DISCIPLINE

Control that is gained by requiring that Company Rules

& Regulation/Code of Conduct/Company
Policies/Code of Discipline be obeyed and imposing
rewards for compliance and/or disciplinary sanctions
for infractions.
 Meaning of Discipline
that moulds, strengthens,
Train improves or corrects;

Control gained by enforced obedience

for compliance or infraction of

Reward/Sanction company policies, code of
conduct, lawful orders

In sum, it involves the conditioning or

molding of behavior by applying rewards
or sanctions .
 The Right To Instill Discipline
It is acknowledged that an employer has free rein and enjoys a
wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline on his
employees and to impose penalties, including dismissal, if
warranted, upon erring employees. This is a management
prerogative. Indeed, the manner in which management
conducts its own affairs to achieve its purpose is within the
management’s discretion.
The only limitation on the exercise of management prerogative
is that the policies, rules, and regulations on work-related
activities of the employees must always be fair and reasonable,
and the corresponding penalties, when prescribed,
commensurate to the offense involved and to the degree of the
infraction. (Caong Jr., et. al. vs. Regualos, G. R. No. 179428, January 26, 2011).
 The Right To Instill Discipline
Personnel actions like hiring, transfer, reassignment, detail,
job rotation, secondment, reengineering, reclassification of
jobs, restructuring, merger, consolidation, lay-off, discharge
or discipline to a certain degree of employees.

All aspects of employment, including hiring, work

assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision,
layoff of workers and discipline, dismissal, and recall of
workers. (Manila Jockey Club Employees Labor Union-
PTGWO vs. Manila Jockey Club, Inc., G.R. No.
167760,March 7, 2007).
 The Right to Instill Discipline…
The employer has the prerogative to instill discipline
in his employees and to impose reasonable penalties,
including dismissal, on erring employees pursuant to
company rules and regulations. (SMC vs. NLRC, G.R. No.
871277, 5-12-99).

Except as limited by special laws, an employer is free to

regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to be
used, process to be followed, supervision of workers, working
regulations, transfer and lay-off of workers and the discipline,
dismissal and recall of work. (SMB vs. Ople, G.R. No. 53615, 2-
 The right to discipline…
uccess of industries and public services is the
foundation upon which just wages may be paid
There can be no success without efficiency. There cannot
be efficiency without discipline. Consequently, when
employees and laborers violate the rules of discipline, they
jeopardize not only the interest of the employer but also their
own. In violating the rules of discipline, they aim at killing
the hen that lays the golden eggs. Laborers who trample
down the rules for an efficient service are, in effect, parties to
a conspiracy, not only against capital but also against labor.
The high interests of society and of the individuals demand
that we should insist in requiring everybody to do his duty.
That demand is addressed not only to employers but also to
employees. (Batangas Trans. Co. vs. Bagong Pagkakaisa ng mga
Employees and Laborers of BTCo., G.R. No. 1706, 3-10-49, Dissenting)
 Objectives of Discipline
Motivates an Helps minimize
employee to comply financial cost of
with the company’s personnel /human
resource
performance management ;
standards;
Enhances
Corrects intolerable organization’s
situations; reputation;
Helps change an Serves as an
employee; example to others
Two Approaches to Discipline

1. Hot Stove Rule

2. Progressive
Discipline
Hot Stove Rule

1.Burns Immediately
2.Provides Warning
3.Gives Consistent
Sanction
4.Burns Impersonally
 Progressive Discipline Approach
IIImproper Behavior

Does this violation warrant

disciplinary action? No No Disciplinary
Action
Yes
Does this violation warrant
more than an oral warning? No Oral Warning
Yes
Does this violation warrant more
than a written reprimand? No Written
Reprimand
Yes
Does this violation warrant
more than suspension? No Suspension
Yes

Termination
Some Pointers To Make Sure Subordinates
Do The Right Things
1) Subordinates must know the rules
and understand that they will be
enforced
2) Only desired behavior should be
rewarded
3) Subordinates should not be
rewarded equally. The magnitude
of reward should correspond to
the performance of the employee
4) Supervisors should
respond quickly as
possible, as when
improvement occur in
the subordinates
performance
5) If there are infractions,
supervisors must inform
the subordinates
6) If reprimand is
necessary, it is a matter
between the supervisor
and subordinate
Some Problems Encountered in the administration
of discipline in the workplace
EMPLOYEES’ MANAGEMENT’
Neglect of duty Abdication
Insubordination Abuse in the exercise
Dishonesty of management
Breach of trust & confidence prerogative
Misconduct Lack of due process
Delay
Inconsistency
Some Approaches/ Responses to the
Problem on Discipline
Communication/ consultation – means that
any rank and file employee has a full right to
go to office of the immediate supervisor to
discuss his/ her complaint.
Personnel counseling – the objective is to
talk to employees who are troubled or
having problem and to help them find a way
to resolve it; Coaching and Mentoring

Disciplinary process – enforcement of

Code of Discipline/Code of Conduct vis-à-
vis the application of Labor Code provision
on Termination of Employment Relations.
 Coaching

Coach’s responsibility is to discover, clarify and

align with what the coachee wants to achieve;
he/she encourages the coachee. Coaching is
not about winning the game; it’s about growing,
winning people, breaking down resistance,
building up hope, bringing out the best in people.
(Marie May SJ Soriano, Chief Employment Officer, Visions & Breakthroughs
International, Inc., CSC Reporter, October 2014).
 Mentoring
Mentoring should be viewed as a reward and not
a punitive procedure.
Mentoring builds a culture that enables people to
solve problems; gets work done faster; transfers
knowledge and expertise to new employees;
reduces poor performance, rewards ;people who
develop others . A mentor should listen, be able
to ask good question, restrain from talking. (Anne
Wolfe, Director, Mentoring Works, Australia, in CSC Reporter, October 2014).
 PREVENTIVE SUSPENSION*

* Employer may place worker under preventive suspension –

If his continued employment poses serious and imminent threat
to the life or property of employer or of his co-workers.
It shall not last longer than 30 days, otherwise, employer shall –
(a) reinstate worker to former or substantially equivalent position;
or (b) pay wages and other benefits to worker which he/she is not
bound to reimburse in case he/she is finally dismissed.
*(Sections 8 & 9, Rule XXIII, Book V, Rules to Implement The Labor Code, as
amended by Article I, Department Order No. 9, Series of 1997)
 Preventive Suspension –vs- Suspension
• Imposed at the inception of as a penalty
the admin proceedings to be
conducted by the employer.
* Not a penalty but a Imposed as a penalty
precautionary measure to after the conduct of
preserve the integrity of the admin investigation, if the
admin investigation, free from
duress, coercion and/or
evidence gathered in the
intimidation, or such that the course thereof, warrants
employee being complained the imposition of this
of, for obvious reasons, may form of penalty.
be separated from the scene
of alleged misfeasance while
the same is being
investigated.
Communication of CompanyRules/Policies

*Employees must have knowledge of the rules before they can be

held accountable/responsible for any infraction..
*Commonly used method of informing employees is thru a company
handbook/manual/Code of Conduct/Code of Discipline with a list of
penalties and sanctions for violation/infraction thereof. Or thru
posting in e-mails and/or bulletin boards, as an established policy
or Standard Operating Procedure.
This can be followed-up with oral explanation/clarification if needed
during the initial orientation program for new employees. Similarly,
the Immediate supervisor shall be responsible in cascading these
rules or policies to their subordinates.
 (A Sample)
Steps in Administrative Investigation
Step 1: Pre-investigation
To initiate investigation into an alleged
violation or irregularity committed against the
Company Policies or Rules or Code of
Discipline or Code of Conduct through the
issuance of a written Notice to Explain (NTE)
or Show Cause Memo or Memo to Explain.
 Steps in Administrative Investigation

Step 2: Investigation Proper

To provide a venue for the presentation of
valid and reliable date, requiring extensive
probing and questioning, necessary to provide
a factual picture of the events /incident in the
question.
 Steps in Administrative Investigation

Step 3: Post-Investigation
To analyze data collected and make a logical
conclusion as to the validity of the alleged
violation or infraction against the Company
Policies or Rules and Regulations or Code of
Discipline or Conduct.
 Steps in Administrative
Investigation
Step 4: Recommendation
The written recommendation shall be based on the law or
company rules or code of discipline violated, the facts as well
as evidence introduced/submitted and proven in the admin
investigation/hearing conducted for the purpose. The same
recommendation shall contain the appropriate disciplinary
sanction to the acts or infraction committed by the
respondent/employee ; submitted to the Disciplining
Authority.
In the determination of the imposable penalties, the following
circumstances attendant to the violation/infraction of Company
Rules/Code of Discipline shall be appreciated

Performance
Length of service in the company
Education
Physical Illness
Good faith – honest intention to abstain from taking
any unconscious advantage of another. It is the
opposite of bad faith (breach of a known duty thru some motive
of interest or ill will).
Taking undue advantage of official position.
Discipline happens When …
There is congruence between company norms and
employee behavior
Employee understands/internalizes the expected norms
and rules (awareness factor)
Employee is given support (enabling factor) to observe the
norms/rules through appropriate
– training/orientation; working condition; work
environment
Employee is given –
– Appropriate reward for good behavior
– Corresponding punishment for deviation or violation
Some manifestations of a well-
disciplined organization…
omplaints

re

anaged

ffectively
Some manifestations of a well-
disciplined organization…

Low or Zero Complaints rate

Low or Zero Employee
Disciplinary cases

Low or Zero Legal Cases filed

by both parties
 MANAGEMENT PREROGATIVES
1. Select/Hire employees
2. Promulgate Rules and Regulations
3. Transfer employees
4. Suspend employees
5. Temporary lay-off of employees
6. Recall the employees
7. Discipline the employees
8. Discharge/dismiss the employees
9. Abolish positions
10. Reduce personnel complement
11. Close or cease business operations
12. Terminate employees upon merger, consolidation, sale
of substantial or all assets and change of ownership and
management
 Management Prerogative includes
Hire and other personnel actions
Reduction of workforce (Flight Attendants and Stewards
Assn. of the Phils. vs, PAL, Inc., et. al., G.R. No. 178083, July
22, 2008).
Right to close business (Eastridge Golf Club, Inc. vs.
Eastridge Golf Club, Inc. Labor Union-Super, G.R. No. 166760,
August 22, 2008).
Right to dismiss employees for administrative
infractions (Amelia R. Enriquez, et al. vs. BPI, et al., G.R. No.
172812, February 12, 2008).
Management Prerogative includes
Right to transfer and reassign employees (Bisig
Manggawa sa Tryco, et al. vs. NLRC, et al., G.R. No.
151309, October 15, 2008).
Right to reorganize (Smart Communications, Inc. vs.
Regina M. Astorga, G.R. No. 148132, January 28,
2008).
.Right to promulgate reasonable policies
[McDonald’s (Katipunan Branch), et al. vs. Ma. Dulce Alba,
G.R. No. 156382, December 18, 2008]
 Management Prerogatives

The exercise of management prerogative is not

unlimited. It is circumscribed by limitations
found in law, a collective bargaining agreement,
or the general principles of fair play and justice.
(University of Sto. Tomas vs. NLRC, 190 SCRA758 [1990];
Becton Dickinson Phils, Inc. & Wilfredo Joaquin vs. NLRC, et al,
G.R. Nos. 159969 & 160116, Nov. 15, 2005)

30
 Management Prerogatives

Labor laws do not authorize interference with the employer's

judgment in the conduct of his business. Hiring, firing, transfer,
demotion, and promotion of employees traditionally identified as
management prerogatives unless limited by law, CBA, or in
general principles of fair play and justice.
(HSBC v. NLRC, G.R. No. 125038, Nov.6, 1997)

Freedom to administer the affairs of a business enterprise. In

short, the elbow room in the quest for profits."
(Chu v. NLRC, G.R. No. 106107, June 2, 1994)

31
 Management Prerogatives
The doctrine is well-settled that it is the employer’s
prerogative based on its assessment and perception of
its employees; qualifications, aptitudes and
competence, to move them around in the various areas
of its business operations in order to ascertain where
they will function with maximum benefit to the company.
This is a privilege inherent in the employer’s right to
control and manage effectively. The freedom of
management to conduct its business operations to
achieve its purpose cannot be denied. (Alberto O. Tinio vs.
Court of Appeals, G.R. No. 171764, June 8, 2007).

32
 What is Management Prerogative?
Now, on the crux of the matter, jurisprudence abounds
that, except as limited by special laws, an employer is
free to regulate, according to his own discretion and
judgment, all aspects of employment, including the
transfer of employees.  It is the employer’s prerogative,
based on its assessment and perception of its
employees’ qualifications, aptitudes, and competence,
to deploy its employees in the various areas of its
business operations in order to ascertain where they
will function with maximum benefit to the company.  ,
(Alfredo S. Paguio vs. PLDT, et. al. G.R. No. 154072,
October 12, 2005)
 Management Prerogative
Personnel actions like hiring, transfer, reassignment, detail,
job rotation, secondment, reengineering, reclassification of
jobs, restructuring, merger, consolidation, lay-off, discharge
or discipline to a certain degree of employees.

All aspects of employment, including hiring, work

assignments, working methods, time, place and manner of
work, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision,
layoff of workers and discipline, dismissal, and recall of
workers. (Manila Jockey Club Employees Labor Union-PTGWO vs. Manila
Jockey Club, Inc., G.R. No. 167760,March 7, 2007).
Management Prerogative Doctrines

The law protects the both the welfare of

employees and the prerogatives of
management. Courts will not interfere with
prerogatives of management on the discipline of
employees, as long as they do not violate labor
laws, collective bargaining agreements if any,
and general principles of fairness and justice.
(University of the Immaculate Concepcion vs. NLRC and
Axalan, G. R. No. 181146, January 26, 2011).
Management Prerogative Doctrines
It is acknowledged that an employer has free rein
and enjoys a wide latitude of discretion to regulate
all aspects of employment, including the prerogative
to instill discipline on his employees and to impose
penalties, including dismissal, if warranted, upon
erring employees. This is a management
prerogative. Indeed, the manner in which
management conducts its own affairs to achieve its
purpose is within the management’s discretion.
Management Prerogative Doctrines
The only limitation on the exercise of management
prerogative is that the policies, rules, and
regulations on work-related activities of the
employees must always be fair and reasonable,
and the corresponding penalties, when prescribed,
commensurate to the offense involved and to the
degree of the infraction. (Caong Jr., et. al. vs. Regualos, G.
R. No. 179428, January 26, 2011).
Limitations of Management Prerogative and Business
Judgment Rule
The determination that the employee's services are
no longer necessary or sustainable and, therefore,
properly terminable for being redundant is an
exercise of business judgment of the employer,
provided there is no violation of law and no showing
that it was prompted by an arbitrary or malicious
act.   (Coca Cola Bottlers Phils., Inc. vs. Angel U. Del Villar, G. R.
No.163091, 10-06-2010).
Limitations of Management Prerogative and Business
Judgment Rule
  That prerogative accorded management should not defeat
the very purpose for which our labor laws exist: to balance
the conflicting interests of labor and management.  By its very
nature, management prerogative must be exercised always
with the principles of fair play and justice.  In particular, the
employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee;
nor does it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits. Thus, it cannot be
used as a subterfuge by the employer to rid himself of an
undesirable worker. (PLDT, et. al. vs. Alfredo S. Paguio G.R. No.
152689, Alfredo S. Paguio vs. PLDT, et. al. G.R. No. 154072,
October 12, 2005)
 Security of Tenure
Legal Basis: No person shall be deprived of life, liberty or property without due process
of law…(Art. III, Sec. 1, 1987 Phil. Constitution)

No employee/worker shall be dismissed from employment except for just cause/s

and/or authorized cause/s provided for by law
and after due process.
Due process of law -
Procedural – refers to the method or manner by which
the law is enforced. It requires a hearing
before it condemns and renders judgment
only after a fair hearing.

Substantive – requires that the law itself not merely

procedures by which the law would be
enforced, is fair, reasonable and just.

40
 Due Process
For Just Causes (Article 282)
a. Written notice to be served on the employees should contain the specific causes
or grounds for termination and a directive that the employee is given the
opportunity to submit a written explanation w/in five (5) calendar days from receipt
of the said memorandum/notice to explain.
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 employee.
b. Hearing, with assistance of counsel if desired, where employee is given the
opportunity to respond to the charge, present evidence or rebut evidence
presented against him.
c. After determining that termination of employment is justified, the employer shall
serve the employee a written notice of termination indicating – (a) all the
circumstances involving the charge against the employee have been considered
and (b) grounds have been established to justify the severance of employment.

41
 Termination of Employment
Relationship
Just Causes (Article 282, Labor Code)
a. Serious misconduct or willful disobedience by the employee of the lawful
order of his employer or representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him of his
employer or duly authorized representative;
d. Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representative.
e. Other causes analogous to the foregoing.

42
 JUST CAUSES in Terminating Employer-Employee Relationship
(Article 282,Labor Code)

1. SERIOUS MISCONDUCT
a. Grave and aggravated in character and not merely trivial and unimportant
b. Transgression of some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere error in judgment
c. In connection with the employee’s work
Case:
Unmistakably, the unauthorized taking of company documents and files, failure to pay
unremitted collections, failure to surrender keys to the filing cabinets despite earlier
instructions, concealment of shortages, and failure to record inventory transactions
pursuant to a fraudulent scheme are acts of grave misconduct, which are sufficient
causes for petitioners’ dismissal from employment. (Wilfredo M. Baron, et al. v. NLRC
and Magic Sales, Inc. represented by Jose Y. Sy, G.R. No. 182299, February 22,
2010).

43
 Serious Misconduct

Sexual Harassment
“As a managerial employee, petitioner Villarama is bound by a more
exacting work ethics. He failed to live up to this higher standard
of responsibility when he succumbed to his moral perversity. And
when moral perversity is perpetrated against his subordinate, he
provides a justifiable ground for his dismissal for lack of trust and
confidence. It is the right, nay, the duty of every employer to
protect its employees from over-sexed superiors. (Villarama vs.
NLRC and Golden Donuts Inc., G.R. No. 106341, Sept 2, 1994).

44
 Serious Misconduct

An employee who fails to account for and deliver

the funds entrusted to him is liable for
misappropriating the same and is consequently
guilty of serious misconduct.
(Superlines Transportation Company, Inc. vs. Eduardo Pinera, GR.No.
188742, October 13, 2009).

45
 2. Willful Disobedience of Lawful

Order
1. Assailed conduct is willful or intentional,
characterized by wrongful or perverse attitude
2. Order violated is reasonable, lawful, sufficiently
made known to the employee and
3. In connection with the employees duties
Disobedience by a drug salesman or medical
representative to an order of transfer .

46
 Jurisprudential Guidelines concerning
transfer of employees

(Rural Bank of Cantilan, Inc. vs. Arjay Ronnel K. Julve,

G.R. No. 169750, February 27, 2007)

a. transfer is a movement from one position to another of

equivalent rank, level or salary without break in the
service or a lateral movement from one position to
another of equivalent rank or salary.
b. The employer has the inherent right to transfer or
reassign an employee for legitimate business
purposes

47
 Jurisprudential Guidelines concerning
transfer of employees … cont …

c. a transfer becomes unlawful where it is

motivated by discrimination or bad faith or is
effected as a form of punishment or is a
demotion without sufficient cause.
d. the employer must be able to show that the
transfer is not unreasonable, inconvenient or
prejudicial to the employee.

48
 Reassignment/Transfer of Employees
pending investigation

Reassignment /transfer of employees pending

investigations of the irregularities allegedly committed
by the employees has been upheld in several instances
by the Supreme Court.
Rationale – the purpose of reassignments is no different
from that of preventive suspension which management
could validly impose as a measure of protection of the
company’s property pending investigation of any
malfeasance or misfeasance committed by the
employee. (Constancia Duldulao vs. The Court of Appeals,GR No.
164893, March 1, 2007).

49
R.B. Michael Press and Annalene Reyes Escobia v. Nicasio C.
Galit, G.R. No. 153510, February 13, 2008

The issue now is, whether respondent’s refusal or failure to

render overtime work was willful; that is, whether such refusal or
failure was characterized by a wrongful and perverse attitude. In
Lakpue Drug Inc. v. Belga, willfulness was described as
“characterized by a wrongful and perverse mental attitude
rendering the employee’s act inconsistent with proper
subordination.”[1][14] The fact that respondent refused to provide
overtime work despite his knowledge that there is a production
deadline that needs to be met, and that without him, the offset
machine operator, no further printing can be had, shows his
wrongful and perverse mental attitude; thus, there is willfulness.
[1][14] G.R. No. 166379, October 20, 2005, 473 SCRA 617, 624.

50
 3. GROSS & HABITUAL NEGLECT OF DUTIES

Want or absence of or failure to exercise slight care or diligence or the entire

absence of care
Thoughtless disregard of consequences w/out exerting effort to avoid them.
Habitual tardiness and absenteeism
Prolonged unauthorized absences
Abandonment of job constitutes gross neglect
- failure to report for work or absence w/out valid or justifiable reason, and
- clear intention to sever the employer-employee relationship (the more
determinative factor and manifested by some overt acts)

51
R.B. Michael Press and Annalene Reyes Escobia v. Nicasio C.
Galit, G.R. No. 153510, February 13, 2008

Habitual tardiness is a form of neglect of duty. Lack of

initiative, diligence, and discipline to come to work on
time everyday exhibit the employee’s deportment
towards work. Habitual and excessive tardiness is
inimical to the general productivity and business of the
employer. This is especially true when the tardiness
and/or absenteeism occurred frequently and repeatedly
within an extensive period of time.

52
Abelardo P. Abel v. Philex Mining Corporation, represented by
Fernando Agustin, G.R. No. 178976, July 31, 2009

To warrant removal from service, the negligence should not merely be gross
but also habitual.[1][31] Gross negligence implies a want or absence of or
failure to exercise even slight care or diligence, or the entire absence of care.
It evinces a thoughtless disregard of consequences without exerting any effort
to avoid them.[2][32] Habitual neglect implies repeated failure to perform
one's duties for a period of time, depending upon the circumstances. The
single or isolated act of negligence does not constitute a just cause for the
dismissal of the employee.[3][33]
[1][31] Union Motor Corporation v. National Labor Relations Commission, G.R. No.
159738, December 9, 2004, 445 SCRA 683, 694.
[2][32] Philippine Aeolus Automotive United Corporation v. National Labor Relations
Commission, 387 Phil. 250, 263 (2000).
[3][33] Genuino Ice Co., Inc. v. Magpantay, G.R. No. 147790, June 27, 2006, 493
SCRA 195, 205-206.

53
R.B. Michael Press and Annalene Reyes Escobia v. Nicasio C.
Galit, G.R. No. 153510, February 13, 2008

The mere fact that the numerous infractions of respondent have not been
immediately subjected to sanctions cannot be interpreted as condonation of
the offenses or waiver of the company to enforce company rules. A waiver is a
voluntary and intentional relinquishment or abandonment of a known legal
right or privilege.[1][9] It has been ruled that “a waiver to be valid and effective
must be couched in clear and unequivocal terms which leave no doubt as to
the intention of a party to give up a right or benefit which legally pertains to
him.”[2][10] Hence, the management prerogative to discipline employees and
impose punishment is a legal right which cannot, as a general rule, be
impliedly waived
[1][9] Castro v. Del Rosario, et al., No. L-17915, January 31, 1967,
19 SCRA 196, 203.
[2][10] Thomson v. Court of Appeals, G.R. No. 116631, October 28, 1998, 298
SCRA 280, 293-294.

54
4. Fraud or Willful Breach of Trust Reposed by the
Employer

1. Act, omission, or concealment which involves breach of legal

duty, trust or confidence justly reposed by the employer; and
2. Committed against the employer in connection with the
employee’s work
3. Guidelines for loss of confidence
a. Loss of confidence not simulated
b. Not a subterfuge or improper, illegal or unjustified causes
c. May not be asserted in the face of overwhelming evidence to the
contrary

55
Guidelines for loss of confidence (cont’d)
d. Must be genuine, not a mere afterthought to justify
earlier action taken in bad faith; and
e. The employee involved holds a position of trust
and confidence
Loss of confidence applies only to employees:
a. Occupying a position of trust and
confidence or
b. Routinely charged with the care and custody of
money or property
(Vicente C. Ectuban Jr. vs. Sulpicio Lines,Inc., G.R. No.148410, Jan. 17,2005;
Mercury Drug Corp. vs. Zenaida G. Serrano, G.R. No.160509, March 10, 2006;
Cruz vs. BPI, GR No. 173357, Feb. 13, 2013).

56
Fraud or Willful Breach of Trust Reposed by the
Employer
The first requisite for dismissal on the ground of loss of trust and confidence is
that the employee concerned must be holding a position of trust and
confidence. Verily, the Court must first determine if petitioner holds such a
position.
There are two classes of positions of trust.[1][22] The first class consists of
managerial employees. They are defined as those vested with the powers or
prerogatives to lay down management policies and to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions.[2][23] The second class consists of
cashiers, auditors, property custodians, etc.. They are defined as those who,
in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property.[3][24]
[1][22] Mabeza v. National Labor Relations Commission, G.R. No. 118506, April 18, 1997, 271 SCRA 670, 682.
[2][23] Ibid.
[3][24] Ibid.

57
Fraud or Willful Breach of Trust Reposed by the
Employer
In this case, petitioner was a Contract Claims Assistant at respondent’s Legal
Department at the time he allegedly committed the acts which led to its loss of
trust and confidence. It is not the job title but the actual work that the
employee performs.[1][25] It was part of petitioner’s responsibilities to monitor
the performance of respondent’s contractors in relation to the scope of work
contracted out to them.[2][26]
Respondent relies on petitioner’s reports regarding his inspection of the work
accomplishment of such contractors. As a result of his monitoring the
enforcement of respondent’s contracts which involve large sums of money,
petitioner may well be considered an employee with a position of trust
analogous to those falling under the second class. A position where a person
is entrusted with confidence on delicate matters, or with the custody, handling
or care and protection of the employer’s property is one of trust and
confidence.[3][27]
[1][25] Bristol Myers Squibb (Phils.), Inc. v. Baban, G.R. No. 167449, December 17, 2008.
[2][26] Vide rollo, pp. 181-183.
[3][27] Vide Panday v. National Labor Relations Commission, G.R. No. 67664, May 20, 1992, 209 SCRA 122, 125.

58
5. Commission of Crime or Offense Against the Person of the
Employer, Immediate Member of his Family or Duly Authorized
Representative

1. Immediate members of the family limited to spouse,

ascendants, descendants, legitimate, natural, adopted brothers
or sister, or relative by affinity in the same degree or
consanguinity with the fourth civil degree.
2. Conviction in a criminal case not necessary

6. Analogous Cases
To be considered analogous to the just causes enumerated, a
cause must be due to voluntary and or willful act or omission of
the employee

59
An analogous case to loss of trust and
confidence
An employee who cannot get along with his co-
employees is detrimental to the company for he can
upset and strain the working environment. Without
the necessary teamwork and synergy, the
organization cannot function well. Thus,
management has the prerogative to take the
necessary action to correct the situation and protect
its organization.
(HeavyLift Manila, Inc. vs. Court of Appeals, G.R. No.154410, Oct. 28, 2005)

60
 Analogous case ….cont.
When personal differences between employees and
management affect the work environment, the peace
of the company is affected. Thus, an employee’s
attitude problem is a valid ground for his termination.
It must be duly proved by the employer and
compliance with the twin requirements of notice and
hearing must be proven by the employer. (HeavyLift Manila,
Inc. vs. Court of Appeals, G.R. No.154410, Oct. 28, 2005)

61
 Analogous case ….cont.
A cause analogous to serious misconduct is a voluntary
and/or willful act or omission attesting to an employee’s
moral depravity*. Thus, if theft is committed by an
employee against a person other than his employer,
(Fermin’s act of taking the celphone of his co-employee), if proven by
substantial evidence is a cause analogous to serious
misconduct.
(Cosmos Bottling Corporation vs.
Fermin, GR No. 193676, June 20, 2012).
*evil, sinfulness, viciousness, wickedness.

62
 Constructive Dismissal
Constructive dismissal exists where there is cessation of
work because "continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank or
a diminution in pay" and other benefits. 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. (Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208,
January 25, 2012) .

63
 Constructive Dismissal
Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank
and a diminution in pay. Constructive dismissal is a dismissal in
disguise or an act amounting to dismissal but made to appear as
if it were not. In constructive dismissal cases, the employer is,
concededly, charged with the burden of proving that its conduct
and action or the transfer of an employee are for valid and
legitimate grounds such as genuine business necessity. (Galang
vs. Malasugui, G.R. No. 174173, March 7, 2012)

64
 Manolo A. Peñaflor v. Outdoor Clothing Manufacturing Corporation, Nathaniel T.
Syfu, President, Medylene M. Demogena, Finance Manager, and PAUL LEE,
Chairman, G.R. No. 177114, April 13, 2010.

While the letter states that Peñaflor’s resignation was irrevocable, it does not
necessarily signify that it was also voluntarily executed. Precisely because of
the attendant hostile and discriminatory working environment, Peñaflor decided
to permanently sever his ties with Outdoor Clothing. This falls squarely within
the concept of constructive dismissal that jurisprudence defines, among others,
as involuntarily resignation due to the harsh, hostile, and unfavorable conditions
set by the employer. It arises when a clear discrimination, insensibility, or
disdain by an employer exists and has become unbearable to the employee.[1]
[3] The gauge for constructive dismissal is whether a reasonable person in the
employee’s position would feel compelled to give up his employment under the
prevailing circumstances.[2][4] With the appointment of Buenaobra to the
position he then still occupied, Peñaflor felt that he was being eased out and this
perception made him decide to leave the company.

[1][3] Gilles v. Court of Appeals, G.R. No. 149273, June 5, 2009.

[2][4] Siemens Philippines, Inc. v. Domingo, G.R. No. 150488, July 28, 2008, 560 SCRA 86.

65
 Siemens Philippines, Inc. and Mr. Ernst H. Behrens v. Enrico A.
Domingo, G.R. No. 150488, July 28, 2008

A diminution of pay is prejudicial to the employee and amounts to constructive

dismissal.[1][35] The gauge for constructive dismissal is whether a reasonable
person in the employee’s position would feel compelled to give up his
employment under the prevailing circumstances. Constructive dismissal is defined
as quitting when continued employment is rendered impossible, unreasonable or
unlikely as the offer of employment involves a demotion in rank or diminution in
pay.[2][36] It exists when the resignation on the part of the employee was
involuntary due to the harsh, hostile and unfavorable conditions set by the
employer. It is brought about by the clear discrimination, insensibility or disdain
shown by an employer which becomes unbearable to the employee. An employee
who is forced to surrender his position through the employer’s unfair or
unreasonable acts is deemed to have been illegally terminated and such
termination is deemed to be involuntary. [3][37]
[1][35] Francisco v. NLRC, G.R. No. 170087, August 31, 2006, 500 SCRA 690, 702.
[2][36] New Ever Marketing, Inc. v. Court of Appeals, G.R. No. 140555, July 14, 2005, 463 SCRA 284, 297.
 [3][37] Aguilar v. Burger Machine Holdings Corporation, G.R. No. 172062, October 30, 2006, 506 SCRA 266, 273.

66
 Burden of Proof in Termination Cases

We must stress anew that, in termination cases, the

burden rests upon the employer to show that the
dismissal of an employee is for just cause, and
failure to do so would mean that the dismissal is not
justified and, therefore, illegal. (Grandteq Industrial Steel
Products, Inc., et. al. vs. Estrella, G.R. No. 192416, March 23, 2011)

67
Termination of Employment Relationship

Authorized Causes (Article 283,Labor Code)

1. Installation of labor saving device
2. Redundancy
3. Retrenchment to prevent losses
4. Closing or cessation of operations of the
establishment.
5. Disease (Article 284, Labor Code)
68
 AUTHORIZED CAUSES
(Art. 283 and 284)
1. Installation of labor saving devices
2. Redundancy
a. When the services of an employee are excess of what is
reasonably demanded by the actual requirements of the
enterprise
b. Employer acted in good faith in abolishing redundant
position; and
c. Fair and reasonable criteria in ascertaining what positions
are to be abolished
69
AMA Computer College, Inc. v. Ely Garcia and Ma. Teresa
Balla, G.R. No. 166703, April 14, 2008

. In other words, it is not enough for a company to merely declare

that it has become overmanned.  It must produce adequate proof
of such redundancy to justify the dismissal of the affected
employees.[1][23]
 
In Panlilio v. National Labor Relations Commission,[2][24] it was
held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/proposal
on the viability of the newly created positions, job description and
the approval by the management of the restructuring.
[1][23] Asufrin, Jr. v. San Miguel Corporation , 469 Phil. 237, 245 (2004).
[2][24] 346 Phil. 30, 34 (1997).

70
AMA Computer College, Inc. v. Ely Garcia and Ma. Teresa
Balla, G.R. No. 166703, April 14, 2008

In balancing the interest between labor and capital, the prudent

recourse in termination cases is to safeguard the prized security
of tenure of employees and to require employers to present the
best evidence obtainable, especially so because in most cases,
the documents or proof needed to resolve the validity of the
termination, are in the possession of employers.  A contrary
ruling would encourage employers to utilize redundancy as a
means of dismissing employees when no valid grounds for
termination are shown by simply invoking a feigned or
unsubstantiated redundancy program.

71
Culili vs. Eastern Telecommunications Philippines, Inc., et. al., G.R.
No. 165381, February 9, 2011.

An employer cannot simply declare that it has become overmanned

and dismiss its employees without producing adequate proof to
sustain its claim of redundancy. Among the requisites of a valid
redundancy program are: (1) the good faith of the employer in
abolishing the redundant position; and (2) fair and reasonable criteria
in ascertaining what positions are to be declared redundant, such as
but not limited to: preferred status, efficiency, and seniority.
This Court also held that the following evidence may be proffered to
substantiate redundancy: the new staffing pattern, feasibility studies/
proposal on the viability of the newly created positions, job
description and the approval by the management of the restructuring.

72
 AUTHORIZED CAUSES
3. Retrenchment to prevent losses – standard used:
a. Loses expected should be substantial
b. Substantial loss expected must be reasonably
imminent, perceived objectively and in good faith by
the employer
c. Retrenchment is reasonably necessary and likely to
effectively prevent the expected losses
d. Losses either realized or expected must be proven by
sufficient and convincing evidence

73
 AUTHORIZED CAUSES

3.1. Retrenchment distinguished from redundancy

a. As to causes
1. Redundancy : superfluity
2. Retrenchment : losses

b. As to effect
1. Redundancy : higher separation pay
2. Retrenchment : losses

74
 AUTHORIZED CAUSES
3.2. Constructive retrenchment: arises when there is drastic
reduction of work days due to serious financial losses
4. Closure or cessation of operation not due to serious
business losses or financial reverses
a. Effect on employment due to closure resulting from sale
of enterprise
b. Effect on employment due to merger or consolidation

75
 AUTHORIZED CAUSES
5. Closure or cessation of operations due to serious
business losses or financial reverses
6. Disease
a. Continued employment prohibited by law or prejudicial to
employee’s health or health of his co-employees; and
b. Certification from competent public health authority that
the disease cannot be cured within a period of 6 months
with proper medical treatment.

76
 Disease
In order to validly terminate employment on this ground, Section 8, Rule I,
Book VI of the Omnibus Rules Implementing the Labor Code requires that:
Section 8. Disease as a ground for dismissal. — Where the employee suffers
from a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the employer
shall not terminate his employment unless there is a certification by a
competent public health authority that the disease is of such nature or at such
a stage that it cannot be cured within a period of six (6) months even with
proper medical treatment. If the disease or ailment can be cured within the
period, the employer shall not terminate the employee but shall ask the
employee to take a leave. The employer shall reinstate such employee to his
former position immediately upon the restoration of his normal health.

77
 Due Process
* For Authorized Causes (Article 283, 284)

Service of written notice to the employee/s concerned and

appropriate DOLE Regional Office at least 30 days before
termination specifying the ground/s for termination.
(e.g. Installation of labor saving device; Redundancy; Retrenchment;
Sale/Acquisition of one corporation by another corporation which may
result to redundancy or retrenchment; Consolidation/Merger of two or
three corporations which may result to redundancy or retrenchment).

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 Separation Pay (SP)
(Article 283, Labor Code)

Installation of labor saving device and redundancy = SP

equivalent to at least his one (1) month pay for every
year of service.
Retrenchment to prevent losses, Closures or cessation of
operations of the establishment or undertaking not due
to serious business losses or financial reverses = SP
equivalent to I month pay or at least one-half (1/2)
month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be
considered as one (1) whole year.

79
 Separation Pay (SP)

Disease = SP equivalent to at least one (1) month

salary or to one-half month salary for every year
of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1)
whole year. (Article 284, Labor Code).

80
 Procedures in obtaining redress in Illegal
Dismissal cases

- Mediation pursuant to the Single Entry Approach (SENA) 2-3 meetings

(approximately) in two (2) weeks. Then, if unsuccessful/no settlement –
Raffled to :

1. Labor Arbiter (LA)- at least two(2) preliminary mandatory conferences

between the parties before the LA. If unsuccessful/no settlement, then filing
of Position Paper, Replies, Rejoinders = 1-4 months; then -
2. Appeal within 10 days from receipt the LA’s decision to the NLRC
(Commission Level)
= 1- 6 months; MR = 1 month; then- 60 days
81
 Procedures in obtaining redress in
Illegal Dismissal cases

3. Appeal to the Court of Appeals from NLRC

(Commission level) = by Certiorari (Rule 45) – 15 days;
Certiorari (Rule 65) – 60 days; then, 6-12 months;
MR = 6 months, then –

4. Appeal to the Supreme Court = 8-24 months

Risks in the event the decision is against
the respondent company
- Payroll reinstatement – without working, until
final decision or settlement with party.
- Backwages and/or Separation pay
- Moral damages
- Exemplary damages
-Attorney’s fees ( not less than 10% of the total
amount-judgment award.
Principles in the administration of employee
discipline in the workplace.......

In the administration of employee discipline in

the workplace and the imposition of rewards and
sanctions, employees and management must
constantly bear in mind/be aware of the dual
objectives of preserving the interests of the
organization vis-a-vis protecting rights of
employees.