LABOR LAW

AND SOCIAL
LEGISLATION
Termination of
Employment

TERMINATION OF
EMPLOYMENT
A. SECURITY OF TENURE
1. Categories of Employment as to Tenure
a. Regular
The employee has been engaged to
perform activities which are usually
necessary or desirable in the usual
business or trade of the employer
The test to determine whether
employment is regular or not is the
reasonable connection between the
particular activity performed by the
employee in relation to the usual
business or trade of the employer. If the
employee has been performing the job
for at least one year, even if the
performance is not continuous or merely
intermittent, the law deems the repeated
and continuing need for its performance
as sufficient evidence of the necessity, if
not indispensability, of that activity to
the business. (Geraldo v. The Bill Sender
Corp., [2018]; Vicmar Development
Corporation v. Elarcosa [2015])
The primary standard for determining
regular employment is the reasonable
connection between the particular
activity performed by the employee in
relation to the usual trade or business of
the employer. Respondents' jobs as
fishermen-crew members of F/B MG 28
were directly related and necessary to
petitioner's deep-sea fishing business
and they had been performing their job
for more than one year. (Lu v. Enopia
[2017])
Full time teachers become regular or
permanent employees once they have
satisfactorily completed the
probationary period of three school
2
years. (Colegio Del Santisimo Rosario v.
Rojo [2013])
An employee who was suffered to work
for more than the legal period of six (6)
months of probationary employment or
less shall, by operation of law, become
a regular employee. (Umali v.
Hobbywing Solutions, Inc., [2018])
The necessity or desirability of the work
performed by an employee can be
inferred from the length of time that an
employee has been performing this
work. If an employee has been
employed for at least one (1) year, he or
she is considered a regular employee by
operation of law.
Maintenance personnel performing
repair works and maintenance services
such as fixing livestock and poultry
houses and facilities as well as doing
construction activities within the
premises of the employer’s farms and
other sales outlets for an interrupted
period of three (3) to seventeen (17)
years performed necessary and
desirable activities to the employer’s
poultry and livestock business. (Abuda
vs. L. Natividad Poultry Farms [2018])
The services of regular employees can
be terminated only by the employer for
just cause or authorized cause. In case of
illegal dismissal, the regular employee
shall be entitled to reinstatement
without loss of seniority rights and other
privileges and to his full backwages,
inclusive of allowance, and to his other
benefits or their monetary equivalent
computed from the time his
compensation was withheld from him to
the time of his actual reinstatement. (Art.
294, Labor Code)
The services of an employee who has
been engaged on probationary basis
may be terminated for any of the
 following: (a) a just or (b) an authorized
cause; and (c) when he fails to qualify as
a regular employee in accordance with
reasonable standards prescribed by the
employer.
The employer is made to comply with
two (2) requirements when dealing with
a probationary employee: first, the
employer must communicate the
regularization standards to the
probationary employee; and second, the
employer must make such
communication at the time of the
probationary employee’s engagement. If
the employer fails to comply with either,
the employee is deemed as a regular and
not a probationary employee.
Keeping with these rules, an employer is
deemed to have made known the
standards that would qualify a
probationary employee to be a regular
employee when it has exerted
reasonable efforts to apprise the
employee of what he is expected to do
or accomplish during the trial period of
probation. This goes without saying that
the employee is sufficiently made aware
of his probationary status as well as the
length of time of the probation.
The exception to the foregoing is when
the job is self-descriptive in nature, for
instance, in the case of maids, cooks,
drivers, or messengers. Also, the rule on
notifying a probationary employee of
the standards of regularization should
not be used to exculpate an employee
who acts in a manner contrary to basic
knowledge and common sense in regard
to which there is no need to spell out a
policy or standard to be met. In the same
light, an employee’s failure to perform
the duties and responsibilities which
have been clearly made known to him
constitutes a justifiable basis for a
probationary employee’s non-
regularization. (Abbott Laboratories v.
3
Alcaraz [2013])
b. Casual
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 (by
operation of law) with respect to the
activity in which he is employed and his
employment shall continue while such
activity exists.
Repeated rehiring of casual employee
makes him a regular employee. (Tan vs.
Lagrama [1998])
The second paragraph of Article 280,
stating that an employee who has
rendered service for at least one (1) year
shall be considered a regular employee,
is applicable only to a casual employee
and not to a project or
a regular employee referred to in
paragraph one thereof. (E. Ganzon, Inc. v.
Ando, Jr., [2017])
c. Probationary
A probationary employee is one who is
placed on trial by an employer, during
which the latter determines whether or
not the former is qualified for
permanent employment.
By virtue of a probationary
employment, an employer is given an
opportunity to observe the fitness and
competency of a probationary employee
while at work. During the probationary
period of employment, an employer has
the right or is at liberty to decide who
will be hired and who will be denied
employment. (Moral v. Momentum
Properties Management Corp., G.R. No.
226240 [2019])
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.
GENERAL RULE: Probationary period shall
not exceed 6 months from the date the
employee started working. Once exceeded,
the employee becomes a regular employee.
EXCEPTIONS:
a. when the employer and the employee
agree on a shorter or longer period;
b. when the nature of the work to be
performed requires a longer period;
c. when a longer period is required and
established by company policy.
If not one of the circumstances above is
proven, the employee whose employment
exceeds 6 months is undoubtedly a regular
employee. (San Miguel Corporation vs. Del
Rosario [2005])
There can be no dispute that 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 period, the
law does not preclude the employer from
terminating the probationary employment
on justifiable ground; or, a shorter
probationary period may be incorporated in
a collective bargaining agreement
4
(Universidad de Sta. Isabel vs. Sambajon Jr.,
[2014])
As a probationary employee, he may also be
validly dismissed for a just or authorized
cause, or when he fails to qualify as a
regular employee in accordance with
reasonable standards made known to him
by the employer at the time of his
engagement. Apart from the protection this
last ground in the dismissal of a
probationary employee affords the
employee, it is also in line with the right or
privilege of the employer to choose who will
be accorded with regular or permanent
status and who will be denied employment
after the period of probation. It is within the
exercise of this right that the employers may
set or fix a probationary period within
which it may test and observe the
employee's conduct before hiring him
permanently. (Philippine National Oil Co.-
Energy Development Corp. v. Buenviaje, [2016])
It is also indispensable in probationary
employment that the employer informs the
employee of the reasonable standards that
will be used as a basis for his or her
regularization at the time of his or her
engagement. If the employer fails to comply
with this, then the employee is considered a
regular employee. (Philippine National Oil
Co.-Energy Development Corp. v. Buenviaje
[2016])
As regards a probationary employee, his or
her dismissal may be allowed only if there is
just cause or such reason to conclude that
the employee fails to qualify as regular
employee pursuant to reasonable standards
made known to the employee at the time of
engagement. (Dagasdas v. Grand Placement
and General Services Corp. [2017])
When the standards set are too general and
failed to specify what is expected of the
employee as an executive chef, he was not
informed of the reasonable standards by
which his probationary employment was to
be assessed. Consequently, he was hired as
a regular employee. (Agustin v. Alphaland
[2020])
d. Project
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.
For an employee to be considered
project-based, the employer must show
that:
a. the employee was assigned to carry
out a specific project or undertaking;
and
b. the duration and scope of which
were specified at the time the
employee was engaged for such
project. Being assigned to a project or
a phase thereof which begins and
ends at determined or determinable
times, the services of project
employees may be lawfully
terminated at the completion of such
project or phase. (Freyssinet Filipinas
v. Lapuz [2019]; Dacles vs. Millenium
Erectors Corporation [2015])
Failure to present contract of project
employment means that the employees are
regular. (Hanjin Heavy Industries vs. Ibanez
[2008])
Once a project or work pool employee has
been: (1) continuously, as opposed to
intermittently, rehired by the same
employer for the same tasks or nature of
tasks; and (2) these tasks are vital,
necessary, and indispensable to the usual
business or trade of the employer, then the
employee must be deemed
a regular employee. Indeed, while length
of time is not the controlling test for
project employment, it is nonetheless vital
in determining if the employee was hired
5
for a specific undertaking or tasked to
perform functions that are vital, necessary,
and indispensable to the usual business or
trade of the employer. (Freyssinet Filipinas
Corp. v. Lapuz, 2019)
Repeated and successive rehiring of
project employees does not, by and of
itself, qualify them as regular employees.
Case law states that length of service
(through rehiring) is not the controlling
determinant of the employment tenure,
but whether the employment has been
fixed for a specific project or undertaking,
with its completion having been
determined at the time of the engagement
of the employee. (Dacles vs. Millenium
Erectors Corporation [2015])
TEST: The test to determine whether a
particular employee is engaged as a
project or regular employee is whether or
not the employee is assigned to carry out a
specific project or undertaking, the
duration or scope of which was specified,
and made known to him, at the time of his
engagement. (Herma Shipyard, Inc v.
Oliveros [2017])
The services of project-based employees
are co-terminous with the project and
may be terminated upon the end or
completion of the project or a phase
thereof for which they were hired. The
principal test in determining whether
particular employees were engaged as
project-based employees, as distinguished
from regular employees, is whether they
were assigned to carry out a specific
project or undertaking, the duration and
scope of which was specified at, and made
known to them, at the time of their
engagement. It is crucial that the
employees were informed of their status as
project employees at the time of hiring and
that the period of their employment must
be knowingly and voluntarily agreed
upon by the parties, without any force,
duress, or improper pressure being
 brought to bear upon the employees or
any other circumstances vitiating their
consent. (Herma Shipyard, Inc. v. Oliveros
[2017])
The activities of project employees may or
may not be usually necessary or desirable
in the usual business or trade of the
employer. (E. Ganzon, Inc. v. Ando, Jr.
[2017])
The rehiring of construction workers on a
project-to-project basis does not confer
upon them regular employment status as
it is only dictated by the practical
consideration that experienced
construction workers are more preferred.
(E. Ganzon, Inc. v. Ando, Jr. [2017])
e. Seasonal
The work or service to be performed is
seasonal in nature and the employment
is for the duration of the season.
f. Fixed-Term
The employment is for a fixed term
where its duration is for a definite
period.
NOTE: The decisive determinant in
term employment is not the nature of
the activities performed by the
employee, but the “day certain” agreed
upon by the parties for the
commencement and termination of their
employment relationship (Brent School
vs. Zamora [1990]).
Two (2) general parameters to
determine the validity of fixed term
employment:
(i). The fixed period of employment was
knowingly and voluntarily agreed
upon 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,
6
(ii) It satisfactorily appears that the
employer and the employee dealt with
each other on more or less equal terms
with no moral dominance exercised by
the former or the latter. (Id.)
Since a part-time faculty can neither
attain a probationary nor regular status
due to lack of all the academic
qualifications, the only conclusion
therefore is that a part-time faculty will
always be a fixed-term employee. (Brazil
v. STI Education Ser Group, Inc., G.R. No.
233314, [2018])
A fixed-term employment is allowable
under the Labor Code only if the term
was voluntarily and knowingly entered
into by the parties who must have dealt
with each other on equal terms not one
exercising moral dominance over the
other. (Samonte vs. La Salle Greenhills,
Inc., [2016])
Fixed term employees enjoy also
security of tenure but only during the
lifetime of the employment contract. If
they are illegally dismissed during the
lifetime of their contracts, they will be
entitled to reinstatement and payment
of back wage but only up to the end of
the contracts. (New Sunrise Metal
Construction v. Pia, G.R. No. 171131
[2007])
g. Work-pool Employee
Work pool refers to a group of workers
from which an employer, like a
construction company, draws the
workers it deploys or assigns to its
various projects or any phase or phases
thereof.
A work pool may exist although the
workers in the pool do not receive
salaries and are free to seek other
employment during temporary breaks
in the business, provided that the
worker shall be available when called to
 report for a project. Although primarily
applicable to regular seasonal workers,
this set-up can likewise be applied to
project workers insofar as the effect of
temporary cessation of work is
concerned. This is beneficial to both the
employer and employee for it prevents
the unjust situation of "coddling labor at
the expense of capital" and at the same
time enables the workers to attain the
status of regular employees. (Tomas Lao
Construction v. NLRC, G.R. No. 116781
[1997])
The Supreme Court ruled that a project
employee or a member of a work pool
may acquire the status of a regular
employee when the following concur:
1) There is a continuous rehiring of
project employees even after
cessation of a project; and
2) The tasks performed by the alleged
project employee are vital, necessary
and indispensable to the usual
business or trade of the employer.
(GMA Network, Inc. v. Pabriga, G.R.
No. 176419 [2013])
The creation of a work pool is a valid
exercise of management prerogative. It
is a privilege inherent in the employer's
right to control and manage its
enterprise effectively, and freely conduct
its business operations to achieve its
purpose. However, to ensure that the
work pool arrangement is not used as a
scheme to circumvent the employees'
security of tenure, the employer must
prove that (i) a work pool in fact exists,
and (ii) the members therein are free to
leave anytime and offer their services to
other employers. These requirements
are critical in defining the precise nature
of the workers' employment.
By analogy, and as applied to the
members of the IJM System work pool,
even if they are allowed to offer their
7
services to other employers during the
lulls in the production business, they
shall still be regarded as regular
employees who are simply "on leave"
during such periods of suspension in
production. On the part of ABS-CBN, it
shall not be obliged to pay the
employees during such temporary
breaks.
However, the continuous rehiring of the
members of the DM System work pool
from one program to another bestowed
upon them regular employment status.
As such, they cannot be separated from
the service without cause as they are
considered regular, at least with respect
to the production of the television
programs. This holds true
notwithstanding the fact that they were
allowed to offer their services to other
employers. (Del Rosario v. ABS-CBN
Broadcasting Corporation [2020], J.
CAGUIOA)
Classification of Employees in
Construction Industry
1. Project Employees
Those employed in connection with
a particular construction project or
phase thereof and whose
employment is co-terminous with
each project or phase of the project
to which they are assigned. (Sec.
2(2.1), Dept. Order 19, s. 1993, DOLE-
Bureau of Working Conditions)
2. Non-Project Employees
Those employed without reference
to any particular construction project
or phase of a project. (Id.)
Members of a work pool from which a
construction company draws its project
employees, if considered employees of
the construction company while in the
work pool, are non-project employees or
employees for an indefinite period. If they
are employed in a particular project, the
 completion of the project or any phase
thereof will not mean severance of (the)
employer-employee relationship. (J. &
D.O. Aguilar Corporation v. NLRC, G.R.
No/ 116352 [1997], citing Philippine
National Construction Corp. v. NLRC
[1989])
While in the work pool, such employee
or employees do not enjoy remuneration
or allowance for their sustenance. This is
in line with the decision of the Supreme
Court on “a fair day’s wage for a fair
day’s work”. (Caltex Refinery Employees
Association v. Brillantes, G.R. No. 123782
[1997])
2. Legitimate Subcontracting vs. Labor-Only
Contracting
GENERAL RULE: The contractor is a labor-only
contractor – UNLESS the contractor overcomes
the burden of proving that it has the substantial
capital, investment, tools and the like. In labor-
only contracting, the statute creates an employer-
employee relationship for a comprehensive
purpose: to prevent a circumvention of labor
laws.
PERMISSIBLE OR LEGITIMATE job contracting
or subcontracting, on the other hand, “refers to an
arrangement whereby a principal agrees to put
out or farm out with the contractor or
subcontractor the performance or completion of a
specific job, work, or service within a definite or
predetermined period, regardless of whether such
job, work, or service is to be performed or
completed within or outside the premises of the
principal.
Under Section 4 (a) of DO 18-02, legitimate labor
contracting or subcontracting refers to an
arrangement whereby a principal agrees to put
out or farm out with a contractor or subcontractor
the performance or completion of a specific job,
work or service within a definite or
predetermined period, regardless of whether such
job, work or service is to be performed or
8
completed within or outside the premises of the
principal. The "principal" refers to any employer
who puts out or farms out a job, service or work
to a contractor or subcontractor.
Further, the "right to control" must be exercised
by the contractor, otherwise, the arrangement
shall be considered to be labor only contracting.
(Daguinod v. Southgate Foods, Inc. [2019], J.
CAGUIOA)
Assets, share capital, donated capital, and
statutory funds cannot replace the paid-up capital
requirement as these are separate and distinct
accounting terminologies with differing purposes
and implications on the financial standing of the
contractor. It is settled that a sum of assets,
without more, is insufficient to prove that an
entity is engaged in valid job contracting. We
cannot readily presume that the assets were those
contemplated by D.O. No. 18-A-11 since
principal’s allegation that the contractor possesses
substantial capital is not supported by the
evidence on record.
Share capital refers to the money paid or required
to be paid by the members for the conduct of the
operation of the cooperative. Meanwhile, paid-up
capital pertains to the portion of the subscribed
share capital which has been paid by the members
of the cooperative. Donated capital is defined as
the subsidies, grants, donations and aids received
by the cooperative from any person, whether
natural or juridical, local or foreign both
government and private. Statutory funds or
reserves refer to earnings of
the cooperative allocated to various statutory
accounts such as: (a) Reserved fund; (b) Education
and training fund; (c) Community development
Fund; and (d) Optional fund.
Since share capital refers to the total number of
shares paid or required to be paid by its members,
the paid-up capital of a cooperative is only a
fraction or portion of share capital. Share capital is
not automatically equivalent to the paid-up
capital because it may include unpaid shares of
the cooperative. The amount of paid-up capital
may only be equal to the amount of share capital
if all share capital have been paid. (Serman
Cooperative v. Montarde [2020])
a. Elements of Labor-Only Contractor
• The contractor or subcontractor
does not have substantial capital or
investment which relates to the job,
work or service to be performed
and the employees recruited,
supplied or placed by such
contractor or subcontractor are
performing activities which are
directly related to the main business
of the principal; or
• The contractor does not exercise the
right to control over the
performance of the work of the
contractual employee
b. Trilateral Relationship
Relationship in a contracting or
subcontracting arrangement where there is
a CONTRACT FOR A SPECIFIC JOB,
WORK OR SERVICE between the principal
and the contractor, and a CONTRACT OF
EMPLOYMENT between the contractor
and its workers.
There are three parties involved:
1. Principal – who decides to farm
out a job, work or service to a
contractor;
2. Contractor – who has the capacity
to independently undertake the
performance of the job, work, or
service; and
3. Contractual workers – engaged by
the contractor to accomplish the
job, work or service.
In this trilateral relationship, the principal
controls the contractor and his employees
with respect to the ultimate results or
output of the contract; the contractor, on
the other hand, controls his employees
9
with respect, not only to the results to be
obtained, but with respect to the means
and manner of achieving this result. This
pervasive control by the contractor over its
employees results in an employer-
employee relationship between them.
c. Solidary Liability
Liability of the principal pursuant to the
provision of Art 109 LC, as direct employer
together with the contractor for any
violation of the LC.
A finding by the appropriate authorities
that a contractor is a “labor-only”
contractor establishes an employer-
employee relationship between the
principal employer and the contractor’s
employees and the former becomes
solidarily liable for all the rightful claims of
the employees (Coca-Cola Bottlers Phils., Inc.
vs. Agito [2009]).
The contractor is considered merely an
agent of the principal employer and the
latter is responsible to the employees of the
labor-contractor as if such employees had
been directly employed by the principal
employer. (Valencia v. Classique and Cantigas
[2017])
B. TERMINATION BY EMPLOYER
Employers cannot be compelled to retain the
services of an employee who is guilty of acts that
are inimical to the interest of the employer.
(Sameer Overseas Placement Agency, Inc. vs. Cabiles,
[2014])
Requisites for validity
The dismissal of employees must be made within
the parameters of the law and pursuant to the
basic tenets of equity, justice and fair play. In
Brahm Industries, Inc. v. NLRC, the Court
explained that there are two (2) facets of valid
termination of employment: (a) the legality of the
act of dismissal, i.e., the dismissal must be under
any of the just causes provided under Art. 282 of
the LC; and (b) the legality of the manner of
dismissal, which means that there must be
observance of the requirements of due process,
otherwise known as the two-notice rule. (Orlando
Farms Growers Association vs. NLRC, [1998])
The principle echoed and re-echoed in our
jurisprudence is that the onus of proving that the
employee was dismissed for a just cause rests on
the employer, and the latter’s failure to discharge
that burden would result in a finding that the
dismissal is unjustified. (Balais, Jr. vs. Se’lon by
Aimee [2016])
1. Substantive Due Process
a. Just Causes
For an act to be considered a loss of trust
and confidence, it must be first, work-
related, and second, founded on clearly
established facts.
The complained act must be work related
such as would show the employee
concerned to be unfit to continue working
for the employer and it 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.
(Malcaba vs. ProHealth Pharma Philippines,
Inc.,[2018])
The misconduct must "relate to the
performance of the employee's duties"
that would render the employee "unfit to
continue working for the employer."
Gambling during office hours, sexual
intercourse within company premises,
sexual harassment, sleeping while on
duty, and contracting work in
competition with the business of one's
employer are among those considered as
serious misconduct for which an
employee's services may be terminated.
(Bravo v. Urios College [2017])
10
Ordinary misconduct would not justify
the termination of the services of an
employee as the law is explicit that the
misconduct should be serious (Oikonomos
Int’l. Resources Corporation vs. Navaja, Jr.
[2015])
The breach of trust must likewise
be willful, that is, "it is done intentionally,
knowingly and purposely, without
justifiable excuse, as distinguished from
an act done carelessly, thoughtlessly,
heedlessly or inadvertently.
The employee was able to meet his sales
quota, surpass his sales target and turn
over all his pending work to a reliever
before he left for a vacation leave and the
employer did not suffer any loss because
of his absence. This first infraction in his
nine years of service does not constitute
willful breach of trust on his part.
(Malcaba vs. ProHealth Pharma Philippines,
Inc., [2018])
The rank-and-file employee's act must
have been "performed with wrongful
intent" to warrant dismissal based on
serious misconduct. Dismissal is deemed
too harsh a penalty to be imposed on
employees who are not induced by any
perverse or wrongful motive despite
having committed some form of
misconduct. (Bravo v. Urios College [2017])
It is implied in every case of willful
disobedience that “the erring employee
obtains undue advantage detrimental to
the business interest of the employer.”
(Malcaba vs. ProHealth Pharma Philippines,
Inc., [2018])
The admittedly insulting and unbecoming
language uttered by petitioner (“Siguro
nga abnormal utak mo”) to the HR Manager
should be viewed with reasonable
leniency in light of the fact that it was
committed under an emotionally charged
state. the on-the-spur-of-the-moment
 outburst of petitioner, he having reached
his breaking point, was due to what he
perceived as successive retaliatory and
orchestrated actions of respondent.
Indeed, there was only lapse in judgment
rather than a premeditated defiance of
authority. (Maula v. Ximex Delivery
Express, Inc., [2017])
Misappropriating fuel allowance, theft of
fuel and corn, and sale of spare parts
while in the performance of his duties,
constitute serious misconduct. (Ting
Trucking v. Makilan [2016])
When a teacher engages in extra-marital
relationship, especially when the parties
are both married, such behavior amounts
to immorality, justifying his termination
from employment. (Santos, Jr. vs. NLRC,
March [1998])
Mere private sexual relations between
two unmarried and consenting adults,
even if the relations result in pregnancy
or miscarriage out of wedlock and
without more, are not enough to warrant
liability for illicit behavior. The voluntary
intimacy between two unmarried adults,
where both are not under any
impediment to marry, where no deceit
exists, and which was done in complete
privacy, is neither criminal nor so
unprincipled as to warrant disciplinary
action. (Inocente v. St. Vincent Foundation
for Children and Aging, Inc. [2016])
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-à-vis the
prevailing norms of conduct, i.e., what
the society generally considers moral and
respectable. (Leus vs. St. Scholastica College
[2015])
Jurisprudence has already set the
11
standard of morality with which an act
should be gauged — it is public and
secular, not religious. Whether a conduct
is considered disgraceful or immoral
should be made in accordance with the
prevailing norms of conduct, which, as
stated in Leus, refer to those conducts
which are proscribed because they are
detrimental to conditions upon which
depend the existence and progress of
human society. The fact that a particular
act does not conform to the traditional
moral views of a certain sectarian
institution is not sufficient reason to
qualify such act as immoral unless it,
likewise, does not conform to public and
secular standards. More importantly,
there must be substantial evidence to
establish that premarital sexual relations
and pregnancy out of wedlock is
considered disgraceful or immoral.
(Capin-Cadiz v. Brent Hospital and Colleges,
Inc. [2016])
If the teacher and student 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.
(Chua-Qua v. Clave [1990])
Willful Disobedience
Moreno’s failure to obtain the required
permission from the school before she
engaged in external teaching
engagements is a clear transgression of
SSC-R’s policy. However, said
misconduct falls below the required level
of gravity that would warrant dismissal
as a penalty. Under Art. 282(a) of the
Labor Code, willful disobedience of the
employer’s lawful orders as a just cause
for termination of employment envisages
the concurrence of at least two requisites:
(1) the employee’s assailed conduct must
have been willful or intentional, the
 willfulness being 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 has been engaged to discharge.
(Moreno v. SSC-R Manila [2008])
Not every case of insubordination or
willful disobedience by an employee
reasonably deserves the penalty of
dismissal. The penalty to be imposed on
an erring employee must be
commensurate with the gravity of his
offense. To the Court’s mind, the case of
an employee who is compelled to
apologize for a previous infraction but
fails to do so is not one which would
properly warrant his termination, absent
any proof that the refusal was made in
brazen disrespect of his employer.
(Montallana vs. La Consolacion College
Manila [2014])
Dismissing employees merely on the
basis that they complained about their
employer in a radio show is not only
invalid, it is unconstitutional. (Hubilla vs.
HSY Marketing, Ltd., Co [2018])
Gross and habitual neglect of his duties
To warrant the dismissal of the employee
for just cause, Article 282(b) of the Labor
Code requires the negligence to be gross
and habitual.
Gross negligence has been defined as "the
want or absence of or failure to exercise
slight care or diligence, or the entire
absence of care. It evinces a thoughtless
disregard of consequences without
exerting any effort to avoid them." On the
other hand, habitual neglect "imparts
repeated failure to perform one's duties
for a period of time, depending on the
circumstances." A SINGLE OR
ISOLATED ACT OF NEGLIGENCE
DOES NOT CONSTITUTE A JUST
CAUSE FOR THE DISMISSAL OF THE
12
EMPLOYEE. (Villanueva v. Ganco Resort
and Recreation, Inc., G.R. No. 227175 [2020],
J. CAGUIOA)
Records reveal that it was not only on
May 25, 2006 that Llanes, the pilferer, was
seen during a Meralco operation as he
was previously noticed by Meralco
employees in past operations. Also, the
evidence ascertained the presence of
Matis in the worksite where the pilferage
took place, and his familiarity with
Llanes. Matis's tolerance of the activities
of Llanes demonstrates his complicity in
the theft, and not a mere want of care in
the performance of his duty or gross
negligence. Assuming Matis were
negligent, his inaction can only be
regarded as a single or isolated act of
negligence which cannot be considered as
gross and habitual, hence, cannot be
considered as a just cause for his
dismissal. (Matis v. Manila Electric Co.,
[2016])
Gross negligence evinces a thoughtless
disregard of consequences without
exerting any effort to avoid them. There is
gross negligence in driving the bus
causing death and damages to property.
(Yellow Bus Line Employees Union v. Yellow
Bus Line, Inc. [2016])
Gross inefficiency is closely related to
gross neglect because both involve
specific acts of omission resulting in
damage to another. Gross neglect of duty
or gross negligence refers to negligence
characterized by the want of even slight
care, acting or omitting to act in a
situation where there is a duty to act, not
inadvertently but willfully and
intentionally, with a conscious
indifference to consequences insofar as
other persons may be affected. (Rio vs.
Colegio De Sta. Rosa-Makati [2014])
Puncia's repeated failure to perform his
duties — i.e., reaching his monthly sales
 quota — for such a period of time falls
under the concept of gross inefficiency. In
this regard, case law instructs that "gross
inefficiency" is analogous to "gross
neglect of duty," a just cause of dismissal
under Article 297 of the Labor Code, for
both involve specific acts of omission on
the part of the employee resulting in
damage to the employer or to his
business. (Puncia v. Toyota Shaw/Pasig, Inc.
[2016])
As a general concept, “poor performance”
is equivalent to inefficiency and
incompetence in the performance of
official duties. Under Article 282 of the
Labor Code, an unsatisfactory rating can
be a just cause for dismissal only if it
amounts to gross and habitual neglect of
duties. The fact that an employee’s
performance is found to be poor or
unsatisfactory does not necessarily mean
that the employee is grossly and
habitually negligent of his duties. Gross
negligence implies a want or absence of
or failure to exercise slight care or
diligence, or the entire absence of care. It
evinces a thoughtless disregard of
consequences without exerting any effort
to avoid them. (Eastern Overseas
Employment Center, Inc. vs. Bea [2005])
To show that dismissal resulting from
inefficiency in work is valid, it must be
shown that: 1) the employer has set
standards of conduct and workmanship
against which the employee will be
judged; 2) the standards of conduct and
workmanship must have been
communicated to the employee; and 3)
the communication was made at a
reasonable time prior to the employee’s
performance assessment. (Sameer Overseas
Placement Agency, Inc. vs. Cabiles, [2014])
While the rule is that a single or isolated
act of negligence is not sufficient to
constitute a just cause for the dismissal of
the employee, the same, however, is not
13
absolute. An infraction, even if not
habitual, may warrant a dismissal under
appropriate circumstances. (Rustan
Commercial Corporation v. Raysag [2021])
Abandonment, while it is not expressly
enumerated under Article 297 of the
Labor Code as a just cause for dismissal of
an employee, it has been recognized by
jurisprudence as a form of, or akin to,
neglect of duty. It requires the
concurrence of two elements: 1) failure to
report for work or absence without valid
or justifiable reason; and 2) a clear
intention to sever the employer-employee
relationship as manifested by some overt
acts. (Rodriguez v. Sintron Systems, Inc,
G.R. No. 240254 [2019], J. CAGUIOA)
No separation pay when employee’s
dismissal is based on gross and habitual
neglect of duty. (Quiambao v. Manila
Electric Company [2009])
Fraud or willful breach of the trust
To legally dismiss an employee on the
ground of loss of trust, the employer must
establish that 1.) the employee occupied a
position of trust and confidence, or has
been routinely charged with the care and
custody of the employer’s money or
property; 2.) the employee committed a
willful breach of trust based on clearly
established facts; and 3.) such loss of trust
relates to the employee’s performance of
duties. It is a cardinal rule that the loss of
trust and confidence should be genuine,
and not simulated. It must arise from
dishonest or deceitful conduct, and must
not be arbitrarily asserted in the face of
overwhelming contrary evidence. (Sta.
Ana v. Manila Jockey Club, Inc. [2017])
The breach is willful if it is done
intentionally, knowingly and purposely,
without justifiable excuse, as
distinguished from an act done carelessly,
thoughtlessly, heedlessly, or
inadvertently. It is the breach of the
 employer's trust, not the specific
employee act/s which the employer
claims caused the breach, which the law
requires to be willful, knowingly and
purposefully done by the employee to
justify the dismissal on the ground of loss
of trust and confidence. (Inocente v. St.
Vincent Foundation for Children and Aging,
Inc. [2016])
To warrant dismissal based on loss of
confidence, there must be SOME BASIS
for the loss of trust or the employer must
have reasonable grounds to believe that
the employee is responsible for
misconduct that renders the latter
unworthy of the trust and confidence
demanded by his or her position. (Paulino
vs. NLRC [2012])
The law contemplates two (2) classes of
positions of trust. The first class consists
of managerial employees or those who are
vested with the power or prerogative to
lay down management policies and to
hire, transfer, suspend, layoff, recall,
discharge, assign or discipline employees
or effectively recommend such
managerial actions. The second class
consists of cashiers, auditors, property
custodians, etc. who, in the normal and
routine exercise of their functions,
regularly handle significant amounts of
money or property.
Loss of trust and confidence is a just cause
to terminate either managerial employees
or rank-and-file employees who regularly
handle large amounts of money or
property in the regular exercise of their
functions. (Malcaba vs. ProHealth Pharma
Philippines, Inc., [2018])
The Court has distinguished the
treatment of managerial employees from
that of rank-and-file personnel, insofar as
the application of the doctrine of loss of
trust and confidence is concerned. With
respect to rank-and-file personnel, loss of
14
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 be
sufficient. But as regards a managerial
employee, the mere existence of a basis
for believing that such employee has
breached the trust of his employer would
suffice for his dismissal. Hence, in the
case of managerial employees, proof
beyond reasonable doubt is not required,
it being sufficient that there is some basis
for such 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 of his
position.(Lourdes School of Quezon City v.
Garcia [2018]) (PJ Lhuillier, Inc. v. Camacho
[2017])
A selling teller is a position of trust and
confidence since it requires the handling
and custody of tickets issued and bets
made in the teller's station. (Sta. Ana v.
Manila Jockey Club, Inc. [2017])
Guidelines for the application of the
doctrine of loss of confidence, namely: (1)
the loss of confidence should not be
simulated; (2) it should not be used as a
subterfuge for causes which are improper,
illegal or unjustified; (3) it should not be
arbitrarily asserted in the face of
overwhelming evidence to the contrary;
and (4) it must be genuine, not a mere
afterthought to justify earlier action taken
in bad faith. In short, there must be an
actual breach of duty which must be
established by substantial evidence.
(Inocente v. St. Vincent Foundation for
Children and Aging, Inc. [2016])
A frantic search for gainful employment
opportunities elsewhere should be
considered as inappropriate for being
 made during office hours, the same did
not constitute willful breach of trust and
confidence of the employer. The loss of
trust and confidence contemplated under
Article 282 (c) of the Labor Code is not
ordinary but willful breach of trust. The
cause of the loss of trust must be work-
related as to expose the employee as unfit
to continue working for the employer.
(Lagahit v. Pacific Concord Container Lines
[2016])
A Senior Purser is imbued with trust and
confidence. She had in her custody and
control company properties which are of
significant value, and she also had the
responsibility of informing the In-flight
Service Manager whether there was a
defective or missing equipment.
Moreover, she had oversight over two to
four cabin crew members assigned in her
section of the aircraft and rated their
performance for promotion purposes. She
had been entrusted with the custody and
control of valuable company properties in
the normal and routine exercise of her
duties. (Lamadrid v. Cathay Pacific Airways
Limited [2021]
Commission of a crime
Spouse, Ascendants, Descendants,
Legitimate, natural, adopted brothers and
sisters of the employer, Relative by
affinity in the same degrees and those by
consanguinity within the fourth civil
degree
The conviction of an employee in a
criminal case is not indispensable to
warrant his dismissal by his employer
and that the fact that a criminal complaint
against the employee has been dropped
by the city fiscal is not binding and
conclusive upon a labor tribunal (Sea-Land
Service, Inc. vs. NLRC [1985])
Other causes analogous
Theft committed by an employee against
a person other than his employer, if
15
proven by substantial evidence, is a cause
analogous to serious misconduct.
(Hocheng Philippines Corp. v. Farrales
[2015])
Repeated failure to perform his duties —
i.e., reaching his monthly sales quota —
for such a period of time falls under the
concept of gross inefficiency. In this
regard, case law instructs that "gross
inefficiency" is analogous to "gross
neglect of duty," a just cause of dismissal
under Article 297 of the Labor Code, for
both involve specific acts of omission on
the part of the employee resulting in
damage to the employer or to his
business. (Puncia v. Toyota Shaw/Pasig, Inc.
[2016])
The obesity of petitioner, when placed in
the context of his work as flight attendant,
becomes an analogous cause under
Article 282 (e) of the Labor Code that
justifies his dismissal from the service.
His obesity may not be unintended, but is
nonetheless voluntary. As the CA
correctly puts it, "voluntariness basically
means that the just cause is solely
attributable to the employee without any
external force influencing or controlling
his actions. This element runs through all
just causes under Article 282, whether
they be in the nature of a wrongful action
or omission. Gross and habitual neglect, a
recognized just cause, is considered
voluntary although it lacks the element of
intent found in Article 282 (a), (c), and
(d)." (Yrasuegui v. Pilippine Airlines, Inc.
[2008]
b. Authorized Causes
Installation of labor-saving devices;
Redundancy
Redundancy exists when the service of an
employee is in excess of what is
reasonably demanded by the actual
requirements of the business. A
redundant position is one rendered
 superfluous by any number of factors,
such as overhiring of workers, decreased
volume of business, dropping of a
particular product line previously
manufactured by the company or phasing
out of a service activity formerly
undertaken by the enterprise. (Que v. Asia
Brewery, Inc. [2019], J. CAGUIOA)
Redundancy requires good faith in
abolishing the redundant position. To
establish good faith, the company must
provide substantial proof that it is
overmanned. The act of hiring new
employees while firing the old ones
"negates the claim of redundancy."
(Philippine Airlines, Inc. v. Dawal [2016])
While a declaration of redundancy is
ultimately a management decision in
exercising its business judgment, and the
employer is not obligated to keep in its
payroll more employees than are needed
for its day-to-day operations,
management must not violate the law nor
declare redundancy without sufficient
basis. Redundancy is ultimately a
management prerogative, and the
wisdom or soundness of such business
judgment is not subject to discretionary
review by labor tribunals or even this
Court, as long as the law was followed
and malicious or arbitrary action was not
shown. (Manggagawa ng Komunikasyon sa
Pilipinas v. Philippine Long Distance
Telephone Co., Inc. [2017])
Even if a business is doing well, an
employer can still validly dismiss an
employee from the service due to
redundancy if that employee’s position
has already become in excess of what the
employer’s enterprise requires.
It is illogical for employer to terminate the
petitioners’ employment and replace
them with contractual employees. The
replacement effectively belies employer’s
claim that the petitioners’ positions were
16
abolished due to superfluity. Redundancy
could have been justified if the functions
of the petitioners were transferred to
other existing employees of the company.
(Arabit v. Jardine Pacific Finance, Inc.
[2014])
Retrenchment
Retrenchment is only a measure of last
resort when other less drastic means have
been tried and found to be inadequate.
Retrenchment is a management
prerogative consistently recognized and
affirmed by this Court. It is, however,
subject to faithful compliance with the
substantive and the procedural
requirements laid down by law and
jurisprudence. It must be exercised
essentially as a measure of last resort,
after less drastic means have been tried
and found wanting.
Retrenchment is one of the authorized
causes for termination of employment
which the law accords an employer who
is not making good in its operations in
order to cut back on expenses for salaries
and wages by laying off some employees.
The purpose of retrenchment is to save a
financially ailing business establishment
from eventually collapsing. (Blue Eagle
Management, Inc. v. Naval [2016])
When termination of employment is
occasioned by retrenchment to prevent
losses, an employer must declare a
reasonable cause or criterion for
retrenching an employee and who would
be retained among the employees, such as
status (i.e., whether they are temporary,
casual, regular or managerial employees),
efficiency, seniority, physical fitness, age,
and financial hardship for certain
workers.” (La Consolacion College of Manila
vs. Pascua, [2018])
Retrenchment that disregards an
employee’s record and length of service is
 an illegal termination of employment.
(ibid)
Proof of financial losses becomes the
determining factor in proving the
legitimacy of retrenchment. In
establishing a unilateral claim of actual or
potential losses, financial statements
audited by independent external auditors
constitute the normal method of proof of
profit and loss performance of a
company. The condition of business
losses justifying retrenchment is normally
shown by audited financial documents
like yearly balance sheets and profit and
loss statements as well as annual income
tax returns.
While financial statements for previous
years may be material in establishing the
financial trend for an employer, these are
not indispensable in all cases of
retrenchment. The evidence required for
each case of retrenchment will still
depend on its particular circumstances.
Proof of actual financial losses incurred
by the company is not a condition sine
qua non for retrenchment," and
retrenchment may be undertaken by the
employer to prevent even future losses.
(Blue Eagle Management, Inc. v. Naval
[2016]) see also (FASAP v. PAL [2018])
Documents that have not been the subject
of an independent audit may very well be
self-serving. Moreover, it is not enough
that it presents its audited financial
statement for the year that retrenchment
was undertaken for even as it may be
incurring losses for that year, its overall
financial status may already be
improving. Thus, it must “also show that
its losses increased through a period of
time and that the condition of the
company is not likely to improve in the
near future.” La Consolacion College of
Manila vs. Pascua, [2018])
In dismissing a full-time, highest paid
17
employee in her division, the employer
disregarded employee’s seniority and
preferred status relative to a part-time
employee which indicates its resort to an
unfair and unreasonable criterion for
retrenchment. (ibid)
A lay-off, used interchangeably with
retrenchment, is a recognized prerogative
of management. It is the termination of
employment resorted to by the employer,
through no fault of nor with prejudice to
the employees, during periods of business
recession, industrial depression, 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. (Dela Cruz
vs. NLRC [1997])
Jurisprudence, in both a permanent and a
temporary layoff, dictates that the one-
month notice rule to both the DOLE and
the employee under Article 283 (now
Article 298) is mandatory. (Pasig
Agricultural vs. Nievarez [2015])
Closure or cessation of business operations
Closure of business, is the reversal of
fortune of the employer whereby there is
a complete cessation of business
operations and/or an actual locking-up of
the doors of establishment, usually due to
financial losses. Closure of business as an
authorized cause for termination of
employment aims to prevent further
financial drain upon an employer who
cannot pay anymore his employees since
business has already stopped. (JAT vs.
NLRC [2004]) In such a case, the employer
is generally required to give separation
benefits to its employees, unless the
closure is due to serious business losses.
(Zambrano v. Philippine Carpet
Manufacturing Corp. [2017])
While serious business losses generally
 exempt the employer from paying The Labor Code and its IRR are silent on
separation benefits, it must be pointed the procedural due process required in
that the exemption only pertains to the terminations due to disease. Despite the
obligation of the employer under Article seeming gap in the law, Section 2, Rule 1,
297 of the Labor Code. This is because of Book VI of the IRR expressly states that
the law's express parameter that the employee should be afforded
mandates payment of separation benefits procedural due process in all cases of
"in case of closures or cessation of dismissals. (Deferio v. Intel Technology
operations of establishment or [2014])
undertaking not due to serious business
losses or financial reverses."
2. Procedural Due Process
When the obligation to pay separation
For a dismissal to be valid, the employer must
benefits, however, is not sourced from
comply with both substantive and procedural due
law (particularly, Article 297 of the Labor
process requirements. Substantive due process
Code), but from contract, such as an
requires that the dismissal must be pursuant to
existing collective bargaining agreement
either a just or an authorized cause under Articles
between the employer and its employees,
297, 298 or 299 of the Labor Code. Procedural due
an examination of the latter's provisions
process, on the other hand, mandates that the
becomes necessary in order to determine
employer must observe the twin requirements of
the governing parameters for the said
notice and hearing before a dismissal can be
obligation. (Benson Industries Employees
effected. (Puncia vs. Toyota Shaw/Pasig, Inc., [2016])
Union-ALU-TUCP v. Benson Industries, Inc.
[2014])
a. Twin-notice Rule
Disease or illness
The rule is explicit. For a dismissal on the The cardinal rule in our jurisdiction is
ground of disease to be considered valid, that the employer must furnish the
two requisites must concur: (a) the employee with two (2) written notices
employee suffers from a disease which before the termination of his
cannot be cured within six months and employment can be effected.
his continued employment is prohibited
by law or prejudicial to his health or to The employer must serve the erring
the health of his co-employees, and (b) a employee a first notice which details the
certification to that effect must be issued ground/s for termination, giving the
by a competent public health authority. employee a reasonable opportunity to
(Manly Express vs. Payong, Oct. 2005) explain his side. In practice, this is
commonly referred to as the notice to
The Implementing Rules of the Labor explain (NTE). The second notice
Code impose upon the employer the duty pertains to the written notice of
not to terminate an employee until there termination indicating that upon due
is a certification by a competent public consideration of all circumstances, the
health authority that the employee's employer has decided to dismiss the
disease is of such nature or at such a stage employee. (Pardillo v. Bandojo [2019], J.
that it cannot be cured within a period of CAGUIOA)
six months even with proper medical
treatment. (Marina's Creation Enterprises v.
Ancheta [2016]) Notice to the employee should merely
embody the particular acts or omissions
constituting the grounds for which the

18
 dismissal is sought. … In fact, Tiu vs
NLRC merely requires that the employee
be appraised of the particular acts and
omissions for which the dismissal is
sought. (Glaxo-Wellcome Philippines vs.
NEW-DFA [2005])
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
employees are 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. A general description of the
charge will not suffice. Lastly, the notice
should specifically mention which
company rules, if any, are violated
and/or which among the grounds under
Art. 282 is being charged against the
employees.
After determining that termination of
employment is justified, the employers
shall serve the employees a written
notice of termination indicating that: (1)
all circumstances involving the charge
against the employees have been
19
considered; and (2) grounds have been
established to justify the severance of
their employment. (King of Kings v.
Mamac [2007])
Under Section 17 of the POEA Standard
Employment Contract for Seafarers, it is
only the second notice or the notice of
dismissal which may be dispensed with
under exceptional circumstances (i.e if
doing so will prejudice the safety of the
crew or the vessel) – the first written
notice could never be dispensed with.
The seafarer should always be furnished
with the written notice informing him of
the charges against him and the date,
time, and place of the formal
investigation. (MECO Manning &
Crewing Services, Inc. v. Sorrera [2019])
Hearing
Guiding principles in connection with the
hearing requirement in dismissal cases: (a)
"ample opportunity to be heard" means
any meaningful opportunity (verbal or
written) given to the employee to answer
the charges against him and submit
evidence in support of his defense, whether
in a hearing, conference or some other fair,
just and reasonable way; (b) a formal
hearing or conference becomes mandatory
only when requested by the employee in
writing or substantial evidentiary disputes
exist or a company rule or practice requires
it, or when similar circumstances justify it;
(c) the "ample opportunity to be heard"
standard in the Labor Code prevails over
the "hearing or conference" requirement in
the implementing rules and regulations.
(Perez v. Philippine Telegraph and Telephone
Co. [2009])
It is not enough that the employee is given
an “ample opportunity to be heard” if
company rules or practices require a formal
hearing or conference. In such instance, the
requirement of a formal hearing and
conference becomes mandatory because
 company policies or practice, such as those
which regulate the procedures and
requirements for their termination, are
binding on the parties. (Surigao del Norte
Electric Cooperative, Inc. vs. Gonzaga [2013])
A hearing means that any party should be
given a chance to adduce evidence to
support his side of the case and that the
evidence should be taken into account in the
adjudication of the controversy. “To be
heard” does not mean verbal argumentation
alone inasmuch as one may be heard just as
effectively through written explanations,
submissions or pleadings. (Perez v. Philippine
Telegraph and Telephone Co. [2009])
That the workers involved in the incident
were "mustered" or convened thereafter by
the captain is inconsequential. It is
insufficient compliance with the law which
requires, as a vital component of due
process, observance of the twin
requirements of notice and hearing before
dismissing an employee. (Wallem Maritime
Services, Inc. v. National Labor Relations
Commission [1996]
Failure to observe due process
In Agabon v. NLRC, where the dismissal is for an
authorized cause, the lack of statutory due
process should not nullify the dismissal, or render
it illegal, or ineffectual. However, the employer
should indemnify the employee, in the form of
nominal damages (P30,000.00), for the violation of
his right to statutory due process.
In Jaka Food Processing Corp. v. Pacot, we fixed the
nominal damages at P50,000.00 if the dismissal is
due to an authorized cause under Article 283 of
the Labor Code, but the employer failed to
comply with the notice requirement. The reason is
terminations under Article 283 of the Labor Code
are initiated by the employer in the exercise of his
management prerogative, thus, the sanction
should be stiffer.
20
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 employer's grant of other termination
benefits in favor 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. (PNCC Skyway Corp. v. Secretary of
Labor & Employment [2017])
3. Illegal Dismissal, Reliefs Therefrom
Kinds:
• No Just or Authorized Cause
Termination of employment effected
merely because the employer no
longer wanted the services of the
employee is not an authorized or just
cause of dismissal under the Labor
Code. (Aldovino vs. Gold and Green
Manpower Management and Development
Services, Inc., [2019])
Dismissing employees merely on the
basis that they complained about their
employer in a radio show is not only
invalid, it is unconstitutional. (Hubilla
vs. HSY Marketing, Ltd., Co., [2018])
It is unreasonable to deny employees
their means of earning a living
exclusively on the basis of age when
there is no other indication that they
are incapable of performing their
functions. Age, per se, is not a reliable
indication of physical stamina or
mental rigor. What is crucial in
determining capacity for continuing
employment is an assessment of an
employee’s state of health, not his or
her biological age. (Padilla vs. Airborne
 Security Service, Inc., [2017])
• Constructive Dismissal
Constructive dismissal has been
described as tantamount to
“INVOLUNTARILY RESIGNATION
due to the harsh, hostile, and
unfavorable conditions set by the
employer.” (Saudi Arabian Airlines
(Saudia) vs. Rebesencio [2015])
Aptly called a dismissal in disguise or
an act amounting to dismissal but
made to appear as if it were not,
constructive dismissal may, likewise,
exist if an act of clear discrimination,
insensibility, or disdain by an
employer becomes so unbearable on
the part of the employee that it could
foreclose any choice by him except to
forego his continued employment.
(Sumifru (Philippines) Corporation vs.
Baya [2017]) The test of constructive
dismissal is whether a reasonable
person in the employee’s position
would have felt compelled to give up
his job under the circumstances. (Borja
vs. Miñoza [2017).
The employer’s act of calling several
meetings inquiring about the
employees’ absences, for which the
latter were issued separate
memoranda; subjecting the employees
to an on-the-spot drug test; barring
entry into the restaurant; and allegedly
threatening and intimidating the
employees by the presence of a
stranger, in the restaurant, do not
constitute constructive dismissal. The
employer was validly exercising its
management prerogative when it
called meetings to investigate the
employees’ absences, gave them
separate memoranda seeking
explanation therefor, and conducted
an on-the-spot drug test on its
employees, including respondents. As
the Court sees it, the employer only
21
found it necessary to enforce the
foregoing measures to control and
regulate the conduct and behavior of
the employees, to maintain order in
the work premises, and ultimately,
preserve the business. (Ibid)
Not every inconvenience, disruption,
difficulty, or disadvantage that an
employee must endure sustains a
finding of constructive dismissal.” It is
an employer’s right to investigate acts
of wrongdoing by employees.
Employees involved in such
investigations cannot ipso facto claim
that employers are out to get them.
Their involvement in investigations
will naturally entail some
inconvenience, stress, and difficulty.
However, even if they might be
burdened — and, in some cases, rather
heavily so — it does not necessarily
mean that an employer has embarked
on their constructive dismissal.
(Philippine Span Asia Carriers
Corporation (formerly Sulpicio Lines, Inc.)
vs. Pelayo [2018])
The act of moving the effectivity date
of an employee’s resignation to a date
earlier than what she had stated
cannot be deemed malicious. This
cannot be viewed as an act of
harassment but merely the exercise of
respondent's management prerogative.
We cannot expect employers to
maintain in their employ employees
who intend to resign, just so the latter
can have continuous work as they look
for a new source of income. (Paredes v.
Feed the Children, Inc, [2015])
a. Reinstatement
Reinstatement restores the employee who
was unjustly dismissed to the position
from which he was removed, that is, to
his status quo ante dismissal. (Advan
Motor., Inc. v. Veneracion [2017])
 General rule: an illegally dismissed
employee is entitled to reinstatement or
separation pay, if reinstatement is not
viable; and payment of full backwages.
(Holcim Philippines, Inc. vs. Obra [2016])
Exceptions: reinstatement of the
employee without backwages on account
of the following: (a) the fact that the
dismissal of the employee would be too
harsh a penalty; and (b) that the employer
was in good faith in terminating the
employee. (Universal Robina Sugar Milling
Corporation vs. Ablay [2016])
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.
(Art. 294, Labor Code)
The decision of the Labor Arbiter (LA)
reinstating a dismissed or separated
employee, insofar as the reinstatement
aspect is concerned, shall immediately be
executory, even pending appeal.
Consequently, the employer is duty-
bound to reinstate the employee, failing
which, the employer is liable instead to
pay the dismissed employee’s salary.
(Manila Doctors College vs. Olores [2016])
This duty is terminated upon the reversal
of the LA’s decision by a higher tribunal.
Notwithstanding this reversal, an
employer who did not reinstate an
employee shall still be liable for the
accrued wages of the employee, i.e., the
unpaid salary accruing up to the time of
the reversal except if the reason for the
delay of reinstatement is not the fault of
the employer. (Ibid)
Jurisprudence provides that in instances
22
where there was neither dismissal by the
employer nor abandonment by the
employee, the proper remedy is to
reinstate the employee to his former
position, but without the award of
backwages. However, since reinstatement
was already impossible due to strained
relations between the parties, as found by
the NLRC, each of them must bear their
own loss, so as to place them on equal
footing. At this point, it is well to
emphasize that “in a case where the
employee’s failure to work was
occasioned neither by his abandonment
nor by a termination, the burden of
economic loss is not rightfully shifted to
the employer; each party must bear his
own loss.” (Borja vs. Minoza [2017])
b. Backwages
Payment of backwages is a form of relief
that restores the income that was lost by
reason of the unlawful dismissal. (Advan
Motor., Inc. v. Veneracion [2017])
In illegal dismissal cases, back wages refer
to the employee's supposed earnings had
he/she not been illegally dismissed. As
applied in this case, back wages
correspond to the amount ought to have
been received by the affected employees if
only they had been reinstated following
the Assumption Order. This shall
similarly include not only the employee's
basic salary but also the regular
allowances being received, such as the
emergency living allowances and the 13th
month pay mandated by the law, as well
as those granted under a CBA, if any.
(Albay Electric Cooperative, Inc. v. Aleco
Labor Employees Organization [2020], J.
CAGUIOA)
The award of backwages and/or
separation pay due to illegally dismissed
employees shall include all salary
increases and benefits granted under the
 law and other government issuances,
Collective Bargaining Agreements,
employment contracts, established
company policies and practices, and
analogous sources which the employees
would have been entitled to had they not
been illegally dismissed. On the other
hand, salary increases and other benefits
which are contingent or dependent on
variables such as an employee's merit
increase based on performance or
longevity or the company's financial
status shall not be included in the award.
This ruling is consistent with the
Constitutional command that the State
shall afford full protection to labor
(Section 3, Article XIII) and the edict
under Article 3, Chapter I of the Labor
Code. Most important, it conforms with
the purpose to restore an illegally
dismissed employee to the same status as
if their employment was not illegally
severed by allowing the, to continuously
enjoy the salaries, benefits, and
allowances they were assured to receive
during the term of their employment.
(Dumapis v. Lepanto Consolidated Mining
[2020])
The grant of additional backwages is
necessary in arriving at a complete and
just resolution of the case and is a relief
granted by substantive law which cannot
be defeated by mere procedural lapse.
Since the illegally dismissed employee
was found to be a regular employee and
not a probationary employee, his
backwages accrued from the time of his
illegal dismissal until his reinstatement
and not merely for the unexpired portion
his probationary employment. (Agustin v.
Alphaland [2020])
These twin remedies — reinstatement and
payment of backwages — make the dismissed
employee whole who can then look forward to
continued employment. Thus, do these two
remedies give meaning and substance to the
23
constitutional right of labor to security of tenure.
(A. Nate Casket Maker v. Arango [2016])
Illegally dismissed overseas workers, including
seafarers, shall be entitled to salaries
corresponding to the unexpired portion of their
employment contracts. This includes the monthly
vacation leave pay and all other benefits
guaranteed in the employment contract which
were not made contingent upon the performance
of any task or the fulfillment of any condition.
(MECO Manning & Crewing Services, Inc. v. Sorrera
[2019])
c. Separation Pay, Doctrine of Strained
Relations
Separation pay becomes due if an
employee is dismissed without just cause
and without due process and is therefore
entitled to backwages and reinstatement.
(Radar Security & Watchman Agency, Inc. v.
Castro [2015])
Under the law and prevailing
jurisprudence, an illegally dismissed
employee is entitled to reinstatement as a
matter of right. The award of separation
pay is a mere exception to the rule.
It is made an alternative relief in lieu of
reinstatement in certain circumstances,
like: (a) when reinstatement can no longer
be effected in view of the passage of a
long period of time or because of the
realities of the situation; (b) reinstatement
is inimical to the employer's interest; (c)
reinstatement is no longer feasible; (d)
reinstatement does not serve the best
interests of the parties involved; (e) the
employer is prejudiced by the workers'
continued employment; (f) facts that
make execution unjust or inequitable
have supervened; or (g) strained relations
between the employer and employee.
(Fernandez, Jr. v. MERALCO [2018])
Separation pay, equivalent to one month's
salary for every year of service, is
 awarded as an alternative to
reinstatement when the latter is no longer
an option. Separation pay is computed
from the commencement of employment
up to the time of termination, including
the imputed service for which the
employee is entitled to backwages, with
the salary rate prevailing at the end of the
period of putative service being the basis
for computation. (Concurring Opinion, J.
CAGUIOA, Dumapis v. Lepanto
Consolidated Mining Company [2020])
Doctrine of Strained Relations
Under the doctrine of strained relations,
the payment of separation pay is
considered an acceptable alternative to
reinstatement when the latter option is no
longer desirable or viable. (Symex Security
Services, Inc. v. Rivera [2017], J. CAGUIOA)
However, strained relations must be
demonstrated as a fact to be adequately
supported by evidence-substantial
evidence to show that the relationship
between the employer and the employee
is indeed strained as a necessary
consequence of the judicial controversy.
(Radar Security & Watchman Agency, Inc. v.
Castro [2015])
The doctrine of strained relations cannot
be applied indiscriminately since every
labor dispute almost invariably results in
"strained relations;" otherwise,
reinstatement can never be possible
simply because some hostility is
engendered between the parties as a
result of their disagreement. That is
human nature. Strained relations must be
demonstrated as a fact. The doctrine
should not be used recklessly or loosely
applied, nor be based on impression
alone. (Rodriguez v. Sintron Systems, Inc.,
supra., J. CAGUIOA)
d. Damages
Moral damages are recoverable when the
dismissal of an employee is attended by
24
bad faith or fraud or constitutes an act
oppressive to labor, or is done in a
manner contrary to good morals, good
customs or public policy. Exemplary
damages, on the other hand, are
recoverable when the dismissal was done
in a wanton, oppressive, or malevolent
manner. (Sysmex Security Services, Inc. v.
Rivera [2017], J. CAGUIOA)
The violation of the employee's right to
statutory due process by the employer
warrants the payment of indemnity in the
form of nominal damages. The amount of
such damages is addressed to the sound
discretion of the court, taking into
account the relevant circumstances. The
payment of nominal damages would
serve to deter employers from future
violations of the statutory due process
rights of employees. It likewise provides a
vindication or recognition of the
fundamental right to due process
accorded to employees under the Labor
Code and its Omnibus Implementing
Rules. (Moral v. Momentum Properties
Management Corp. [2019])
e. Attorney’s Fees
There are two commonly accepted
concepts of attorney's fees - the ordinary
and extraordinary. In labor cases,
attorney's fees partake of the nature of an
extraordinary award granted to the
victorious party as an indemnity for
damages. As a general rule, it is payable
to the client, not to his counsel, unless the
former agreed to give the amount to the
latter as an addition to, or part of the
counsel's compensation.
Notably, Article 111 of the Labor Code
sanctions the award of attorney's fees in
cases of the unlawful withholding of
wages, wherein the culpable party may be
assessed attorney's fees equivalent to ten
percent (10%) of the amount of wages
recovered. The amount of attorney's fees
shall not exceed ten percent (10%) of the
 total monetary award, and the fees may
be deducted from the amount due the
winning party.
In addition, Article 2208 of the Civil Code
allows the award of attorney's fees in the
following instances, to wit:
(2) When the defendant's act or omission
has compelled the plaintiff to litigate with
third persons or to incur expenses to
protect his interest; x x x
(7) In actions for the recovery of wages of
household helpers, laborers and skilled
workers;
(8) In actions for indemnity under
workmen's compensation and employer's
liability laws; x x x
(11) In any other case where the court
deems it just and equitable that attorney's
fees and expenses of litigation should be
recovered.
Both the Labor Code and the Civil Code
provide that attorney's fees may be
recovered in the following instances,
namely, (i) in cases involving the
unlawful withholding of wages; (ii)
where the defendant's act or omission has
compelled the plaintiff to litigate with
third persons or the plaintiff incurred
expenses to protect his interest; (iii) in
actions for the recovery of wages of
household helpers, laborers and skilled
workers; (iv) in actions for indemnity
under workmen's compensation and
employer's liability laws; and (v) in cases
where the court deems it just and
equitable that attorney's fees and
expenses of litigation should be
recovered.
In a catena of cases, the Court awarded
attorney's fees in favor of illegally
dismissed employees who were
compelled to file an action for the
recovery of their lawful wages, which
were withheld by the employer without
any valid and legal basis. A plain
showing that the lawful wages were not
25
paid without justification was sufficient to
warrant an award of attorney's fees. (Alva
v. High Capacity Security Force, et. al.
[2017])
But, being compelled to litigate is not
sufficient reason to grant attorney's fees.
The Court has consistently held that
attorney's fees cannot generally be
recovered as part of damages based on
the policy that no premium should be
placed on the right to sue. Under Article
2208 of the Civil Code, factual, legal, and
equitable grounds must be presented to
justify an award for attorney's fees.
Absent a showing of bad faith on the part
of petitioners, the award of attorney's fees
is deemed inappropriate. (Rickmers Marine
Agency Phils., Inc. v. Global Management
Limited [2018], J. CAGUIOA)
f. Liabilities of Corporate Officers
Corporate directors and officers are
solidarily liable with the corporation for
the termination of employment of
employees done with malice or in bad
faith. (Polymer v. Salamuding [2013])
g. Burden of Proof
In illegal dismissal cases, the burden of
proof that employees were validly
dismissed rests on the employers. Failure
to discharge this burden means that the
dismissal is illegal. (Aldovino vs. Gold and
Green Manpower Management and
Development Services, Inc. [2019])
There can be no case for illegal
termination of employment when there
was no termination by the employer.
While, in illegal termination cases, the
burden is upon the employer to show just
cause for termination of employment,
such a burden arises only if the
complaining employee has shown, by
substantial evidence, the fact of
termination by the employer. (Remoticado
vs. Typical Construction Tradiong Corp,
 [2018])
C. TERMINATION BY EMPLOYEE
With notice to the employer
An employee may terminate without just cause
the employee-employer relationship by serving a
written notice on the employer at least one (1)
month in advance. The employer upon whom no
such notice was served may hold the employee
liable for damages. (Art. 285 (a), Labor Code)
In illegal dismissal cases, the fundamental rule is
that when an employer interposes the defense of
resignation, the burden to prove that the
employee indeed voluntarily resigned necessarily
rests upon the employer. (Doble, Jr. v. ABB, Inc.
[2017])
Since Doble claims to have been forced to submit
a resignation letter, it is incumbent upon him to
prove with clear and convincing evidence that his
resignation was not voluntary, but was actually a
case of constructive dismissal, i.e., a product of
coercion or intimidation. Coercion exists when
there is a reasonable or well-grounded fear of an
imminent evil upon a person or his property or
upon the person or property of his spouse,
descendants or ascendants. (1) that the
intimidation caused the consent to be given; (2)
that the threatened act be unjust or unlawful; (3)
that the threat be real or serious, there being
evident disproportion between the evil and the
resistance which all men can offer, leading to the
choice of doing the act which is forced on the
person to do as the lesser evil; and (4) that it
produces a well-grounded fear from the fact that
the person from whom it comes has the necessary
means or ability to inflict the threatened injury to
his person or property. (Doble, Jr. v. ABB, Inc.
[2017])
An employee who voluntarily resigns is not
entitled to separation pay unless it was previously
stipulated in the employment contract or has
become established company policy or practice.
(Pascua vs. Bank Wise, Inc [2018])
26
Without notice to the employer
An employee may put an end to the relationship
without serving any notice on the employer for
any of the following just causes:
i. Serious insult by the employer or his
representative on the honor and person of
the employee;
ii. Inhuman and unbearable treatment
accorded the employee by the employer or
his representative;
iii. Commission of a crime or offense by the
employer or his representative against the
person of the employee or any of the
immediate members of his family; and
iv. Other causes analogous to any of the
foregoing. (Art. 285 (b), Labor Code)
1. Resignation vs. Constructive Dismissal
Resignation is the FORMAL
PRONOUNCEMENT or RELINQUISHMENT
of a position or office — the voluntary act of
an employee who is in a situation where he
believes that personal reasons cannot be
sacrificed in favor of the exigency of the
service, and he has then no other choice but to
disassociate himself from employment. The
intent to relinquish MUST concur with the
overt act of relinquishment. (Silvertex Weaving
vs. Campo [2016]; Malixi v. MEXICALI [2016],
Panasonic v. Peckson [2019])
A resignation must be unconditional and
with the intent to operate as such. To
determine whether the employee indeed
intended to relinquish such employment, the
act of the employee before and after the
alleged resignation must be considered.
Voluntary resignation is difficult to reconcile
with the filing of a complaint for illegal
dismissal. The filing of the complaint belies
respondent's claim that petitioner voluntarily
resigned. (Grande v. Philippine Nautical
Training College [2017])
Constructive dismissal has been described as
tantamount to “INVOLUNTARILY
RESIGNATION due to the harsh, hostile, and
unfavorable conditions set by the employer.”
(Saudi Arabian Airlines (Saudia) vs. Rebesencio
[2015])
Aptly called a dismissal in disguise or an act
amounting to dismissal but made to appear as
if it were not, constructive dismissal may,
likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer
becomes so unbearable on the part of the
employee that it could foreclose any choice by
him except to forego his continued
employment. (Sumifru (Philippines) Corporation
vs. Baya [2017])
The test of constructive dismissal is whether a
reasonable person in the employee’s position
would have felt compelled to give up his job
under the circumstances. (Borja vs. Miñoza
[2017)
The employer’s act of calling several meetings
inquiring about the employees’ absences, for
which the latter were issued separate
memoranda; subjecting the employees to an
on-the-spot drug test; barring entry into the
restaurant; and allegedly threatening and
intimidating the employees by the presence of
a stranger, in the restaurant, do not constitute
constructive dismissal. The employer was
validly exercising its management prerogative
when it called meetings to investigate the
employees’ absences, gave them separate
memoranda seeking explanation therefor, and
conducted an on-the-spot drug test on its
employees, including respondents. As the
Court sees it, the employer only found it
necessary to enforce the foregoing measures to
control and regulate the conduct and behavior
of the employees, to maintain order in the
work premises, and ultimately, preserve the
business. (Ibid)
It is constructive dismissal when resignation
“was made under compulsion or under
circumstances approximating compulsion,
27
such as when an employee’s act of handing in
his [or her] resignation was a reaction to
circumstances leaving him or her no
alternative but to resign.” Pascua vs. Bank Wise,
Inc., [2018])
2. Abandonment
Abandonment of employment is a deliberate
and unjustified refusal of an employee to
resume his employment, without any
intention of returning. While it is not
expressly enumerated under Article 297 of
the Labor Code as a just cause for dismissal of
an employee, it has been recognized by
jurisprudence as a form of, or akin to, neglect
of duty.
It requires the concurrence of two elements:
1) failure to report for work or absence
without valid or justifiable reason; and 2) a
clear intention to sever the employer-
employee relationship as manifested by some
overt acts (Rodriguez v. Sintron Systems, Inc.
[2019], J. CAGUIOA)
Abandonment must be accompanied by overt
acts unerringly pointing to the fact that the
employee simply does not want to work
anymore. The filing of complaint for illegal
dismissal is inconsistent with abandonment
of employment. An employee who takes
steps to protest his/her dismissal cannot
logically be said to have abandoned his/her
work. The filing of such complaint is proof
enough of his/her desire to return to work,
thus negating any suggestion of
abandonment. (Unirock Corporation v. Pajarito
[2020])
Abandonment is essentially a matter of
intent. It cannot be presumed from the
occurrence of certain equivocal acts. There
must be a positive and overt act signifying an
employee’s deliberate intent to sever his or
her employment. Thus, mere absence from
work, even after a notice to return, is
insufficient to prove abandonment. (Hubilla
vs. HSY Marketing, Ltd., Co., [2018])
 Mere allegation that the employees
voluntarily terminated their employment due
to continued refusal to report from work
without any presenting any proof that they
intended to abandon their employment is
insufficient to prove abandonment. (ibid)
On the theory that the same is proof enough
of the desire to return to work, the immediate
filing of a complaint for illegal dismissal,
more so when it includes a prayer for
reinstatement, has been held to be totally
inconsistent with a charge of abandonment.
To reiterate, abandonment of position is a
matter of intention and cannot be lightly
inferred, much less legally presumed, from
certain equivocal acts. (Claudia's Kitchen, Inc.
v. Tanguin [2017])
An employee who forthwith takes steps to
protest his layoff cannot, as a general rule, be
said to have abandoned his work, and the
filing of the complaint is proof enough of his
desire to return to work, thus negating any
suggestion of abandonment. (Padilla vs.
Airborne Security Service, Inc [2017])
D. PREVENTIVE SUSPENSION
The employer may place the worker concerned
under preventive suspension if his continued
employment poses a serious and imminent threat
to the life or property of the employer or of his co-
workers.
Preventive suspension is a disciplinary measure
for the protection of the company’s property
pending investigation of any allege malfeasance
or misfeasance committed by the employee. The
employer may place the worker concerned under
preventive suspension if his continued
employment poses a serious and imminent threat
to life or property of the employer or his co-
workers. (Philippine Airlines vs. NLRC [1998])
Where preventive suspension is more apparent
than real, there is constructive dismissal. (Anonas
Construction and Industrial Supply Corporation vs.
NLRC [2008])
28
Not all preventive suspensions are tantamount to
constructive dismissal. To be valid, however, not
only must the preventive suspension be imposed
pursuant to Section 8, it must also follow the 30-
DAY LIMIT exacted under the succeeding
Section 9 of the Rule. … The employer shall
thereafter reinstate the worker in his former or in
a substantially equivalent position or the
employer may extend the period of suspension
provided that during the period of extension, he
pays the wages and other benefits due to the
worker. In such case, the worker shall not be
bound to reimburse the amount paid to him
during the extension if the employer decides, after
completion of the healing, to dismiss the worker.
(Agcolicol, Jr. vs. Casiño [2016])
E. FLOATING STATUS
While there is no specific provision in the Labor
Code governing the "floating status" or temporary
"off-detail" of employees, the Court, applying
Article 301 [286] of the Labor Code by analogy,
considers this situation as a form of temporary
retrenchment or lay-off. Conformably with Article
301, the placement of an employee on "floating
status" must not exceed six months. Otherwise,
the employee may be considered constructively
dismissed. (Seventh Security Services, Inc. v. Loque
[2020]. J. CAGUIAO)
The bona-fide suspension of the operation of a
business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not
terminate employment. In all such cases, the
employer shall reinstate the employee to his
former position without loss of seniority rights if
he indicates his desire to resume his work not
later than one (1) month from the resumption of
operations of his employer or from his relief from
the military or civic duty. (Art. 301, Labor Code)
Temporary “off-detail” or the period of time
security guards are made to wait until they are
transferred or assigned to a new post or client
does not constitute constructive dismissal, so
long as such status does not continue beyond six
(6) months. The onus of proving that there is no
post available to which the security guard can be
assigned rests on the employer. (Tatel vs. JLFP
Investigation and Security Agency, Inc.,[2015]); (Ibon
v. Genghis Khan Security Services [2017)
The period of temporary off-detail must not
exceed six (6) months. Beyond this, a security
guard’s floating status shall be tantamount to
constructive dismissal. (Padilla vs. Airborne
Security Service, Inc, [2017])
A security guard’s employer must give a new
assignment to the employee within six (6) months.
This assignment must be to a specific or particular
client. Jurisprudence reveals that: [1] an employer
must assign the security guard to another posting
within six (6) months from his last deployment,
otherwise, he would be considered constructively
dismissed; and [2] the security guard must be
assigned to a specific or particular client. A
general return-to-work order does not suffice.
(Ibid.)
Series of letters requiring an employee to report to
employer’s head office and explain why he had
failed to report to office without identifying any
specific client to which the employee which the
employee will be assigned, were at best, nothing
more than general return-to-work orders. (ibid)
The only time a prolonged floating status is
considered an authorized cause for dismissal is
when the security agency experiences a surplus of
security guards brought about by lack of clients.
(Soliman Security Services, Inc. v. Sarmiento [2016])
F. RETIREMENT
Retirement is a different specie of termination of
employment from dismissal for just or authorized
causes under Articles 282 and 283 of the Labor
Code. While in all three cases, the employee to be
terminated may be unwilling to part from service,
there are eminently higher standards to be met by
the employer validly exercising the prerogative to
dismiss for just or authorized causes. Retirement,
on the other hand, is the result of a bilateral act of
the parties, a voluntary agreement between the
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employer and the employee whereby the latter
after reaching a certain age agrees and/or consents
to sever his employment with the former (Cainta
Catholic School vs. CCSEU [2006]).
In case of early retirement programs, the offer of
benefits must be certain while the acceptance to
be retired should be absolute. The acceptance by
the employees contemplated herein must be
explicit, voluntary, free and uncompelled. (Robina
Farms Cebu v. Villa [2016])
Retirement laws, in particular, are liberally
construed in favor of the retiree because their
objective is to provide for the retiree's sustenance
and, hopefully, even comfort, when he no longer
has the capability to earn a livelihood. The liberal
approach aims to achieve the humanitarian
purposes of the law in order that efficiency,
security, and well-being of government
employees may be enhanced. Indeed, retirement
laws are liberally construed and administered in
favor of the persons intended to be benefited, and
all doubts are resolved in favor of the retiree to
achieve their humanitarian purpose. (Philippine
National Bank v. Dalmacio [2017])
Art. 287 of the Labor Code provides for two types
of retirement: (a) compulsory and (b) optional.
The first takes place at age 65, while the second is
primarily determined by the collective bargaining
agreement or other employment contract or
employer's retirement plan. In the absence of any
provision on optional retirement in a collective
bargaining agreement, other employment
contract, or employer's retirement plan, an
employee may optionally retire upon reaching the
age of 60 years or more, but not beyond 65 years,
provided he has served at least five years in the
establishment concerned. That prerogative is
exclusively lodged in the employee. (Universal
Robina v. Caballeda [2008])
Retirement plans allowing employers to retire
employees who have not yet reached the
compulsory retirement age of 65 years are not per
se repugnant to the constitutional guaranty of
security of tenure. By its express language, the
Labor Code permits employers and employees to
fix the applicable retirement age at 60 years or Catholic Education Association of the Philippines
below, provided that the employees' retirement [2020])
benefits under any CBA and other agreements
shall not be less than those provided therein.
-oOo-
However, company retirement plans must not
only comply with the standards set by existing
labor laws, but they should also be accepted by
the employees to be commensurate to their
faithful service to the employer within the
requisite period. (Obusan v. Philippine National
Bank [2010]

An employee in the private sector who did not

expressly agree to the terms of an early retirement
plan cannot be separated from the service before
he reaches the age of 65 years. The employer who
retires the employee prematurely is guilty of
illegal dismissal, and is liable to pay his
backwages and to reinstate him without loss of
seniority and other benefits, unless the employee
has meanwhile reached the mandatory retirement
age under the Labor Code, in which case he is
entitled to separation pay pursuant to the terms of
the plan, with legal interest on the backwages and
separation pay reckoned from the finality of the
decision. (Laya v. Philippine Veterans Bank [2018])

The Court is not unaware of its rulings wherein it

pronounced that retirement pay and separation
pay are not mutually exclusive (unless there is a
specific prohibition in the collective bargaining
agreement or retirement plan against the payment
of both benefits); however, with the employee’s
entitlement to retirement pay not included as an
issue in an illegal dismissal case which had
already been finally decided, it is quite absurd for
the employee to submit a “contemporaneous”
claim for retirement pay on the execution phase of
these proceedings. Plea to include retirement pay
in the execution of a final decision under the
phrase “other benefits” cannot be granted. (Villena
vs. Batangas II Electric Cooperative, Inc., [2015])
R.A. No. 7641 does not exempt a school from
paying retirement benefits to qualified part-time
employees. The law encompasses all private
sector employees, save for those specifically
exempted. (Father Saturnino Urious University v.

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