Labor Relations Part 2 by Atty. Anselmo S.

Rodiel IV
B. Termination by employer
1. Requisites for validity
1. Substantive due process; Just cause (6 mentioned in the Labor Code)
1. Serious Misconduct - Serious misconduct in connection with his
work
2. Willful Disobedience - Willful disobedience of the lawful orders of
the employer in connection with his work (COVID vax is unlawful
because not connected to work)
3. Neglect - Gross AND habitual neglect
4. Fraud or Breach of trust - Fraud/Willful breach of the trust reposed
in him by the employer
5. Crime - Commission of crime - employer or immediate family
members or representatives
6. Other - Other analogous. (Art. 297)
1. Serious misconduct; requisites (MSCU)
1. Misconduct
1. Misconduct is defined as the transgression of some
established and definite rule of action, willful in character,
and with wrongful intent. (DO 147-15)
2. Grave and aggravated character (Serious)
3. In Connection with his work
4. Unfit to continue working for the employer. (DO No. 147-15)
1. The use of expletives (anak ng puta/putangina) as a
casual expression of surprise or exasperation is not
serious misconduct per se that warrants an employee's
dismissal.
1. It is not serious nor does it render the employee unfit.
Hence, it is not a just cause for termination.
2. However, the refusal to acknowledge this mistake and the
attempt to cause further damage and distress to a minor
student cannot be mere errors of judgment. Petitioner's
subsequent acts are willful, which negate professionalism
in his behavior. They contradict a professor's
responsibility of giving primacy to the students' interests
and respecting the institution in which he teaches.
(Adamson University Faculty and Employees Union v.
Adamson University, 2020, Leonen)
2. Insubordination/Willful disobedience; requisites
(DWLCK)
 1. Disobedience/insubordination
1. Disobedience or insubordination means the refusal to
obey some order of a superior. (DO NO. 147-15)
2. Willful
3. Lawful/reasonable order
4. In Connection to his work
5. Made Known order to employee
1. Exception to made known: when the rule violated is
fundamental and universal, i.e., reckless driving
3. Gross and habitual neglect; requisites
(NGH)
1. Neglect
2. Gross
3. Habitual
1. The neglect of duties must not only be gross, but also
habitual. (Cavite v Marquez, 2013; Robustan v CA, 2021,
Leonen)
2. Gross negligence has been defined as the want or
absence of even slight care or diligence as to amount to a
reckless disregard of the safety of the person or property.
(Robustan, Inc. v. Court of Appeals, 2021, Leonen)
(Gross - want of care - reckless disregard)
3. Habitual negligence is repeated failure to perform one’s
duties over a period of time depending upon the
circumstances. (DO 147-15)
(Habitual - repeated fail)
1. An unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual
neglect of duties. Poor or unsatisfactory rating alone
does not mean neglect. (INC v Camporedondo, 2015)
4. Fraud or willful breach of trust reposed; requisites
(ABWCC)
1. Act/omission/concealment
2. Breach of legal duty/trust/confidence reposed
3. Willful
4. In Connection of employee’s work
5. Committed against the employer/representative. (DO 147-15)
5. Commission of crime; requisites
1. Act/omission punishable by law
2. Committed against any of the following: (EFR)
1. Employer
2. Immediate Family
3. Representatives
 3. Conviction is NOT indispensable for this ground. (Starlite
Plastic v NLRC, 1989)
6. Other analogous; requisites
1. Analogous causes must be voluntary/WILLFUL act or
omission of employee. (Nadura v Benguet Consolidated,
1962)
2. Further, no act or omission can be considered analogous
unless EXPRESSLY SPECIFIED in the company rules or
policies. (DO No. 147-15)
1. Golangco: Says no need to be expressly specified in the
company rules.
2. As example, theft of co-employee’s property is
“analogous” to serious misconduct. It does not have to be
written in the company rules or policies. (John Hancock
Life Insurance v Joanna Davis, 2008)
1. In the case, Davis was discovered by the NBI as the
person who stole the wallet of the corporate affairs
manager, during office hours.
2. This showed the moral depravity of Davis, which was
deemed analogous to serious misconduct.
3. “Gross efficiency” is analogous to gross and habitual
neglect. (Aliling v Feliciano, 2012)
1. In the case, an employee’s failure to meet sales or work
quotas falls under the concept of gross inefficiency, which
in turn is analogous to gross neglect of duty that is a just
cause for dismissal under Article 282 of the Code.
2. However, in order for the quota imposed to be considered
a valid productivity standard and thereby validate a
dismissal, management’s prerogative of fixing the quota
must be exercised in good faith for the advancement of its
interest.
4. The doctrine of incompatibility provides that where the
employee has done something incompatible to the faithful
performance of his duties, his employer has a just cause of
terminating his employment. (Manila Chauffers v Bachrach
Motor, 1940)
7. Abandonment; analogous to gross and habitual neglect;
requisites
(FWIO)
1. Failed to report to work/absent without valid or justifiable
reason
2. Clear intention to sever employment relationship manifested
by overt act, i.e., failure to report to work. (CRC v NRLC,
 2.

2009)
(Failed to report + without valid + Intent to sever +
manifested by overt act)
1. Mere absence or failure to report to work is insufficient.
There must be CLEAR PROOF that is has no valid reason
AND there is intention to sever. The second requisite is
the determining factor. (Aliten v U-Need Lumber, 2006)
2. The burden of proof that there was abandonment lies with
the employer.
3. Where the employee takes steps to protest his layoff, it
cannot be said that he has abandoned his work because a
charge of abandonment is totally inconsistent with the
immediate filing of a complaint for illegal dismissal, more
so when it includes a prayer for reinstatement. (Robustan,
Inc. v. Court of Appeals, 2021, Leonen)
4. Illustration of abandonment of work:
1. Arriola abandoned his employment with Pilipino Star
Ngayon, Inc. Assuming that Arriola started writing for
Imbestigador only on February 17, 2003, he
nonetheless failed to report for work at Pilipino Star
Ngayon, Inc. after November 15, 1999 and only filed
his illegal dismissal complaint on November 15, 2002.
He took three years and one day to remedy his
dismissal. This shows his clear intention to sever his
employment with Pilipino Star Ngayon, Inc. (Arriola v
Pilipino Star, 2014, Leonen)
8. Loss of confidence; analogous to fraud/willful breach of trust;
requisites
(ALPS)
1. Act/omission/concealment
2. Loss - Justifies loss of trust and confidence
3. Position Confidence - Holding a position of trust and
confidence
4. Simulated - Loss of trust and confidence is not simulated/
subterfuge/must be genuine/not afterthought to justify prior
bad faith.
(DO 147-15)
1. When is an employee considered to be holding a position
of trust and confidence?
1. Managerial
2. Supervisory
3. Those who, in the normal and routine exercise of
functions, regularly handle significant amounts of
 3.

money of property of the employer. (DO No. 147-15;

WU-P v Reyes, 2014)
1. An example of a person holding trust and
confidence is a kasambahay and a bank teller.
2. Robustan v CA, 2021, Leonen (3 grounds: Loss of
confidence, Gross and habitual neglect, and
Abandonment of Work)
1. Loss of confidence
1. It is INAPPLICABLE because respondent did not
occupy a position of confidence. Further, the act
that justifies loss of trust and confidence was not
proven.
2. Respondent was the service engineer of the
company, tasked to resolve customer needs,
concerns, and problems for a particular medical/
hospital equipment. He was also tasked to carry
out various maintenance and construction works.
2. Gross and habitual neglect
1. It is INAPPLICABLE. Even if respondent were
negligent, such negligence must be proven to be
gross and habitual. Neither the records nor the
Petition establishes the required wantonness and
habituality of respondent’s neglect that would
merit his dismissal.
2. Petitioner refers to facts allegedly established in
prior proceedings and concludes that the simple
fact of loss of property amounted to gross
negligence.
3. However, the records indicate that respondent
was willing to admit the consequences of the loss
and even offered to pay for the lost properties'
value. This directly contradicts the "conscious
indifference to consequences"indicative of gross
and habitual neglect. Thus, there was no basis to
terminate respondent's employment for gross and
habitual neglect of duty.
3. Abandonment of work
1. It is INAPPLICABLE. Once the respondent was
informed that he was dismissed, he cannot be
expected to report back to work, even to turn
over his work.
2. The records would indicate that respondent’s
employment had already been terminated by the
 2.

time he supposedly abandoned his work. Nothing

in the records shows respondent’s failure to
report for work prior to his receipt of the January
4, 2010 termination notice.
3. Further, where the employee takes steps to
protest his layoff, it cannot be said that he has
abandoned his work because a charge of
abandonment is totally inconsistent with the
immediate filing of a complaint for illegal
dismissal, more so when it includes a prayer for
reinstatement.
Serious Willful Gross and Abandonment Gross
misconduct disobedience/ habitual (FWIO) inefficiency
(MSCU) Insubordinatio neglect (NGH) (Analogous) (Analogous)
n (DWLCK)
1. Misconduct 1. 1. Neglect 1. Failed to
2. Serious Disobedience/ 2. Gross report to work
3. Connection insubordi. 3 Habitual 2. Without
with his work 2. Willful valid reason
4. Unfit to 3. Lawful/ 3. Intention to
continue reasonable sever
working for order 4. Overt act
the employer. 4. Connection manifesting
to his work intention
5. Known
order to
employee
Fraud/Willful Loss of Commission of
breach of the confidence crime against
trust reposed (ALPS) employer/
by employer (Analogous) family/
(ABWCC) represen.
(AEC)
1. Act/ 1. Act/ 1. Act/
omission/ omission/ omission
concealment concealment punish by law
2. Breach of 2. Loss of 2. Employer;
legal duty/ confidence Family; Rep
trust/ 3. Position of 3. Conviction
3. Willful confidence NOT
4. Connection 4. Simulated indispensable
employee not
work
5. Committed
employer/rep.
trust reposed (ALPS) employer/
by employer (Analogous) family/
(ABWCC) represen.
(AEC)
1. Act/ 1. Act/ 1. Act/
omission/ omission/ omission
concealment concealment punish by law
2. Breach of 2. Loss of 2. Employer;
legal duty/ confidence Family; Rep
trust/ 3. Position of 3. Conviction
3. Willful confidence NOT
4. Connection 4. Simulated indispensable
employee not
work
5. Committed
employer/rep.
2. Substantive due process; Authorized causes (5 mentioned in Labor Code)
1. Labor-saving devices; Requisites
(IGVO to show why; F to show who will be removed)
1. Introduction of machine
2. Good faith
3. Valid purpose, such as to save labor cost
4. No other option but to terminate the employees affected
5. Fair and reasonable criteria in selecting employees to be
terminated. (DO No. 147-15)
2. Redundancy; Requisites
(SIGP to show why; F to show who will be removed)
1. Superfluous positions or services
2. In excess of what is reasonably demanded by the requirements of
the enterprise
3. Good faith in abolishing positions
4. Adequate Proof of redundancy, such as new staffing pattern,
feasibility studies/proposal, on the viability of the newly created
positions, job description, and the approval by the management of
the restructuring.
5. Fair and reasonable criteria in selecting the employees to be
terminated (DO No. 147-15)
1. Redundancy may be the outcome of a number of factors, such
as over hiring of employees, decreased volume of business, or
dropping a particular product line or service previously
undertaken by the enterprise. (Coats Manila Bay v Ortega,
2009) Even reorganization of departments may lead to
redundancy.
2. To establish good faith, there must be adequate proof that the
services of the employees are in excess of what is required of
the company. (Acosta v. Matiere SAS, 2019, Leonen)
3. Further, a fair and reasonable criteria must be shown to
 3.
determine what positions should become redundant. (Acosta
v. Matiere SAS, 2019, Leonen)
1. In the case, respondents' only basis for declaring
petitioner's position redundant was that his function,
which was to monitor the delivery of supplies, became
unnecessary upon completion of the shipments. Hence,
the Court declared the redundancy illegal.
3. Retrenchment to prevent losses; Requisites
(NSPG to show why; F to show who will be removed)
1. Reasonable necessary and likely to prevent business losses
2. If losses already incurred, not merely de minimis, but substantial,
serious, actual, and real, or
If losses only expected, reasonably imminent (If merely to
prevent losses, the losses must be “reasonably imminent”
already.)
3. Proven by sufficient and convincing evidence, i.e., financial
statements over a period of time
4. Good faith for the advancement of interest of employer and not to
defeat the right to security of tenure, i.e., there is indeed sharp
losses
5. Fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained. (DO No. 147-15)
1. Various Leonen decisions invalidated the retrenchment due to
lack of fair and reasonable criteria.
1. Examples of this criteria are 1) status (i.e., whether part-
time/full-time or casual/regular etc.), 2) seniority, 3)
efficiency, 4) physical fitness, 5) age, 6) financial hardship
for certain workers, and 7) effectivity on the job.
1. This Court considered SENIORITY as crucial facet of
fair and reasonable criterion for effecting
retrenchment. Hence, a retrenchment scheme without
taking seniority into account rendered the
retrenchment invalid. (La Consolacion College of
Manila v. Pascua, 2018, Leonen)
1. In the case, there is no dispute about the
respondent's seniority and full-time status.
Meanwhile, the employee retained was hired
recently and was serving part-time. Hence, the
seniority of the respondent is the criteria used for
retrenching her instead of retaining her, i.e., that
she became the highest paid employee due to
seniority.
2. Jurisprudence requires that the necessity of retrenchment be
 2.
demonstrated by an independently audited financial
statements. Moreover, it is not enough that it presents its
audited financial statement for the year that retrenchment
was undertaken for even as it may be incurring losses for that
year, its overall financial status may already be improving.
Thus, it must "also show that its losses increased through a
period of time and that the condition of the company is not
likely to improve in the near future." (La Consolacion College
of Manila v. Pascua, 2018, Leonen)
3. In Do No. 150-16 (security guards), the lack of service
assignment of the security guard for a continuous period of 6
months is treated as a retrenchment.
4. There is no difference between retrenchment and partial
closure/cessation of business due to financial losses.
Obviously, there is difference if it is not due to financial
losses. (Sanoh Fulton v Bernardo, 2013)
4. Last in, first out rule; fair and reasonable criteria must take into
account SENIORITY
1. Under this rule, when there are two or more employees occupying
the same position, the LAST ONE employed shall be the FIRST
ONE to go. (Maya Farms v NLRC, 1994) This rule applies to
installation of labor-saving devices, redundancy, and
retrenchment. (DO 147-15)
2. Why? Because of the requisite of fair and reasonable criteria.
5. Closure or cessation of establishment
(CGO)
1. Decision to close or cease operation
2. Good faith decision
3. No other option but to close or cease. (DO 147-15)
1. If the establishment was closed and another corporation is
organized, continuing the business of the former, there is
illegal dismissal, since the decision was not made in good
faith. (Labor answer)
2. If asked in Mercantile law, state the requisites of piercing the
corporate veil on fraud cases.
6. Disease + continue is prohibited by law/prejudicial to him co-
employees. (Art. 298)
(DPC6)
1. Suffering from disease
2. Continued employment is prohibited by law/prejudicial to his
health and his co-employees
3. Certification by competent public health authority
4. The disease is incurable for 6 months even with a proper
 4.
treatment
1. Why 6 months? Because after 6 months, it is deemed a
termination of employment already, and not merely a
suspension of employment.
2. If it is curable within 6 months, the employer shall not
terminate him, but ask him to take a leave. Upon restoration to
normal health, he shall be immediately reinstated. (IRR of
Labor Code)
Labor-saving Redundancy Retrenchment Closure of Disease
devices (SIGPF) (NSGPF) establishment (DPC6)
(IVGOF) (CGO)
1. 1. 1. Necessary 1. Decision 1. Disease
Introduction Superfluous to prevent to Close 2. Continue
machine positions loss 2. Good faith Prejudicial
2. Valid 2. In excess 2. decision 3.
purpose requirements Substantial/ 3. No Other Certification
(save labor 3. Good faith imminent option CPHA
costs) 4. Proof 3. Good faith 4. Incurable
3. Good faith adequate 4. Proven for 6 mo.
4. No Other 5. Fair/ evidence
option reason. 5. Fair/
5. Fair/ criteria reason.
reason. criteria
criteria
Authorized cause Separation pay (no loss - 1 month; if
loss + disease - 1 month or 1/2 )
Installation of labor-saving devices 1 month pay for every year of service
Redundancy 1 month pay for every year of service
Retrenchment prevent loss 1 month pay OR 1/2 month for every year
of service
Closure NOT due to losses 1 month pay OR 1/2 month for every year
of service
Closure due to losses No separation pay
Disease 1 month pay of 1/2 month for every
year of service
Redundancy Retrenchment
For purposes of economy, To prevent losses (substantial or
the company decides to reorganize reasonably imminent)
the department - impose the duties of
one department to another - hence,
the job of the former becomes
unnecessary. (Caffco International v
Office of the Minister of Labor, 1992)
Equivalent to 1 month pay for every Equivalent to 1 month pay or at least
year of service. (Art. 298) 1/2 month for every year of service.
Redundancy Retrenchment
For purposes of economy, To prevent losses (substantial or
the company decides to reorganize reasonably imminent)
the department - impose the duties of
one department to another - hence,
the job of the former becomes
unnecessary. (Caffco International v
Office of the Minister of Labor, 1992)
Equivalent to 1 month pay for every Equivalent to 1 month pay or at least
year of service. (Art. 298) 1/2 month for every year of service.
(Art. 298)
Even if the business is doing well, the Because of losses in business, or lack
employer can still validly dismiss an of work, or reduction of volume of
employee from the service due to business, the employer may dismiss
redundancy if that employee’s position the employee. (Waterfront Cebu Hotel
has already become in excess of what v Jimenez, 2012)
the employer’s enterprise. (Arabit v
Jardine Pacific Finance, 2014)
3. Procedural due process
1. Just causes - twin-notice requirement + hearing
1. Notice of the charge
1. The first written notice must be given specifying the grounds for
termination, among others.
2. Notice of dismissal
1. The second written notice must be given, after hearing or
opportunity to be heard, indicating that the grounds have been
established to justify the severance of employment.
3. Hearing
1. After serving the first notice, the employer should afford the
employee ample opportunity to be heard and to defend himself/
herself with the assistance of his/her representative if he/she so
desires, as provided in Article 299 (b) of the Labor Code,
2. “Ample opportunity to be heard” means any meaningful
opportunity (verbal or written) given to the employee to answer
the charges against him/her and submit evidence in support of
his/her defense, whether in a hearing, conference or some other
fair, just, and reasonable way. A formal hearing or conference
becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rule
or practice requires it, or when similar circumstances justify it.
(DO 147-15)
3. Therefore, while the phrase “ample opportunity to be heard” may
in fact include an actual hearing, it is not limited to a formal
hearing only. In other words, the existence of an actual, formal
 3.

“trial-type” hearing, although preferred, is not absolutely

necessary to satisfy the employee’s right to be heard. This Court
has consistently ruled that the due process requirement in cases
of termination of employment does not require an actual or formal
hearing. (Perez vs. Philippine Telegraph and Telephone Company,
April 7, 2009)
2. Authorized causes - written notice at least 1 month in advance
1. The employer must serve a written notice to the employee and the
Secretary at least 1 month in advance before the intended date of
termination. (Art. 283)
3. Disease - similar to procedural due process for just causes. (Deoferio vs.
Intel Technology Philippines, Inc., G.R. No. 202996, June 18, 2014)
4. Interplay of compliance with substantial and procedural due process
1. Valid - if both substantive and procedural due process were observed.
(PAL v NLRC, 2000)
2. Valid - if substantive due process was observed but without procedural
due process. (Agabon v NLRC, 2004)
3. Invalid - Without substantive and procedural due process. (Lambert
Pawnbrokers v Binamira, 2004)
4. Invalid - Without substantive due process but procedural process is
observed. (ACD Investigation v Daquera, 2004)
1. In Agabon v NLRC, 2004, where the dismissal is for a just cause/
authorized cause, the lack of procedural due process does NOT nullify
the dismissal NOR render it illegal NOR render it ineffectual. However,
the employer should indemnify the employee for violation of his right
to procedural due process, in the form of NOMINAL DAMAGES.
2. In short, the dismissal is valid, subject to indemnification for damages.
1. Existing jurisprudence on the amount of nominal damages to be
awarded:
1. Just causes - P30,000
2. Authorized causes - P50,000
3. Authorized causes (serious business losses) - May be lighter.
(Industrial Timber Corp. v Ababon, 2006; Sangwoo v Sangwoo
Employee Union, 2013)
5. Contractual due process rule
1. If there is an existing company policy enunciating the procedural due
process, compliance ALONE with the statutory due process would NOT
suffice. Additionally, there must be compliance with the company-
prescribed due process. (Abbott v Alcaraz, 2013)
1. In Abbott, there was a company procedure for evaluating probationary
employees. Since the company did not follow the same, the employee
must be indemnified for violation of his rights, in the form of nominal
damages.
6. Preventive suspension
1. Preventive suspension is a disciplinary measure for the protection of
company property, pending the investigation of any alleged malfeasance
committed by the employee. He may be placed under preventive
suspension if his continued employment POSES A SERIOUS AND
IMMINENT THREAT TO THE LIFE OR PROPERTY of the employer/co-
employees. (Gatbonton v NLRC, 2006)
(pending investigation + serious and imminent threat to life/property)
2. No preventive suspension shall last longer than 30 days. However, the
employer may extend the same provided that during the period of
extension, he pays the wages/benefits of the worker. (DO No. 09-97)
7. Illegal dismissal (Part of termination of employee)
1. Kinds
1. No just or authorized cause
1. Where there is no showing of clear, valid, and legal cause of
termination, the law considers it a case of illegal dismissal.
(General Baptist College v NLRC, 1993)
2. Constructive dismissal
1. When is there constructive dismissal? (IDDS)
1. Impossible -
When continued employment is rendered impossible,
unreasonable, or unlikely;
2. Demotion/Diminution -
When there is demotion in rank/diminution in pay
3. Discrimination Clear -
When a clear discrimination, insensibility, or disdain makes
the employment unbearable to the employee
4. Suspension beyond maximum -
When the suspension went beyond the maximum period
allowed by law. (Hyatt Taxi Services v Catinoy, 2001)
2. What is the test of constructive dismissal?
1. The test is whether a reasonable person would be compelled
to give up his position under the circumstances. (McMer v
NLRC, 2014)
1. In the Bar, combine clear act of discrimination +
compelled to give up position under the circumstances (of
discrimination)
3. Burden of proof
1. In constructive dismissal cases, the employee has the burden
to prove first the fact of dismissal by substantial evidence.
2. Once proven, the burden shifts to the employer to prove that
the dismissal was for a just/authorized cause. (Galang v Boie
Takeda Chemicals, 2016)
4. Constructive dismissal v Management Prerogative
1. Not every inconvenience, disruption, difficulty, or
disadvantage that an employee must endure sustains a
finding of constructive dismissal. It is an employer's right to
investigate acts of wrongdoing by employees. Employees
involved in such investigations cannot ipso facto claim that
employers are out to get them. (Philippine Span Asia Carriers
Corp. v. Pelayo, 2018, Leonen)
2. As it is a question of whether an employer acted fairly, it is
inexorable that any allegation of constructive dismissal be
contrasted with the validity of exercising management
prerogative.
1. Transferring employees, if done fairly and in good faith, is
a valid exercise of management prerogative and will not
amount to constructive dismissal. (Manalo v. Ateneo de
Naga University, 2015, Leonen)
2. Further, the removal of Arriola’s column from Pilipino Star
Ngayon, Inc.’s newspaper is not tantamount to a
termination of employment. Instead, this is a valid
exercise of management prerogative because a
newspaper publisher has the right to determine what
columns to print in its newspaper. (Arriola v Pilipino Star,
2014, Leonen)
5. Liability of officers
1. As a general rule, officers are NOT personally liable for
corporate obligation.
2. As exception, the following requisites must be present:
1. the director or officer assented to the patently unlawful
acts of the corporation, or that the director or officer was
guilty of gross negligence or bad faith; and
2. there must be proof that the director or officer acted in
bad faith. (Lozada v Mendoza, 2016)
6. Reliefs from illegal dismissal
1. Reinstatement without loss of seniority rights and other
privileges
(in short, reinstated in the same position)
2. Full backwages, inclusive of allowances, and to his other
benefits (or their monetary equivalent)
(in short, give everything that should have been given)
1. Computed from the time his compensation was withheld
2. Up to the time of his actual reinstatement. (Art. 294)
3. Reinstatement
1. Reinstatement means restoration to the former position
 1.
occupied prior to dismissal or to substantially equivalent
position.
2. Hence, it does not mean promotion. Promotion is based
primarily on an employee’s performance during a certain
period. Just because their contemporaries are already
occupying higher positions does not automatically entitle
respondents to similar positions. (Asian Terminals v
Villanueva, 2006)
4. Kinds of Reinstatement
1. Actual reinstatement - admitted back to work
2. Payroll reinstatement - merely reinstates in the payroll.
(University of Immaculate Conception v Secretary of
Labor, 2005)
1. Payroll reinstatement is allowed only in case of the
immediately executory decision of the labor
arbiter.
2. Actual reinstatement is always required after a final
and executory judgment in the labor dispute.
5. What are the provisions regarding reinstatement in the
Code?
1. Labor Arbiter - Reinstatement of employee whose
dismissal was declared illegal by the Labor Arbiter. This
decision is self-executory and must be implemented
during the pendency of the appeal. (Art. 229)
2. Secretary of Labor - Reinstatement as a result of
suspension of the effects by the Secretary in the even of
prima facie finding that the termination may cause a
serious labor dispute or in implementation of mass lay-off.
(Art. 229(b))
3. Final and executory judgment - Reinstatement as a
relief to an employee whose dismissal is declared illegal in
a final and executory judgment. (Art. 294)
4. Resumption of operation - Reinstatement by the
employer after resumption of operation after a bona fide
suspension of the same for a period not exceeding 6
months. (Art. 301)
6. What if the position is already occupied by another person at
the time of reinstatement?
1. Finally, we cannot ignore the undisputed fact that the
respondent company has already hired a replacement for
the petitioner. Thus, the petitioner's reinstatement to his
former position would merely compound the injustice. It
would not be justified for the respondent company to
 terminate the services of the person who was hired to
replace the petitioner just so the latter could assume his
former position. Neither should we order the respondent
company to create a new position for sales administrative
clerk. Instead, the proper remedy is to reinstate him in
an existing substantially equivalent position. (Magtoto
v NLRC, 1985) (obiter dictum)
2. On the other hand, in government offices, when a regular
government employee was illegally dismissed, his position
never became vacant. Hence, the incumbency of the new
appointee is temporary and he must give way to the
employee who was illegally dismissed. (Campol v Mayor
Balao-As, 2016)
1. Why is this the rule for government? Because in
government, there is limited number of positions.
7. What if the former position of the illegally dismissed
employee was abolished?
1. If the position no longer exists at the time of as
reinstatement, he shall be given a substantially
equivalent position in the same establishment without
loss of seniority rights. (Magtoto v NLRC, 1985)
8. Can he be reinstated if he already found a new employment
during the pendency of the case?
1. Yes. The Court held in Gonzales v Hernandez that his
employment in the GSIS is no hindrance to his
reinstatement. We categorically stated that Gonzales had
the right to live during his appeal which necessarily
means that he can accept any form of employment.
This is in keeping with the constitutional value placed on
security of tenure. (Campol v Mayor Balao-As, 2016)
2. Hence, despite the definition of an “employee” in Art.
219(f), i.e., ULP/Labor dispute + he must not acquire a
substantially equivalent and regular employment, he can
still be reinstated.
9. When will “separation pay in leu of reinstatement” apply?
(Strained; Decides not to; Moot)
1. Doctrine of Strained Relations/No longer viable/
Antagonism - when the continued relationship between
the parties is no longer viable due to the strained relations
and antagonism between them. (Aliling v Feliciano, 2012)
1. Strained relations must be demonstrated as a fact
supported by evidence. It must be shown that the
"relationship between the employer and the employee
 1.

is indeed strained" as a consequence of the

controversy. (Claret School of Quezon City v. Sinday,
2019, Leonen)
2. When the employee decides NOT to be reinstated - in
his complaint, he does not pray for reinstatement but
asked for separation pay. (FF Marine v NLRC, 2005)
3. Moot and academic (death/insolvency/closure/old
age) - such as when the employee dies, or the employer
becomes insolvent, or the establishment was destroyed
by fire, or there is closure of business. (Price v Innodata,
2008)
10. How should separation pay in lieu of reinstatement be
computed?
1. The employee shall be entitled to separation pay
equivalent to 1 month salary for every year of service.
2. Reckoning period for separation pay in lieu of
reinstatement
1. FROM the time of dismissal
2. UP TO the time the decision becomes final and
executory.
3. Computation for separation pay in lieu of reinstatement be
computed
1. The salary rate must be the rate at the time of their
termination. (Dumapis v. Lepanto Consolidated Mining
Co., 2020)
2. The salary shall include the whole amount of salaries
plus all other guaranteed benefits and bonuses such
as COLA, 13th month pay, meal and transportation
allowances, holiday pay, SIL, fringe benefits, and just
share in the service charge.
(basic wage + guaranteed benefits - include in the
separation pay)
3. It shall also include the guaranteed salary increases,
i.e., salary increase due to wage orders.
4. However, it shall exclude salary increases and other
benefits or bonuses which are contingent or
dependent on variables such as an employee's merit
increase based on performance or longevity or the
company's financial status, i.e., productivity incentive
schemes. (Not guaranteed/contingent - exclude in
the separation pay) (Dumapis v. Lepanto
Consolidated Mining Co., 2020)
4. Backwages and separation pay in lieu of reinstatement are
 4.
distinct reliefs; Both may be awarded at the same time
1. The former is awarded as remuneration for the
employee's lost income from the erring employer due
to illegal dismissal. (Dumapis v Lepanto Consolidated
Mining Co., 2020, Caguioa Concurring Opinion)
2. The latter is given to alleviate the economic damage
suffered by an illegally dismissed employee. Hence,
an award of separation pay in lieu of reinstatement
does not bar an award of backwages. (Masagana
Concrete v NLRC, 1999)
1. In short, in case the employee decides not to be
reinstated, he is paid 1) backwages from the time
it was withheld up to the time the decision
becomes final and executory, and 2) separation
pay in lieu of reinstatement from the time of
dismissal up to the time the decision becomes
final and executory.
11. Backwages
1. Reckoning period for BACKWAGES:
1. Computed from the time his compensation was
withheld, i.e., illegal termination
2. Up to the time of his actual reinstatement. (Art. 294)
2. What if he was never reinstated?
1. Up to the time of finality of decision. (Dumapis v
Lepanto Consolidated Mining Co., 2020)
3. Computation for backwages
1. Same. Check the case of Dumapis v Lepanto
Consolidated Mining Co., 2020)
2. The salary rate must be the rate at the time of their
termination.
3. Verily, the Court now ordains the uniform rule that the
award of backwages and/or separation pay due to
illegally dismissed employees shall include all salary
increases and benefits granted under the law and
other government issuances, Collective Bargaining
Agreements, employment contracts, established
company policies and practices, and analogous
sources which the employees would have been
entitled to had they not been illegally dismissed.
4. On the other hand, salary increases and other
benefits which are contingent or dependent on
variables such as an employee's merit increase based
on performance or longevity or the company's
 4.

financial status shall not be included in the award.

(Dumapis v Lepanto Consolidated Mining Co., 2020)
8. Money claims arising from employer-employee relationship
1. Money claims arising from employer-employee relationship include money
claims specifically recoverable under the Labor Code, and demand for
unpaid retirement/separation benefits arising from CBA provisions. (De
Guzman, 1998)
2. Claims under Art. 291 of the Labor Code include OT pay, holiday pay, SIL,
leave pay, bonuses, NSDs, and illegal deductions by an employer. It also
covers claims arising from seafarer contracts. (Arriola v Pilipino Star, 2014,
Leonen)
3. What is the prescriptive period for money claims/damages consequent to
an ILLEGAL DISMISSAL?
1. These claims are governed by Article 1146 of the Civil Code, which
provides that “the following actions must be instituted within 4 years:
(1) Upon injury to the rights of the plaintiff.
1. Why do we treat this differently? Because an illegal dismissal case
is NOT a money claim. Further, the claim for backwages is merely
one of the reliefs which an illegally dismissed employee prays the
labor arbiter and the NLRC to render in his favor as a
consequence of the unlawful act committed by the employer.
(Arriola v Pilipino Star, 2014, Leonen)
4. What about other money claims NOT consequent to illegal dismissal, i.e.,
claim for illegal deduction?
1. All money claims arising from employer-employee relations, accruing
during the effectivity of this Code, shall be filed within 3 years from
the time the cause of action accrued; Otherwise, it is forever barred.
(Art. 306)
5. What about offenses penalized under the Labor Code?
1. Offenses penalized under this Code shall prescribed in 3 years.
2. Unfair labor practice shall be filed within 1 year from accrual of such
ULP; Otherwise, it is forever barred. (Art. 305)
Illegal dismissal, and claims as a 4 years (Civil Code)
consequence
Money claims arising from employer- 3 years
employee relationship
Offenses under the Code 3 years
Unfair labor practice 1 year
9. When not deemed dismissed; employee on floating status
1. Employment shall NOT be deemed terminated when:
1. Bona fide suspension NOT exceed 6 months - There is bona fide
suspension of operation of business or undertaking for a period not
 1.

exceeding 6 months
2. Military - The employee has to fulfill a military or civic duty. (Art. 301)
2. In both cases, the employer shall REINSTATE the employee to his former
position without loss of seniority rights,
if he INDICATES his desire to resume his work NOT later than 1 month:
1. From resumption of operations of his employer or
2. From his relief from the military or civic duty. (Art. 301)
3. When does floating status rule apply?
1. Security guards - This is applicable, traditionally, to security guards
who are temporarily sidelined from duty while waiting to be
transferred or assigned to a new post or client. (Nippon Housing v
Leynes, 2011)
2. Bona fide suspension of business - To other industries when, as a
consequence of the bona fide suspension of a business, an
employer’s constrained to put employees on a “floating status” for a
period not exceeding 6 months. (JPL Marketing Promotions v CA,
2005)
4. The suspension must be bona fide.
1. Clear economic reason - An employer must prove the existence of a
clear and compelling economic reason for the temporary shutdown of
its business or undertaking and that there were no available posts to
which the affected employee could be assigned.
2. Notify 1 month DOLE employee - In implementing this measure,
jurisprudence has set that the employer should notify the DOLE and
the affected employee, at least one month prior to the intended date
of suspension of business operations.
3. Good faith - The employer must also prove that it acted in good faith
in suspending its operations and in placing respondent on float.
(Facilities Managers v Villarta, 2021)
5. If the suspension is NOT bona fide, there is illegal dismissal.
6. How long may an employee’s floating status last?
1. Art. 301 may be applied to floating status employees by analogy.
(PT&T v NLRC)
2. Hence, it shall not exceed 6 months. (Art. 301)
3. During this period, there is temporary displacement of employee.
(Airborne Maintenance v Egos, 2019)
7. What is the effect if the bona fide suspension/floating status exceeds 6
months?
1. After the period of 6 months, the employees should either:
1. Be recalled to work or
2. Be permanently retrenched following the requirements of the law.
2. Failure to comply with this requirement would be tantamount to
dismissing the employees, and the employer would be held liable for
 2.

the same. (Airborne Maintenance v Egos, 2019)

3. Placing security guards on floating status is a valid exercise of
management prerogative. However, any such placement on off-detail
should not exceed six (6) months. Otherwise, constructive
dismissal shall be deemed to have occurred. (Padilla v Airborn
Security Service, 2017, Leonen)
_______________________________________________________________________________________
_______________________________________________________________________________________
________________
C. Termination by employee
1. Termination by employee means resignation. Resignation means the
VOLUNTARY ACT of the employee who finds himself in a situation where
personal reasons cannot be sacrificed in favor of the service, so much so that
he has no other choice but to dissociate from the employment. (Intertrod
Marine v NLRC, 1991)
2. Requisites:
1. Overt act of relinquishment
2. Intent to relinquish. (Mendoza v HMS Credit, 2011)
3. May a resignation be withdrawn?
1. Yes. It is withdrawable even if the employee called it irrevocable. However,
once the resignation is accepted, he no longer has a right to the job.
(Intertrod Marine v NLRC, 1991)
4. With notice to the employer
1. An employee may terminate the employment WITHOUT JUST CAUSE
2. by serving a WRITTEN NOTICE to the employer
3. At least 1 month in advance. (Art. 300)
4. Written acceptance by the employer of the resignation. (Shie Jie Corp v
NFL, 2005)
1. No notice was served - liable for damages. (Art. 300) However, the
resignation is still valid. (Serrano v NLRC, 2000)
2. The 1-month period can also be shortened. It is for the benefit of the
employer so he may insist on the full observance of the period OR
shorten it as he may deem necessary, or waive it completely.
(Hechanova v Matorre, 2013)
5. Without notice to the employer
1. An employee may put an end to the employment WITHOUT SERVING the
written notice on the employer for any of the following JUST CAUSES:
1. Insult - Serious insult
2. Inhuman - Inhuman and unbearable treatment
3. Crime - Commission of crime against the employee or his immediate
family members
4. Other - Other analogous. (Art. 300)
6. These grounds are merely for the NECESSITY OF NOTICE. It does not talk
 6.
about the right to separation pay.
1. If the topic is separation pay, we need to check whether the resignation
amounted to constructive dismissal.
Just causes of employer to terminate Just causes of employee to put an end
the employment to the employment (IICO)
Serious misconduct/Willful 1. Insult
disobedience/Gross and habitual 2. Inhuman
neglect/Fraud or breach of trust/ 3. Crime
Commission of crime/Other analogous 4. Other
causes
7. Distinguish voluntary resignation and constructive dismissal
Voluntary resignation Constructive Dismissal
Resignation means the VOLUNTARY Constructive dismissal is an act of
ACT of the employee who finds himself CLEAR DISCRIMINATION,
in a situation where personal reasons insensibility, or disdain by an employer
cannot be sacrificed in favor of the that becomes SO UNBEARABLE for the
service, so much so that he has no employee that it foreclosed any choice
other choice but to dissociate from the except to FOREGO HIS EMPLOYMENT.
employment. (Intertrod Marine v NLRC, (Hyatt Taxi v Catinoy, 2001)
1991)
To become valid, the test is there must The test of constructive dismissal is
be OVERT ACT of relinquishment and whether a reasonable person in the
INTENT to relinquish. (Doble v ABB, employee’s position would be
2017) COMPELLED TO GIVE UP his position.
(McMer v NLRC, 2014)
An employee who voluntarily resigned As a rule, entitled to reinstatement
is NOT entitled to separation pay, without loss of seniority rights and
unless stipulated in the employment payment of backwages. (Pido v NLRC,
contract/CBA/company policy/practice. 2007; Art. 294) As exception, the
(Travelaire v NLRC, 1998; Hanford employee can claim separation pay in
Philippines v Joseph, 2005) Legal lieu of reinstatement. (FF Marine v
basis? Separation pay is only given in NLRC, 2005)
case of authorized causes for
dismissal. Other causes of termination
of employment does not warrant
separation pay.
_______________________________________________________________________________________
_______________________________________________________________________________________
________________
D. Retirement
1. Retirement is a result of a bilateral act of the parties, that after reaching a
certain age, the employee consents to sever his employment with the
1.

employer. (Brion v South PH Union Mission, 1999)

2. Any employee in the private sector, upon reaching the retirement age,
regardless of the position/designation/status/manner of payment, shall be
covered. (IRR of RA 7641) Hence, this shall include:
1. Part-time employees (RA 7641)
2. Domestic helpers and employees in the personal service of another. (DO
No. 20 of 1994)
3. Who are exempted from the coverage of labor Code on retirement?
1. Government employees, including GOCC
2. Employees of Retail, Service, and Agricultural establishments regularly
not employing more than 10 employees. (IRR of Labor Code; Art. 302)
4. In what situations will Art. 302 apply?
1. No - No CBA/applicable employment contract providing for retirement
benefits
2. Less - CBA/applicable employment contract BUT benefits are LESS than
those provided in Art. 302.
5. When is an employee eligible for retirement under Art. 302?
1. Optional - Upon reaching at least 60 years old
Compulsory - Upon reaching 65 years old; AND
2. Served at least for 5 years in the same establishment
6. What is the amount of retirement benefits under Art. 302?
1. He is entitled to retirement pay equivalent to:
1. At least 1/2 month salary for EVERY YEAR of service
1. Fraction of at least 6 months is considered as 1 whole year
2. 1/2 month salary means:
1. 15 days +
2. 2.5 days (1/12 of 13th month) +
3. 5 days (SIL)
= 22.5 days
7. Violation of this provision - unlawful - subject to penal provisions under Art.
288.
8. Nothing herein shall deprive the employee of benefits which he is entitled
under existing laws/company policies/practices. (Art. 302)
9. What if he was forced to retire by the employer?
1. That is tantamount to CONSTRUCTIVE dismissal, i.e., clear act of
discrimination/disdain/insensibility.