TERMINATION OF EMPLOYMENT

General Coverage
All establishments or undertaking, whether for profit or not, including educational, medical,
charitable and religious institutions and organizations, in cases of regular employment.

Exception: the government and its political subdivisions, including GOCCs

Security of tenure

LC294. In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
equivalent computed from the time his compensation was withheld from him up to the time of
his actual reinstatement.

Note: LC294 v Constitution

ESPINA, ET AL. V CA
While petitioners were only probationary employees who do not enjoy permanent status,
nonetheless, they were still entitled to the constitutional protection of security of tenure. As may
be gleaned in the Art. 281 of the LC, their employment may only be terminated for a valid and
just cause or for failing to qualify as a regular employee in accordance with the reasonable
standards made known to them by the employer at the time of engagement and after being
accorded due process.

Management Prerogative: Limitations

IMASEN PHIL MFG. CORP. V ALCON

In protecting the rights of the workers, the law does not authorize the oppression or self-
destruction of the employer. The Constitutional commitment to the policy of social justice cannot
be understood to mean that every labor dispute shall automatically be decided in favor of labor.
The Constitutional and legal protection equally recognize the employer’s right and prerogative
to manage its operation according to reasonable standards and norms of fair play. Accordingly,
except as limited by special law, an employer is free to regulate, according ot his own judgment
and discretion, all aspects of employment.

As a general proposition, an employer has free reign over every aspect of its business, including
the dismissal of his employees as long as the exercise of its management prerogative is done
reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent the
rights of the workers.
SUGUE V TRIUMPH INTERNATIONAL (PHILS.) INC.
The Act of management in reorganizing the sales department in order to achieve its objectives is
a legitimate exercise of its management prerogatives, barring any showing of bad faith which is
absent in the instant case. Indeed, labor laws discourage interfering in employer’s judgments
concerning the conduct of their business. The law must protect not only the welfare of
employees, but also the right of employers.

REQUISITED FOR LAWFUL DISMISSAL: Concurrence of substantive and procedural due process

SUBSTANTIVE DUE PROCESS: mandates that an employee can only be dismissed on just or
authorized causes

PROCEDURAL DUE PROCESS: requires that an employee can only be dismissed after being given
an opportunity to be heard

Compliance with both substantial and procedural due process is necessary.

COCA-COLA BOTTLERS V GARCIA

In dismissing an employee, the employer has the burden of proving that the dismissed worker
has been served TWO notices:
1) the first to inform the employee of the particular act or omissions for which the employer
seeks his dismissal, and
2) the second to inform the employee of his employer’s decision to terminate him.

The first notice must state that the employer seeks dismissal for the act or omission charged
against the employee; otherwise, the notice does not comply with the rules.

Coca-Cola failed to satisfy the two-notice requirement. They argue that the purpose of the notice
requirement was achieved when they sent several notices to Garcia’s last known address. While
they presented the envelopes of the alleged notices sent to the last known address, the contents
thereof were not offered in evidence. Thus, the records are wanting of proof that Garcia was
properly apprised of the charges against her and was given an opportunity to explain her side, as
petitioner maintains. Evidently, it is clear that Garcia’s dismissal was effected without the notice
required by law.

GUIDE IN DISPOSITION OF LABOR DISPUTES

MANSION PRINTING CERNTER V BITARA, JR.

The termination of employment must be based on a just or authorized cause of dismissal and the
dismissal must be effected after due notice and hearing.

On the substantive aspect, in Valiao, we defined gross negligence as, “want of care in the
performance of one’s duties” and habitual neglect as “repeated failure to perform one’s duties
for a period of time, depending upon the circumstance.” Bitara’s last absences on 11, 13, 14, 15
and 16 March 2000 were undertaken without even notice/permission from management. These
attendance delinquencies may be characterized as habitual and are sufficient justifications to
terminate the complainant’s employment.

We cannot simply tolerate injustice to employers of only to protect the welfare of undeserving
employees.

Bitara claims that he was denied due process when the company failed to observe the two-notice
rule as the Notice of Explanation and Notice of Termination were never served upon him.
However, in Bughaw v Treasure Island Industrial Corporation, this Court, in verifying the veracity
of the allegation that respondent refused to receive the Notice of Termination, essentially looked
for the following:
1. affidavit of service stating the reason for failure to serve the notice upon the recipient;
and
2. notation to that effect, which shall be written on the notice itself.

In the case at bar, Mansion Printing, through its GM, did both. First, the notices indicated the
notation that Bitara “ refused to sign” together with the corresponding dates of service. Second,
an Affidavit executed by the Mansion Printing GM that 1) he is the GM; 2) that he personally
served each notice upon Bitara. Bitara refused to acknowledge receipt thereof. We are, thus,
convinced that the notices have been validly served.

PROCEDURAL AND SUBSTANTIVE ISSUES

Note: cause and procedure of dismissal are important but do not have the same legal effect.

LACK OF VALID CAUSE (SUBSTANTIVE)

- makes the dismissal illegal and invalid
- this entitles the employee to certain reliefs (e.g. reinstatement)

LACK OF PROPER PROCEDURE (PROCEDURAL)

- does not invalidate the dismissal but employee becomes liable for violating the
employee’s right to due process

ANG V SAN JOAQUIN, JR.

Despite Ang’s failure to attach certified copies of the assailed CA decision in his petition to the
SC, the Court opted to forego the matter of procedural errors. Due to the nature of the labor
cases, the nature of the alleged procedural infirmity cannot prod the Court to dismiss the petition
outright without first considering the merits.
NORMAL CONSEQUENCES OF ILLEGALITY OF DISMISSAL

Look at: LC294. Security of Tenure

The normal consequences of illegal dismissal are:

1. reinstatement without loss of seniority rights and payment of backwages computed from
the time compensation was withheld up to the date of actual reinstatement; or
2. where reinstatement is no longer viable as an option, separation pay equivalent to one
month salary for every year of service should be awarded as an alternative. The payment
of separation pay is in addition to payment of backwages. (Golden Ace Buikders v Talde)

DOCTRINE OF STRAINED RELATIONS

- the payment of separation pay is considered an acceptable alternative to reinstatment
when the latter option is no longer desirable or viable
- on one hand, such payment liberates the employee from what could be a highly
oppressive work environment
- on the other hand, it releases the employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust.
- Strained relations must be demonstrated as a fact to be adequately supported by
substantial evidence

EMPLOYEE’S BURDEN OF PROOF

LC 292. The burden of proving that the termination was for a valid or authorized cause shal rest
on the employer.

- Failure to show that a dismissal is for just and valid cause necessarily means that it was
not justified and therefore, was illegal
- The employer must affirmatively show by substantial evidence that the dismissal was for
a just cause

SUBSTANTIAL EVIDENCE- such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion

EMPLOYEE MUST FIRST ESTABLISH FACT OF DISMISSAL

ILADAN V LA SUERTE INTL MANPOWER AGENCY INC.

In illegal dismissal cases, the employer has the burden of proving that the employee’s dismissal
was legal. However to discharge the burden, the employee must first prove, by substantial
evidence, that he had been dismissed from employment. Iladan maintains that she was
threatened and coerced by respondents to write the resignation letter, to accept the financial
assistance and to sign the waiver and the settlement. Consequently, she insists that her act of
her resigning was involuntary. The Court is not convinced as we find no proof of Iladan’s
allegations. It is a settled jurisprudence that it is incumbent upon an employee to prove that his
resignation is not voluntary. However, Iladan did not adduce any competent evidence to prove
that respondents used force and threat.

MEASURE OF PENALTY

Rule : Penalty must be commensurate to the offense

Note: a dismissal with a valid cause and which afforded the employee due process may still be
questioned and nullified if the penalty itself is not appropriate

MONTELLANA V LA CONSOLACION COLLEGE MANILA

Even on the assumption that there was willful disobedience, still, the Court finds that the penalty
of dismissal too harsh. It bears to stress that 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 brazed disrespect of his employer.

MORENO V SAN SEBATIAN COLLEGE-RECOLETOS MANILA

Even if dismissal for cause is the prescribed penalty for the misconduct herein committed, in
accordance with the Faculty Manual and Moreno’s employment contract, the Court finds the
same to be disproportionate to the offense. Time and again, we have ruled that while an
employer enjoys wide latitude of discretion in promulgation of polices, rules, and regulations on
work-related activities of the employees, those directives, however, must always be fair and
reasonable, and the corresponding penalties, when prescribed, must be commensurate to the
offense involved.
 TERMINATION OF EMPLOYMENT BY EMPLOYEE

RESIGNATION

LC 300. Termination by employee. (a) 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.

(b) 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

RESIGNATION
The voluntary act of an employee who finds himself in a situation where he believes that personal
reason cannot be sacrificed in favor of the exigency of the service, then he has no other choice
but to disassociate himself from his employment

JUST CAUSE

LC300. (b) 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

WITHOUT JUST CAUSE- requisites

LC 300. (a) 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.

BONAFIDE SUSPENSION OF OPERATIONS/PERFORMANCE OF MILITARY OR CIVIC DUTY

LC 301. The bonafide suspension of the operation of a business or undertaking for a period not
exceeding six monts 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
1 month from the resumption of operations of his employer or from his relief from the military
or civic duty.

FORCED RESIGNATION

In voluntary resignation, the employee is compelled by persona reason(s) to disassociate himself

from employment. It is done with the intention of relinquishing an office, accompanied bu the
act of abandonment. 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.

RESIGNATION FOR NONPAYMENT OF WAGES, CONSTRUCTIVE DISMISSAL

A quitting beqacuse employment is rendered impossible, unreasonable, or unlikely, as, an offer
involving a demotion in rank and a diminution in pay.

An employer’s act amounting to dismissal but made to appear as if it were not,

DREAMLAND HOTEL RESORT V JOHNSON

While it was Johnson who tendered his resignation, it was due to the petitioner’s acts that he
was constrained to resign. The petitioners cannot expect Johnson to tolerate working for them
without any compensation. Since Johnson was constructively dismisses, he was illegally
dismissed.
An illegally dismissed employee is entitled to two reliefs: backwages and reinstatement, the two
reliefs provide are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

GILLES V CA
Invariably, the law recognizes and resolves such situation in favor of the employees in order to
protect their rights from the coercive acts of the employer. Resignation contemplates a voluntary
act; thus, an employee who is forced to relinquish his position due to the employer’s unfair or
unreasonable treatment is deemed to have been illegally terminated or discharged. The test of
constructive dismissal is whether a reasonable person in the employee’s position would have felt
compelled to give up his position under the circumstances.
TERMINATION OF EMPLOYMENT BY EMPLOYER

LC 297. Termination by employer. An employer may terminate an employment for any of the
following causes:

1. Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

2. Gross and habitual neglect by the employee of his duties;

3. Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;

4. 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 representatives; and

5. Other causes analogous to the foregoing

YABUT V MERALCO
An employer may terminate an employment for any of the cases in LC 297.

We emphasize the dismissal of a dishonest employee to the best interest not only of the
management but also of labor, as a measure of self-protection against acts inimical to its interest,
a company has the right to dismiss his erring employees. An employer cannot be compelled to
continue employing an employee guilty of acts inimical to the employer’s interest, justifying loss
of confidence in him.

INHERENT RIGHT TO DISCIPLINE IS SUBJECT OT REASONABLE STATE REGULATION IN THE

EXERCISE OF ITS POLICE POWER

HOLCIM PHIL V OBRA

There is no question that the employer has the inherent right to discipline, including that of
dismissing its employees for just causes. This right is, however, subject to reasonable regulation
by the State in the exercise of its police power. Accordingly, the finding that an employee violate
company rules and regulations is subject to scrutiny by the Court to determine if the dismissal is
justified and, if so, whether the penalty imposed is commensurate to the gravity of his offense.
SERIOUS MISCONDUCT

Misconduct- improper or wrong conduct; it is the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment.

To be considered “serious,” it must be of such a grave and aggravated character and not merely
trivial or unimportant.

Elements:
1. It must be serious;
2. It must relate to the performance of the employee’s duties; and
3. It must show that the employee has become unfit to continue working for the employer.
(Johansen World Group Corporation v Gonzales III)

Examples of misconduct:

- Pressuring, inducing, and influencing others to commit dereliction of duty

- The use of obscene, insulting or offensive words against a superior
- Sleeping on the post
- Challenging superior officers to a fight
- Sexual harassment

UNIVERSAL CANNING, INC V CA

Infraction of the company rules and regulations which is akin to serious misconduct is a just cause
for termination of employment recognized under Art282 of the Labor Code. Misconduct is
defined as an improper or wrong conduct. It is a transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment.

The use of the company’s time and premises for gambling activities is a grave offense which
warrants the penalty of dismissal for it amounts to theft of the company’s time and it is explicitly
prohibited by the company rules on the ground that it is against public morals.

DISOBEDIENCE

Elements:
1. The employeee’s assailed conduct must have been willful or intentional (wilfulness
characterized by a wrongful and perverse attitude)
2. The order violated must have been:
a. Reasonable
b. Lawful
 c. Made known to the employe; and
d. Must pertain to the duties which he had been engaged to discharge
(Gold City Integrated Port Services, Inc. v NLRC)

GROSS AND HABITUAL NEGLECT OF DUTIES

Gross Negligence
- Generally means an absence of that diligence that an ordinarily prudent man would use
in his own affairs
- The want or absence of or a failure to exercise slight care or diligence, or the entire
absence of care; it evinces a thoughtless regard of consequences without exerting any
effort to avoid them. (PNB v Padao)
- Connotes a want of care in the performance of one’s duties (Publico v Hospital Manager,
Inc)

Habitual Neglect
- Implies repeated failure to perform on’es duties for a period of time, depending upon the
circumstances

Elements of negligence in termination of employment

Such negligence must be:
1. Gross; and
2. Habitual

Note:
- A single or isolated act of negligence cannot constitute as a just casue for termination or
dismissal
- Unsatisfactory performance is not the same as gross and habitual neglect of duties, and
thus, is not a just cause for termination

RESPONDEAT SUPERIOR (COMMAND RESPONSIBILITY)

JUMUAD V HI-FLYER FOOD, INC

Reports of Hi-Flyer show that there were anomalies committed in the branches managed by
Jumuad. On the principle of respondeat superior or command responsibility alone, Jumuad may
be held liable for negligence in the performance of her managerial duties. She may not have been
directly involved in causing cash shortages in KFC Bohol, but her involvement in not performing
her duty monitoring and supporting the day to day operations of the branches and ensure that
all the facilities and equipment at the restaurant were properly maintained and serviced, could
have truly prevented the whole debacle from ever occurring .

Rather than taking proactive steps to prevent the anomalies at her branches, Jumuad merely
affected remedial measures. In the restaurant business where the health and well-being of the
consuming public is at stake, this does not suffice. Thus, there is reasonable basis for Hi-Flyer to
withdraw its trust in her and dismissing her from its service.

Gross negligence
- The want or absence of or a 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 (PNB v Dan Padao)
- Constitutes a valid just cause for termination of employment

Simple negligence
- Simple neglect of duty is the failure of an employee to give attention to a task expected
of him, and signifies disregard of a duty resulting from carelessness or indifference.
(Panaligon v Valente)
- Not a valid cause for termination of employment

Includes: GROSS INEFFICIENCY

CENTURY IRON WORKS V BAÑAS

Art282 of the Labor Code provides that one of the just causes for terminating an employment is
the employee’s gross and habitual neglect of duties. This cause includes gross inefficiency,
negligence and carelessness. Fraud and willful neglect of duties imply bad faith of the employee
in failing to perform his job, to the detriment of the employer and the latter’s business.

To our mind, such numerous infractions are sufficient to hold him grossly and habitually
negligent. His repeated negligence is not tolerable. The totality of infractions or the number of
violations he committed during his employment merits his dismissal. Moreover, gross and
habitual negligence includes unauthorized absences and tardiness, as well as gross inefficiency,
negligence and carelessness.

LOSS OF TRUST AND CONFIDENCE

While the right of an employer to select or discharge his employee is regulated by the State, an
employer cannot be compelled to continue the employment of an employee guilty of acts
inimical to its interests. To be a valid reason of dismissal, loss of confidence must be genuine.

Guidelines in the application of the doctrine

1. Loss of confidence should not be simulated

2. It may not be arbitrarily asserted in the face of overwhelming evidence
3. It should not be used as a subterfuge for causes which are improper, illegal, or unjustified;
4. It must be genuine, not mere afterthought to justify earlier action, taken in bad faith; and
5. The employee involved holds a position of trust and confidence
(Midas Touch Food Corp. v NLRC)
Elements of loss of trust and confidence in termination of employment
1. The employee concerned must be one holding a position of trust and confidence either:
i. Managerial employees or
ii. Fiduciary rank-and-file employees
2. Loss of confidence must be based on:
i. A willful breach of trust
ii. Done intentionally, knowingly, and purposely,
iii. Without justifiable excuse (Wesleyan University Phils v Reyes)

Requisites for FRAUD to constitute as a just cause for termination

1. Fraud must be committed against the employer or representative;
2. The fraud must be in connection with the employee’s work

Examples of dishonesty:
- Falsification of time cards
- Theft of company property

WESLEYAN UNIVERSITY PHILS v REYES

With respect to rank-and-file personnel, loss of trust and confidence, as ground for valid
dismissal, requires proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer would not suffice. With respect to 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.

VILLANUEVA JR V NLRC & MECO

The loss of trust and confidence must be based on willful breach of trust reposed in the employee
by his employer. Such 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.

Moreover, it must be based on substantial evidence and not on the employer’s whims or
suspicions. Otherwise, the employee would eternally remain at the mercy of the employer.

TWO CLASSES OF CORPORATE POSITIONS OF CLASS AND CONFIDENCE

PJ LHULLIER V VELAYO
There are two classes of corporate positions of trust: on the one hand are the managerial
employees. On the other hand, are the fiduciaruy rank-and-file employees.
MANAGERIAL EMPLOYEES
Those who by the nature of their position, are entrusted with confidential and delicate matters
and from whom greater fidelity to duty is correspondingly expected. (Baguio Central University v
Gallente)

Those who are “vested with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline
employees, or to effectively recommend such managerial actions.”

Those whose primary duty consists of the management of the establishment in which they are
employed or of a department or a subdivision thereof, and other officers or members of the
managerial staff.

FIDUCIARY RANK-AND-FILE EMPLOYEES

Those who, in the normal and routine exercise of their functions, regularly handle significant
amounts of the employer’s money or property.

These employees, though rank-and-file, are routinely charged with the care and custody of the
employer’s money or property and are thus classified as occupying positions of trust and
confidence. (PJ LHUILLER INC v VELAYO)
Ex. Cashiers, auditors, property custodians

HORMOSILLA V COCA-COLA BOTTLERS PHIL, INC

Hormillosa, being a route salesman, falls under the second class. By selling soft drink products
and collecting payments for the same, he was considered an employee who regularly handled
significant amounts of money and property in the normal and routine exercise of his functions.
The nature of the position of a route salesman was described in Coca-cola Bottlers, Phils. v
Kapisanan ng Malayang Manggagawa sa Coca-Coca -FFW and Florention Ramirez, where it was
written: We agree that route salesmen are likely individualistic personnel who roam around
selling softdrinks, deal with customers and are entrusted large asset and funds and property of
the employer. There is a high degree of trust and confidence reposed on them, and when
confidence is breached, the employer may take proper disciplinary action on them.

The work of a salesman exposes him to voluminous financial transactions involving his employer’s
goods. The life if the soft drinks company depends not so much on the bottling or production of
the production of the product since this is primarily done by automatic machines and personnel
who are easily supervised but upon mobile and fa-ranging salesmen who go from store to store
all over the country or region. Salesmen are highly individualistic personnel who have to be
trusted and left essentially on their own. A high degree of confidence is reposed on them because
they are entrusted with funds or properties of their employer.

CHUANICO V LEGACY CONSOLIDATED PLANS, INC

The CA found reasonable basis for believing that Atty. Chuanico had breached his employer’s
trust. He was not a mere rank-and-file employee but an in-house counsel. Thus, Legacy
Consolidated enjoyed wide latitude in evaluating his work and attitude and in terminating his
employment on the ground of loss of trust and confidence. His mishandling of the cases assigned
to him shows that he had been unfit to continue working for his employer.

But these are broad principles that do not themselves show when, where, and how Atty.
Chuanico betrayed the trust that Legacy Consolidated gave him as in-house counsel.

The company charged him with having mishandled two things that were assigned to him, the
drafting of an answer in one and the preparation of a complaint affidavit in the other. It failed to
present proof, however, of such mishandling.