What is suspensive condition?

Under the CIVIL CODE of the Philippines

Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or
loss of those already acquired, shall depend upon the happening of the event which constitutes
the condition.
In the realm of civil law, a condition is defined as "every future and uncertain event upon which
an obligation or provision is made to depend. It is a future and uncertain event upon which the
acquisition or resolution of rights is made to depend by those who execute the juridical act."
Jurisprudence states that when a contract is subject to a suspensive condition,
its effectivity shall take place only if and when the event which constitutes the condition
happens or is fulfilled.
A contract is one of the five (5) sources of obligations as stated in the Civil Code. An obligation
is defined as the juridical necessity to give, to do or not to do. While a contract may be
perfected in the manner of operation described above, the efficacy of the obligations created
thereby may be held in suspense pending the fulfillment of particular conditions agreed upon.
In other words, a perfected contract may exist, although the obligations arising therefrom — if
premised upon a suspensive condition — would yet to be put into effect.
What is Retraction Letter?
A retraction letter is a formal written notice from the employer informing a job candidate of the
withdrawal of the employment offer.

1. Concept

A retraction letter is a formal written notice from the employer informing a job candidate who have been
signed for employment that the latter is being withdrawn.

a. Validity

Q: Is a retraction letter involving an employment contract with suspensive conditions valid?

A: Yes, provided that the employment contract is clear with the suspensive conditions.

In the case of Sagun v. ANZ Global Services and Operations (Manila), Inc (G.R. No. 220399),
the offered of employment of the company to the applicant was later retracted after the
former found material inconsistencies in declared information and documents after
conducting a background check with his previous employer. The supreme court held that
there was no existing employee-employer relationship in this case because the employment
status of the applicant was conditional or under suspensive condition, although the mere fact
that the applicant accepted the offer of the company constituted a contract, but in this case
their contract specified that the subject employment contract required a satisfactory
completion of petitioner's background check before he may be deemed an employee of
ANZ.
1

1
https://www.officialgazette.gov.ph/1949/06/18/republic-act-no-386/
https://laborlaw.ph/retraction-letter/

Here are the facts of the case:

Petitioner was employed at Hongkong and Shanghai Banking Corporation Electronic
Data Processing (Philippines), Inc. (HSBC-EDPI) when he applied online for the
position of Payments and Cash Processing Lead at respondent ANZ Global Services
and Operations (Manila), Inc. (ANZ), a domestic corporation whose businesses involve
a full range of banking products and services.

Petitioner passed the interview and online examination, ANZ offered petitioner the
position of Customer Service Officer, Payments and Cash Resolution, which the latter
accepted on June 8, 2011.

In the letter of confirmation of the offer which constituted petitioner's employment

agreement with ANZ, the terms and conditions of his employment required, among
others, a satisfactory result of his pre-employment screening. The pertinent portions of
which read as follows:

Your initial and ongoing employment is conditional on ANZ being satisfied

that the results of:

• a police record check are compatible with the inherent requirements of your
position; and

• any other required background or other checks are to the satisfaction of

ANZ (keeping in mind your position and ANZ's role as a financial institution).

ANZ may use any information you provide to conduct reference checks and any
other background checks.

Your employment is also conditional upon you holding all necessary visas and
meeting all immigration requirements necessary for you to work in Philippines in
this position.

If, in the opinion of ANZ, any of your background checks, reference checks
or visas are not satisfactory, ANZ may choose not to commence your
employment, or where you have already started, to end your employment
immediately, with no liability to pay compensation to you.

It was likewise formed part of the employment agreement, that petitioner was to be
placed on a probationary status for a period of six (6) months and that his appointment
would take effect from the date of reporting, which was to be not later than July 11,
2011.

Accordingly, on June 11, 2011, petitioner tendered his resignationat HSBC-EDPI and
the acknowledged copy thereof was transmitted to ANZ together with his other pre-
employment documentary requirements.

On July 11, 2011, petitioner was instructed to report to ANZ and was handed a letter of
retraction signed by ANZ's Human Resources Business Partner, Paula Alcaraz
(Alcaraz), informing him that the job offer had been withdrawn on the ground that the
company found material inconsistencies in his declared information and documents
provided after conducting a background check with his previous employer.

Asserting that his employment contract had already been perfected upon his
acceptance of the offer on June 8, 2011, and as such, was already deemed an
employee of ANZ who can only be dismissed for cause, petitioner filed a complaint for
illegal dismissal with money claims against ANZ, Cruzada, and Alcaraz (respondents)
before the NLRC,

Respondents countered that the NLRC had no jurisdiction over the complaint as they
have no employer-employee relationship with petitioner.

They contended that their offer was conditional and the effectivity of
petitioner's employment contract was subject to a term or period. They
claimed that petitioner made material misrepresentations in his job
application and interview that prompted them to withdraw the offer. They
pointed out that the discrepancies in his declarations, namely: (a) that he
only held the position of a Level 1 and not a Level 2 Technical Support
Representative at Siemens; and (b) that he was terminated for cause due
to his absence without official leave (AWOL) and not because of his
resignation, were not satisfactorily explained despite the opportunity
accorded to him. They added that petitioner likewise failed to report for
work on or before July 11, 2011; hence, his employment never took effect
and no employer-employee relationship was created. Thus, they asserted
that petitioner was never dismissed, more so, illegally. Finally, they
denied his money claims for lack of basis and further averred that the
impleaded officers cannot be held personally liable under the
circumstances.

The LA Ruling

Dismissed the complaint, holding that there was no perfected employment contract
between petitioner and respondents since there was a valid cause for the withdrawal of
the offer that was made prior to the commencement of petitioner's service with the
company. reasonable ground to withdraw the employment offer and as such, no
employer-employee relationship was created between them.

The NLRC Ruling

NLRC affirmed the findings of the LA, added that the withdrawal of job offer was valid
and reasonable, there being substantial evidence to show that petitioner committed
misrepresentations in his job application.

The CA Ruling

The CA found no grave abuse of discretion to have been committed by the NLRC in
upholding the dismissal of the complaint. It held that the contract was perfected on June
8, 2011, when it was signed by the parties. However, it ruled that the employment
contract did not commence since respondents did not allow petitioner to begin work due
to the misrepresentations, he made in his application form. The CA also pointed out that
since the employment offer was conditioned on the satisfactory completion of his
background check, his failure to comply with the same rendered the withdrawal of the
offer justified. Hence, no employer-employee relationship was created between the
parties.

The Issue Before the Court

whether or not the CA erred in not finding grave abuse of discretion on the part of the
NLRC in holding that no employer-employee relationship existed between petitioner and
respondent.

The Court's Ruling

The petition lacks merit, THERE IS no employer-employee relationship existed between

petitioner and respondent.

A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. There is no contract
unless the following essential requisites concur: (a) consent of the contracting
parties; (b) object certain which is the subject matter of the contract; and (c) cause of
the obligation which is established.
An employment contract, like any other contract, is perfected at the moment the parties
come to agree upon its terms and conditions, and thereafter, concur in the essential
elements thereof. In this relation, the contracting parties may establish such
stipulations, clauses, terms, and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order or public policy.

In this case, the Court agrees with the finding of the CA that there was already a
perfected contract of employment when petitioner signed ANZ's employment offer and
agreed to the terms and conditions that were embodied therein. Nonetheless, the offer
of employment extended to petitioner contained several conditions before he may be
deemed an employee of ANZ. Among those conditions for employment was
the "satisfactory completion of any checks (e.g. background, bankruptcy, sanctions and
reference checks) that may be required by ANZ." 40 Accordingly, petitioner's
employment with ANZ depended on the outcome of his background check, which
partakes of the nature of a suspensive condition, and hence, renders the obligation of
the would-be employer, i.e., ANZ in this case, conditional. Article 1181 of the Civil Code
provides:

Art. 1181. In conditional obligations, the acquisition of rights, as well as the

extinguishment or loss of those already acquired, shall depend upon the happening of
the event which constitutes the condition.

In the realm of civil law, a condition is defined as "every future and uncertain event upon
which an obligation or provision is made to depend. It is a future and uncertain event
upon which the acquisition or resolution of rights is made to depend by those who
execute the juridical act." 41 Jurisprudence states that when a contract is subject to a
suspensive condition, its effectivity shall take place only if and when the event which
constitutes the condition happens or is fulfilled. 42 A contract is one of the five (5) sources
of obligations as stated in the Civil Code. 43 An obligation is defined as the juridical
necessity to give, to do or not to do. 44 While a contract may be perfected in the manner
of operation described above, the efficacy of the obligations created thereby may be
held in suspense pending the fulfillment of particular conditions agreed upon. In other
words, a perfected contract may exist, although the obligations arising therefrom - if
premised upon a suspensive condition - would yet to be put into effect.

Here, the subject employment contract required a satisfactory completion of petitioner's

background check before he may be deemed an employee of ANZ. Considering,
however, that petitioner failed to explain the discrepancies in his declared information
and documents that were required from him relative to his work experience at Siemens,
namely: (a) that he was only a Level 1 and not a Level 2 Technical Support
Representative that conducts troubleshooting for both computer hardware and software
problems; and (b) that he was found to have been terminated for cause and not merely
resigned from his post, that rendered his background check unsatisfactory, ANZ's
obligations as a would-be employer were held in suspense and thus, had yet to acquire
any obligatory force. 45 To reiterate, in a contract with a suspensive condition, if the
condition does not happen, the obligation does not come into effect. Thus, until and
unless petitioner complied with the satisfactory background check, there exists no
obligation on the part of ANZ to recognize and fully accord him the rights under the
employment contract. In fact, records also show that petitioner failed to report for work
on or before July 11, 2011, which was also a suspensive condition mandated under
sub-paragraph 4 of Schedule 1 of the contract.

Consequently, no employer-employee relationship was said to have been created

between petitioner and ANZ under the circumstances, and the dismissal of the farmer's
complaint for illegal termination from work, as held by the NLRC, was correctly
sustained by the CA.

WHEREFORE, the petition is DENIED. The Decisions are hereby AFFIRMED.

EMPLOYER- EMPLOYEE RELANTIONSHIP

4 FOLD TEST

1) selection and engagement of the employee

2) payment of wages
3) power of dismissal over the employee; and
4) power to control the employee’s conduct.

Requirements for termination procedural and substantive

Due process is essentially the observance of substantive due process (i.e.
causes/grounds) and Procedural due process (i.e. steps/procedure) prior to the
termination of employment or separation from employment.
Substantive due process guarantees a right to liberty that cannot be taken away or
unduly constricted, except through valid causes provided in the law. The concepts of
procedural and substantive due process had been carried over and applied to illegal
dismissal cases, although notably, employers are not governmental bodies to which
these rights usually refer. Agabon v. NLRC described the due process required in
dismissing employees as statutory – requirements that the law imposes on employers to
comply with, in contrast to constitutional due process rights that guarantee against
overreach from the government.

Labor-Only Contracting -is PROHIBITED

Labor only contracting shall refer to an arrangement where the contractor or subcontractor
recruits, supplies, or places workers to perform a job or work for a principal, and the elements
hereunder:
1. The contractor does not have substantial capital; or the contractor or subcontractor does not
have investments in the form of tools, equipment, machineries; and the contractor’s or
subcontractor’s employees recruited and placed are performing activities which are directly
related to the main business operation of the principal; or
2. The contractor or subcontractor does not exercise the right of control over the work of the
employee
Labor-only contracting exists when any of the two elements is present. Only one of either (i)
substantial capital or (ii) performing activities related to the main business – is required for
Labor-Only Contracting to exist. Performing activities directly related to the principal business of
the employer is only one of the two indicators that "labor-only" contracting exists; the other is
lack of substantial capital or investment. Labor-only contracting exists when any of the two
elements is present.

TERMINATION BY EMPLOYER
Requisites for Valid Dismissal
A. Substantive Due Process: The dismissal must be for cause; and
A.1. Just Causes
Grounds:
1. Serious misconduct or Willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work (work-related)
Serious Misconduct Improper or wrong conduct; 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 serious within the meaning and intendment of the law, the misconduct
must be of such grave and aggravated character and not merely trivial or unimportant.

Examples 1. Reckless Driving. The irregularities or infractions committed by the bus driver, including his
tendency to speed up during his trips, his reckless driving, his picking up passengers in the middle of the
road, his racing with other buses and his jostling for vantage positions constitute as serious misconduct

2. The charge of drug abuse inside the company’s premises and during working hours

3. Sexual harassment;

4. Fighting within company premises;

5. Accusatory and inflammatory language used by an employee to an employer or superior (Nissan

Motors Phils. v. Angelo, G.R. No. 164181, 2011) 6. Falsification of time records;

Elements of Serious Misconduct

1. There must be misconduct;

2. The misconduct must be of such grave and aggravated character;

3. Relates to the performance of the employee’s duties; and

4. A showing that the employee becomes unfit to continue working for the employer

Elements of Willful Disobedience

1. There must be disobedience or insubordination;

2. The disobedience or insubordination must be willful or intentional characterized by a wrongful and

perverse attitude;

3. The order violated must be reasonable, lawful, and made known to the employee; and

4. The order must pertain to the duties which he has been engaged to discharge.

2. Gross and Habitual neglect by the employee of his duties

Gross Neglect An absence of that diligence that an ordinarily prudent man would use in his own affairs
(DOLE Manual, Sec. 4343.01[27])

Habitual Neglect Implies repeated failure to perform one’s duties over a period of time
Elements of Gross and Habitual Neglect:

1. There must be neglect of duty; and

2. The negligence must be both gross and habitual in character.

Exception: Where the negligence was gross, but not habitual, the SC still dismissed the erring employee.
The SC agreed that the resultant damage caused by the employee’s negligence should be considered in
the dismissal of the employee. In this case, the damage went as far as claiming the life of a child

3. Fraud or Willful breach by employee of the Trust reposed in him by his employer or
duly authorized representative (not mere suspicion)
Elements of Fraud or Willful Breach of Trust

1. There must be an act, omission, or concealment;

2. The act, omission or concealment involves a breach of legal duty, trust, or confidence justly reposed;
3. It must be committed against the employer or his/her representative; and

4. It must be in connection with the employees’ work.

Elements of Loss of Confidence

1. There must be an act, omission or concealment;

2. The act, omission or concealment justifies the loss of trust and confidence of the employer to the
employee;
3. The employee concerned must be holding a position of trust and confidence;
4. The loss of trust and confidence should not be simulated;
5. It should not be used as a subterfuge for causes which are improper, illegal, or unjustified; and
6. It must be genuine and not a mere afterthought to justify an earlier action taken in bad faith.

4. Commission of a crime or offense by the employee against the person of his

employer or any immediate member of his family or duly authorized representative
Commission of a crime or offense - Refers to an offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representative

Elements

1. There must be an act or omission punishable/ prohibited by law; and

2. The act or omission must be voluntary and/or willful on the part of the employees.
5. Other analogous cases
Analogous Cases must be due to the voluntary and/or willful act or omission of the employee

D.O. No. 147-15 (new qualification) No act or omission shall be considered as analogous cause unless
expressly specified in he company rules and regulations or policies. Analogous Cases must be due to the
voluntary and/or willful act or omission of the employee. (Cosmos Bottling Corp. v. Fermin, G. R. No.
193676, 2012)

Examples : 1. Abandonment 2. Violation of safety rules 3. Gross inefficiency 4. Wrongful acts of

employee against the company 5. Violation of code of discipline 6. Failure to heed an order not to join an
illegal picket 7. Immorality 8. Sexual harassment

Requisites

1. There must be an act or omission similar to those specified just causes;

2. The act or omission must be voluntary and/or willful on the part of the employees

b. 1. Authorized Causes

Grounds:
1. Redundancy
Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise

Elements of Redundancy

1. There must be superfluous positions or services of employees;

2. The positions or services are in excess of what is reasonably demanded by the actual requirements of
the enterprise to operate in an economical and efficient manner;

3. There must be good faith in abolishing redundant positions;

4. There must be fair and reasonable criteria in selecting the employees to be terminated; and

5. There must be an adequate proof of redundancy such as but not limited to 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.
2. Retrenchment
Retrenchment is one of the economic grounds resorted to by an employer to terminate employment
primarily to avoid or minimize business losses.

Elements of Retrenchment or Downsizing

1. The retrenchment must be reasonably necessary and likely to prevent business losses;

2. The losses, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or
if only expected, are reasonably imminent.

3. The expected or actual losses must be proved sufficient and convincing evidence such as financial
statements (audited by an independent firm) over a span of several years OR some reasonable period of
time, and not merely the actual year of business loss;

4. The retrenchment must be in good faith for the advancement of its interest and not to defeat or
circumvent the employees’ right to security of tenure; and

5. There must be fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers

3. Introduction of Labor-saving devices

This refers to the installation of machinery to effect economy and efficiency in the employer’s method of
production

Elements of a valid termination based on installation of labor-saving devices

1. There must be introduction of machinery, equipment or other devices;

2. The introduction must be done in good faith;

3. The purpose for such introduction must be valid such as to save on cost, enhance efficiency and other
justifiable economic reasons;

4. There is no other option available to the employer than the introduction of machinery, equipment or
device and the consequent termination of employment of those affected thereby; and

5. There must be fair and reasonable criteria in selecting employees to be terminated.

Due Process Requirements for Termination Due to Installation of Labor-Saving Device

1. The employer served a written notice both to the employees and to the DOLE at least 30 days prior to
the intended date of termination; and
2. The employer pays the employees separation pay equivalent to one month pay or at least one month
pay for every year of service, whichever is higher, a fraction of at least six months being considered as
one whole year

4. Cessation or Closure of Operation of the Establishment or Undertaking

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.

Elements of Closure or Cessation of Operation

1. There must be a decision to close or cease operation of the enterprise by the management;

2. The decision was made in good faith; and

3. There is no other opinion available to the employer except to close or cease operations. (DO 147-15)

Due Process Requirements for Termination Due to Closure or Cessation of Operation

1. Service of written notice to the employees and to the DOLE at least one month before the intended
date thereof;

2. The cessation of or withdrawal from business operations must be bona fide in character; and

3. When Closure is not due to losses. Payment to the employees of termination pay amounting to at
least one-half (1/2) month pay for each year of service, or one month pay, whichever is higher. (Azucena,
The Labor Code with Comments and Cases Volume II-B, 903)

4. When Closure is due to losses. Article 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to serious losses. To require an employer to be generous
when it is no longer in a position to do so, in our view, would be unduly oppressive, unjust, and unfair to
the employer.

5. Disease
Substantive Elements of Due Process for Termination Due to Ailment or Disease

1. An employee has been found to be suffering from any disease, whether contagious or not;

2. His continued employment is prohibited by law or prejudicial to his health, or to the health of his co-
employees;

3. A competent public health authority certifies that the disease is of such nature or at such a stage that
it cannot be cured within a period of six months even with proper medical treatment; and
4. Payment of separation pay equivalent to at least one month salary or to one-half month salary for
every year of service, whichever is greater, a fraction of at least six months being considered as one
whole year

B. Procedural Due Process: The employee must be afforded an opportunity to be heard

and defend himself
Subject to the constitutional right of workers to security of tenure and their right to be protected against
dismissal except for a just and authorized cause and without prejudice to the requirement of notice
under Art. 283 of this Code,

The employer shall furnish the worker whose employment is sought to be terminated:

1. A written notice containing a statement of the causes for termination,

2. And shall afford the latter ample opportunity to be heard and to defend himself with the assistance of
his representative if he so desires, in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment.

Note: Employee may have a counsel but it is not indispensable.

Two-notice rule
The employer has the burden of proving that a dismissed worker has been served two notices:
First written notice: served on the employee specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which to explain his side.
Second written notice: served upon the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

Procedural Requirements in Termination Cases

A. Just Cause and - First Notice specifying the grounds for which dismissal is sought Hearing or
opportunity to be heard Second Notice of the decision to dismiss
 B. Authorized Cause- Notice to the following: 1. Employee; and 2. DOLE At least 1 month prior to
effectivity of the separation
Requisites for Notice in Authorized Causes
1. Notice is not needed when Employee consented to the retrenchment or voluntarily applied for one
(Int’l Hardware v. NLRC, G.R. No. 80770, 1989)
2. Notice must be individual, and not collective (Shoppers Gain Supermart v. NLRC, G.R. No. 110731,
1996)
3. Voluntary Arbitration satisfies notice requirement for authorized causes

Are Government Employees allowed to self-organization?

Gr : Not allowed
EXCEPTION : EMPLOYEES OF GOCCs CREATED UNDER THE CORPORATION CODE

The prohibitions of GOVERNMENT EMPLOYEES are not absolute.

Employees of government corporations established under the Corporation Code shall
have the right to organize and to bargain collectively with their respective employers.
All other employees of the civil service shall have the right to form associations for
purposes not contrary to law. (Art. 254, Labor Code)

E.O. 180: Guidelines for the exercise of the right to organize of government employees,
creating a Public Sector Labor-Management Council, and for other purposes
Right to Self-Organization under EO 180 is for a limited purpose – only for the furtherance and
protection of their interests not for purposes of collective bargaining.
Coverage of EO 180
(a) Applies to all government employees
(b) Employees of all branches, subdivisions, instrumentalities, and agencies of the government,
including GOCCs with original charters.
Excluded from Coverage :Members of the Armed Forces of the Philippines, Including police
officers , Policemen , Firemen and , Jail guards

what is bargaining unit?

A group of employees sharing mutual interests within a given employer unit, comprised of all or less
than all of the entire body of employees in the employer unit or any specific occupational or
geographical grouping within such employer unit. (D.O. No. 40-03, Sec. 1[d], Rule I, Book V)

Appropriate Bargaining Unit (ABU)

A group of employees of a given employer comprised of all or less than all of the entire body of
employees, which the collective interests of the employees, consistent with the equity of the employer,
indicate to be best suited to serve reciprocal rights and duties of the parties.