be deprived of his work without due process.

(Asuncion v. NLRC, 362 SCRA 56) Due process is not a matter of strict or rigid or formulaic

process. The essence of due process is simply the opportunity to be heard, or as applied to

administrative proceedings, an opportunity to explain one's side or an opportunity to seek a

reconsideration of the action or ruling complained of. A formal or trial-type hearing is not at all

times and in all instances essential, as the due process requirements are satisfied where the

parties are afforded fair and reasonable opportunity to explain their side of the controversy at

hand. (Primo E. Caong v. Alexander J. Tresquio et al., G.R. No. 179428, January 26, 2011) The

entitlement of the workers to security of tenure humane conditions of work and a living wage is

likewise mandated in Section 3, Article XIII of the Constitution.

In the hierarchy of rights of employees, the right to security of tenure is high, if not the

highest. Its paramount value is recognized and guaranteed under the new Constitution.

Consequently, the first paragraph of Article XIII, Section 3 of the 1987 Constitution, extends the

protective mantle of the Constitution to all of labor including the promotion of full employment.

The second paragraph specifies the guaranteed right to security of tenure. All other rights, e.g.,

the right to collective bargaining and negotiations, the right to peaceful concerted activities, the

right to strike and form unions, and the right to due process, merely complement the right tojob security. All these complementary rights are meaningless to an unemployed worker. It is the

policy of the State to assure the right of workers to security of tenure. 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, Therefore he should be protected against any arbitrary deprivation of his

job.

The law, in protecting the rights of the laborers, authorizes neither oppression nor self-

destruction of the employer. While the Constitution is committed to the policy of social justice

and the protection of the working class, it should not be supposed that every labor dispute will

be automatically decided in favor of labor. The management also has its own rights, as such, are

entitled to respect and enforcement in the interest of simple fair play. Out of its concern for

those with less privilege in life, the Supreme Court has inclined more often than not toward the

worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has

not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed

in the light of the established facts and applicable law and doctrine. (Solidbank Corporation vs.

NLRC, G.R. No. 165951, March 30, 2010)

DUE PROCESS

(Article 277)

The Labor Code has special provisions found in Title IX, Book V. Under this Tile is Article

277 which is described as miscellaneous provisions of the Labor Code which provides for theworkers right to security of tenure and due process. Article 277 (b) provides:

Subject to the constitutional right of workers to security of tenure and their right to be

protected against dismissal except for a just and authorized cause and without prejudice to the

requirement of notice under Article 283 of this Code, the employer shall furnish the worker

whose employment is sought to be terminated a written notice containing a statement of the

cause for termination and shall afford the latter ample opportunity to be heard and to defend


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himself with the assistance of his representative if he so desires in accordance with company

rules and regulations promulgated pursuant to guidelines set by the Department of Labor and

Employment. Any decision taken by the employer shall be without prejudice to the right of the

worker to contest the validity or legality of his dismissal by filing a complaint with the regional

branch of the National Labor Relations Commission. The burden of proving that the termination

was for a valid or authorized cause shall rest on the employer. The Secretary of the Department

of Labor may suspend the effects of the termination pending resolution of the dispute in the

event of a prima facie finding by the appropriate official of the Department of Labor and

Employment before whom such dispute is pending that the termination may cause a serious

labor dispute or is in implementation of a mass lay-off.

Under Article 279 of the Labor Code, an employer may terminate the services of an

employee for just causes or for authorized causes. Furthermore, under Article 277 (b) of the

Labor Code, the employer must send the employee who is about to be terminated, a written

notice stating the causes for termination and must give the employee the opportunity to be

heard and to defend himself. Thus, to constitute valid dismissal from employment, two

requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the

employee must be afforded an opportunity to be heard and to defend himself. (Jeffrey Nacaguev. Sulpicio Lines, Inc., G.R. No. 172589, August 9, 2010)

Article 277 (b) of the Labor Code mandates that subject to the constitutional right of

workers to security of tenure and their right to be protected against dismissal, except for just

and authorized cause and without prejudice to the requirement of notice under Article 283 of

the same Code, the employer shall furnish the worker, whose employment is sought to be

terminated, a written notice containing a statement of the causes of termination, and shall

afford the latter ample opportunity to be heard and to defend himself with the assistance of a

representative if he so desires, in accordance with company rules and regulations pursuant to

the guidelines set by the Department of Labor and Employment. (Robinson Galleria/Robinson

Supermarket Corporation v. Irene R. Ranchez, G.R. No. 177937, January 19, 2011)

For better understanding the real meaning and rigid requirements of due process, the

ruling of the Supreme Court in Lima Land et al. v. Marlyn Cuevas, G. R. No. 169523, June 16,

2010, is more definitive and instructive. It states:

The requisites for a valid dismissal are: (a) the employee must be afforded due

process, i.e., he must be given an opportunity to be heard and defend himself; and

(b) the dismissal must be for a valid cause, as provided in Article 282 of the Labor

Code.

Well-settled is the rule that the essence of due process is simply an opportunity tobe heard or, as applied to administrative proceedings, an opportunity to explain

one's side or an opportunity to seek a reconsideration of the action or ruling

complained of.

Moreover, in dismissing an employee, the employer has the burden of proving that

the former worker has been served two notices: (1) one to apprise him of the

particular acts or omissions for which his dismissal is sought, and (2) the other to


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inform him of his employer's decision to dismiss him. The first notice must state that

dismissal is sought for the act or omission charged against the employee, otherwise,

the notice cannot be considered sufficient compliance with the rules.

The first written notice to be served on the employees should contain the specific

causes or grounds for termination against them, and a directive that the employeesare given the opportunity to submit their written explanation within a reasonable

period. "Reasonable opportunity" under the Omnibus Rules means every kind of

assistance that management must accord to the employees to enable them to

prepare adequately for their defense. This should be construed as a period of at

least five (5) calendar days from receipt of the notice to give the employees an

opportunity to study the accusation against them, consult a union official or lawyer,

gather data and evidence, and decide on the defenses they will raise against the

complaint. Moreover, in order to enable the employees to intelligently prepare their

explanation and defenses, the notice should contain a detailed narration of the facts

and circumstances that will serve as basis for the charge against the employees. Ageneral description of the charge will not suffice. Lastly, the notice should

specifically mention which company rules, if any, were violated and/or which among

the grounds under Article 282 is being charged against the employees.

In Serrano v. National Labor Relations Commission, the Supreme Court noted that a job

is more than the salary that it carries. There is a psychological effect or a stigma in immediately

finding one's self laid off from work. This is exactly why our labor laws have provided for

mandating procedural due process clauses. Our laws, while recognizing the right of employers to

terminate employees it cannot sustain, also recognize the employee's right to be properly

informed of the impending severance of his ties with the company he is working for.

Over the years, the Supreme Court has had the opportunity to reexamine the sanctions

imposed upon employers who fail to comply with the procedural due process requirements in

terminating its employees. In Agabon v. National Labor Relations Commission, the Supreme

Court reverted back to the doctrine in Wenphil Corporation v. National Labor Relations

Commission and held that where the dismissal is due to a just or authorized cause, but without

observance of the due process requirements, the dismissal may be upheld but the employer

must pay an indemnity to the employee. The sanctions to be imposed however, must be stiffer

than those imposed in Wenphil to achieve a result fair to both the employers and the

employees.

In Jaka Food Processing Corporation v. Pacot, the Supreme Court, taking a cue from

Agabon, held that since there is a clear-cut distinction between a dismissal due to a just cause

and a dismissal due to an authorized cause, the legal implications for employers who fail to

comply with the notice requirements must also be treated differently. Accordingly, it is wise for

the Supreme Court 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


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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 employer's exercise of his

management prerogative. (Nelson A. Culili v. Eastern Telecommunications Philippines, Inc. et al.,

G.R. No. 165381, February 9, 2011)

TERMINATION OF EMPLOYMENT

(Articles 278 286)

Termination of employment under Title I, Book VI of the Labor Code shall apply to all

establishments or undertakings, whether for profit or not (Article 278). InAlabang Country Club,

Inc. v. National Labor Relations Commission, the Supreme Court laid down the grounds for

which an employee may be validly terminated. Under the Labor Code, an employee may be

validly terminated on the following grounds: (1) just causes under Article 282; (2) authorized

causes under Article 283; (3) termination due to disease under Article 284, and (4) termination

by the employee or resignation under Article 285. Another cause for termination is dismissal

from employment due to the enforcement of the union security clause in the collective

bargaining agreement (CBA).

Termination of employment may also be meted to a 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 as this is provided in Article 264 of the Labor Code.

Likewise, worthy to note that in a number of cases, the Supreme Court has ruled that defiance

of the assumption and return-to-work orders of the Secretary of Labor after he has assumed

jurisdiction (Article 263, Labor Code) is a valid ground for the loss of employment status of any

striking union officer or member.

Both the employer and employee have equal rights to terminate employment. The

employers right to terminate employment is inherently within the coverage of its managementprerogative and in accordance with the provisions of Articles 248 (e) (Union security clauses),

263 264 and 282284 of the Labor Code while the employees right to terminate employment

is provided by Article 285.

In plethora of cases, the Supreme Court abundantly describes management prerogatives.

InJimmy Areno, Jr. v. Skycable PCCBaguio, G.R. No. 180302, February 5, 2010, the Supreme

Court emphasizes that it is axiomatic that appropriate disciplinary sanction is within the purview

of management imposition. What should not be overlooked is the prerogative of an employer to

prescribe reasonable rules and regulations necessary for the proper conduct of its business and

to provide certain disciplinary measures in order to implement said rules to assure that the

same would be complied with.

It is acknowledged that an employer has free rein and enjoys a wide latitude of

discretion to regulate all aspects of employment, including the prerogative to instill discipline on

his employees and to impose penalties, including dismissal, if warranted, upon erring

employees. This is a management prerogative. Indeed, the manner in which management

conducts its own affairs to achieve its purpose is within the management's discretion. The only

limitation on the exercise of management prerogative is that the policies, rules, and regulations

on work-related activities of the employees must always be fair and reasonable, and the


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corresponding penalties, when prescribed, commensurate to the offense involved and to the

degree of the infraction. (Primo E. Caong, Jr. v. Avelino Regualos, G. R. No. 179428, January 26,

2011) The law protects both the welfare of employees and the prerogatives of management.

Courts will not interfere with prerogatives of management on the discipline of employees, as

long as they do not violate labor laws, collective bargaining agreements if any, and general

principles of fairness and justice. (The University of Immaculate Conception v. NLRC, G.R. No.

181146, January 26, 2011)

The employee on the other hand may terminate employee through resignation or by

reason of constructive dismissal. 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. (Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R.

No. 186614, February 23, 2011) Constructive dismissal occurs when there is cessation of workbecause continued employment is rendered impossible, unreasonable, or unlikely as when there

is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain

by an employer becomes unbearable to the employee leaving the latter with no other option

but to quit. (The University of the Immaculate Conception v. NLRC, G.R. No. 181146, January 26,

2011)

Security of tenure

In the exercise of its management prerogative, the employer should not overlook or

ignore the employees right to security of tenure as provided inArticle 279 of the Labor Code. It

is stated:

In cases of regular employment, the employer shall not terminate the services of

an employee except for a just cause or when authorized by this Title. An employee who is

unjustly dismissed from work 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.

The enthronement of the worker's right to security or tenure in our fundamental law was

not achieved overnight. For all its liberality towards labor, our 1935 Constitution did not elevate

the right as a constitutional right. For a long time, the worker's security of tenure had only the

protective mantle of statutes and their interpretative rules and regulations. It was as uncertain

protection that sometimes yielded to the political permutations of the times. It took labor nearly

four decades of sweat and tears to persuade our people thru their leaders, to exalt the worker's

right to security of tenure as a sacrosanct constitutional right. It was Article II, Section 2 of our

1973 Constitution that declared as a policy that the State shall assure the right of worker's to

security tenure. The 1987 Constitution is even more solicitous of the welfare of labor. Section 3

of its Article XIII mandates that the State shall afford full protection to labor and declares that all

workers shall be entitled to security of tenure. Among the enunciated State policies are the


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promotion of social justice and a just and dynamic social order. In contrast, the prerogative of

management to dismiss a worker, as an aspect of property right, has never been endowed with

a constitutional status. The unequivocal constitutional declaration that all workers shall be

entitled to security of tenure spurred our lawmakers to strengthen the protective walls around

this hard earned right. The right was protected from undue infringement both by our

substantive and procedural laws. Thus, the causes for dismissing employees were more defined

and restricted; on the other hand, the procedure of termination was also more clearly

delineated. These substantive and procedural laws must be strictly complied with before a

worker can be dismissed from his employment. (BPI Credit Corporation v. NLRC, G.R. No.

106027, July 25, 1994)

Security of tenure is guaranteed by the Constitution and the Labor Code. The 1987

Philippine Constitution provides in Section 18, Article II that the State shall protect the rights of

workers and promote their welfare. Section 3, Article XIII also provides that all workers shall be

entitled to security of tenure. Along that line, Article 3 of the Labor Code mandates that the

State shall assure the rights of workers to security of tenure. Under the security of tenure

guarantee, a worker can only be terminated from his employment for cause and after due

process. For a valid termination by the employer: (1) the dismissal must be for a valid cause asprovided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the

Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend

himself. A just and valid cause for an employee's dismissal must be supported by substantial

evidence, and before the employee can be dismissed, he must be given notice and an adequate

opportunity to be heard. In the process, the employer bears the burden of proving that the

dismissal of an employee was for a valid cause. Its failure to discharge this burden renders the

dismissal unjustified and, therefore, illegal. (Wensha Spa Center, Inc. v. Loreta T. Yung, G.R. No.

185122, August 16, 2010)

Well-established is the rule that regular employees enjoy security of tenure and they

can only be dismissed for just or valid cause and upon compliance with due process, i.e., afternotice and hearing. In cases involving an employee's dismissal, the burden is on the employer to

prove that the dismissal was legal. (Judy O. Dacuital et al. v. L.M. Camus Engineering

Corporation, G.R. No. 176748, September 1, 2010)

Thus, as an illegally or constructively dismissed employee is entitled to: (1) either

reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2)

backwages. These two reliefs are separate and distinct from each other and are awarded

conjunctively. (Robinsons Galleria/Robinson Supermarket Corporation v. Irene R. Ranchez, G.R.

No. 177937, January 19, 2011)

In F.F.Marine Corporation v. National Labor Relations Commission, the Supreme Court

had the occasion to state:

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 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


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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.

Similarly, the Supreme Court previously held that an employee's demand for separation

pay may be indicative of strained relations that may justify payment of separation pay in lieu of

reinstatement. The finding of strained relations must nonetheless still be supported by

substantial evidence. (Pfizer, Inc. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011)

Like regular employees, probationary employees are entitled to security of tenure but

only within the limited legal six-month probationary period. It is expressly provided in Article

281 of the Labor Code that a probationary employee may be terminated only on two grounds:

(a) for just cause, or (b) when he fails to qualify as a regular employee in accordance with

reasonable standards made known by the employer to the employee at the time of his

engagement. (Philippine Daily Inquirer, inc. v. Leon M. Magtibay et al., G.R. No. 164532, July 27,

2007)

Status of employment

Article 280 of the Labor Code provides for regular and casual employment. It states:

The provisions of written agreement to the contrary notwithstanding and regardless of

the oral agreement of the parties, an employment shall be deemed to be regular where the

employee has been engaged to perform activities which are usually necessary or desirable in the

usual business or trade of the employer, except where the employment has been fixed for a

specific project or undertaking the completion or termination of which has been determined at

the time of the engagement of the employee or where the work or services to be performed is

seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That any employee who has rendered at least one year of service, whether

such service is continuous or broken, shall be considered a regular employee with respect to the

activity in which he is employed and his employment shall continue while such activity exist.

The foregoing contemplates four (4) kinds of employees: (a) regular employees or those

who have been "engaged to perform activities which are usually necessary or desirable in the

usual business or trade of the employer"; (b) project employees or those "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"; (c) seasonal employees or

those who work or perform services which are seasonal in nature, and the employment is for

the duration of the season; and (d) casual employees or those who are not regular, project, or

seasonal employees. Jurisprudence has added a fifth kind a fixed-term employee. Article 280

of the Labor Code, as worded, establishes that the nature of the employment is determined by

law, regardless of any contract expressing otherwise. The supremacy of the law over the

nomenclature of the contract and the stipulations contained therein is to bring to life the policy

enshrined in the Constitution to "afford full protection to labor." Thus, labor contracts are

placed on a higher plane than ordinary contracts; these are imbued with public interest and

therefore subject to the police power of the State. (Leyte Geothermal Power Progressive


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Employees Union ALU TUCP v. Philippine National Oil Company Energy Development

Corporation, G.R. No. 170351, March 30, 2011)

Regular Employment

A regular employee is one who is engaged to perform activities which are necessary and

desirable in the usual business or trade of the employer as against those which are undertaken

for a specific project or are seasonal. Even in these latter cases, where such person has rendered

at least one year of service, regardless of the nature of the activity performed or of whether it is

continuous or intermittent, the employment is considered regular as long as the activity exists, it

not being indispensable that he be first issued a regular appointment or be formally declared as

such before acquiring a regular status. (Shipping Limited vs. NLRC, 148130, June 16, 2006)

Where from the circumstances it is apparent that the periods of employment have been

imposed to preclude acquisition of security of tenure by the employee, they should be struck

down or disregarded as contrary to public policy and morals. 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 theemployee 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. (Supreme Steel Corporation v.

Nagkakaisang Manggagawa Ng Supreme Independent Union (NMS IND APL, G.R. No.

185556, March 28, 2011) What determines whether a certain employment is regular or casual is

not the will and word of the employer, to which the desperate worker often accedes, much less

the procedure of hiring the employee or the manner of paying his salary. It is the nature of the

activities performed in relation to the particular business or trade considering all circumstances,

and in some cases the length of time of its performance and its continued existence. (RandyAlmeda, et al. vs. Asahi Glass Phil., Inc., G.R. No. 177785, September 3, 2008)

Completion of Apprenticeship

In Atlanta Industris, Inc. v. Aprilito R. Sebolino, G.R. No. 187320, January 26, 2011, the

Supreme Court has ruled:

Even if we recognize the company's need to train its employees through

apprenticeship, we can only consider the first apprenticeship agreement for the

purpose. With the expiration of the first agreement and the retention of the

employees, Atlanta had, to all intents and purposes, recognized the completion of

their training and their acquisition of a regular employee status. To foist upon themthe second apprenticeship agreement for a second skill which was not even

mentioned in the agreement itself, is a violation of the Labor Code's implementing

rules and is an act manifestly unfair to the employees, to say the least. This we

cannot allow.

Project Employment


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Generally, length of service provides a fair yardstick for determining when an employee

initially hired on a temporary basis becomes a permanent one, entitled to the security and

benefits of regularization. But this standard will not be fair, if applied to the construction

industry, simply because construction firms cannot guarantee work and funding for its payrolls

beyond the life of each project. And getting projects is not a matter of course. Construction

companies have no control over the decisions and resources of project proponents or owners.

There is no construction company that does not wish it has such control but the reality,

understood by construction workers, is that work depended on decisions and developments

over which construction companies have no say. For this reason, the Supreme Court held in

Caseres v. Universal Robina Sugar Milling Corporation that the repeated and successive rehiring

of project employees do not qualify them as regular employees, as length of service is not the

controlling determinant of the employment tenure of a project employee, but whether the

employment has been fixed for a specific project or undertaking, its completion has been

determined at the time of the engagement of the employee. DOLE Order 19 required employers

to submit a report of termination of employees every completion of construction project.

(William Uy Construction Corp. v. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010)

There are two types of employees in the construction industry. The first is referred to asproject employees or those employed in connection with a particular construction project or

phase thereof and such employment is coterminous with each project or phase of the project to

which they are assigned. The second is known as non-project employees or those employed

without reference to any particular construction project or phase of a project. The second

category is referred to as regular employees. In the latter type, when one project is completed

employees are automatically transferred to the next project awarded to the employer. There

was no employment agreement given to the employees that clearly spelled out the duration of

their employment, the specific work to be performed and that such is made clear to them at the

time of hiring. Nonetheless,

assuming that employees were initially hired as project employees, they may still acquire the

status of a regular employee when the following factors concur: (1) There is a continuousrehiring of project employees even after cessation of a project; and (2) The tasks performed by

the alleged "project employee" are vital, necessary and indespensable to the usual business or

trade of the employer." (Exodus International Construction Corporation v. Guillermo Biscocho,

G.R. No. 166109, February 23, 2011)

A project employee is assigned to a project which begins and ends at determined or

determinable times. Employees who work under different project employment contracts for

several years do not automatically become regular employees; they can remain as project

employees regardless of the number of years they work. Length of service is not a controlling

factor in determining the nature of one's employment. Their rehiring is only a natural

consequence of the fact that experienced construction workers are preferred. In fact,

employees who are members of a "work pool" from which a company draws workers for

deployment to its different projects do not become regular employees by reason of that fact

alone. The Court has consistently held that members of a "work pool" can either be project

employees or regular employees. The principal test used to determine whether employees are

project employees is whether or not the employees were assigned to carry out a specific project

or undertaking, the duration or scope of which was specified at the time the employees were

engaged for that project. Even though the absence of a written contract does not by itself grant

regular status to employees, such a contract is evidence that employees were informed of the


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duration and scope of their work and their status as project employees. Where no other

evidence was offered, the absence of the employment contracts raises a serious question of

whether the employees were properly informed at the onset of their employment of their

status as project employees. (Judy O. Dacuital v. L. M. Camus Engineering Corporation, G.R. No.

176748, September 1, 2010)

Seasonal Employment

The primary standard of 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. The test is whether the former is usually necessary or desirable in the

usual trade or business of the employer. The connection can be determined by considering the

nature of the work performed and its relation to the scheme of the particular business or trade

in its entirety. Also if the employee has been performing the job for at least a year, even if the

performance is not continuous and merely intermittent, the law deems repeated and continuing

need for its performance as sufficient evidence of the necessity if not indispensability of that

activity to the business. Hence, the employment is considered regular, but only with respect to

such activity and while such activity exists. The fact that employee does not work continuouslyfor one whole year but only for the duration of the season does not detract from considering

them in regular employment since in a litany of cases the Supreme Court has already settled

that seasonal workers who are called to work from time to time and are temporarily laid off

during off-season are not separated from service in said period, but merely considered on leave

until re-employed. (Hacienda Fatima v. NLRC, G.R. No. 149440, January 28, 2003)

Term Employment

Although Article 280 does not expressly recognize employment for a fixed period, which

is distinct from employment which has been fixed for a specific project or undertaking, BrentSchool, Inc. v. Zamora has clarified that employment for a fixed period is not in itself illegal.

Thus, even if the duties of an employee consist of activities usually necessary or desirable in the

usual business of the employer, it does not necessarily follow that the parties are forbidden

from agreeing on a period of time for the performance of such activities through a contract of

employment for a fixed term. (Noelito Fabella et al. v. San Miguel Corporation, G.R. No. 150658,

February 9, 2007)

The Supreme Court has lengthily discussed the term employment as an exception to the

general application of Article 280 of the Labor Code when it decided en banc the case of Brent

School, Inc. v. Ronaldo Zamora, G.R. No. 48494, February 5, 1990 and its most significant portion

reads:

On the one hand, there is the gradual and progressive elimination of references to

term or fixed-period employment in the Labor Code. There is, on the other hand,

the Civil Code, which has always recognized, and continues to recognize, the validity

and propriety of contracts and obligations with a fixed or definite period, and

imposes no restraints on the freedom of the parties to fix the duration of a contract,

whatever its object, be it specie, goods or services, except the general admonition

against stipulations contrary to law, morals, good customs, public order or public


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policy. Under the Civil Code, therefore, and as a general proposition, fixed-term

employment contracts are not 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.

Some familiar examples may be cited of employment contracts which may be

neither for seasonal work nor for specific projects, but to which a fixed term is an

essential and natural appurtenance: overseas employment contracts, for one, to

which, whatever the nature of the engagement, the concept of regular employment

with all that it implies does not appear ever to have been applied, Article 280 of the

Labor Code notwithstanding; also appointments to the positions of dean, assistant

dean, college secretary, principal, and other administrative offices in educational

institutions, which are by practice or tradition rotated among the faculty members,

and where fixed terms are a necessity without which no reasonable rotation would

be possible. Similarly, despite the provisions of Article 280, Policy Instructions No. 8

of the Minister of Labor implicitly recognize that certain company officials may be

elected for what would amount to fixed periods, at the expiration of which theywould have to stand down, in providing that these officials may lose their jobs as

president, executive vice-president or vice-president, etc. because the stockholders

or the board of directors for one reason or another did not reelect them.

There can of course be no quarrel with the proposition that where from the

circumstances it is apparent that periods have been imposed to preclude acquisition

of tenurial security by the employee, they should be struck down or disregarded as

contrary to public policy, morals, etc. But where no such intent to circumvent the

law is shown, or stated otherwise, where the reason for the law does not exist, e.g.,

where it is indeed the employee himself who insists upon a period or where the

nature of the engagement is such that, without being seasonal or for a specificproject, a definite date of termination is a sine qua non, would an agreement fixing

a period be essentially evil or illicit, therefore anathema? Would such an agreement

come within the scope of Article 280 which admittedly was enacted to prevent the

circumvention of the right of the employee to be secured in his employment?

As it is evident from even only the three examples already given that Article 280 of

the Labor Code, under a narrow and literal interpretation, not only fails to exhaust

the gamut of employment contracts to which the lack of a fixed period would be an

anomaly, but would also appear to restrict, without reasonable distinctions, the

right of an employee to freely stipulate with his employer the duration of his

engagement, it logically follows that such a literal interpretation should be

eschewed or avoided. The law must be given a reasonable interpretation, to

preclude absurdity in its application. Outlawing the whole concept of term

employment and subverting to boot the principle of freedom of contract to remedy

the evil of employers' using it as a means to prevent their employees from obtaining

security of tenure is like cutting off the nose to spite the face or, more relevantly,

curing a headache by lopping off the head.


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Accordingly, and since the entire purpose behind the development of legislation

culminating in the present Article 280 of the Labor Code clearly appears to have

been, as already observed, to prevent circumvention of the employee's right to be

secure in his tenure, the clause in said article indiscriminately and completely ruling

out all written or oral agreements conflicting with the concept of regular

employment as defined therein should be construed to refer to the substantive evil

that the Code itself has singled out: agreements entered into precisely to

circumvent security of tenure. It should have no application to instances where a

fixed period of employment was agreed upon knowingly and voluntarily by the

parties, without any force, duress or improper pressure being brought to bear upon

the employee and absent any other circumstances vitiating his consent, or where it

satisfactorily appears that the employer and employee dealt with each other on

more or less equal terms with no moral dominance whatever being exercised by the

former over the latter. Unless thus limited in its purview, the law would be made to

apply to purposes other than those explicitly stated by its framers; it thus becomes

pointless and arbitrary, unjust in its effects and apt to lead to absurd and

unintended consequences.

Probationary Employment

A probationary employee is one who, for a given period of time, is being observed and

evaluated to determine whether or not he is qualified for permanent employment. A

probationary appointment affords the employer an opportunity to observe the skill,

competence and attitude of a probationer. The word "probationary," as used to describe the

period of employment, implies the purpose of the term or period. While the employer observes

the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for

permanent employment, the probationer at the same time, seeks to prove to the employer thathe has the qualifications to meet the reasonable standards for permanent employment.

(Esperanza C. Escorpizo et al. v. University of Bagiuo, G.R. No. 121962, April 30, 1999) To achieve

these purposes, Article 281of the Labor Code sets an unequivocal conditions on the engagement

of probationary employees when it states:

Probationary employment shall not exceed six (6) months from the date the

employee started working, unless it is covered by an apprenticeship agreement

stipulating a longer period. The services of an employee who has been engaged on a

probationary basis may be terminated for a just cause or when he fails to qualify as

a regular employee in accordance with reasonable standards made known by the

employer to the employee at the time of his engagement. An employee who is

allowed to work after a probationary period shall be considered a regular

employee.

The services of an employee hired on probationary basis may be terminated when he or

she fails to qualify as a regular employee in accordance with reasonable standards made known

by the employer to the employee at the time of his engagement. The law does not preclude the

employer from terminating the probationary employment, if the employer finds that the

probationary employee is not qualified for regular employment. As long as the termination was


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made for reasons provided under Article 281 of the Labor Code before the expiration of the six-

month probationary period, the employer is well within its rights to sever the employer-

employee relationship. A contrary interpretation would contravene the clear meaning of the

term probationary. The law in protecting the rights of the laborer authorizes neither the

oppression nor the self-destruction of the employer. The provision which states that "the

probationary period shall not exceed six months" means that the probationary employee may

be dismissed for cause at any time before the expiration of six months after hiring. If, after

working for less than six months, he or she is found unfit for the job, he or she can be dismissed.

On the other hand, if such worker continues to be employed longer than six months, he or she is

considered as a regular employee and ceases to be a probationary employee. (Jennifer Fabillo

Pasamba v. NLRC, G.R. No. 168421, June 8, 2007)

It must be clearly emphasized, however, that in all cases involving employees engaged

on probationary basis, the employer shall make known to its employees the standards under

which they will qualify as regular employees at the time of their engagement. Where no

standards are made known to an employee at the time, he shall be deemed a regular employee,

unless the job is self-descriptive, like maid, cook, driver, or messenger. However, the

constitutional policy of providing full protection to labor is not intended to oppress or destroymanagement. (Robinson Galleria/Robinson Supermarket Corporation v. Irene R. Ranchez, G.R.

No. 177937, January 19, 2011) Under Article 281 of the Labor Code, a probationary employee

can be legally dismissed either: (1) for a just cause; or (2) when he fails to qualify as a regular

employee in accordance with the reasonable standards made known to him by the employer at

the start of the employment. Nonetheless, the power of the employer to terminate the services

of an employee on probation is not without limitations. First, this power must be exercised in

accordance with the specific requirements of the contract. Second, the dissatisfaction on the

part of the employer must be real and in good faith, not feigned so as to circumvent the

contract or the law. Third, there must be no unlawful discrimination in the dismissal. In

termination cases, the burden of proving just or valid cause for dismissing an employee rests on

the employer. (Davao Contractors Development Cooperative v. Marilyn A. Pasawa, G.R. No.172174, July 9, 2009) Unlike under the first ground for the valid termination of probationary

employment which is for just cause, the second ground does not require notice and hearing.

Due process of law for this second ground consists of making the reasonable standards expected

of the employee during his probationary period known to him at the time of his probationary

employment. By the very nature of a probationary employment, the employee knows from the

very start that he will be under close observation and his performance of his assigned duties and

functions would be under continuous scrutiny by his superiors. It is in apprising him of the

standards against which his performance shall be continuously assessed where due process

regarding the second ground lies, and not in notice and hearing as in the case of the first

ground. (Philippine Daily Inquirer, Inc. v. Leon M. Magtibat, G.R. No. 164532, July 27, 2007)

Probationary Period of Employment for School Teachers

The common practice is for the employer and the teacher to enter into a contract,

effective for one school year. At the end of the school year, the employer has the option not to

renew the contract, particularly considering the teacher's performance. If the contract is not

renewed, the employment relationship terminates. If the contract is renewed, usually for

another school year, the probationary employment continues. Again, at the end of that period,

the parties may opt to renew or not to renew the contract. If renewed, this second renewal of


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the contract for another school year would then be the last year since it would be the third

school year of probationary employment. At the end of this third year, the employer may

now decide whether to extend a permanent appointment to the employee, primarily on the

basis of the employee having met the reasonable standards of competence and efficiency set by

the employer. For the entire duration of this three-year period, the teacher remains under

probation. Upon the expiration of his contract of employment, being simply on probation, he

cannot automatically claim security of tenure and compel the employer to renew his

employment contract. It is when the yearly contract is renewed for the third time that Section

93 of the Manual of Regulations for Private School becomes operative, and the teacher then is

entitled to regular or permanent employment status. It is important that the contract of

probationary employment specify the period or term of its effectivity. The failure to stipulate its

precise duration could lead to the inference that the contract is binding for the full three-year

probationary period. All this does not mean that academic personnel cannot acquire permanent

employment status earlier than after the lapse of three years. The period of probation may be

reduced if the employer, convinced of the fitness and efficiency of a probationary employee,

voluntarily extends a permanent appointment even before the three-year period ends.

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 probationaryemployment on justifiable ground; or, a shorter probationary period may be incorporated in a

collective bargaining agreement. But absent any circumstances which unmistakably show that

an abbreviated probationary period has been agreed upon, the three-year probationary term

governs. (Magis Young Achievers Learning Center v. Adelaida P. Manalo,G. R. No. 178835

February 13, 2009)

A reality that has to be faced in the consideration of employment on probationary

status of teaching personnel is that they are not governed purely by the Labor Code. The Labor

Code is supplemented with respect to the period of probation by special rules found in the

Manual of Regulations for Private Schools. On the matter of probationary period, Section 92 of

these regulations provides:

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 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.

Given the clear constitutional and statutory intents, it cannot be concluded 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. To highlight what is meant by a fixed-term contract specifically used

for the fixed term it offers, a replacement teacher, for example, may be contracted for a period

of one year to temporarily take the place of a permanent teacher on a one-year study leave. The

expiration of the replacement teacher's contracted term, under the circumstances, leads to no

probationary status implications as she was never employed on probationary basis; her

employment is for a specific purpose with particular focus on the term and with every intent to

end her teaching relationship with the school upon expiration of this term.


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If the school were to apply the probationary standards these standards must not only be

reasonable but must have also been 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. As explained above, the details

of this finding of just cause must be communicated to the affected teachers as a matter of due

process. (Yolanda M. Mercado v. AMA Computer College Paranaque City, Inc., G. R. 183572,

April 13, 2010)

While the law provides that the maximum period of probationary period of employment

is six (6) months and in the case of school teachers three (3) years, in some highly exceptional

cases and favorable to the employee, our jurisprudence has allowed extension of probationary

period of employment. In Esperanza C. Escorpizo v. University of Baguio, G.R. No. 121962, April

30, 1999, the Supreme Court has ruled:

She had failed the Professional Board Examination for Teachers (PBET) twice at the

time her probationary period ended. That she did not qualify to become apermanent employee is further evidenced by the fact that before her employment

contract expired, she was informed that her services would be terminated by the

end of the school year in March 1991. When she was given, upon her plea, a

teaching load in the next succeeding school year, it was already beyond the two-

year probationary period. The most that could be conceded in this situation is that

her continued employment was deemed an extension, ex-gratia, of her

probationary period, affording her another chance to pass the requisite licensure

test for teachers. Petitioners did not even deny that Escorpizo was rehired on a

temporary basis on condition that she has to pass the PBET in order to become a

permanent employee. Under no circumstance could continued employment alone

beyond the two-year period bestow on her the status of a regular employee. It wasonly after fulfilling the cited second requirement when, on the third try, she passed

the PBET that she qualified for regular and permanent employment.

With respect to non teaching employees, jurisprudence does not foreclose the

possibility of extending the probationary period of employment. In Mariwasa Manufacturing,

Inc. v. Joaquin A. Dequilla, G.R. No. 74246, January 26, 1989, the Supreme Court recognizes the

extension of probationary period of employment as an act of liberality on the part of the

employer when it ruled that:

For aught that appears of record, the extension of Dequila's probation was ex gratia,

an act of liberality on the part of his employer affording him a second chance to

make good after having initially failed to prove his worth as an employee. Such an

act cannot now unjustly be turned against said employer's account to compel it to

keep on its payroll one who could not perform according to its work standards. The

law, surely, was never meant to produce such an inequitable result.

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

waived any benefit attaching to the completion of said period if he still failed to

make the grade during the period of extension. The Court finds nothing in the law

which by any fair interpretation prohibits such a waiver. And no public policy


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protecting the employee and the security of his tenure is served by proscribing

voluntary agreements which, by reasonably extending the period of probation,

actually improve and further a probationary employee's prospects of demonstrating

his fitness for regular employment.

Termination by Employer

JUST AND VALID GROUNDS FOR TERMINATION

Article 282 of the Labor Code prescribes four separate and distinct grounds for

termination of employment, namely: (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. Paragraph (e) of the

same article which is likewise a ground for termination of employment simply describes thecauses which are analogous to those already mentioned in paragraphs (a) to (d).

The law, in protecting the rights of the laborers, authorizes neither oppression nor self-

destruction of the employer. While the Constitution is committed to the policy of social justice

and the protection of the working class, it should not be supposed that every labor dispute will

be automatically decided in favor of labor. The management also has its own rights, as such, are

entitled to respect and enforcement in the interest of simple fair play. Out of its concern for

those with less privilege in life, the Supreme Court has inclined more often than not toward the

worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has

not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed

in the light of the established facts and applicable law and doctrine. (Solidbank Corporation vs.NLRC, G.R. No. 165951, March 30, 2010)

In Exodus International Construction Corporation v. Guillermo Biscocho, G.R. No. 166109,

February 23, 2011 the Supreme Court emphasizes that it is not unmindful of the rule that in

cases of illegal dismissal the employer bears the burden of proof to prove that the termination

was for a valid or authorized cause. But before the employer must bear the burden of proving

that the dismissal was legal, the employees must first establish by substantial evidence that

indeed they were dismissed. If there is no dismissal, then there can be no question as to the

legality or illegality thereof. In Machica v. Roosevelt Services Center, Inc., the Supreme Court

sustained the employer's denial as against the employees' categorical assertion of illegal

dismissal. In so ruling, this Court held that:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners

were burdened to prove their allegation that respondents dismissed them from

their employment. It must be stressed that the evidence to prove this fact must be

clear, positive and convincing. The rule that the employer bears the burden of proof

in illegal dismissal cases finds no application here because the respondents deny

having dismissed the petitioners.


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Serious misconduct or willful disobedience by the

employee of the lawful orders of his employer or

representative in connection with his work

As a just cause for dismissal of an employee under Article 282 of the Labor Code, willful

disobedience of the employer's lawful orders requires the concurrence of two elements: (1) the

employee's assailed conduct must have been willful, i.e., characterized by a wrongful and

perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to

the employee, and must pertain to the duties which he had been engaged to discharge.

Deliberate disregard or disobedience of rules by the employee cannot be countenanced. It may

encourage him to do even worse and will render a mockery of the rules of discipline that

employees are required to observe. (Jimmy Areno, Jr. vs. Skycable PCC Baguio, G.R. No.

180302, February 5, 2010) Misconduct has been defined as improper or wrong conduct. It is the

transgression of some established and definite rule of action, a forbidden act, a dereliction of

duty, willful in character, and implies wrongful intent and not mere error of judgment. The

misconduct to be serious must be of such grave and aggravated character and not merely trivialand unimportant. Such misconduct, however serious, must nevertheless be in connection with

the employee's work to constitute just cause for his separation. (Wilfredo Baron vs. NLRC, G.R.

No. 182299, February 22, 2010) For misconduct to be a just cause for dismissal, (a) it must be

serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that

the employee has become unfit to continue working for the employer. (Blazer Car Marketing,

Inc. vs. Spouses Tomas T. Buluan and Analyn A. Briones, G.R. No. 181483, March 9, 2010)

Jurisprudence has classified theft of company property as a serious misconduct. The

employees twenty years of service with no negative record prior to his dismissal, does not call

for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse,

betrayal of the company. If an employee's length of service is to be regarded as justification for

moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty,

distorting the meaning of social justice and undermining the efforts of labor to clean its ranks of

undesirables. Indeed, length of service and a previously clean employment record cannot

simply erase the gravity of the betrayal exhibited by a malfeasant employee. Length of service is

not a bargaining chip that can simply be stacked against the employer. After all, an employer-

employee relationship is symbiotic where both parties benefit from mutual loyalty and

dedicated service. If an employer had treated his employee well, has accorded him fairness and

adequate compensation as determined by law, it is only fair to expect a long-time employee to

return such fairness with at least some respect and honesty. Thus, it may be said that betrayal

by a long-time employee is more insulting and odious for a fair employer. (Reno Foods, Inc. vs.

Nagkakaisang Lakas Ng Manggagawa (NLM) Katipunan, G.R. No. 164016, March 15, 2010)

Insubordination, as a just cause for the dismissal of an employee, necessitates the

concurrence of at least two requisites: (1) the employee's 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. (Grandteq Industrial Steel Products, Inc. v.

Annaliza M. Estrella, G.R. No. 192416, March 23, 2011)


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A waiver is a voluntary and intentional relinquishment or abandonment of a known legal

right or privilege. It has been ruled that "a waiver to be valid and effective must be couched in

clear and unequivocal terms which leave no doubt as to the intention of a party to give up a

right or benefit which legally pertains to him." Hence, the management prerogative to discipline

employees and impose punishment is a legal right which cannot, as a general rule, be impliedly

waived. Thus it is incumbent upon the employee to adduce substantial evidence to

demonstrate condonation or waiver on the part of management to forego the exercise of its

right to impose sanctions for breach of company rules. In Lakpue Drug Inc. v. Belga, willfulness

was described as "characterized by a wrongful and perverse mental attitude rendering the

employee's act inconsistent with proper subordination." Refusal to provide overtime work

despite his knowledge that there is a production deadline that needs to be met, and that

without him, the offset machine operator, no further printing can be had shows his wrongful

and perverse mental attitude; thus, there is willfulness. (R.B. Michael Press vs. Nicasio C. Galit,

G.R. No. 153510, February 13, 2008)

Not every case of willful disobedience by an employee of a lawful work-connected order

of the employer may be penalized with dismissal. There must be reasonable proportionality

between, on the one hand, the willful disobedience by the employee and, on the other hand,the penalty imposed therefore. (Elizabeth C. Bascon vs. CA, G.R. No. 144899, February 5, 2004.)

While it is well recognized that an employee's violation of lawful and reasonable

company rules or regulations constitutes a just cause for his dismissal, it is also true that the

application of such company rules must be done without abuse of discretion, for what is at stake

is not only his position, but also his means of livelihood. (Coca-Cola Bottlers Philippines, Inc. vs.

Dominic E. Vital, G.R. No. 154384, September 13, 2004.)

That the utterance of obscene, insulting or offensive words against a superior

constitutes gross misconduct, which is one of the grounds to terminate the services of an

employee, is settled. (Echeverria vs.Venutek Medika, Inc., G.R. No. 169231, February 15, 2007) In

the old case ofRadio Communications of the Philippines, Inc. v. NLRC, the Court considered thedismissed employee's act of hurling invectives at a co-employee as a minor offense. The Court

therein ruled that the termination of an employee on account of a minor misconduct is illegal

because Article 282 of the Labor Code mentions "serious misconduct" as a cause for cessation of

employment.

When an employee, despite repeated warnings from the employer, obstinately refuses

to curtail a bellicose inclination such that it erodes the morale of co-employees, the same may

be a ground for dismissal for serious misconduct. A series of irregularities when put together

may constitute serious misconduct, which under Article 282 of the Labor Code, is a just cause for

termination. And as it held inAsian Design and Manufacturing Corporation v. Deputy Minister of

Labor, acts destructive of the morale of one's co-employees may be considered serious

misconduct. (Citibank vs. NLRC, G.R. No. 159302, February 6, 2008)

For her act of understating the company's profits or financial position was willful and

not a mere error of judgment, committed as it was in order to "save" costs, which to her warped

mind, was supposed to benefit respondent. It was not merely a violation of company policy, but

of the law itself, and put respondent at risk of being made legally liable. An employer cannot be

compelled to retain in its employ someone whose services are inimical to its interests. (Eden

Llamas, vs. Ocean Gateway Maritime and Management, Inc., G.R. No. 179293, August 14, 2009)


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Drug use in the premises of the employer constitutes serious misconduct. The charge of

drug use inside the company's premises and during working hours against the employee

constitutes serious misconduct, which is one of the just causes for termination. The Supreme

Court took judicial notice of scientific findings that drug abuse can damage the mental faculties

of the user. It is beyond question therefore that any employee under the influence of drugs

cannot possibly continue doing his duties without posing a serious threat to the lives and

property of his co-workers and even his employer. (Bernardo B. Jose vs. Michaelmar Phils., Inc.,

G.R. No. 169606, November 27, 2009)

Examples of serious misconduct justifying termination, as held in some of the Supreme

Court decisions, include: sexual harassment (the manager's act of fondling the hands, massaging

the shoulder and caressing the nape of a secretary); fighting within company premises; uttering

obscene, insulting or offensive words against a superior; misrepresenting that a student is his

nephew and pressuring and intimidating a co-teacher to change that student's failing grade to

passing. (Colegio De San Juan de Letran Calamba vs. Belen P. Villas, G.R. No. 137795, March

26, 2003)

In the case of Technological Institute of the Philippines Teachers and Employees

Organization vs. Technological Institute of the Philippines, G.R. No. 158703, June 26, 2009, the

Supreme Court has the following pronouncement:

We do not find these entreaties sufficiently compelling or convincing as Salon is no

ordinary employee. She is a teacher from whom a lot is expected; she is expected to

be an exemplar of uprightness, integrity and decency, not only in the school, but

also in the larger community. She is a role model for her students; in fact, as she

claims, she stands in loco parenti to them. She is looked up to and is accorded

genuine respect by almost everyone as a person tasked with the heavy

responsibility of molding and guiding the young into what they should be

productive and law-abiding citizens.

What Salon committed is a corrupt act, no less, that we cannot allow to pass

without giving a wrong signal to all who look up to teachers, and to this Court, as

the models who should lead the way and set the example in fostering a culture of

uprightness among the young and in the larger community. From the personal

perspective, Salon demonstrated, through her infractions, that she is not fit to

continue undertaking the serious task and the heavy responsibility of a teacher. She

failed in a teacher's most basic task in honestly rating the performance of

students. Her failings lost her the trust and confidence of her employer, and even of

her students.

However, a female teacher who fell in love with her grade VI pupil, fifteen (15) yearsjunior than her age is not treated as gross misconduct. In the case of Evelyn Chua Qua vs. Hon.

Jacobo C. Clave, G.R. No. 49549, August 30, 1990, the Supreme Court has the following

pronouncement:

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


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emotion is not to be so casually equated with immorality. The deviation of the

circumstances of their marriage from the usual societal pattern cannot be

considered as a defiance of contemporary social mores.

It would seem quite obvious that the avowed policy of the school in rearing and

educating children is being unnecessarily bannered to justify the dismissal of the

teacher. This policy, however, is not at odds with and should not be capitalized on todefeat the security of tenure granted by the Constitution to labor.

Gross and habitual neglect by the employee of his duties

Gross negligence connotes want or absence of or failure to exercise even slight care or

diligence, or the total absence of care. It evinces a thoughtless disregard of consequences

without exerting any effort to avoid them. To warrant removal from service, the negligence

should not merely be gross, but also habitual. A single or isolated act of negligence does not

constitute a just cause for the dismissal of the employee. Habitual neglect implies repeatedfailure to perform one's duties for a period of time, depending upon the circumstances. Fraud

and willful neglect of duties imply bad faith of the employee in failing to perform his job, to the

detriment of the employer and the latter's business. (Chona Estacio vs. Pampanga I Electric

Cooperative, G.R. No. 183196, August 19, 2009)

Sleeping on the job and leaving the work area without prior authorization is a failure to

live up to the employers reasonable expectation. No employer may rationally be expected to

continue in employment a person whose lack of morals, respect and loyalty to his employer,

regard for his employer's rules, and appreciation of the dignity and responsibility of his office,

has so plainly and completely been bared. (Eduardo Tomada, Sr. vs. RFM Corporation Bakery

Flour Division, G.R. No. 163270, September 11, 2009)

It bears stressing that in dismissing an employee for gross and habitual neglect of duties,

the negligence should not merely be gross. It should also be habitual. The single or isolated act

of negligence does not constitute a just cause for the dismissal of the employee. (Abelardo P.

Abel vs. Philex Mining Corporation, G.R. No. 178976, July 31, 2009; Anabel Benjamin vs. Amellar

Corporation, G.R. No. 183383, April 5, 2010)

Habitual absenteeism and tardiness constitute gross and habitual neglect of duties that

justifies termination of employment provided that they are sufficiently supported by evidence

on record. Repeated acts of absences without leave and employees frequent tardiness reflect

his indifferent attitude to and lack of motivation in his work. More importantly, repeated and

habitual infractions, committed despite several warnings, constitute gross misconduct.

Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline

to come to work on time everyday exhibits the employee's deportment towards work. Habitual

and excessive tardiness is inimical to the general productivity and business of the employer. This


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is especially true when the tardiness and/or absenteeism occurred frequently and repeatedly

within an extensive period of time. (R.B. Michael Press vs. Nicasio C. Galit, G.R. No. 153510,

February 13, 2008)

Article 282 (b) and (c) of the Labor Code provide that an employer may terminate an

employee for "gross and habitual neglect by the employee of his duties" and for "fraud." In bothinstances, substantial evidence is necessary for an employer to effectuate any dismissal.

Uncorroborated assertions and accusations by the employer do not suffice, otherwise the

constitutional guaranty of security of tenure of the employee would be jeopardized. (Kulas Ideas

& Creations vs. Juliet Alcoseba, G.R. No. 180123, February 18, 2010)

Fraud or willful breach by the employee of the trust

reposed in him by his employer or duly authorized

representative;

Loss of trust and confidence, as a ground for dismissal, must be based on the willful

breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A

breach of trust is willful if it is done intentionally, knowingly and purposely, without justifiable

excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

Loss of trust and confidence, as a cause for termination of employment, is premised on the fact

that the employee concerned holds a position of responsibility or of trust and confidence. As

such, he must be invested with confidence on delicate matters, such as custody, handling or

care and protection of the property and assets of the employer. And, in order to constitute a

just cause for dismissal, the act complained of must be work-related and must show that the

employee is unfit to continue to work for the employer. (Joeb M. Alivado vs. Procter & Gamble

Philippines, Inc., G.R. No. 160506, March 9, 2010) In Sagales v. Rustan's Commercial Corporation,

the Supreme Court held that in loss of trust and confidence, as a just cause for dismissal, it is

sufficient that there must only be some basis for the loss of trust and confidence or that there is

reasonable ground to believe, if not to entertain the moral conviction, that the employee

concerned is responsible for the misconduct and that his participation in the misconduct

rendered him absolutely unworthy of trust and confidence.

The quantum of proof which the employer must discharge is substantial evidence. An

employee's dismissal due to serious misconduct and loss of trust and confidence must be

supported by substantial evidence. To validly dismiss an employee on the ground of loss of

trust and confidence, the confluence of the following requisites must be established: (a) the loss

of confidence must not be simulated; (b) it should not be used as a subterfuge for causes whichare illegal, improper or unjustified; (c) it may not be arbitrarily asserted in the face of

overwhelming evidence to the contrary; (d) it must be genuine, not a mere afterthought, to

justify earlier action taken in bad faith; and (e) the employee involved holds a position of trust

and confidence. While proof beyond reasonable doubt is not required still, substantial evidence

is vital and the burden rests on the employer to establish it. Any other rule would place the

employee eternally at the mercy of the employer. Moreover, the term trust and confidence is

restricted to managerial employees only. (BPI vs. Ramon A. Uy, G.R. No. 156994, August 31,


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2005; Rolando P. Ancheta vs. Destiny Financial Plans, Inc., G.R. No. 179702, February 16, 2010.)

With respect to rank-and-file personnel, loss of trust and confidence as ground for valid

dismissal requires proof of involvement in the alleged events in question and that mere

uncorroborated assertions and accusations by the employer will not suffice. But as regards a

managerial employee, mere existence of a basis for believing that such employee has breached

the trust of his employer would suffice for his dismissal. (Triumph International (Phils.), Inc. vs.

Ramon L. Apostol, G.R. No. 164423, June 16, 2009)

Inefficiency should have a factual basis to be a ground of loss of trust and confidence on

managerial employee. Inefficiency may be unmasked either by: (a) comparing it with efficiency

or (b) by showing its effects on the company. (Rosemarie Balba vs. Peak Development, G. R. No.

148288, Aug. 12, 2005; Equitable PCI Bank vs. Generosa A. Caquioa, G.R. 159170, August 12,

2005) The rule, therefore, is that if there is sufficient evidence to show that the employee

occupying a position of trust and confidence is guilty of a breach of trust, or that his employer

has ample reason to distrust him, the labor tribunal cannot justly deny the employer the

authority to dismiss such employee. (Eats-Cetera Food Services Outlet vs. Myrna B. Letran, G.R.No. 179507, October 2, 2009) The settled rule is that the mere existence of a basis for believing

that a managerial employee has breached the trust of the employer justifies dismissal. The law,

in protecting the rights of labor, authorizes neither oppression nor self-destruction of an

employer company which itself is possessed of rights that must be entitled to recognition and

respect. (Cynthia Gana vs. NLRC, G.R. No. 164640, June 13, 2008; Chona Estacio vs. Pampanga I

Electric Cooperative, Inc., G.R. No. 183196, August 19, 2009)

Employees acceptance of commissions and rebates from a customer, without the

knowledge and consent of the employer and without said rebates and commissions being

reported and turned over to the latter, are acts which can clearly be considered as a willful

breach of trust and confidence reposed by the employer upon him. Settled is the rule that an

employer cannot be compelled to retain an employee who is guilty of acts inimical to theinterests of the employer. A company has the

Documents

Materials for Final Exam - Part I