BOOK SIX POST- EMPLOYMENT

Termination of Employment Sec. 3, Art. 13, 1987 Constitution and Art. 294,
Labor Code
[Introduction: Employee’s Security of Tenure]
- Enunciate the rights available to an employee.

Sec. 9, Art. 2, 1973 Constitution

Art. 293 Coverage
SEC. 9. The State shall afford protection to labor,
The provisions of this Title shall apply to all
promote full employment and equality in employment,
establishments or undertakings, whether for profit or
ensure equal work opportunities regardless of sex,
not.
race, or creed, and regulate the relations between
workers and employers. The State shall assure the
rights of workers to self-organization, collective
Art. 294. Security of Tenure bargaining, security of tenure, and just and humane
In cases of regular employment, THE EMPLOYER shall conditions of work. The State may provide for
not terminate the services of an employee EXCEPT for compulsory arbitration.
a just cause or when authorized by this Title. Sec. 3, Art. 13, 1987 Constitution
AN EMPLOYEE who is unjustly dismissed from work
shall be entitled to REINSTATEMENT- Section 3. The State shall afford full protection
to labor, local and overseas, organized and
 without loss of seniority rights and other unorganized, and promote full employment and
privileges and to his full backwages, equality of employment opportunities for all.
inclusive of allowances, and to his other
benefits It shall guarantee the rights of all workers to
self-organization, collective bargaining and
 or their monetary equivalent computed
negotiations, and peaceful concerted activities,
from the time his compensation was including the right to strike in accordance with law.
withheld from him up to the time of his They shall be entitled to security of tenure, humane
actual reinstatement. conditions of work, and a living wage. They shall also
- The Policy of the State is to ASSURE THE RIGHT participate in policy and decision-making processes
OF WORKERS to “SECURITY OF TENURE.” affecting their rights and benefits as may be provided
- GUARANTY is an ACT OF SOCIAL JUSTICE. by law.
 The State shall promote the principle of shared - The ordinary rank-and-file employees, whose
responsibility between workers and employers and the termination on the basis of same grounds
preferential use of voluntary modes in settling require a higher proof of involvement in the
disputes, including conciliation, and shall enforce their
events in question.
mutual compliance therewith to foster industrial
peace.
- A managerial employee may be dismissed
The State shall regulate the relations between merely on the ground of loss of confidence.
workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right
of enterprises to reasonable returns to investments,
and to expansion and growth. Managerial Employees are Entitled to Security of
Tenure
- Differentiate the two Provision
Managerial personnel and other employees
Security of Tenure occupying positions of trust and confidence are
entitled to security of tenure, fair standards of
- Is a right which may not be denied on mere
employment, and the protection of labor laws.
speculation of any unclear and nebulous basis.
 Where a person has no property, his job may - An in-house legal counsel
possibly be his only possession or means of o may be an employee, a regular
livelihood. He should be protected against any employee.
arbitrary deprivation of his job. o He is entitled to security of tenure.
- There is security of tenure for a limited period o The relationship is that of employer-
and security of tenure for unlimited period. employee.
Tenure of Management Personnel o To terminate the relationship the
applicable law is the Labor Code.
Employers are allowed a wider latitude of
discretion in terminating the employment of Contrast: Employment-At-Will (EAW)
managerial personnel or those who, while not of 55% percent of all US private sector employees are at-
similar rank, perform functions that require the will employees.
employer’s full trust and confidence.
o Meaning the employees are working with
no assurance about their condition or
 term of employment which can be altered Every employment termination has to accord with
or terminated by the employer at any “due process” which has two aspects:
time, for good reason, no reason, or
1. Existence of lawful cause
immoral reason.
2. Observance of proper procedure
Not in the Philippines

EAW – is not recognized in employment in the

Philippines.

In Book I, we noted that an EAW contract, entered into

by an overseas Filipino worker in a foreign land where
EAW is legal, has been held valid and binding for both
employer and employee. – but that’s abroad.

EAW – existed in the Philippines for sometime under te

Spanish Code of Commerce (Art. 302) which was
reenacted as R.A. No. 1052 in 1954.

- To terminate employment this law required only

a ONE MONTH NOTICE or in lieu of notice, at
LEAST ONE MONTH’S PAY IN ADVANCE.

EAW – was ended by R.A. No. 1787 on June 21, 1957,

which initiated the security of tenure right of
employees.

- One’s employment, without definite period, can

be terminated by the employer on the basis only
of a “JUST CAUSE.”

In the Labor Code the lawful grounds for employment

termination are called “just causes” in Art. 297 and
“authorized causes” in Art. 298 and 299.
 the employer. They exist for a defined
period, the duration of the project or of the
season.
 A project employee becomes regular when the
employee has served for at least one year.
3. What are the kinds of fixed-period
employment and under what
circumstances are they considered valid?

(3) The kinds of fixed-period employment are:

1) To substitute for a worker on a one-year
study leave, or on 60-day special leave,
or protracted temporary total disability.
2) Or may be a woman employee is on
KEY QUESTIONS: maternity leave and someone must do
her work in her absence.
1. What are the kinds of employment and
a) The nature of his work is necessary or
which ones are entitled to the right to
desirable in the principal business of the
security of tenure?
employer.
b) He enjoys security of tenure during the
(1) The kinds of employment are: regular,
limited time of his employment.
project, seasonal and casual.
 Fixed-period employment is considered valid
 Regular employees are entitled to all benefits
when it is entered into by the parties without
and right to security of tenure.
any force, duress or improper pressure, being
 Project employees are entitled to security of
brought to bear upon either party, particularly
tenure at least for the duration of the project or
the employee, and absent any other
of the season.
circumstance vitiating consent.
2. What is project employment? When does a
project employee become regular?

(2) Project employment is usually necessary or

desirable in the usual business or trade of
- Such employment for a DEFINED PERIOD is JUST and AUTHORIZED CAUSES of
o
allowed even where the duties of the employee termination.
consist of activities usually necessary or o May be terminated for failure to qualify as
desirable in the usual business of the employer. a regular employee in accordance with
4. Who is considered “regular seasonal” and REASONABLE STANDARDS made KNOWN
“regular casual” employee? by the employer to the employee at the
(4) A regular casual employee is who, time of the engagement.
o Rendered at least 1 year of service, 6. May the employer contract out a regular
whether continuous or broken with job?
respect to the activity in which they are
employed. (6) Yes. The employer may contract out a
o He is regular only for that work activity regular job.
for which he was hired.
In the Serrano ruling, efficiency and economical
o His employment may be on-and-off, but
operations are recognized as valid, lawful
every time the particular work activity
reasons for contracting out jobs, even those
occurs, he is the one to be rehired.
being done by direct-hire regular employees.
o May become regular even if he is not
issued a regular appointment. The legal bars must not be transgressed so as to
project the workers, namely:

1. The contractor must be a legitimate one and

A seasonal regular employee not labor-only contractor.
2. The contracting out is not one of the
o Those who are engaged to perform
arrangements prohibited under Sec. 6, D.O.
activities which are usually necessary or
No.18-02 [replaced by D.O. No. 18-A nor does
desirable in the usual business or trade of
it amount to ULP.
the employer.
5. What are the rights of a probationary
employee? Wack wack Golf & Country Club vs. NLRC
(5) The rights of a probationary employee are
their is Ruling:
The employees availed themselves of the special separation The provisions of written agreement to the contrary
package offered by the petitioner. This special separation and regardless of the oral agreement of the parties,
package was thought of and agreed by the two parties after
a series of discussions and negotiations to avert any labor AN EMPLOYEE [1st paragraph]
unrest due to the closure of Wack wack.
- Shall be deemed to be regular
As a legitimate job contractor, there can be no doubt as to - Has been engaged to perform activities which
the existence of an employer-employee relationship are usually necessary or desirable in the usual
between the contractor and the workers. business or trade of the employer,

EXCEPT where the employment

- Has been fixed for a specific project or

undertaking
- The completion or termination of which has
been determined at the time of the engagement
of the employee or
- Where the work or services to be performed is
seasonal in nature and
- The employment is for the duration of the
season.

AN EMPLOYMENT [2nd paragraph]

- Shall be deemed to be casual if it is not covered

by the preceding paragraph.

PROVIDED, THAT,

- Any employee who has rendered at least 1 year

of service, whether such service is continuous or
broken
ARTICLE 295 REGULAR AND CASUAL - Shall be considered a regular employee with
EMPLOYMENT respect to the activity in which he is employed,
 and his employment shall continue while such
activity exists.

Art. 295 states four kinds of employment: Example Of Regular employees by nature of work (De
Leon vs. NLRC)
1. Regular
2. Project Ruling:
3. Seasonal
It is the nature of the activities performed in relation to
4. Casual
the particular business or trade considering all
circumstances, and in some cases the length of time of
- The relationship of being employer and
its performance and its continued existence.
employee exists between the parties.
Workers supplied by Labor-only Contractor May be
Commission Agent (Singer-Sewing Machine vs. Drilon)
declared Regular Employee of Contractee (Ecal vs.
The Court finds the contention that the union NLRC)
members are employees under Art. 295 to have NO
Ruling:
BASIS. A regular employees are those who perform
activities which are desirable and necessary for the A finding that Mr. Ecal is a labor-only contractor is
business of the employer is not determinative in the equivalent to a finding that an employer-employee
case. relationship exists between the company and Ecal
including the latter’s contract workers, the relationship
REGULAR EMPLOYMENT
being such as provided by the law itself.
- there is reasonable connection between the
Since petitioners perform tasks which are usually
particular activity performed by the employee in
necessary or desirable in the main business of Hi-Line,
relation to the usual business or trade of the
they should be deemed regular employees of the latter
employer.
and are entitled to all the benefits and rights
Two kinds of regular employees: appurtenant to regular employment.

1. regular employees by nature of work. Contract Project Employee Becoming Regular

2. Regular employees by years of service. (Magante vs. NLRC)

Ruling:
The petitioner has established that since the very terminated “after the accomplishment of her task” is
inception of his employment in 1980, he was never UNTENABLE.
deployed from project to project of private respondent
Under the LC, an employment may only be said to be
but had been regularly assigned to perform carpentry
“temporary”
work.

This goes that petitioner was assigned to perform

tasks which are usually necessary or desirable in the
usual business or trade of private respondent; and that
said assignments did not end on a project basis. - where it has been fixed for a specific
undertaking
Day to Day Contractual Employee Becoming Regular - the completion or termination of which has been
(Baguio vs. NLRC) determined at the time of the engagement of
the employee or
Ruling:
- where the work or services to be performed is
Such repeated rehiring and the continuing need for his seasonal in nature and
service are sufficient evidence of the necessity and - the employment is for the duration of the
indispensability of his services to the petitioner’s season.
business or trade.
No Legal Room for Perpetual Employment (Sorreda vs.
He is entitled by law to be considered a regular Cambridge Electronics)
employee.
Ruling:
The nature of the work performed must be viewed
The Court cannot countenance Sorreda’s claim that a
from the perspective of the business or trade in its
contract of perpetual employment was ever
entirety.
constituted.
Temporary Employee Becoming Regular (Beta Electric
While the Constitution recognizes the primacy of labor,
Corp. vs NLRC)
it also recognized the critical role of private enterprise
Ruling: in nation-building and the prerogatives of
management.
She had been hired merely on a “temporary basis” for
purposes of meeting the seasonal or peak demands of o A contract of perpetual employment
the business,” and her services may lawfully be deprives management of its prerogative
 to decide whom to hire, fire and promote, - The adoption and enforcement within a religious
and renders inutile the basic precepts of association of needful laws and regulations for
labor relations. the government of the membership, and
o While management may validly waive it - The power of excluding from such associations
prerogatives, such waiver should NOT BE those deemed unworthy of membership.
CONTRARY TO LAW, PUBLIC ORDER, o It involves the relationship between the
PUBLIC POLICY, MORALS OR GOOD church and its members and related to
CUSTOMS. matters of faith, religious doctrines,
worship and governance of the
An absolute and unqualified employment for life in the
congregation.
mold of petitioner’s concept of perpetual employment
o Examples: proceedings for
is contrary to public policy and good customs, as it
excommunication, ordinations of religious
unjustly forbids the employer from terminating the
ministers, administration of sacraments
services of an employee despite the existence of a just
and other activities attached with
or valid cause.
religious significance.
Church Policy Requiring Yearly Submission of
Regular Casual Employee
Resignation
- Who, after one year of service, becomes regular.
A church requires its pastors or ministers to tender a
- Regular only for that work activity for which he
courtesy resignation every year.
was hired.
- The sole concern is WON the matter that are - His employment may be on-and-off, but every
purely ecclesiastic matter over which our labor time the particular work activity occurs, he is
tribunals are deprived of jurisdiction. the one to be rehired.

In Pastor Austria vs. NLRC, matters are outside the Casual Employee; Regular Employee by Years of
jurisdiction of civil courts and tribunals. Service (Philippine Geothermal vs. NLRC)

Ecclesiastical Affair Ruling:

- One that concerns doctrine, creed, or form of Two kinds of regular employees as:
worship of the church or
 1. Those who are engaged to perform activities Salary of Casual Employee Converted to Regular
which are usually necessary or desirable in the Should not be Reduced.
usual business or trade of the employer;
Casual employees
2. Those who have rendered at least one year of
service, whether continuous or broken with - Converted to regular should be entitled to be
respect to the activity in which they are treated as such in every respect.
employed. - They should also be allowed to retain the same
rate they were enjoying at the time of their
Employee’s right to security of tenure; casual
conversion to regular employees.
becoming regular employee.

- An employee could properly be regarded as a

casual, he becomes entitled to be regarded as a
regular employee of the employer AS SOON AS
HE COMPLETES ONE YEAR OF SERVICE.
- ART. 106 of the LC is precisely designed to
prevent such result.

Casual Employee with Less Than 1 Year of Service does

not become Regular (Capule vs. NLRC) May Regular Jobs be Contracted Out?

Ruling: Yes. Article 106 t0 109 of the Rules Implementing and

Book III Vol. 1
The cutting of the cogon grass in the premises of its
factory is hardly necessary or desirable in the usual In De Ocampo vs. NLRC, it held;
business of the private respondents. Indeed, it is In contracting the services of Gemac Mechanics, as
ALIEN. part of the company’s cost saving program, the
Thus, petitioners are casual employees who CANNOT services rendered by the mechanics became
be considered regular employees. Nevertheless, they redundant and superfluous and property terminable.
may be considered regular employees if they have In the absence of any proof that the management
rendered services for at least 1 year. abused its discretion or acted in a malicious or
arbitrary manner, the court will not interfere with the It is LEGAL for an EMPLOYER, in the absence of a
exercise of such prerogative. prohibition in the CBA,

In Asian Alcohol Corp. vs. NLRC - to outsource jobs being held by union members.
- Outsourcing does not violate the union security
It ruled that an employer’s good faith in implementing
clause in the CBA.
a redundancy program is not necessarily put in doubt
- Nor does it interfere with the employees’ right
by the availment of the services of an independent
to self-organization.
contractor to replace the services of the terminated
employees to promote economy and efficiency. Contracting Out Almost All Regular Jobs (Wack Wack
Golf vs. NLRC)
We have only the bare assertion of petitioner that in
abolishing the security section, private respondent’s Ruling:
real purpose was to avoid payment of a security
The employees availed themselves of the special
checkers of the wage increases provided in the CBA
separation package offered by the petitioner. This
approved in 1990.
special separation package was thought of and agreed
In the Serrano ruling, efficiency and economical by the two parties after a series of discussions and
operations are recognized as valid, lawful reasons for negotiations to avert any labor unrest due to the
contracting out jobs, even those being done by direct- closure of Wack wack.
hire regular employees.
There is indubitable evidence showing that BSMI is an
The legal bars must NOT BE TRANSGRESSED so as to independent contractor, engaged in the management
protect the workers, namely: of projects, business operations, functions, jobs and
other kinds of business ventures, and has sufficient
1. The contractor must be a legitimate one and not
capital and resources to undertake its principal
a labor-only contractor;
business.
2. The contracting out is not one of the
arrangements prohibited under Sec. 6 of D.O. As a LEGITIMATE JOB CONTRACTOR, there can be no
No. 18-A nor does it amount to U.L.P. Taken up doubt as to the existence of an employer-employee
under Arts. 106 -109. relationship between the contractor and the workers.

Outsourcing of Union Members’ Jobs: Is this Allowed? Does Contracting Out Require Union’s Conformity?
(San Miguel Employees Union vs. Bersamira)
Contracting out is a management right, subject to - The completion or termination of which has
regulations already existing. been determined at the time of the engagement
of the employee or
Contracting out of work is a proprietary right of the
- Where the work or service to be performed is
employer in the exercise of an inherent management
seasonal in nature and the employment is for
prerogative.
the duration of the season.
Contracting out is a prerogative that management
The “project” for the carrying out of which “project
enjoys subject to well-defined legal limitations.
employees”
PROJECT EMPLOYMENT: MEANING AND SCOPE
- Are hired would ordinarily have some
Art. 295 defines a regular job as something usually relationship to the usual business of the
necessary or desirable in the usual business or trade of employer.
the employer. - So as long as the duration and scope of the
project were determined or specified at the time
Two EXCEPTIONS: of the engagement of the “project employees.”
1. Project employment Two Types of Project Activities
2. Seasonal employment
1. A project could refer to a particular job or
- According to court rulings, they are also entitled undertaking that is within the regular or usual
to security of tenure at least for the duration of business of the employer company,
the project or of the season. o Which is distinct and separate and
identifiable from the other undertaking of
- They are exceptions because they are the company.
temporary in existence. o Such job or undertaking begins and ends
at determined or determinable times.
- They exist for a defined period, the duration of o Example: construction job or project of a
the project or of the season. construction company.
A PROJECT EMPLOYEE
2. Project could refer to a particular job or
- One whose employment has been fixed for a undertaking that is not within the regular
specific project or undertaking, business of the corporation.
 o Such job or undertaking must also be - a point of time marking a termination as of a
identifiably separate and distinct from the cause or an activity; AN END
ordinary or regular business operations of - a limit, a bound; CONCLUSION; termination.
the employer. - A series of years, months or days in which
something is completed.
The common requisite
- A time of definite length or the period from one
- Is that the designation of named employees as fixed date to another fixed date.
project employees and
In Violeta case, the Court observes that the employee
- their assignment to a specific project are
is clearly hired for a specified project.
effected and implemented in good faith.
But the absence of definite duration of the project led
The services of PROJECT EMPLOYEES
the Court to conclude that the employee was regular.
- are coterminous with the project and
The Court reiterates, security of workers in their job is
- may be terminated upon the end or completion
a fundamental objective of Philippine labor laws.
of that project for which they were hired.
Art. 295 manifests a bias for regularity of status. Any
Principal Test
other arrangement is an unpreferred deviation from
Art. 295, the principal test for determining whether that presumption.
particular employees are properly characterized as
o To be exempted from the presumption of
“project employees as distinguished from “regular
regularity of employment, the agreement
employees,” is whether or not the
between a project employee and his
- “PROJECT EMPLOYEES” WERE ASSIGNED TO employer MUST STRICLTY CONFORM with
CARRY OUT A “SPECIFIC PROJECT OR requirements and conditions provided in
UNDERTAKING,” Article 295.
- the DURATION and SCOPE of which were
specified at the time the employees were o There must also be a determination of or
ENGAGED for that project. a clear agreement on the completion or
termination of the project at the time the
Term PERIOD; DEFINED
employee is engaged if the objective of
- a length of existence; DURATION Art. 295 is to be achieved.
The length of service of a PROJECT EMPLOYEE is WON Sec. 2.2, D.O. No. 19 states:
the employment has been fixed for a specific project or
May be considered as indicators that an employee is a
undertaking the completion or termination of which
project employee:
has been determined at the time of the engagement of
the employee. 1) The duration of the specific/identified
undertaking for which the worker is engaged is
The 2nd paragraph of Art. 295, providing that an
reasonably determinable;
employee who has served for at least 1 year shall be
2) Such duration, as well as the specific
considered a regular employee, relates to casual
work/service to be performed, is defined in an
employees.
employment agreement and is made clear to
Project Employees in the Construction Industry the employee at the time of hiring;
(Fernandez vs. NLRC) 3) The work/service performed by the employee is
in connection with the particular
Ruling:
project/undertaking for which he is engaged;
The documentary evidence showed gaps of month or 4) The employee, while not employed and awaiting
months between the hiring of petitioner in the engagement, is free to offer his services to any
numerous projects wherein he was assigned, the other employer;
ineluctable conclusion is that petitioner has not 5) The termination of his employment in the
continuously worked with private respondent but only particular project/undertaking is reported to the
intermittently as he was hired solely for specific DOLE RO having jurisdiction over the workplace
projects. He is governed by Policy Instruction No. 20. within 30 days following the date of his
separation from work, using the prescribed form
The Policy Instruction requires an employer company on employees’
to report to the nearest Public Employment Office the terminations/dismissals/suspensions;
fact of termination of a project employee as a result of
the completion of the project or any phase in which he 6) An undertaking in the employment contract by
is employed. the employer to pay completion bonus to the
project employee as practiced by most
construction companies.

Indicators of Project Employment

Criteria of Project Employment Summarized (Mirandilla such that there is a constant necessity for the
vs. Jose Calm Development Corp.) performance of the task in question, said job or
undertaking should NOT BE CONSIDERED A PROJECT,
Applying those criteria, she concluded that the
as in this case.
construction workers in the case had to be classified as
regular employees. As case law holds, the absence of the employment
contracts puts into serious question the issue of
The principal test for determining whether particular
whether the employees at the time of their
employees are properly characterized as project
engagement, especially if there were no other
employees as distinguished from regular employees, is
evidence offered.
WON:
Work Pool
a. The employees were assigned to carry out a
specific project or undertaking; Members of a work pool from which a
b. Duration and scope of which were specified construction company draws its project employees, if
at the time the employees were engaged for considered employee of the construction company
that project. while in the work pool, are NON-PROJECT EMPLOYEES
or employees for an INDEFINITE PERIOD.
In Dacles vs. Millenium Erectors Corp., the Court held
that the Policy Instruction No. 20 is explicit that In Raycor Aircontrol Systems vs. NLRC, the status of
employers of project employees are exempted from project employees in a “work pool” as recognized by
the clearance requirement but not from the submission Policy Instruction No. 20, thus:
of termination report.
Members of a work pool could be either project
The Court has held that failure of the employer to file employees or regular employees.
termination reports after every project completion
An employee in the work pool may also be a project
proves that the employees are not project employees
employee.
as in this case.
Project Employee (Cartagenas vs. Romago Electric
In GMA Network vs. Pabriga,
Company)
The Court pointed out that if the particular job or
Ruling:
undertaking is within the regular or usual business of
the employer company and it is not identifiably distinct Since its work depends on availability of such
or separate from the undertakings of the company contracts or projects, necessarily the duration of the
employment of its workforce is NOT PERMANENT but If the separation is brought about by the completion of
COTERMINUOUS with the projects to which they are the project or its phase, no prior notice of termination
assigned and from whose payrolls they are paid. need be given to the employee.

Lack of notice does not entitle the employee to

nominal damages. Neither does the two-notice rule
apply. (See discussion under Art. 297-298)
Project Employee Not Entitled to Separation Pay;
Exception (Salazar vs. NLRC)

Ruling:

It was ruled that petitioner is a project employee and

therefore not entitled to separation pay. Policy De Ocampo vs. NLRC
Instructions No. 20 explicitly mandates that:
Ruling:

Contract workers are not considered regular

“Project employees are not entitled to employees, their services being needed only when
termination pay if they are terminated as a there are projects to be undertaken.
result of the completion of the project or any
The rationale of this rule is that if a project has already
phase thereof in which they are employed,
been completed, it would be unjust to require the
regardless of the number of projects in which
employer to maintain them in the payroll while they
they have been employed by a particular
are doing absolutely nothing except waiting until
construction company.”
another project is begun, if at all.
The company is not required to obtain a clearance
In effect, these stand-by workers would be enjoying
from the Sec. of Labor in connection with such
the status of privileged retainers, collecting payments
termination. What is required is a REPORT to the
for work not done, to be disturbed by the employer
nearest Public Employment Office for statistical
from profits not earned.
purposes.
Their services were discontinued by the MDC not
because of the expiration of their contracts, which had
not prevented their retention or rehiring before as long
as the project they were working on had not yet been rather a CONDITION, that is, progress
completed. accomplishment.”

The real purpose of the MDC was to retaliate against It cannot be definite that will exempt the respondent
the workers, to punish them for their defiance by company from the effects of Art. 295.
replacing them with more tractable employees.
Members of a work pool from which a construction
company draws its project employees, if considered
employees of the construction company while in the
work pool, are NON-PROJECT EMPLOYEES or employees
for an INDEFINITE PERIOD.

If they are employed in a particular project, the

completion or the project or of any phase
Non-Project Employee; Three Types (De Jesus vs. thereof will not mean severance of employer-
Philippine National Construction) employee relationship.
Ruling: However, if the workers in the work pool are
Petitioner is contrary to the assailed decision, a non- FREE TO LEAVE ANY TIME and offer their
project employee and is entitled to regular services to other employers then they are
employment having rendered service for more than 10 project employees employed by a construction
years. He cannot be terminated unless for just cause. company in a particular project or in a phase.

The petitioner a carpenter, performs work “necessary Three types of non-project employees:
or desirable” in the construction business, the 1. Probationary employees
respondent corporation’s field of activity. 2. Regular employees
We cannot say that the petitioner’s engagement has 3. Casual employees
been predetermined because the duration of the work The petitioner is either a member of a work pool of
is “contingent upon the progress accomplishment” and workers, which Policy Instructions No. 20 terms as
the company under the contract is free to determine “non-project employees,” or at the very least, a
the personnel and the number as the work probationary worker who, after the period of 6 months,
progresses.” The employment is subject to no term but has achieved a regular status.
As a regular employee, the petitioner could not have without loss of seniority rights and other benefits that
been validly terminated by reason alone of the may have accrued.
completion of the project.
Computing the Backwages of Project Employee Who
In 2010 case of William Uy Construction vs. Trinidad, has Become Regular; “No Work, No Pay” Rule
the Court explains that the test for distinguishing a Applicable
project employee from a regular employee is WON he
In computing petitioners’ backwages, the amounts
has been assigned to carry out a “specific project or
corresponding to what have been earned during the
undertaking” with the duration and scope of his
periods from the date petitioners were dismissed until
assignment specified “at the time his service is
their reinstatement when petitioners’ respective
contracted.”
Shooting Units were not undertaking any movie
After William Uy comes the D.M. Consunji decision of projects, should be deducted.
2012, the Court ruled that the continuous rehiring, the
Sec. 279 of the Labor Code and Bustamante vs. NLRC,
long period of service, and the relation of the
complainant’s work of the employer’s business are the Petitioners are entitled to receive full backwages
primary factors that the Court considered in declaring from the date of their dismissal up to the time of their
the worker a regular employee. reinstatement, without deducting whatever earnings
derived elsewhere during the period of illegal
Where the employer was repeatedly rehired due to the
dismissal, subject to the observations.
demands of the business, his employment ceases to
be co-terminuous with specific project.

Completion Project Not Valid Reason to Separate a SEASONAL EMPLOYMENT; REGULAR SEASONAL
Project Employee Who Has Become Regular AFTER ONE SEASON
When a project employee who has gained Seasonal employees
regular status is separated from employment on the
alleged ground of completion of project, such - Are considered regular employees.
separation is for an INVALID REASON, hence Regular seasonal employees
unwarranted.
- Are those called to work from time to time,
Because the termination is unjustified the season after season.
employee is entitled to reinstatement with backwages,
The nature of their relationship with the employer is Pakiao workers are considered employees as long as
that during off season they are temporarily laid off but the employer exercises control over the means by
during summer season they are reemployed, or when which such workers are to perform their work.
their services may be needed.
Seasonal workers whose work is not merely for the
They are considered as on leave of absence without duration of the season, but who are rehired every
pay until they are reemployed. Their employment working season are considered regular employees.
relationship is only suspended.
The Mercado Ruling: Project Employees Do Not
o They must have also been employed Become Regular Although Service Exceeds One Year
ONLY FOR THE DURATION OF ONE
The one-year duration on the job is pertinent to
SEASON.
deciding whether a casual employee has become
Employer-Employee Relationship Exists Between regular or not. But it is not pertinent to a seasonal or
Milling Company and Its Workers Even During Off project employee.
Season
Mercado vs. NLRC
The cessation of the Central’s milling activities at the
Ruling:
end of the season is a foreseeable suspension of work,
both the Central and laborers have reason to expect The contention of petitioner is without merit. Policy
that such activities will be resumed, as they are in fact Instructions No. 12 of the DOLE discloses that the
resumed, when sugar cane ripe for milling is again concept of regular and casual employees was
available. designed to put an end to casual employment in
regular jobs, which has been abused by many
There is merely a temporary cessation of the
employers to prevent so-called casuals from joining
manufacturing process due to passing shortage of raw
unions.
material that by itself alone is not sufficient, in the
absence of other justified reasons, to sever the 2nd paragraph of Art. 295 seeks to eliminate the
employment or labor relationship between the parties, abuses of employers against their employees and not,
since the shortage is not permanent. as petitioners would have us believe, to prevent small-
scale businesses from engaging in legitimate methods
Seasonal “Pakiao” Employees (Zamudio vs. NLRC)
to realize profit. Hence, the proviso is applicable only
to the employees who are deemed “casuals” but not to
the project nor regular employees treated in paragraph ARTICLE 296 PROBATIONARY EMPLOYMENT
one of Art. 295.
Probationary employment
Petitioners being seasonal employees, their
- Shall not exceed 6 months from the date the
employment legally ends upon completion of the
employee started working,
project or the season. The termination of their
UNLESS it is covered by an apprenticeship
employment cannot and should not constitute an
agreement stipulating a longer period.
illegal dismissal.
The services of an employee who has been engaged
Mercado Reconciled with Earlier Rulings
on a probationary basis MAY BE TERMINATED for
Their employment would naturally end upon the
- a just cause or
completion of each project or each phase of farm work
- when he fails to qualify as a regular employee in
which has been contracted.
accordance with REASONABLE STANDARDS
Regular Contractuals Entitled to Benefits of Regular made known by the employer to the employee
Employees (Cinderella Marketing vs. NLRC) at the time of his engagement.

Ruling: An employee who is allowed to work AFTER a

probationary period shall be considered a REGULAR
It is undeniable that private respondents have
EMPLOYEE.
rendered at least one year of service to petitioner as
sales clerks, an activity which is necessary or desirable PROBATIONARY EMPLOYEE
in the usual business or trade of the employer.
- one who is under observation by an employer to
Therefore, they are regular employees under the CBA
determine whether he is qualified for permanent
who are entitled to the benefits granted to all other
employment.
regular employees of petitioner under the CBA.
PROBATIONARY APPOINTMENT
Casual Employment
- gives the employer an opportunity to observe
the fitness of a probationary employee while at
work, and to ascertain whether he will become a
productive and efficient employee.
Probationary Manila Hotel Corp. vs. NLRC

- the period of employment implies the purpose Ruling:

of the term or period.
The Labor Code provided that the termination of
PROBATIONARY EMPLOYMENT employment of probationary employees and those
employed with a fixed period shall be subject to such
- is a trial period.
regulations as the Secretary of Labor may prescribe to
The employer observes the fitness, propriety and prevent circumvention of the right of the employees to
efficiency of a probationer to ascertain whether he is be secured in their employment.
qualified for permanent employment.
By terminating his employment and/or abolishing his
PROBATIONER position with but only one day remaining in his
probationary appointment, the petitioner deprived
- seeks to prove to the employer that he has the Cruz of qualifying as a regular employee with its
qualifications to meet the reasonable standards concomitant rights and privileges.
for permanent employment.
Cruz was also deprived of his only means of livelihood
Probationary employment must have been EXPRESSLY upon a vague and empty assertion of retrenchment.
AGREED upon. The agreement must be GENUINE.
If an employee hired allegedly on probationary basis
In the absence of a genuine probationary employment was not informed of the standards that should qualify
contract, the employee should be considered her as a regular employee, the employee is deemed to
REGULAR. have been hired from day one as a regular employee.
Probationary employees are entitled to security of A.M. Oreta vs. NLRC
tenure. Except for just or authorized causes as
provided by law, or under the employment contract, a Ruling:
probationary employee CANNOT BE TERMINATED.
There is justification that Grulla was a regular
employee at the time he was dismissed by the
company. As such, he is entitled to security of tenure
during his period of employment.

Probation – is the time and the opportunity the

employer utilizes to size up the knowledge, skills and
abilities and also the character traits of the 3. The employer’s dissatisfaction must be real and
prospective permanent employee. in good faith, not feigned so as to circumvent
the contract or the law;
Canadian Opportunities Unlimited vs. B. Dalangin

Ruling: 4. There must be no unlawful discrimination in the

dismissal.
It highlights his lack of interest in familiarizing himself
with the company’s objectives and policies. In his  The standards of performance should be
employment, Dalangin exhibited negative working EXPLAINED and ACCEPTED, and the
habits, particularly with respect to the one-hour lunch performance should be APPRAISED against
break policy of the company and the observance of the those standards unless the job is self-
company’s working hours. descriptive.
Dalangin’s actuations, behavior and deportment
during a four-week period to realize that Dalangin  A probationary employee engaged to work
would be a liability rather than an asset to its BEYOND the probationary period of six months,
operation. or any length of time set forth by the employer,
shall be considered a REGULAR EMPLOYEE.
 The probationary employee may be terminated
for failure to qualify as a regular employee in
accordance with reasonable standards made Too General Probation Standard: INVALID TERMINATION
known by the employer to the employee. R.Y. Agustin vs. Alphaland Corp.
Limitations to Termination of Probation; Regular Status Ruling:
after Probationary Period
The dismissal was illegal. Agustin was hired from the
1. It must be exercised in accordance with the management’s standpoint as a probationary employee
specific requirements of the contract; but was not informed of the reasonable standards by
which his probationary employment was assessed.
2. If a particular time is prescribed, the termination
must be within such time and if formal notice is The standards set are too general and failed to specify
required, then that form must be used; with clarify what is expected of Agustin as an
Executive Chef.
Backwages Granted Despite Lack of Appeal failure to establish the existence of valid cause to
dismiss.
Agustin did not appeal to the Decision of the LA it does
not bar the Court from awarding additional backwages,
backwages from the time of his illegal dismissal until
Duration and Termination of Probation
reinstatement as a regular employee.
Period of Probation Not Necessarily Six Months
The award is a logical consequence of the finding that
Agustin was a regular employee who has been illegally Art. 296 provides that probationary employment shall
dismissed by Alphaland. not exceed 6 months.
Agustin is entitled to backwages reckoned from the - Meaning the probationary employee may be
time he was illegally dismissed. The Court finds that dismissed for cause at any time BEFORE the
the award of separation pay in lieu of reinstatement expiration of 6 months.
will be in the best interest of both parties. - 6 month probation is a GENERAL RULE.
Probation longer than 6 months can be justified.
Non-observance of Employer’s Own Termination
Procedure: Termination “Procedurally Infirm” Buiser vs. Hon. Vicente Leogardo
Abbot Laboratories vs. Alcaraz EXCEPTION to the general rule
Ruling: 1. When the parties to an employment contract
agree otherwise
Abbot (the employerfailed to abide by its own
2. When the same is established by company
procedure which required that the employee’s
policy
performance be discussed and reviewed with the
3. When the same is required by the nature of
employee two times. A performance improvement plan
work to be performed by the employee.
was also required during the third-month review.
The petitioners’ failure to meet the sales quota
Since the procedure was not followed, the dismissal
assigned to each of them constitutes as just cause of
was therefore procedurally infirm. This fault made by
their dismissal, regardless of the permanent or
the employer liable for nominal damages.
probationary status of their employment.
Justice Brion dissented that there was non-observance
No Successive Probation
of procedural due process and there was Abbot’s
Lina should be considered a regular employee on all Probation of 6 months, end on the same date it started
counts. 6 months before.

1. The nature of her job as a parts clerk required CALS Poultry vs. Roco
her to perform activities which are deemed
184th day was still within the 6-month period because
necessary and desirable in the usual business of
the computation of the 6-month probationary period is
General Diesel Power Corp., in connection with
reckoned from the date of appointment up to the same
dealing in parts, sales and services.
calendar date of the 6th month following.
2. Her employment was not covered by any Second method
apprenticeship agreement.
It ends 180 days from the starting date.
3. She was rehired on May 22, 1985 and on Alcira vs. NLRC
February 20, 1986.
On the 185th when the employer terminated the
Lina had been hired and again and again rehired and probation the employee was still probationary.
again and again. These successive hirings and firings
as a ploy to avoid the obligations imposed by law on Mitsubishi Motors vs. Chrysler
employers for the protection and benefit of Ruling:
probationary employees, who are kept in the bondage,
so to speak, of unending probationary employment The probationary period of 6-months means 180 days
without any complaint due to the serious in conformity with Art. 13, CC which provides that a
unemployment problem besetting our country today. “MONTH” undesignated by name is understood to
consist of 30 days.
Probation in Sister Company
Hence, the formula for 6-month probation is 30 days x
There is no basis for subjecting an employee to a new 6-months = 180 days.
probationary or temporary employment where he had
already become a regular employee when absorbed by Extension of Probation
a sister company. Mariwasa Manufacturing vs. Hon. V. Leogardo
Last Day of Probation Ruling:
First method
The extension of Dequila’s probation was ex gratia, an
act of liberality on the part of his employer affording  There has to be performance standards that
him a second chance to make good after having were made known to the employee at the time
initially failed to prove his worth as an employee. of hiring and which the employee failed to meet.
 Termination has to be based on the employee's
By voluntarily agreeing to an extension of the
failure to meet the standards or other valid
probationary period, Dequila in effect WAIVED any
cause.
benefit attaching to the completion of said period if he
still failed to make the grade during the period of
extension.

No public policy protecting the employee and the

Probation of Teachers
security of tenure is served by prescribing voluntary
agreements which, by reasonably extending the period Policy Instructions No. 11 issued by the DOLE,
of probation, actually improve and further a
probationary employee’s prospects of demonstrating - The probationary employment of professors,
his fitness for regular employment. instructors and teachers shall be subject to
standards established by the Department of
Probation Not the Same as Fixed-Term Employment Education and Culture.
Probationary employment Probationary and regular status of school personnel in
general, are GOVERNED as of this WRITING, by TWO
- Ends at a certain time, usually on the sixth
MANUALS, one for basic education and another for
month,
higher education.
Fixed-Term Employment
For Basic Education
- Terminates when the agreed period ends and in
SEC. 63 of the 2011 Revised Manual for Basic
which there is no need to prove the employee’s
Education
unsatisfactory performance.
“Probationary period of not more than 3 years in the
Terminating probationary employment
case of the school teaching personnel and not more
- Has to be justified by a valid cause grounded on than 6-months for non-teaching personnel.”
the employee’s failure to pass the agreed
For Higher Education
standards of performance or conduct.
Sec. 117 of the 2008 Manual for Higher Education

“the probationary employment of academic teaching

personnel shall not be more than a period of 6
consecutive semesters or 9 consecutive trimesters of
satisfactory service.”

Reversion from Full-time to Part-time Teacher to Avoid TERMINATION OF EMPLOYMENT

“Regularization”
Key Questions:
Bongar vs. NLRC
1. Serious misconduct as a valid reason of
Ruling: dismissal requires certain elements. What are
those?
The principal cause of petitioner’s dismissal was the
alleged expiration of his teaching contract. Petitioner
For misconduct be a just cause for dismissal:
had rendered service for nearly four years. AMA’s
1. It must be serious;
contention that petitioner could not qualify as a
2. It must relate to the performance of the
regular employee for failure to comply with the three-
employee’s duties;
year full-time service rule is unavailing.
3. It must show that the employee has become
unfit to continue working for the employer.
 A series of irregularities when put together may
Is it Proper to Reinstate a Probationary Employee?
constitute serious misconduct which under Art.
The Court ruled that Article 294 providing for 283 of the LC, is a just cause for dismissal.
reinstatement applies even to a probationary
employee unjustly dismissed. Hence, reinstatement is 2. If an employee, on grounds of inconvenience,
the proper relief. disobeys an order transferring him to another
 location or job, may such employee be In Cadavas vs. CA, loss of trust and confidence
dismissed? to be a valid cause for dismissal must be based
on
Yes. In the case of Homeowners Savings vs.
NLRC, the private respondent’s refusal to obey 1. A willful breach of trust and founded on
the transfer order constitutes willful clearly established facts.
disobedience of a lawful order of her employer 2. Breach is willful when it is done intentionally,
sanctioned under Art. 297 of LC and warrants knowingly, and purposely without justifiable
dismissal. excuse.

3. Is ignorance an excuse for having violated a

company policy or regulation?

Yes. The Supreme Court says that the act of a

passenger bus driver constitutes serious
misconduct or conduct analogous to serious
misconduct under Art. 297.
Article 297 Termination by Employer
To such claim of lack of information, the High
Court points out that those job requirements are An employer may terminate an employment for any of
so fundamental and so universal that any bus the following causes:
driver is expected to satisfy them. The Court 1. Serious misconduct or willful disobedience by
concludes the driver has become a liability the employee of the lawful orders of his
rather than an asset to his employer. employer or representative in connection with
his work;
4. Under what conditions or circumstances may an
employee be dismissed on grounds of loss of 2. Gross and habitual neglect by the employee of
confidence? his duties;
 3. Fraud or willful breach by the employee of the Ruling:
trust reposed in him by his employer or duly
Encarnacion was not dismissed but was only demoted
authorized representative;
and transferred to Caltex because his failure to
observe proper diligence in his work and also because
4. Commission of a crime or offense by the
of his indolence, habitual tardiness and absences.
employee against the person of his employer or
any immediate member of his family; It is management prerogative to transfer, demote,
discipline and even to dismiss an employee to protect
5. Other analogous to the foregoing. its business, provided it is not TAINED with ULP.
Management Rights THE RIGHT TO DISMISS
RIGHT TO MANAGE PEOPLE, IN GENERAL The law in protecting the rights of the laborer
authorizes neither oppression nor self-destruction of
 Equality of right exist between the employer
the employer.
and the employee.
Management has its own rights, which as such are
 The rights of a laborer to sell his labor to such entitled to respect and enforcement in the interests of
persons as he may choose is, in its essence, the simple fair play.
same as the right of an employer to purchase
labor from any person whom it chooses. The right of the company to dismiss its employees is a
measure of self-protection.
 The employer’s obligation to give his workers Power to Dismiss Not Absolute
just compensation and treatment carries with it
the corollary right to expect from the workers An employer can dismiss or lay off an employee for
adequate work, diligence and good conduct. just and authorized cause under Art. 297 and 298, LC.

THE RIGHT TO DISCIPLINE However, the right of an employer to freely discharge

his employees is subject to regulation by the State,
The employer has the prerogative to instill discipline in basically in the exercise of its paramount police power.
his employees and to impose reasonable penalties.
The preservation of the lives of the citizens is a basic
THE RIGHT TO DEMOTE duty of the State.
Petrophil Corp. vs. NLRC
Just Cause of Dismissal

CAUSES OF DISMISSAL IN GENERAL

A company has the right to dismiss its erring

employees if only as a measure of self-protection
against acts inimical to tis interest.

The employer’s right to freely select or discharge his

employees is subject to regulation by the State
basically in the exercise of police power.

Authorized Causes of Termination

Key Questions:

1. In what respects are the authorized causes and

the just causes the same and different?

Just cause Authorized cause

Refer to faults, misdeed of Refer to business or economic
the employee. reasons.
Dismissal
- Does not make the - Employer is required by
employer liable for law to pay separation
separation pay. pay to the employee.
Due process 7. Defiance of return-to-work order;
- Consists of notifying - No hearing is needed 8. Commission of illegal acts in a strike;
and hearing the but notices to the 9. Non-feasible reinstatement;
employee. employee and the DOLE 10.Floating status or off-detail beyond 6-months;
should be given 30
11.Resignation
days before the
employee’s separation. 12.Violation of a contractual commitment such as
Effectivity date of dismissal being a consultant to a competitor;
due - Takes at least 30 days 13.Retirement
- Determined by the after the employee is 14.Death of the employee;
employer. notified. 15.Disease

The authorized cause that does not entail payment of

separation pay is the closure or cessation which cause
is serious losses.

2. What are the authorized cause and the 3. How does preventive retrenchment differ from
corresponding rates of separation pay? What redundancy?
authorized cause does not entail payment of Preventive retrenchment Redundancy
separation pay?
The determination of the Exists where the services of an
The authorized causes are:
need to phase out a employee are in excess of what
1. Total and permanent disability of an employee; particular department and is reasonably demanded by the
2. Valid application of a union security clause; consequent reduction of actual requirements of the
personnel and reorganization enterprise.
3. Expiration of period in term employment;
as a labor and cost-saving
4. Completion of project in project employment; device is a recognized
5. Failure in probation; management prerogative.
6. Sale amounting to closure of business;
Is lawful but certain A position is redundant where it
standards or pre-conditions is superfluous and superfluity of 3. Be reasonably necessary and likely to
must be met, otherwise the a position or positions may be effectively prevent the expected losses.
extreme recourse to the outcome of a number of
retrenchment may be factors. The employer should have taken other
invalidated.
measures prior or parallel to retrenchment to
Does not necessarily or
ordinarily refer to duplication of forestall losses, cut other costs than labor
work. costs.

4. Alleged losses if already realized, and the

4. Explain the four standards of a valid
expected imminent losses, sought to be
retrenchment.
forestalled, must be proven by sufficient and
1. The losses expected should be substantial
convincing evidence.
and not merely de minimis in extent.
Any less exacting standard of proof would
If the loss purportedly sought to be
render too easy the abuse of this prior
forestalled by retrenchment is shown to be
ground for termination of services of
insubstantial and inconsequential in
employees.
character, the bona fide nature of the
retrenchment would appear to be seriously in
question.
2. The substantial loss apprehended must be
reasonably imminent, as such imminence
can be perceived objectively and in good
faith by the employer.

There should be a certain degree of urgency Article 298

for the retrenchment, which is a drastic
Closure of Establishment and Reduction of
recourse with serious consequences for the
Personnel
livelihood of the employees retired or
otherwise laid-off. The employer may also terminate the
employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation An employer may terminate the services of an
of the establishment or undertaking unless the closing employee who has been found to be suffering from
is for the purpose of circumventing the provision, by any disease and whose continued employment is
serving a written notice on the worker and the Ministry prohibited by law or is prejudicial to his health as well
of Labor and Employment at least 1 month before the as to the health of his co-employees:
intended date.
Provided, That he is paid separation pay
In case of termination due to the installation of equivalent to at least 1month salary or to ½ month
labor-saving devices or redundancy, the worker salary for every year of service, whichever is greater, a
affected shall be entitled to a separation pay fraction of at least 6 months being considered as one 1
equivalent to at least his 1 month pay or at least 1 whole year.
month pay for every year of service, whichever is
higher.

In case of retrenchment to prevent losses and in

cases of closure or cessation of operations of
establishment or undertaking not due to serious
business losses or financial reverses, the separation
pay shall be equivalent to 1 month pay or at least ½
month pay for every year of service, whichever is
higher.

A fraction of at least 6 months shall be

considered as one 1 whole year.

Article 299

Disease as ground for termination Art. 298 and 299

 - Deal with authorized causes of termination. - The employer is required to notify the employee
30 days ahead of the intended termination of
Art. 297 - Just causes.
the employment.
Shoppers Gain Supermart vs. NLRC and - Employee is still part of the employment and
AHS/Philippines still be required to attend his job but there may
be reasons, favorable to either or both employer
- Retrenchment is referred to as a just cause. or employee to spare presence during this time
Separation pay may be used in: which the court in a recent decision identifies as
GARDEN LEAVE.
1. As a statutory benefit;
2. As employment benefit voluntarily granted or o The practice of the employer directing an
required by contract; employee not to attend work during the
3. As alternative to reinstatement of an illegally period of notice of resignation or
dismissed employee; termination of employment – Gardening
4. As financial assistance to a legally dismissed Leave.
worker.

Under Art. 294 o During the period of Garden Leave,

employees continue to be paid their
- An employee who is unjustly dismissed from salary and any other contractual benefits
work is entitled to reinstatement without loss of as if they were rendering their services to
seniority rights and other privileges and to his the employer.
full backwages, inclusive if allowances.

Under Art. 298 o The notice of termination is to be sent to

the employee and DOLE Regional Office.
- An employee whose employment is terminated
due to any of the causes under Art. 298 is In Mejila vs. Wrigley, the dismissal initiated by the
entitled to separation pay. employer’s exercise of its management prerogative,
strict observance of the proper procedure is required in
30-day Notice; Garden Leave the order to give life to the constitutional protection
afforded to labor.

REDUNDANCY
The employer may terminate an employee due to report to the CD Manager, leading us to believe that
redundancy. the organizational setup of the sales department has
been changed. Second, CDS are field personnel who
The employer must comply with procedural
drive assigned vehicles and deliver stocks to dealers
requirements of a written notice to the Minister of
who under the job description are those who sell and
Labor and the employee concerned at least 1 month
deliver the same stocks to smaller retail outlets.
prior to the dismissal.
CDS are required to physically deliver, sell and collect
- Redundancy exists where the services of an
payments for soft drinks. The ADMs job is to ensure
employee are in excess of what is reasonably
that the soft drinks products ordered from them are
demanded by the actual requirements of the
marketed in a certain manner in keeping with the
enterprise.
promotional thrust of the company.
- A position is redundant where it is superfluous
and superfluity of a position or positions may be The two positions are different, and that the
the outcome of a number of factors, such as redundancy program instituted by PEPSI was
over hiring or workers and decreased volume of undertaken in good faith. Petitioners have not
business. established that the title ADM was created to
- Redundancy does not necessarily or ordinarily maliciously terminate their employment. The
refer to duplication of work. restructuring and streamlining of PEPSI’s distribution
and sales systems were an honest effort to make the
Valid Redundancy – (3M Philippines vs. Yuseco, Aboitiz
company more efficient.
Power Renewable Union vs. Aboitiz Power Renewable)
Redundancy Selection Criteria
Creation of Positions with Functions Related or
Similar to those of the Abolished Positions Does Golden Thread Knitting Industries vs. NLRC
Not Necessarily Invalidate the Declaration of
Ruling:
Redundancy.
The principle that the employer must use fair and
Santos vs. CA
reasonable criteria in the selection of employees who
Ruling: will be dismissed from employment due to redundancy.

We cannot subscribe to the complainant’s assertion Fair and reasonable criteria may include the following:
that the positions have similar job descriptions. First,
1. Less preferred status
CDS report to a CD Manager, whereas the ADMs do not
 2. Efficiency 4. Fair and reasonable criteria in ascertaining what
3. Seniority positions are to be declared redundant and
accordingly abolished.
- Shows good faith on its part and is evidence
In cases of redundancy, the management should
that the implementation of redundancy was
adduce evidence and prove that a position which was
painstakingly done by the employer to properly
created in place of a previous one should pertain to
justify the termination of the service of its
functions which are dissimilar and incongruous to the
employees.
abolished office.

SPI Technologies vs. Mapua

Ruling:
Valid Abolition of Position and Transfer to Lower
Redundancy means an excess position. If the functions Position
of the position are still needed but the position holder
Great Pacific Life Assurance vs. NLRC
needs to be removed, the cause of the removal should
be valid, and the proper procedure should be Ruling:
observed.
In case of termination of employment due to
- Must show that they are dissimilar and installation of labor-saving devices or redundancy, the
incongruous. worker affected shall be entitled to a separation pay of
at least 1 month pay or at least 1 month pay for every
Redundancy to be valid; Requisites:
year of service, whichever is higher.
1. Written notice served on both the employees
Allado’s proposed transfer to Makati would indeed
and the DOLE at least 1 month prior to the
entail much sacrifice on her part and the finding of the
intended date of retrenchment;
NLRC that the position which Allado was to assume is
2. Payment of separation pay equivalent to at least
two grades lower that a Regional Cashier so much so
1 month pay or at least 1 month pay for every
that GREPALIFE’s accommodation of her is almost
year of service, whichever is higher;
illusory.
3. Good faith in abolishing the redundant positions;
Allado should be entitled to receive 1 month’s pay for to avoid payment to the security checkers of the wage
every year of service as her separation pay. Since increases provided in the CBA approved in 1990.
Allado was already paid ½ month pay for every year of
Such assertion is not a sufficient basis for concluding
service, she is only entitled to the balance.
that the termination of petitioner’s employment was
Offer of Lower Position to Redundant Employee not a bona fide decision of management to obtain
reasonable return from its investment, which is a right
International Harvester Macleod vs. Intermediate
guaranteed to employers under the Constitution.
Appellate Court
The termination of petitioner’s services was for an
Ruling:
authorized cause, i.e., redundancy. Pursuant to Art.
The phasing out of the department in question was 298, petitioner should be given separation pay at the
preceded by a bitter discussion between private rate of 1 month pay for every year of service.
respondent and his superiors, alluded to the latter as
the probable cause of the alleged illegal dismissal.

There is no argument against the fact that with the

hiring of IHEC, it was no longer economical to retain Contracting Out to a Concessionaire
the services of the employee so much so that despite
The Court will not interfere with the management’s
the findings of the trial court.
decision unless it is shown that the action is
It is a management prerogative to transfer, demote, characterized by abuse of discretion or is arbitrary or
discipline and even to dismiss an employee to protect malicious.
its business, provided it is not tainted with unfair labor
The ff are evidence of good faith to arrest losses
practice.
before terminating the employees:
Replacing a Regular Employee with an
1. Engaging an independent consulting firm to
Independent Contractor
conduct manpower audit and organization
Serrano vs. NLRC development;
2. Instituting of cost-saving programs;
Ruling:
3. Termination of probationary employees;
Petitioner’s contention has no merit. In abolishing the 4. Retrenchment of some managers;
security section, private respondent’s real purpose was
 5. Efforts to find jobs in other firms where observe fair and reasonable criteria in ascertaining
employees to be retrenched may be employed. which positions are redundant.

Good Faith is Presumed The redundant cannot just be alleged; it has to be

proved by evidence. GMC should have shown that it
- The employer has the burden of proof to present
evaluated the effect to the company of retaining the
substantial evidence to support the allegation of
alleged redundant positions.
ULP.
The termination report to DOLE was not such a proof; it
Invalid Declaration of Redundancy
was just a self-serving compliance with formalities.
Asufrin vs. San Miguel Corp GMC should have been presented evidence to show
that the declaration of redundancy of the positions was
Ruling: justified.
The SC ordered his reinstatement with full backwages. When GMC tried to compel Viajar to sign an
The Court was not convinced about the alleged “Application for Retirement and Benefit” although she
redundancy because the 14 employees who did not was not applying for retirement, GMC was acting in
avail of the retirement package, only the complainant bad faith. What was happening was a forced
was not reployed to other offices and no criteria, e.g., termination due to an authorized cause.
employee status, efficiency and seniority was adopted
in determining the employees to be laid off. We do not Viajor is entitled to reinstatement with seniority and
treat our workers as merchandise and their right to other privileges, full backwages and because of GMC’s
security of tenure cannot be valued in precise peso- bad faith, moral and exemplary damages.
and centavo terms.

Redundancy in Bad Faith; Hiring New Employees

RETRENCHMENT
While Firing Old Ones
- One of the economic grounds resorted to by an
General Miling vs. V.L. Viajar
employer to terminate employment primarily to
Ruling: avoid or minimize business losses.
o The employer bears the burden to prove
The Court emphasized that the abolition of redundant
his allegation of economic or business
positions be in good faith and that the employer
reverses.
 o The employer’s failure to prove it Basic Requisites of Valid Retrenchment
necessarily means that the employee’s
1. The retrenchment is necessary to prevent or
dismissal was not justified.
minimize losses and such losses are proven;
(Whether or not an employer would imminently
- Retrenchment to prevent losses is considered a
suffer serious or substantial losses for economic
just cause for terminating employment and the
reasons is essentially a question of fact for the
decision whether to resort to such move or not
Labor Arbiter and the NLRC to determine.)
is a management prerogative.

2. Written notice is given to the employees and the

- The idea of rightsizing is to reduce the number
DOLE at least 1 month before the intended date
of workers and related functions and trim down,
of retrenchment;
streamline, or simplify the structure of the
organization to the level of utmost efficiency
(The law requires a written notice to DOLE and
and productivity to realize profit and survive.
to the employees concerned, and that
Causes of Retrenchment requirements is mandatory.
The notice must be given at least 1 month in
- Lack of work or business recession.
advance of the intended date of retrenchment
Lack of work to enable the employees to look for other means
of employment and to ease the impact of the
- A justifiable cause for termination of loss of their jobs and income.)
employment.

Business Recession 3. Separation pay is paid.

- Where the management found it unnecessary to (The employer to pay the employee a
continue employing some of its laborers separation pay equivalent to 1 month pay or at
because of a business recession, lack of least ½ month pay for every year of service,
materials to work on due to government control whichever is higher.)
or due to lack of demand for its products, the Addition:
Could upheld management’s right to dismiss its
laborers.
 4. The employer exercises its prerogative to (Hence, the discharge of employee, thereby
retrench employees in good faith for the terminating such rights, would not violate the
advancement of its interest and not to defeat or Constitution.)
circumvent the employee’s right to security of
Contribution to Income
tenure.
The positions that give high contributions to the
5. The employer uses fair and reasonable criteria company income will be retrenched last, while the
in ascertaining who will be dismissed or retained positions with low contributions to income will be
among the employees, such as status efficiency, retrenched first.
seniority, physical fitness, age and financial
hardship for certain workers. Income contribution is a significant consideration in
identifying the positions that have to be abolished.
Criteria: Who to Retrench
LI-FO Rule (Last in-first out Rule)
There must be fair and reasonable criteria to be used
in selecting employees to be dismissed, on account of - indicates that when there is a need to reduce
retrenchment, such as personnel, the more recently hired ones will be
the first to go instead of those with longer years
1. Less preferred status of service.
2. Efficiency rating
3. Seniority - Yields to the employer’s judgment unless a CBA
provision requires otherwise.
Seniority Rights

- An employee has no inherent right to seniority.

He has only such rights as may be based on a - In case of installation of labor-saving devices,
contract, a statute, or an administrative redundancy and retrenchment, the LI-FO Rule
regulation relative. shall apply except when an employee volunteers
to be separated from employment.
- Which are required by an employee through
long-time employment, are contractual.

Four Standards of Retrenchment

 - Retrenchment is recognized as a preventive and c. Be reasonably necessary and likely to
curative measure. effectively prevent the expected losses.
(The employer should have taken other
Lopez Sugar Corp. vs. Federation of Free Workers
measures prior or parallel to retrenchment to
Ruling: forestall losses, cut other costs than labor
costs.)
1. To prevent losses justifies retrenchment – “to d. Alleged losses if already realized, and the
prevent losses” means that retrenchment or expected imminent losses, sought to be
termination of the services of some employees forestalled, must be proven by sufficient and
is authorized to be undertaken by the employer convincing evidence.
sometime before the losses anticipated are (Any less exacting standard of proof would
actually sustained or realized. render too easy the abuse of this prior
ground for termination of services of
2. Standards which justify retrenchment employees.)
a. The losses expected should be substantial
and not merely de minimis in extent. 3. Determination of loss lies with the Labor Arbiter
(If the loss purportedly sought to be and NLRC
forestalled by retrenchment is shown to be (Whether or not an employer would imminently
insubstantial and inconsequential in suffer serious or substantial losses for economic
character, the bona fide nature of the reasons is essentially a question of fact for the
retrenchment would appear to be seriously in LA and the NLRC to determine.
question.) 4. Effect of quitclaims
b. The substantial loss apprehended must be (Quitclaims executed by laborers are commonly
reasonably imminent, as such imminence frowned upon as contrary to public policy and
can be perceived objectively and in good ineffective to bar claims for the full measure of
faith by the employer. the worker’s legal rights.
(There should be a certain degree of urgency
for the retrenchment, which is a drastic 5. Effect of unjustified retrenchment
recourse with serious consequences for the (All retrenched employees should be reinstated
livelihood of the employees retired or and backwages paid to them.)
otherwise laid-off.)
Evidence to Prove Losses: Modicum of
Admissibility

In Uichico vs. NLRC

Validity of Retrenchment; Earlier SC Decision
Ruling: Reversed; Judicial Notice of PAL’s Losses

The SC held that alleged losses if already realized and FASAP vs. PAL
the expected losses sought to be forestalled must be
Ruling:
proved by sufficient and commencing evidence. There
being no financial reverses for (sic) men (sic) PAL illegally dismissed the 1,400 plus crew members.
termination of complainants from their employment is The dismissal or retrenchment was illegal because PAL
perforce illegal. failed to prove severe financial losses because of its
non-presentation of audited financial statements. The
The SC upheld that evidence presented in NLRC
decision said that the retrenchment was done in bad
proceedings must have modicum of admissibility.
faith and that PAL had not used fair and reasonable
In a PAL case the retrenchment of some 5,000 criteria in selecting the employees that were
employees of the Philippine Airlines was declared retrenched.
invalid. PAL failed to submit its audited financial
The court’s decision is reconsidered. These arguments
documents to prove severe losses in the several years
of PAL sufficed to show that the assailed decision
preceding the retrenchment.
contravened settled jurisprudence of PAL’s precarious
In deciding who to retrench, PAL in effect disregarded financial condition. Judicial notice should be taken of
the seniority factor because it used as basis the the financial losses incurred; the presentation of
employee’s performance rating for only one year. It audited financial statements was not required in such
used “other reasons” which were never specified. circumstances.

Hiring of Replacements after Retrenchment

Retrenchment does not substitute for dismissal of an

employee.
Dismissal

- Results from an intolerable act of the employee.

- Has its own procedure and effects.

Retrenchment

- Arises from an economic condition – the poor

financial health of the business.
- Not an escape route to implement a secret Redundancy Distinguished from Retrenchment:
desire to remove an unwanted person. Temporary Vs. Permanent Retrenchment
- In fine, retrenchment is justified by ethical,
good-faith business motive. (The employer may As to cause,
be challenged to prove the alleged losses of the Redundancy
business.)
– results from the fact that the position of the
Contracting Out After Retrenchment/Redundancy employee has become superfluous.
Asian Alcohol Corp. vs. NLRC - an excess over what is actually needed, even if the
Ruling: business has not suffered reverses.

The Court upheld the termination of employees on Retrenchment

grounds of redundancy and subsequent hiring of an – is linked with losses.
independent contractor to promote economy and
efficient. – a cost-cutting measure made immediately necessary
by business reduction or reverses.
Preventive Retrenchment
As to effect,
Suspension of Operation under Art. 301 is an example
of preventive retrenchment. Separation pay for redundancy is higher than that for
retrenchment.

Permanent Retrenchment – contemplated in Art. 298

Temporary Retrenchment – included in Art. 301

 o When the 6-month period in Art. 301 is - The termination of employment initiated by the
over and the employee is not recalled, he employer through no fault of the employees and
is deemed separated or constructively without prejudice to the latter, resorted to by
dismissed. management during periods of business
recession, industrial depression, or seasonal
Constructive Dismissal
fluctuations…
- One inferred or construed from the employer’s
action.
- Is dismissal in disguise.

Sebuguero vs. NLRC - The act of the employer of dismissing

employees because of losses in the operation of
Ruling: The petitioner’s first contention is based on a
a business, lack of work and considerable
wrong premise or on a miscomprehension of the
reduction on the volume of his business, a right
statement of the NLRC. What the NLRC sustained and
consistently recognized and affirmed by this
affirmed is not redundancy, but retrenchment as a
Court.
ground for termination of employment. They are not
synonymous but distinct and separate grounds under Article 301 may be applied but only by analogy to set
Art. 298. a specific period that employees may remain
temporarily laid-off or in floating status.
Redundancy
6-months is the period set by law that the operation of
- Exists where the services of an employee are in
the business or undertaking may be suspended. The
excess of what is reasonably demanded by the
temporary lay-off wherein the employees cease to
actual requirements of the enterprise.
work should also not last longer than 6 months. After
- A position is redundant where it is superfluous
6-months, the employees should either be recalled to
and superfluity of a position or positions may be
work or permanently retrenched following the
the outcome of a number of factors, such as
requirements of the law, and that failing to comply
overhiring of workers, decreased volume of
with this would be tantamount to dismissing the
business or dropping of a particular product line.
employees and the employer would be liable for
Retrenchment dismissal.

- Is used interchangeably with the term “lay-off.”

There was compliance with the law regarding a valid Pedroso had not been terminated or retrenched by the
retrenchment at anytime within the 6-month period employer but that due to financial crises the number of
that they were temporarily laid-off. working days of Pedroso was reduced to just two days
a week.
The Puzzle: Redundancy or Preventive Retrenchment?
The employer could not have been expected to notify
Art. 298 recognizes retrenchment to prevent losses.
DOLE of the retrenchment of Pedroso under the
Retrenchment may be undertaken by the employer
circumstances for there was no intention to do so on
before losses are actually sustained.
the part of the employer.
Edge Apparel Case, the puzzle persists because
Pedroso was constructively dismissed or retrenched
decrease in volume of business is acceptable reason to
from employment. Thus, Pedroso is entitled to 1 month
justify redundancy as well as retrenchment.
pay or at least ½ month pay for every year of service,
Edge Apparel vs. NLRC whichever is higher.

Ruling: Reduction of work days applied only to union officers,

was an act that amounted to constructive dismissal
The Court agrees with the SG that here the NLRC has and ULP.
gravely abused its discretion. In exercising its right to
retrench employees, the firm may choose to close all, CLOSURE OF BUSINESS
or a part of, its business to avoid further losses or
Closure Because of Losses
mitigate expenses.
A firm which faces serious business decline and
The mere portion of the business of an employer, not
loss is entitled to close its business in order to avoid
the whole of it, is shut down does not necessarily
further economic loss, and a court has no power to
remove that measure from the ambit of the term
require such firm to continue operating at a loss.
retrenchment within the meaning of Sec. 283 (c) of LC.
Losses Must be Shown.
Reduction of Work Days; Constructive Retrenchment
The losses must be sufficiently proven by the
International Hardware vs. NLRC
employer. Financial losses are a question of fact that
Ruling: must be proven before the LA or the NLRC.

Right to Close Whether Losing or Not

If the business is not losing but its owner, for reasons J.A.T General Services vs. NRLC
of his own, wants to get out of the business, he in good
Ruling:
faith can lawfully do so anytime.
Closure of business
No law forces anyone to go into business, no law
compels anybody to stay in business. - Is the reversal of fortune of the employer
whereby there is a complete cessation of
Catatista vs. NLRC
business operations and/or an actual locking-up
Ruling: of the doors of establishment, usually due to
financial losses.
Article 298 is clear that an employer may close or
- An authorized cause for termination of
cease his business operations or undertaking even if
employment aims to prevent further financial
he is not suffering from serious business losses or
drain upon an employer who cannot pay
financial reverses, as long as he pays his employees
anymore his employees since business has
their termination pay in the amount corresponding to
already stopped.
their length of service.
Retrenchment

- Is reduction of personnel usually due to poor

Art. 298 of LC, cessation of business operations not
financial returns so as to cut down on costs of
due to business reverses, must meet three
operations in terms of salaries and wages to
requirements:
prevent bankruptcy of the company.
a. Service of a written notice to the employees and - Referred to as downsizing.
to the DOLE at least 1 month before the - An authorized cause for termination of
intended date; employment which the law accords an employer
b. The cessation of or withdrawal from business who is not making good in its operations in
operations must be bona fide in character; order to cut back on expenses for salaries and
c. Payment to the employees of termination pay wages by laying off some employees.
amounting to at least ½ month pay for each - To save a financially ailing business
year of service or 1 month pay, whichever is establishment from eventually collapsing.
higher.
Art. 298 shows that closure or cessation of business
Closure Contrasted to Downsizing operation as a valid and authorized ground of
terminating employment is not limited to those
resulting from business losses or reverses.

The payment of separation pay to employees

terminated because of closure of business not due to
losses, implying that termination of employees other
than closure of business due to losses may be VALID.

Procedure to Terminate Employment

Key Questions:

1. In employment termination, what does

procedural due process consist of – for the just
causes? for the authorized causes?

The IRR of Book VI (D.O. No. 247-25, September

7, 2015; Part Two provides termination of
employment based on just causes in Art. 297:
 a. A written notice served on the employee 2. If the termination is justified by a valid cause
specifying the ground or grounds for but done without observance of due process, is
termination, and giving to said employee the termination legal?
reasonable opportunity within which to
explain his side;

b. A hearing or conference during which the

employee concerned with the assistance of
counsel if the employee so desires is given
opportunity to respond to the charge,
present his evidence or rebut the evidence
presented against him; Note: Trial type
hearing is not required.

c. A written notice of termination served on the

employee indicating that upon due
consideration of all the circumstances,
grounds have been established to justify his
termination.
3. What is constructive dismissal? Is preventive
suspension exceeding 30 days considered
For termination of employment based on authorized constructive dismissal?
causes in Art. 298:
A constructive dismissal arises when an act of
a. A written notice to the employee and the clear discrimination, insensibility, or disdain by
appropriate Regional Office of the Department; an employer becomes so unbearable on the part
b. Notice is to individual employees; of the employee that it could foreclose any
c. Notice must be served 30 days before the choice by him except to forego his continued
employee’s separation take effect. employment.
 Yes, preventive suspension amounts to
constructive dismissal when it is beyond the
maximum 30-day period. When the suspension
exceed the 30-day period without any
corresponding action on the part of the
employer, the employer must reinstate the
employee or extend the period of suspension,
provided the employee’s wages and benefits are
paid in the interim.

4. Who has the burden of proof in dismissal cases?

In an unlawful dismissal case, the employer has

the burden of proving the lawful cause
sustaining the dismissal of the employee. The
employer must show rationally adequate
evidence that the dismissal was for a justifiable
cause.

o Absence of valid cause makes the

dismissal illegal and invalid.

o Absence of valid procedure makes the

dismissal merely defective or ineffectual.
Where the dismissal is illegal and invalid, the - Requires that he may be dismissed only after he
employee is entitled to reinstatement, backwages as has been given an opportunity to be heard.
stated in Art. 294.
Standards of Procedural Due Process
Where the dismissal is merely defective for non-
1. For termination of employment based on just
observance of proper procedure, the dismissal stays,
causes:
so the employee remains dismissed, but the employer
a. A written notice served on the employee
has to pay nominal damages.
specifying the ground or grounds for
Illegal termination, and giving to said employee
reasonable opportunity within which to
- Refer to a dismissal lacking in valid cause as
explain his side;
well as to a dismissal lacking in valid procedure.
b. A hearing or conference during which the
employee concerned with the assistance of
 A dismissal lacking in valid cause is
counsel if the employee so desires is given
SUBSTANTIVELY illegal.
opportunity to respond to the charge,
 A dismissal lacking in valid procedure is
present his evidence or rebut the evidence
PROCEDURALLY illegal.
presented against him; Note: Trial type
In substantively illegal dismissal, the employee is hearing is not required.
entitled to reinstatement. c. A written notice of termination served on the
employee indicating that upon due
In procedurally illegal dismissal, the employee remains consideration of all the circumstances,
dismissed, but the employer is liable for nominal grounds have been established to justify his
damages. termination.

Substantive due process

- Mandates that an employee may be dismissed 2. For termination of employment based on

based only on just or authorized cause. authorized causes.
Procedural due process
 a. A written notice to the employee and the a. Notice which apprises the employee of
appropriate Regional Office of the the particular acts or omissions for
Department; which his dismissal is sought;
b. Notice is to individual employees; b. The subsequent notice which informs
c. Notice must be served 30 days before the the employee of the employer’s
employee’s separation take effect. decision to dismiss him.
 Procedure is mandatory, in the absence of which
3. If the termination is brought about by the any judgment reached by management is void
completion of the contract or phrase. and inexistent.

If the termination is brought about by the failure 2. For the authorized causes under Art. 298 and
of an employee to meet the standards of the 299, two notices are also required:
employer in the case of probationary a. One to the employee to be separated and
employment, it shall be sufficient that a written another to the DOLE.
notice is served the employee within a b. Notice is to individual employees.
reasonable time from the effective date of c. Each notice must be served 30 days before
termination. the employee’s separation takes effect.

Preventive Suspension and Investigation Do Not

 The failure of the employer to give the
Replace Two-Notice Requirement of Due Process;
employee the benefits of hearing and an
Defect Not Cured by NLRC Hearings
investigation before his termination constitutes
an infringement of his constitutional right to due De Vera vs. NLRC
process of law.
Ruling:
Two-Notice Rule Requirement for the JUST and
AUTHORIZED CAUSES The Court held that the employer is mandated to
furnish the employee sought to be dismissed two
1. For the dismissal under just causes the law notices, the written charge and the notice of dismissal,
requires the employer to furnish the worker if, after hearing, dismissal is indeed warranted.
sought to be dismissed with two notices before
terminating his employment: The employer claims that the alleged defects in due
process were cured when the employee presented his
case and arguments before the NLRC.
This is untenable. The case before the NLRC is the King of Kings Transport vs. Mamac
petitioner’s complaint for illegal dismissal. At that
Ruling:
time, he had already been terminated. What the Labor
Code sets forth is the procedure PRIOR TO The first notice written notice to be served on the
DISMISSAL. “Fire the employee, and let him explain employees should contain the specific causes or
later” is not in accord with the due process under the grounds for termination against them and a directive
law. that the employees are given the opportunity to
submit their written explanation within a reasonable
Consultation with Union, Insufficient Notice
period.
Century Textile Mills vs. NLRC
Reasonable Opportunity (Omnibus Rules)
Ruling:
- Every kind of assistance that management must
The employer’s prior consultation with the labor union accord to the employees to enable them to
with which the employee is affiliated is legally prepare adequately for their defenses.
insufficient. Such consultation or consent is not a - Be construed as a period of at least 5 calendar
substitute for actual observance of those rights of the days from receipt of the notice to give the
employee. The employee can waive those rights, if he employees an opportunity
chooses, but the union cannot waive them for him. o to study the accusation against them,
o consult a union official or lawyer,
Notice and opportunity to be heard must be accorded
o gather data and evidence
by an employer even though the employee does not
o decide on the defenses they will raise
affirmatively demand them.
against the complaint.
 The notice should contain a detailed narration of
the facts and circumstances that will serve as
basis for the charge against the employees.
 The notice should specifically mention which
company rules, if any, are violated and/or which
among the grounds under Art. 297 is being
charged against the employees.

Two-Notice Rule; Five Days to Explain

After determining that termination of employment is
justified, the employers shall serve the employees a
Meaning of Ample Opportunity to be Heard
written notice of termination indicating that:
Perez vs. Philippine Telegraph
1. All circumstances involving the charge against
the employees have been considered; Ruling:
2. Grounds have been established to justify the
severance of their employment. “Ample opportunity to be heard”

Ample Opportunity Should be Prior to Employee’s - Means any meaningful opportunity given to the
Dismissal employees to answer the charged against him
and submit evidence in support of his defense,
Ruffy vs. NLRC whether in a hearing, conference, or some other
fair, just and reasonable way.
Ruling:

An employee must be given notice and an ample - A formal hearing or conference becomes
opportunity to prior to his dismissal to adequately mandatory only when requested by the
prepare for hi defense. – it must be done in the natural employee in writing or substantial evidentiary
sequence of notice, hearing, and judgment. disputes exist or a company rule or practice
requires it, or when similar circumstances justify
In the case at bar, the employee, prior to investigation,
it.
was informed that his services had been terminated.
He was made to air his side subsequently, it is true,
- Prevails over the hearing or conference
yet the fact remains that such an opportunity, he has
requirement in the implementing rules and
been dismissed from the firm.
regulations.
Ample opportunity means every kind of assistance that
Participation of Counsel
management must accord to the employee to enable
him to prepare adequately for his defense. In this case, Lorlene Gonzales vs. Ateneo de Davao University
there really was nothing to defend, because the fact is,
Ruling:
he had been fired.
Upon being notified of her termination, she has the
right to demand compliance with the basic
requirements of procedural and substantive due
process. Ample opportunity must be accorded the
employee to defend herself either personally and/or
with assistance of a representative; to know the nature
of her offense, to cross examine and confront the
witnesses.

Weingarten Right: Union Representation during

Investigation

Contours and Limits of the Weingarten Rule

o right to union representation inheres in Due Process Not Rigid or Formulaic; Valid Suspension
without Two Notices
Sec. 7’s guarantee of the right of the
employees to act in concert for mutual Caong vs. Regualos
aid protection;
o the right arises only in situations where Ruling:
the employee requests representation; There was no dismissal, only a suspension and the
o the employee’s right to request suspension is valid. The Court says the jeepney
representation as a condition to owner’s policy of suspending drivers who fail to remit
participation in the interview is limited to the full amount of the boundary was fair and
the situations where the employee reasonable under the circumstances.
reasonably believes the investigation will
result in disciplinary action; Due process is not a matter of strict or rigid or
o exercise of the right may not interfere formulaic process. The essence of due process is
simply the opportunity to explain one’s side or an
with the legitimate employer
opportunity to seek a reconsideration of the action or
prerogatives;
ruling complained of.
o the employer may carry on its inquiry
without interviewing the employee, Procedural Due Process Not Wiped Away by Union
o the employer has no duty to bargain with Security Clause
any union representative who may be
Carino vs. NLRC
permitted to attend the investigatory
interview. Ruling:
The Company had acted in bad faith in dismissing In the case at bar, while it is true that the CBA
Carino without giving him a chance to present his side between OFC and the SAMAHAN provided for the
in his controversy with his own union. The Company’s dismissal of employees who have not maintained their
precipitate action in dismissing Carino is an indication membership in the union, the manner in which the
of lack of good faith. dismissal was enforced left much to be desired in
terms of the respect for the right of petitioners to
procedural due process.

In terminating the employment of an employee by

enforcing the union security clause, the employer
needs only to determine and prove that:
The company had failed to accord Carino the latter’s
right to procedural due process. The right of an  The union security clause is applicable;
employee to be informed of the charges against him  The union is requesting for enforcement of the
and to reasonable opportunity to present his side in a union security provisions in the CBA;
controversy with either the company or his union, is  There is sufficient evidence to support the
not wiped away by a union security clause or a union union’s decision to expel the employee from the
shop clause in a CBA. union.

An employee is entitled to be protected not only from

a company which yield to the temptation of swift and
arbitrary expulsion from membership and hence,
dismissal from his job.

Ferrrer vs. NLRC

Ruling:

A CBA is the law between the company and the union

and compliance is mandated by the express policy to
give protection to labor. Policy should be given
paramount consideration unless otherwise provided for
by law.
  Separation pay as employer’s statutory
obligation in cases of legal termination due to
authorized causes;
 Separation pay as financial assistance, as an act
of social justice, even in case of legal dismissal,
at court’s discretion;
 Separation pay in lieu of reinstatement in illegal
dismissal cases where the employee is ordered
reinstated but reinstatement is not feasible;
 Separation pay as an employment benefit
granted in a CBA or company policy;

Consequences of Termination

Key Questions:

1. If the termination is based on any authorized

cause, the employee is entitled to separation pay, and
nothing if it is due to a just cause. What are the 3. May backwages be awarded on appeal if the
exceptions? employee did not appeal its denial?
The general rule is continuance on the job. The
4. In what situations may reinstatement be denied
exception is payment of separation pay in lieu of the
even if the termination is invalid?
job.

No valid reason-No dismissal.

5. In termination disputes, what is indemnity? May
2. What are the kinds of separation pay? it be imposed in addition to backwages?

Separation pay may be viewed in four ways: 6. Is a manager personally liable for the illegal
dismissal of an employee?