15th assignment

Jackqui R. Moreno vs. San Sebastian College Recoletos, Manila, March 28, 2008
Facts:
, SSC-R employed petitioner Jackqui R. Moreno (Moreno) as a teaching fellow. On
23 October 2000, Moreno was appointed as a full-time college faculty member.
Then, on 22 October 2001, Moreno became a member of the permanent college
faculty.She was also offered the chairmanship of the Business Finance and
Accountancy Department of her college on 13 September 2002. Subsequently, reports
and rumors of Morenos unauthorized external teaching engagements allegedly
circulated and reached SSC-R. The Human Resource Department of the school
thereafter conducted a forma investigation on the said activities. On 24 October 2002,
the Department submitted its report, which stated that Moreno indeed had
unauthorized teaching assignments at the Centro Escolar University during the first
semester of the School Year 2002-2003, and at the College of the Holy Spirit, Manila,
during the School Years 2000-2001, 2001-2002 and the first semester of School Year
2002-2003. On 27 October 2002, Moreno received a memorandum from the Dean of
her college, requiring her to explain the reports regarding her unauthorized teaching
engagements. The said activities allegedly violated Section 2.2 of Article II of SSCRs Faculty Manual, which reads:
Administrative permission is required for all full-time faculty
members to teach part-time elsewhere. If ever teaching permission
is granted, the total teaching load should not exceed the maximum
allowed by CHED rules and regulations. Faculty members are
required to report all other teaching assignments elsewhere within
two (2) weeks from start of the classes every semester.
Moreno sent a written explanation in which she admitted her failure to secure any
written permission before she taught in other schools. Moreno explained that the said
teaching engagements were merely transitory in nature as the aforesaid schools
urgently needed lecturers and that she was no longerconnected with them. Moreno
further stated that it was never her intention to jeopardize her work in SSC-R and that
she merely wanted to improve her familys poor financial conditions. A Special
Grievance Committee was then formed in order to investigate and make
recommendations regarding Morenos case. The said committee was composed of
Dean Abraham Espejo of the College of Law, as chairman, and Messrs. Dindo Bunag
and Ramon Montierro, as members.
In a letter, the grievance committee required Moreno to answer the following series of
questions concerning her case, to wit:
1. Did you teach in other schools without first obtaining the consent of your superiors
in SSC-R?
2. Did you ever go beyond the maximum limit for an outside load?
3. Did you ever truthfully disclose completely to your superiors at SSC-R any outside
Load?
4. Do you deny teaching in CEU?
5. Do you deny teaching at Holy Spirit?

Moreno admitted she did not formally disclose her teaching loads at the College of the
Holy Spirit and at the Centro Escolar University for fear that the priest administrators
may no longer grant her permission, as prior similar requests had already been
declined; that the Dean of her college was aware of her external teaching loads; that
she went beyond the maximum limit for an outside load in the School Years 2000
until 2002, because she needed to support her mother and sister, her masteral studies,
and her sisters canteen business, all of which coincided with the payment of the
emergency loan from the SSC-R administrators that paid for her mothers illness; that
she did not deny teaching part-time in the aforementioned schools; and that she did
not wish to resign because she felt she deserved a second chance. On the same day
that Moreno sent her letter, the grievance committee issued its resolution, which
unanimously found that she violated the prohibition against a full-time faculty having
an unauthorized external teaching load. The majority of the grievance committee
members recommended Morenos dismissal from employment in accordance with the
school manual, but Dean Espejo dissented and called only for a suspension for one
semester.
Thereafter, SSC-R sent a letter to Moreno that was signed by the College President,
informing her that they had approved and adopted the findings and recommendations
of the grievance committee and, in accordance therewith, her employment was to be
terminated effective 16 November 2002. Moreno thus instituted with the NLRC a
complaint for illegal termination , seeking reinstatement, money claims, backwages,
separation pay if reinstatement is not viable, and attorneys fees.
Labor Arbiter Veneranda C. Guerrero dismissed Morenos complaint The Labor
Arbiter ruled that Morenos due acceptance of the appointment as a member of the
Permanent Faculty meant that she was bound to the condition therein not to accept
any outside teaching assignments without permission. Morenos admission of her
violation was likewise said to have rendered her liable for the penalty of dismissal as
provided for in the SSC-R Faculty Manual. The Labor Arbiter held that SSC-R had
adequately discharged the burden of proof imposed by law in dismissing Moreno.
Except for her unpaid salary for fifteen (15) days, which was not controverted, the rest
of Morenos money claims were denied for being unsubstantiated.
On appeal by Moreno, the NLRC reversed the rulings of the Labor Arbiter.
Thus, SSC-R instituted with the Court of Appeals a Petition for Certiorari under Rule
65 of the Rules of Court, with a prayer for the issuance of a temporary restraining
order and/or a writ of preliminary Injunction. In a Decision [21] dated 7 November
2006, the appellate court granted the petition and annulled the Decision dated 23
November 2004, and Resolution dated 31 March 2005 of the NLRC.
Issue:
w/n Moreno was properly dismissed?
Held:
In termination cases, the burden of proof rests on the employer to show that the
dismissal is for just cause. When there is no showing of a clear, valid and legal cause
for the termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination was for a
valid or authorized cause

Moreno has indeed committed misconduct against respondent SSC-R. Her admitted
failure to obtain the required permission from the school before she engaged in
external teaching engagements is a clear transgression of SSC-Rs policy. However,
said misconduct falls below the required level of gravity that would warrant dismissal
as a penalty.
Under Art. 282(a) of the Labor Code, willful disobedience of the employers lawful
orders as a just cause for termination of employment envisages the concurrence of at
least two requisites: (1) the employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a "wrongful and perverse
attitude"; and (2) the order violated must have been reasonable, lawful, made known
to the employee and must pertain to the duties which he has been engaged to
discharge Similarly, with respect to serious misconduct, the Court has already ruled in
National Labor Relations Commission v. Salgarino that:
Misconduct is defined as improper or wrong conduct. It is the
transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character and
implies wrongful intent and not mere error of judgment. The
misconduct to be serious within the meaning of the act must be of
such a grave and aggravated character and not merely trivial or
unimportant. Such misconduct, however serious, must nevertheless
be in connection with the work of the employee to constitute just
cause from his separation.
In order to constitute serious misconduct which will warrant the dismissal of an
employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient
that the act or conduct complained of has violated some established rules or policies.
It is equally important and required that the act or conduct must have been
performed with wrongful intent.
After examining the records of the case, the Court finds that SSC-R miserably failed
to prove that Morenos misconduct was induced by a perverse and wrongful intent as
required in Art. 282(a) of the Labor. Code. SSC-R merely anchored Morenos alleged
bad faith on the fact that she had full knowledge of the policy that was violated and
that it was relatively easy for her to secure the required permission before she taught
in other schools. This posture is utterly lacking. It bears repeating that it is the
employer that has the burden of proving the lawful cause sustaining the dismissal of
the employee. Even equipoise is not enough; the employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause.
[29]
In the present case, SSC-R failed to adduce any concrete evidence to prove that
Moreno indeed harbored perverse or corrupt motivations in violating the aforesaid
school policy. In her letter of explanation to the grievance committee dated 12
November 2002, Moreno explained in detail her role as the breadwinner and the grave
financial conditions of her family. As previous requests for permission had already
been denied, Moreno was thus prompted to engage in illicit teaching activities in other
schools, as she desperately needed them to augment her income. Instead of submitting
controverting evidence, SSC-R simply dismissed the above statements as nothing
more than a lame excuse and are clearly an afterthought, onsidering that no evidence

was offered to support them and that Morenos salary was allegedly one of the highest
among the universities in the country.
In addition, even if dismissal for cause is the prescribed penalty for the misconduct
herein committed, in accordance with the SSC-R Faculty Manual and Morenos
employment contract, the Court finds the same to be disproportionate to the offense.
Time and again, we have ruled that while an employer enjoys a wide latitude of
discretion in the promulgation of policies, rules and regulations on work-related
activities of the employees, those directives, however, must always be fair and
reasonable, and the corresponding penalties, when prescribed, must be commensurate
to the offense involved and to the degree of the infraction.
Special circumstances were present in the case at bar which should have been
properly taken into account in the imposition of the appropriate penalty. Moreno, in
this case, had readily admitted her misconduct, which was undisputedly the first she
has ever committed against the school. Her teaching abilities and administrative skills
remained apparently unaffected by her external teaching engagements, as she was
found by the grievance committee to be one of the better professors in the Accounting
Department and she was even offered the Chairmanship of her college.
Also, the fact that Moreno merely wanted to alleviate her familys poor financial
conditions is a justification that SSC-R failed to refute. SSC-R likewise failed to
prove any resulting material damage or prejudice on its part as a consequence of
Morenos misconduct. The claim by SSC-R that the imposition of a lesser penalty
would set a bad precedent for the other faculty members who comply with the school
policies is too speculative for this Court to even consider.
Finally, the Court notes that in Morenos contract of employment, one of the
provisions therein categorically stated that should a violation of any of the terms and
conditions thereof be committed, the penalty that will be imposed would either be
suspension or dismissal from employment. Thus, contrary to its position from the
beginning, SSC-R clearly had the discretion to impose a lighter penalty of suspension
and was not at all compelled to dismiss Moreno under the circumstances, just because
the Faculty Manual said so.
With regard to the observance of procedural due process, neither of the parties has put
the same into issue. Indeed, based on the evidence on record, Moreno was served with
the required twin notices and was afforded the opportunity to be heard. The first
notice was embodied in the memorandum sent by her College Dean, which required
her to explain her unauthorized teaching assignments. The letter by SSC-R that
informed Moreno that her services were being terminated effective 16 November
2002 constituted the second required notice. Moreno was also given the opportunity
to explain her side when the special grievance committee asked her a series of
questions pertaining to their investigation in a letter date and to which she replied
likewise through a letter dated 12 November 2002. Indeed, SSC-R has adequate
reasons to impose sanctions on her. However, this should not be dismissal from
employment. Because of the serious implications of this penalty, our Labor Code
decrees that an employee cannot be dismissed, except for the most serious causes.
Considering the presence of extenuating circumstances in the instant case, the Court
deems it appropriate to impose the penalty of suspension of one (1) year on Moreno,

to be counted from 16 November 2002, the effective date of her illegal dismissal.
However, given the period of time in which Moreno was actually prevented from
working in the respondent school, the said suspension should already be deemed
served. Furthermore, the Court holds that Moreno should be reinstated to her former
position, without loss of seniority rights and other privileges, but without payment of
backwages.
As a general rule, the normal consequences of a finding that an employee has been
illegally dismissed are, firstly, that the employee becomes entitled to reinstatement
without loss of seniority rights; and secondly, the payment of backwages
corresponding to the period from his illegal dismissal up to his actual reinstatement.
The two forms of relief are, however, distinct and separate from each other. Though
the grant of reinstatement commonly carries with it an award of backwages, the
appropriateness or non-availability of one does not carry with it the inappropriateness
or non-availability of the other In accordance with Durabuilt Recapping Plant & Co.
v. National Labor Relations Commission, the Court may not only mitigate, but also
absolve entirely, the liability of the employer to pay backwages where good faith is
evident. Likewise, backwages may be withheld from a dismissed employee where
exceptional circumstances are availing.
[44]
In the present case, the good faith of SSC-R is apparent. The termination of Moreno
from her employment cannot be said to have been carried out in a malevolent,
arbitrary or oppressive manner. Indeed, the only mistake that the respondent school
has committed was to strictly apply the provisions of its Faculty Manual and its
contract with Moreno without regard for the aforementioned special circumstances
that were attendant in this case. Even then, Morenos right to procedural due process
was fully respected, as she was given the required twin notices and an ample
opportunity to be heard. This fact was not even disputed by Moreno herself.
R.B. Michael Press v Nicasio Galit
GR No. 153510 February 13 2008
Facts:
respondent was employed by petitioner R.B. Michael Press as an offset machine
operator, whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays to
Saturdays, and he was paid PhP 230 a day. During his employment, Galit was tardy
for a total of 190 times, totaling to 6,117 minutes and was absent without leave for a
total of nine and a half days. respondent was ordered to render overtime service in
order to comply with a job order deadline, but he refused to do so. The following day,
February 23, 1999, respondent reported for work but petitioner Escobia told him not
to work, and to return later in the afternoon for a hearing. When he returned, a copy of
an Office Memorandum was served on him, re: warning for dismissal, the grounds
contained are the following,to wit: (1) habitual and excessive tardiness; (2)
committing acts of discourtesy, disrespect in addressing superiors; (3) failure to work
overtime after having been instructed to do so; (4) insubordination. respondent was
terminated from employment. The employer, through petitioner Escobia, gave him his
two-day salary and a termination letter. Respondent subsequently filed a complaint for
illegal dismissal and money claims before the National Labor Relations Commission
(NLRC) Regional Arbitration Branch No. IV. petitioners elevated the case to the

NLRC and their appeal was docketed as NLRC NCR CA No. 022433-00. In the April
28, 2000 Decision, the NLRC dismissed the appeal for lack of merit. Not satisfied
with the ruling of the NLRC, petitioners filed a Petition for Certiorari with the CA.
On November 14, 2001, the CA rendered its judgment affirming with modification the
NLRCs Decision
Issue:
Was respondent properly dismissed?
Held:
Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and
discipline to come to work on time everyday exhibit the employees deportment
towards work. Habitual and excessive tardiness is inimical to the general productivity
and business of the employer. This is especially true when the tardiness and/or
absenteeism occurred frequently and repeatedly within an extensive period of time.
The mere fact that the numerous infractions of respondent have not been immediately
subjected to sanctions cannot be interpreted as condonation of the offenses or waiver
of the company to enforce company rules. A waiver is a voluntary and intentional
relinquishment or abandonment of a known legal right or privilege.
a waiver to be valid and effective must be couched in clear and unequivocal terms
which leave no doubt as to the intention of a party to give up a right or benefit which
legally pertains to him. Hence, the management prerogative to discipline employees
and impose punishment is a legal right which cannot, as a general rule, be impliedly
waived. In Cando v. NLRC, the employee did not report for work for almost five
months when he was charged for absenteeism. The employee claimed that such
absences due to his handling of union matters were condoned. The Court held that the
employee did not adduce proof to show condonation coupled with the fact that the
company eventually instituted the administrative complaint relating to his company
violations.
Thus it is incumbent upon the employee to adduce substantial evidence to
demonstrate condonation or waiver on the part of management to forego the exercise
of its right to impose sanctions for breach of company rules. In the case at bar,
respondent did not adduce any evidence to show waiver or condonation on the part of
petitioners. Thus the finding of the CA that petitioners cannot use the previous
absences and tardiness because respondent was not subjected to any penalty is bereft
of legal basis. In the case of Filipio v. The Honorable Minister Blas F. Ople, the
Court, quoting then Labor Minister Ople, ruled that past infractions for which the
employee has suffered the corresponding penalty for each violationncannot be used as
a justification for the employees dismissal for that would penalize him twice for the
same offense. At most, it was explained, these collective infractions could be used as
supporting justification to a subsequent similar offense. In contrast, the petitioners in
the case at bar did not impose any punishment for the numerous absences and
tardiness of respondent. Thus, said infractions can be used collectively by petitioners
as a ground for dismissal.

Respondent is admittedly a daily wage earner and hence is paid based on such
arrangement. For said daily paid workers, the principle of a days pay for a days work
is squarely applicable. Hence it cannot be construed in any wise that such nonpayment
of the daily wage on the days he was absent constitutes a penalty.
For willful disobedience to be a valid cause for dismissal, these two elements must
concur: (1) the employees assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee, and must pertain to the
duties which he had been engaged to discharge.
[13]
In the present case, petitioners order for respondent to render overtime service to meet
a production deadline complies with the second requisite. Art. 89 of the Labor Code
empowers the employer to legally compel his employees to perform overtime work
against their will to prevent serious loss or damage.
In the present case, petitioners business is a printing press whose production schedule
is sometimes flexible and varying. It is only reasonable that workers are sometimes
asked to render overtime work in order to meet production deadlines. Dennis Reyes,
in his Affidavit dated May 3, 1999, stated that in the morning of February 22, 1999,
he approached and asked respondent to render overtime work so as to meet a
production deadline on a printing job order, but respondent refused to do so for no
apparent reason. Respondent, on the other hand, claims that the reason why he refused
to render overtime work was because he was not feeling well that day.
In Lakpue Drug Inc. v. Belga, willfulness was described as characterized by a
wrongful and perverse mental attitude rendering the employees act inconsistent with
proper subordination. The fact that respondent refused to provide overtime work
despite his knowledge that there is a production deadline that needs to be met, and
that without him, the offset machine operator, no further printing can be had, shows
his wrongful and perverse mental attitude; thus, there is willfulness.Respondents
excuse that he was not feeling well that day is unbelievable and obviously an
afterthought. He failed to present any evidence other than his own assertion that he
was sick. Also, if it was true that he was then not feeling well, he would have taken
the day off, or had gone home earlier, on the contrary, he stayed and continued to
work all day, and even tried to go to work the next day, thus belying his excuse, which
is, at most, a self-serving statement.
respondent unjustifiably refused to render overtime work despite a valid order to do
so. The totality of his offenses against petitioner R.B. Michael Press shows that he
was a difficult employee. His refusal to render overtime work was the final straw that
broke the camels back, and, with his gross and habitual tardiness and absences, would
merit dismissal from service.
Under the twin notice requirement, the employees must be given two (2) notices
before his employment could be terminated: (1) a first notice to apprise the employees
of their fault, and (2) a second notice to communicate to the employees that their
employment is being terminated. Not to be taken lightly of course is the hearing or
opportunity for the employee to defend himself personally or by counsel of his choice.

In addition, if the continued employment poses a serious and imminent threat to the
life or property of the employers or of other employees like theft or physical injuries,
and there is a need for preventive suspension, the employers can immediately suspend
the erring employees for a period of not more than 30 days. Notwithstanding the
suspension, the employers are tasked to comply with the twin notice requirement
under the law. The preventive suspension cannot replace the required notices. [18]
Thus, there is still a need to comply with the twin notice requirement and the requisite
hearing or conference to ensure that the employees are afforded due process even
though they may have been caught in flagrante or when the evidence of the
commission of the offense is strong.
On the surface, it would seem that petitioners observed due process (twin notice and
hearing requirement): On February 23, 1999 petitioner notified respondent of the
hearing to be conducted later that day. On the same day before the hearing, respondent
was furnished a copy of an office memorandum which contained a list of his offenses,
and a notice of a scheduled hearing in the afternoon of the same day. The next day,
February 24, 1999, he was notified that his employment with petitioner R.B. Michael
Press had been terminated.
A scrutiny of the disciplinary process undertaken by petitioners leads us to conclude
that they only paid lip service to the due process requirements. The undue haste in
effecting respondents termination shows that the termination process was a mere
simulationthe required notices were given, a hearing was even scheduled and held, but
respondent was not really given a real opportunity to defend himself; and it seems that
petitioners had already decided to dismiss respondent from service, even before the
first notice had been given. Anent the written notice of charges and hearing, it is plain
to see that there was merely a general description of the claimed offenses of
respondent. The hearing was immediately set in the afternoon of February 23, 1999the
day respondent received the first notice. Therefore, he was not given any opportunity
at all to consult a union official or lawyer, and, worse, to prepare for his defense.
Regarding the February 23, 1999 afternoon hearing, it can be inferred that respondent,
without any lawyer or friend to counsel him, was not given any chance at all to
adduce evidence in his defense. At most, he was asked if he did not agree to render
overtime work on February 22, 1999 and if he was late for work for 197 days. He was
never given any real opportunity to justify his inability to perform work on those
days. This is the only explanation why petitioners assert that respondent admitted all
the charges. In the February 24, 1999 notice of dismissal, petitioners simply justified
respondents dismissal by citing his admission of the offenses charged. It did not
specify the details surrounding the offenses and the specific company rule or Labor
Code provision upon which the dismissal was grounded.
In view of the infirmities in the proceedings, we conclude that termination of
respondent was railroaded in serious breach of his right to due process. And as a
consequence of the violation of his statutory right to due process and following
Agabon, petitioners are liable jointly and solidarily to pay nominal damages to the
respondent in the amount of PhP 30,000.
[19]

School of the Holy Spirit of Quezon City v Taguiam

GR No. 165565 July 14 2008
Facts:
Taguiam was the Class Adviser of Grade 5-Esmeralda of the petitioner, School of
the Holy Spirit of Quezon City. On March 10, 2000, the class president, wrote a letter
to the grade school principal requesting permission to hold a year-end celebration at
the school grounds. The principal authorized the activity and allowed the pupils to use
the swimming pool. In this connection, respondent distributed the parents/guardians
permit forms to the pupils. Respondent admitted that Chiara Mae Federicos permit
form was unsigned. Nevertheless, she concluded that Chiara Mae was allowed by her
mother to join the activity since her mother personally brought her to the school with
her packed lunch and swimsuit. Before the activity started, respondent warned the
pupils who did not know how to swim to avoid the deeper area. However, while the
pupils were swimming, two of them sneaked out. Respondent went after them to
verify where they were going. Unfortunately, while respondent was away, Chiara Mae
drowned. When respondent returned, the maintenance man was already administering
cardiopulmonary resuscitation on Chiara Mae. She was still alive when respondent
rushed her to the General Malvar Hospital where she was pronounced dead on arrival.
On May 23, 2000, petitioners issued a Notice of Administrative Charge to respondent
for alleged gross negligence and required her to submit her written explanation.
Thereafter, petitioners conducted a clarificatory hearing which respondent attended.
Respondent also submitted her Affidavit of Explanation. petitioners dismissed
respondent on the ground of gross negligence resulting to loss of trust and confidence.
Meanwhile, Chiara Maes parents filed a P7 Million damage suit against petitioners
and respondent, among others. They also filed against respondent a criminal
complaint for reckless imprudence resulting in homicide. respondent in turn filed a
complaint against the school and/or Sr. Crispina Tolentino for illegal dismissal, with a
prayer for reinstatement with full backwages and other money claims, damages and
attorneys fees. In dismissing the complaint, the Labor Arbiter declared that respondent
was validly terminated for gross neglect of duty. He opined that Chiara Mae drowned
because respondent had left the pupils without any adult supervision. He also noted
that the absence of adequate facilities should have alerted respondent before allowing
the pupils to use the swimming pool. The Labor Arbiter further concluded that
although respondents negligence was not habitual, the same warranted her dismissal
since death resulted therefrom. Respondent appealed to the NLRC which, however,
affirmed the dismissal of the complaint. Aggrieved, respondent instituted a petition
for certiorari before the Court of Appeals, which ruled in her favor. The appellate
court observed that there was insufficient proof that respondents negligence was both
gross and habitual.
Issue:
Was the dismissal proper?
Held:
Our perusal of the records leads us to conclude that respondent had been grossly
negligent. First, Chiara Maes permit form was unsigned. Yet, respondent allowed her

to join the activit because she assumed that Chiara Maes mother has allowed her to
join it by personally bringing her to the school with her packed lunch and swimsuit.
The purpose of a permit form is precisely to ensure that the parents have allowed their
child to join the school activity involved. Respondent cannot simply ignore this by
resorting to assumptions. Respondent admitted that she was around when Chiara Mae
and her mother arrived. She could have requested the mother to sign the permit form
before she left the school or at least called her up to obtain her conformity. Second, it
was respondents responsibility as Class Adviser to supervise her class in all activities
sanctioned by the school. Thus, she should have coordinated with the school to ensure
that proper safeguards, such as adequate first aid and sufficient adult personnel, were
present during their activity. She should have been mindful of the fact that with the
number of pupils involved, it would be impossible for her by herself alone to keep an
eye on each one of them. As it turned out, since respondent was the only adult present,
majority of the pupils were left unsupervised when she followed the two pupils who
sneaked out. In the light of the odds involved, respondent should have considered that
those who sneaked out could not have left the school premises since there were guards
manning the gates. The guards would not have allowed them to go out in their
swimsuits and without any adult accompanying them. But those who stayed at the
pool were put at greater risk, when she left them unattended by an adult. Notably,
respondents negligence, although gross, was not habitual. In view of the considerable
resultant damage, however, we are in agreement that the cause is sufficient to dismiss
respondent. This is not the first time that we have departed from the requirements laid
down by the law that neglect of duties must be both gross and habitual. xxxx
[22]
Indeed, the sufficiency of the evidence as well as the resultant damage to the
employer should be considered in the dismissal of the employee. In this case, the
damage went as far as claiming the life of a child. As a result of gross negligence in
the present case, petitioners lost its trust and confidence in respondent. Loss of trust
and confidence to be a valid ground for dismissal must be based on a wilful breach of
trust and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Otherwise
stated, it must rest on substantial grounds and not on the employers arbitrariness,
whims, caprices or suspicion; otherwise, the employee would eternally remain at the
mercy of the employer. It should be genuine and not simulated; nor should it appear as
a mere afterthought to justify earlier action taken in bad faith or a subterfuge for
causes which are improper, illegal or unjustified. It has never been intended to afford
an occasion for abuse because of its subjective nature. There must, therefore, be an
actual breach of duty committed by the employee which must be established by
substantial evidence. As a teacher who stands in loco parentis to her pupils,
respondent should have made sure that the children were protected from all harm
while in her company. Respondent should have known that leaving the pupils in the
swimming pool area all by themselves may result in an accident. A simple reminder
not to go to the deepest part of the pool was insufficient to cast away all the serious
dangers that the situation presented to the children, especially when respondent knew
that Chiara Mae cannot swim. Dismally, respondent created an unsafe situation which
exposed the lives of all the pupils concerned to real danger. This is a clear violation
not only of the trust and confidence reposed on her by the parents of the pupils but of
the school itself. Finally, we note that based on the criminal complaint filed by Chiara
Maes parents, the Assistant City Prosecutor found probable cause to indict respondent

for the crime of reckless imprudence resulting in homicide. The Assistant City
Prosecutor held that respondent should have foreseen the danger lurking in the waters.
By leaving her pupils in the swimming pool, respondent displayed an inexcusable
lack of foresight and precaution.
[28]
While this finding is not controlling for purposes of the instant case, this only
supports our conclusion that respondent has indeed been grossly negligent. All told,
there being a clear showing that respondent was culpable for gross negligence
resulting to loss of trust and confidence, her dismissal was valid and legal. It was error
for the Court of Appeals to reverse and set aside the resolution of the NLRC.
Qurico Lopez v Alturas Group
GR 191008 April 11 2011
Facts:
Quirico Lopez (petitioner) was hired by respondent Alturas Group of Companies in
1997 as truck driver. Ten years later or sometime in November 2007, he was
dismissed after he was allegedly caught by respondents security guard in the act of
attempting to smuggle out of the company premises 60 kilos of scrap iron worth P840
aboard respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271 that was
then assigned to him. When questioned, petitioner allegedly admitted to the security
guard that he was taking out the scrap iron consisting of lift springs out of which he
would make axes. Petitioner, in compliance with the Show Cause Notice dated
December 5, 2007 issued by respondent companys Human Resource Department
Manager, denied the allegations by a handwritten explanation written in the Visayan
dialect. Finding petitioners explanation unsatisfactory, respondent company
terminated his employment by Notice of Termination effective December 14, 2007 on
the grounds of loss of trust and confidence, and of violation of company rules and
regulations. In issuing the Notice, respondent company also took into account the
result of an investigation showing that petitioner had been smuggling out its cartons
which he had sold, in conspiracy with one Maritess Alaba, for his own benefit to thus
prompt it to file a criminal case for Qualified Theft against him before the Regional
Trial Court (RTC) of Bohol. It had in fact earlier filed another criminal case for
Qualified Theft against petitioner arising from the theft of the scrap iron. Petitioner
thereupon filed a complaint against respondent company for illegal dismissal and
underpayment of wages.
Issue:
Was he properly dismissed?
Held:
Dismissals have two facets: the legality of the act of dismissal, which constitutes
substantive due process, and the legality of the manner of dismissal which constitutes
procedural due process.As to substantive due process, the Court finds that respondent
companys loss of trust and confidence arising from petitioners smuggling out of the
scrap iron, conpounded by his past acts of unauthorized selling cartons belonging to
respondent company, constituted just cause for terminating his services. Loss of trust

and confidence as a ground for dismissal of employees covers employees occupying a

position of trust who are proven to have breached the trust and confidence reposed on
them. Apropos is Cruz v. Court of Appeals which explains the basis and quantum of
evidence of loss of trust and confidence, viz:
In addition, the language of Article 282(c) of the Labor Code states
that the loss of trust and confidence must be based on willful
breach of the trust reposed in the employee by his employer.
Such breach is willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently.
Moreover, it must be based on substantial evidence and not on
the employers whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the employer.
Loss of confidence must not be indiscriminately used as a shield
by the employer against a claim that the dismissal of an employee
was arbitrary. And, in order to constitute a just cause for dismissal,
the act complained of must be work-related and shows that the
employee concerned is unfit to continue working for the
employer. In addition, loss of confidence as a just cause for
termination of employment is premised on the fact that the
employee concerned holds a position of responsibility, trust and
confidence or that the employee concerned is entrusted with
confidence with respect to delicate matters, such as the
handling or care and protection of the property and assets of
the employer. The betrayal of this trust is the essence of the
offense for which an employee is penalized. (emphasis and
underscoring supplied)
Petitioner, a driver assigned with a specific vehicle, was entrusted with the
transportation of respondent companys goods and property, and consequently with its
handling and protection, hence, even if he did not occupy a managerial position, he
can be said to be holding a position of responsibility. As to his actprincipal ground for
his dismissal his attempt to smuggle out the scrap iron belonging to respondent
company, the same is undoubtedly work-related. Respondent companys charge
against petitioner was amply proven by substantial evidence consisting of the
affidavits of various employees of respondent. Contrary to the NLRCs observation,
the security guard who apprehended petitioner, Gerardo Luega, actually executed a
statement relative to the smuggling out of scrap iron, which was attached to, and
served as basis for the filing of, the corresponding complaint for Qualified Theft.
Petitioners claim that he was framed up after he allegedly lost his pay slip to draw
respondent company to suspect that he might file a labor complaint for underpayment
does not inspire credence.
It is, however, with respect to the appellate courts finding that petitioner was not
afforded procedural due process that the Court deviates from. Procedural due process
has been defined as giving an opportunity to be heard before judgment is rendered.
[15]

In termination cases, Perez v. Philippine Telegraph and Telephone Company,

illuminates on the correct proceedings to be followed therein in order to comply with
the due process requirement:
xxx
After receiving the first notice apprising him of the charges
against him, the employee may submit a written explanation
(which may be in the form of a letter, memorandum, affidavit or
position paper) and offer evidence in support thereof, like
relevant company records (such as his 201 file and daily time
records) and the sworn statements of his witnesses. For this
purpose, he may prepare his explanation personally or with the
assistance of a representative or counsel. He may also ask the
employer to provide him copy of records material to his
defense. His written explanation may also include a request
that a formal hearing or conference be held. In such a case, the
conduct of a formal hearing or conference becomes mandatory,
just as it is where there exist substantial evidentiary disputes or
where company rules or practice requires an actual hearing as
part of employment pretermination procedure. (emphasis and
underscoring supplied)
Petitioner was given the opportunity to explain his side when he was informed of the
charge against him and required to submit his written explanation with which he
complied. That there might have been no hearing is of no moment, for as Autobus
Workers Union v. NLRC holds:
This Court has held that there is no violation of due process even
if no hearing was conducted, where the party was given a
chance to explain his side of the controversy. What is frowned
upon is the denial of theopportunity to be heard. (emphasis
supplied)
Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner
should have been afforded counsel or advised of the right to counsel. The right to
counsel and the assistance of one in investigations involving termination cases is
neither indispensable nor mandatory, except when the employee himself requests for
one or that he manifests that he wants a formal hearing on the charges against him. In
petitioners case, there is no showing that he requested for a formal hearing to be
conducted or that he be assisted by counsel. Verily, since he was furnished a second
notice informing him of his dismissal and the grounds therefor, the twin-notice
requirement had been complied with to call for a deletion of the appellate courts
award of nominal damages to petitioner. As for the subsequent dismissal of the
criminal cases filed against petitioner, criminal and labor proceedings are distinct and
separate from each other. Each requires a different quantum of proof, arising though
they are from the same set of facts or circumstances. As Vergara v. NLRC holds:
An employees acquittal in a criminal case does not automatically preclude a
determination that he has been guilty of acts inimical to the employers interest
resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an
employee does not require proof beyond reasonable doubt; as noted earlier, the
quantum of proof required is merely substantial evidence. More importantly, the trial
court acquitted petitioner not because he did not commit the offense, but merely
because of the failure of the prosecution to prove his guilt beyond reasonable doubt..

In other words, while the evidence presented against petitioner did not satisfy the
quantum of proof required for conviction in a criminal case, it substantially
proved his culpability which warranted his dismissal from employment.
(emphasis supplied)
Technol Eight Philippines v NLRC
GR No.. 187605 April 1 2010
Facts:
Technol Eight Philippines Corporation (Technol), located at 127 East Main Avenue,
Laguna Technopark, Bian, Laguna, manufactures metal parts and motor vehicle
components. It hired the respondent Dennis Amular (Amular) in March 1998 and
assigned him to Technols Shearing Line, together with Clarence P. Ducay (Ducay).
Rafael Mendoza (Mendoza) was the lines team leader at about 5:30 p.m., Mendoza
went to the Surf City Internet Caf in Balibago, Sta. Rosa, Laguna. As Mendoza was
leaving the establishment, he was confronted by Amular and Ducay who engaged him
in a heated argument regarding their work in the shearing line, particularly Mendozas
report to Avelino S. De Leon, Jr. (De Leon), Technols Production Control and
Delivery (PCD) assistant supervisor, about Amulars and Ducays questionable
behavior at work. The heated argument resulted in a fistfight that required the
intervention of the barangay tanods in the area.Upon learning of the incident,
Technols management sent to Amular and Ducay a notice of preventive
suspension/notice of discharge dated May 18, 2002 advising them that their fistfight
with Mendoza violated Section 1-k of Technols Human Resource Department (HRD)
Manual. The two were given fortyeight (48) hours to explain why no disciplinary
action should be taken against them for the incident. They were placed under
preventive suspension for thirty (30) days, from May 19, 2002 to June 17, 2002 for
Ducay, and May 21, 2002 to June 20, 2002 for Amular. Amular submitted a written
statement on May 20, 2002. Thereafter, Amular received a notice dated June 8, 200
informing him that Technol management will conduct an administrative hearing on
June 14, 2002. He was also given two (2) days to respond in writing to the statements
attached to and supporting the notice. A day before the hearing or on June 13, 2002,
Amular filed a complaint for illegal suspension/constructive dismissal with a prayer
for separation pay, backwages and several money claims, againstTechnol. Amular
failed to attend the administrative hearing. On July 4, 2002, Techno sent him a notice
of dismissal
Issue:
Are they illegally dismissed?
Held:
Contrary to the CAs perception, we find a work-connection in Amular's and Ducays
assault on Mendoza. As the CA itself noted, the underlying reason why Amular and
Ducay confronted Mendoza was to question him about his report to De Leon Technols
PCD assistant supervisor regarding the duos questionable work behavior. The
motivation behind the confrontation, as we see it, was rooted on workplace dynamics
as Mendoza, Amular and Ducay interacted with one another in the performance of

their duties. The incident revealed a disturbing strain in Amular's and Ducays
characters the urge to get even for a perceived wrong done to them and, judging from
the circumstances, regardless of the place and time. The incident could very well have
happened inside company premises had the two employees found time to confront
Mendoza in the workplace as they intimated in their written statements. Having been
the subject of a negative report regarding his work must have rankled on Amular that
he resolved to do something about it; thus, he confronted Mendoza.
From the records, Ducay appeared to have cooperated with Amular in the violent
confrontation with Mendoza. Ducay, however, resigned on June 7, 2002 a week
before the filing of the complaint. Hence, Technol did not act against him a move that
is within its prerogative to make. Based on their written statements, Amular and
Ducay purposely set out for the Balibago commercial area on April 16, 2002 looking
for Mendoza. It was not an incidental or casual encounter. They sought Mendoza out
and confronted him regarding what they perceived as Mendozas negative attitude
towards them or pamamarako as Mendoza described it. Considering the subject
Amular and Ducay raised with Mendoza, it is not surprising that they had a heated
verbal exchange (mostly between Amular and Mendoza) that deteriorated into a
fistcuff fight, with Mendoza at the losing end as he suffered injuries from the blows
he received. xxx. To reiterate, they were purposely there to confront Mendoza about
their work-related problem. They waited for him at the place where they expected him
to be. When Mendoza appeared, they accosted him and put into motion the entire
sorry incident.
Under these circumstances, Amular undoubtedly committed a misconduct or exhibited
improper behaviour that constituted a valid cause for his dismissal under the law and
jurisprudential standards. The circumstances of his misdeed, to our mind, rendered
him unfit to continue working for Technol; guilt is not diminished by his claim that
Technols management called the three of them to a meeting, and asked them to
explain their sides and settle their differences, which they did. Mendoza significantly
denied the alleged settlement, maintaining that while they were summoned by De
Leon after the incident, he could not shake hands and settle with Amular and Ducay
since they did not even apologize or ask forgiveness for what they
did. We do not find Mendozas denial of Amulars claim unusual as Mendoza would
not have stood his ground in this case if a settlement had previously been reached.
That a meeting had taken place does not appear disputed, but a settlement cannot be
inferred simply because a meeting took place. Neither do we believe that Amular was
discriminated against because he was not the only one preventively suspended. As the
CA itself acknowledged, Ducay received his notice of preventive suspension/notice of
charge on May 19, 2002 while Amular received his on May 21, 2002. These notices
informed them that they were being preventively suspended for 30 days from May 19,
2002 to June 17, 2002 for Ducay, and May 21, 2002 for Amular.
[44]
Thus, Amular was not illegally dismissed; he was dismissed for cause.
The Due Process Issue
The notice of preventive suspension/notice of discharge served on Amular and Ducay
required them to explain within forty-eight (48) hours why no disciplinary action
should be taken against them for their involvement in the mauling incident. Amular
submitted two written statements: the first received by the company on May 19, 2002

and the other received on May 20, 2002. On June 8, 2002, Technol management sent
Amular a memorandum informing him of an administrative hearing on June 14, 2002
at 10:00 a.m., regarding the charges against him.
At the bottom left hand corner of the memorandum, the following notation appears:
accept the copy of notice but refused to receive, he will study first. A day before the
administrative hearing or on June 13, 2002, Amular filed the complaint for illegal
suspension/dismissal and did not appear at the administrative hearing. On July 4,
2002, the company sent Amular a notice of dismissal. What we see in the records
belie Amulars claim of denial of procedural due process. He chose not to present his
side at the administrative hearing. In fact, he avoided the investigation into the
charges against him by filing his illegal dismissal complaint ahead of the scheduled
investigation. Under these facts, he was given the opportunity to be heard and he
cannot now come to us protesting that he was denied this opportunity. To belabor a
point the Court has repeatedly made in employee dismissal cases, the essence of due
process is simply an opportunity to be heard; it is the denial of this opportunity that
constitutes violation of due process of law.
Exodus International Construction Corporation v Biscocho
GR No. 166109 February 23 2011
Facts:
Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a contract for the
painting of the Imperial Sky Garden located at Ongpin Street, Binondo, Manila. On
July 28, 1999, Dutch Boy awarded another contract to Exodus for the painting of
Pacific Plaza Towers in Fort Bonifacio, Taguig City. In the furtherance of its business,
Exodus hired respondents as painters on different dates with th corresponding wages
appearing opposite their names Guillermo Biscocho (Guillermo) was assigned at the
Imperial Sky Garden from February 8, 1999 to February 8, 2000. Fernando Pereda
(Fernando) worked in the same project from February 8, 1999 to June 17, 2000.
Likewise, Ferdinand Mariano (Ferdinand) worked there from April 12,
1999 to February 17, 2000. All of them were then transferred to Pacific Plaza Towers.
Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo Yap
in Ayala Alabang, Muntinlupa City from May 20, 1999 to December 4, 1999.
Afterwards he was transferred to Pacific Plaza Towers. Miguel B. Bobillo (Miguel)
was hired and assigned at Pacific Plaza Towers on March 10, 2000. On November 27,
2000, Guillermo, Fernando, Ferdinand, and Miguel filed a complaint for illegal nonpayment of holiday pay, service incentive leave pay, 13th month pay and night-shift
differential pay. Gregorio also filed a complaint Fernando, Ferdinand, and Miguel
were orally notified of their dismissal from the service on November 25, 2000.
Petitioners denied respondents allegations. As regards Gregorio, petitioners averred
that on September 15, 2000, he absented himself from work and applied as a painter
with SAEI-EEI which is the general building contractor of Pacific Plaza Towers.
Since then, he never reported back to work. Guillermo absented himself from work
without leave on November 27, 2000. When he reported for work the following day,
he was reprimanded for being Absent Without Official Leave (AWOL). Because of
the reprimand, he worked only half-day and thereafter was unheard of until the filing
of the instant complaint. Fernando, Ferdinand, and Miguel were caught eating during

working hours on November 25, 2000 for which they were reprimanded by their
foreman. Since then they no longer reported for work.
Issue:
Were they properly dismissed?
Held:
there was no evidence that respondents were dismissed nor were they prevented from
returning to their work. It was only respondents unsubstantiated conclusion that they
were dismissed. As a matter of fact, respondents could not name the particular person
who effected their dismissal and under what particular circumstances.
In Machica v. Roosevelt Services Center, Inc., this Court sustained the employer's
denial as against the employees' categorical assertion of illegal dismissal. In so ruling,
this Court held that:
The rule is that one who alleges a fact has the burden of proving it;
thus, petitioners were burdened to prove their allegation that
respondents dismissed them from their employment. It must be
stressed that the evidence to prove this fact must be clear, positive
and convincing. The rule that the employer bears the burden of
proof in illegal dismissal cases finds no application here because
the respondents deny having dismissed the petitioners.
In this case, petitioners were able to show that they never dismissed respondents. As
to the case of Fernando, Miguel and Ferdinand, it was shown that on November 25,
2000, at around 7:30 a.m., the petitioners foreman, Wenifredo Lalap (Wenifredo)
caught the three still eating when they were supposed to be working already.
Wenifredo reprimanded them and, apparently, they resented it so they no longer
reported for work. In the case of Gregorio, he absented himself from work on
September 15, 2000 to apply as a painter with SAEI-EEI, the general contractor of
Pacific Plaza Towers. Since then he never reported back to work. Lastly, in the case of
Guillermo, he absented himself without leave on November 27, 2000, and so he was
reprimanded when he reported for work the following day. Because of the reprimand,
he did not report for work anymore. Hence, as between respondents general allegation
of having been orally dismissed from the service vis--vis those of petitioners which
were found to be substantiated by the sworn statement of foreman Wenifredo, we are
persuaded by the latter. Absent any showing of an overt or positive act proving that
petitioners had dismissed respondents, the latters claim of illegal dismissal cannot be
sustained. Indeed, a cursory examination of the records reveal no illegal dismissal to
speak of. There was also no abandonment of work on the part of the respondents. The
Labor Arbiter is also correct in ruling that there was no abandonment on the part of
respondents that would justify their dismissal from their employment. [m]ere absence
or failure to report for work x x x is not enough to amount to abandonment of work.
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.In Northwest Tourism Corporation v. Former Special 3rd Division of the

Court of Appeals this Court held that [t]o constitute abandonment of work, two
elements must concur, [namely]:
(1) the employee must have failed to report for work or must have
been absent without valid or justifiable reason;
(2) there must have been a clear intention on the part of the employee
to sever the employer-employee relationship manifested by some
overt act.
It is the employer who has the burden of proof to show a deliberate and unjustified
refusal of the employee to resume his employment without any intention of returning.
It is therefore incumbent upon petitioners to ascertain the respondents interest or noninterest in the continuance of their employment. However, petitioners failed to do so.
Clearly therefore, there was no dismissal, much less illegal, and there was also no
abandonment of job to speak of. The Labor Arbiter is therefore correct in ordering
that respondents be reinstated but without any backwages. However, petitioners are of
the position that the reinstatement of respondents to their former positions, which
were no longer existing, is impossible, highly unfair and unjust. The project was
already completed by petitioners on September 28, 2001. Thus the completion of the
project left them with no more work to do. Having completed their tasks, their
positions automatically ceased to exist. Consequently, there were no more positions
where they can be reinstated as painters. Petitioners are misguided. They forgot that
there are two types of employees in the construction industry. The first is referred to
as project employees or those employed in connection with a particular construction
project or phase thereof and such employment is coterminous with each project or
phase of the project to which they are assigned. The second is known as non-project
employees or those employed without reference to any particular construction project
or phase of a project. The second category is where respondents are classified. As
such they are regular employees of petitioners. It is clear from the records of the case
that when one project is completed, respondents were automatically transferred to the
next project awarded to petitioners. There was no employment agreement given to
respondents which clearly spelled out the duration of their employment, the specific
work to be performed and that such is made clear to them at the time of hiring. It is
now too late for petitioners to claim that respondents are project employees whose
employment is coterminous with each project or phase of the project to which they are
assigned. Nonetheless, assuming that respondents were initially hired as project
employees, petitioners must be reminded of our ruling in Maraguinot, Jr. v. National
Labor Relations Commission that [a] project employee x x x may acquire the status of
a regular employee when the following [factors] concur: 1. There is a continuous
rehiring of project employees even after cessation of a project; and 2. The tasks
performed by the alleged project employee are vital, necessary and indespensable to
the usual business or trade of the employer. In this case, the evidence on record shows
that respondents were employed and assigned continuously to the various projects of
petitioners. As painters, they performed activities which were necessary and desirable
in the usual business of petitioners, who are engaged in subcontracting jobs for
painting of residential units, condominium and commercial buildings. As regular
employees, respondents are entitled to be reinstated without loss of seniority rights.
Respondents are also entitled to their money claims such as the payment of holiday

pay, service incentive leave pay, and 13th month pay. Petitioners as the employer of
respondents and having complete
control over the records of the company could have easily rebutted the monetary
claims against it. All that they had to do was to present the vouchers or payrolls
showing payment of the same. However, they decided not to provide the said
documentary evidence. Our conclusion therefore is that they never paid said benefits
and therefore they must be ordered to settle their obligation with the respondents.
In cases where there is no evidence of dismissal, the remedy is reinstatement but
without backwages. In this case, both the Labor Arbiter and the NLRC made a finding
that there was no dismissal much less an illegal one. It is settled that factual findings
of quasi-judicial agencies are generally accorded respect and finality so long as these
are supported by substantial evidence.
[31]
In Leonardo v. National Labor Relations Commission, this Court held that:
In a case where the employees failure to work was occasioned neither by his
abandonment nor by a termination, the burden of economic loss is not rightfully
shifted to the employer; each party must bear his own loss.Thus, inasmuch as no
finding of illegal dismissal had been made, and considering that the absence of such
finding is supported by the records of the case, this Court is bound by such conclusion
and cannot allow an award of the payment of backwages. Lastly, since there was no
need to award backwages to respondents, the ruling of the CA that Javalera is
solidarily liable with Exodus International Construction Corporation in paying full
backwages need not be discussed.
Cosmos v Fermin
GR No. 193676, 194303 , June 20 2012
Facts:
Wilson B. Fermin (Fermin) was a forklift operator at Cosmos Bottling Corporation
(COSMOS), where he started his employment on 27 August 1976. On 16 December
2002, he was accused of stealing the cellphone of his fellow employee, Luis Braga
(Braga). Fermin was then given a Show Cause Memorandum, requiring him to
explain why the cellphone was found inside his locker. In compliance therewith, he
submitted an affidavit the following day, explaining that he only hid the phone as a
practical joke and had every intention of returning it to Braga. After conducting an
investigation, COSMOS found Fermin guilty of stealing Bragas phone in violation of
company rules and regulations. Consequently, on 2 October 2003, the company
terminated Fermin from employment after 27 years of service, effective on 6 October
2003.
Following the dismissal of Fermin from employment, Braga executed an affidavit,
which stated the belief that the former had merely pulled a prank without any
intention of stealing the cellphone, and withdrew from COSMOS his complaint
against Fermin.
Meanwhile, Fermin filed a Complaint for Illegal Dismissal, which the Labor Arbiter
(LA) Meanwhile, Fermin filed a Complaint for Illegal Dismissal, dismissed for lack
of merit on the ground that the act of taking a fellow employees cellphone amounted
to gross misconduct. Further, the LA likewise took into consideration Fermins other

infractions, namely:(a) committing acts of disrespect to a superior officer, and (b)

sleeping on duty and abandonment of duty. Fermin filed an appeal with the National
Labor Relations Commission (NLRC), which affirmed the ruling of the LA and
denied Fermins subsequent Motion for Reconsideration. Thereafter, Fermin filed a
Petition for Certiorari with the Court of Appeals (CA), which reversed the rulings of
the LA and the NLRC and awarded him his full retirement benefits
Issue:
Was he illegally dismissed?
Held:
in the case at bar, all the lower tribunals were in agreement that Fermins act of
taking Bragas cellphone amounted to theft. Factual findings made by
administrative agencies, if established by substantial evidence as borne out by the
records, are final and binding on this Court, whose jurisdiction is limited to reviewing
questions of law.
[25]
The only disputed issue left for resolution is whether the imposition of the penalty of
dismissal was appropriate. We rule in the affirmative. Theft committed against a coemployee is considered as a case analogous to serious misconduct, for which the
penalty of dismissal from service may be meted out to the erring employee, viz:
Article 282 of the Labor Code provides:
Article 282. Termination by Employer. - An employer may
terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobendience by the employee
of the lawful orders of his employer or his representatives in
connection with his work;
xxxxxxxxx
(e) Other causes analogous to the foregoing.
Misconduct involves the transgression of some established and definite rule of action,
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment. For misconduct to be serious and therefore a valid
ground for dismissal, it must be:
1. of grave and aggravated character and not merely trivial or unimportant and
2. connected with the work of the employee.
In this case, petitioner dismissed respondent based on the NBI's finding that the latter
stole and used Yusecos credit cards. But since the theft was not committed against
petitioner itself but against one of its employees, respondent's misconduct was
not work-related and therefore, she could not be dismissed for serious
misconduct. Nonetheless, Article 282(e) of the Labor Code talks of other analogous
causes or those which are susceptible of comparison to another in general or in
specific detail. For an employee to be validly dismissed for a cause analogous to those
enumerated in Article 282, the cause must involve a voluntary and/or willful act or
omission of the employee. A cause analogous to serious misconduct is a voluntary
and/or willful act or omission attesting to an employees moral depravity. Theft
committed by an employee against a person other than his employer, if proven by

substantial evidence, is a cause analogous to serious misconduct. In this case, the

LA has already made a factual finding, which was affirmed by both the NLRC and
the CA, that Fermin had committed theft when he took Bragas cellphone. Thus,
this act is deemed analogous to serious misconduct, rendering Fermins dismissal
from service just and valid. Further, the CA was correct in ruling that previous
infractions may be cited as justification for dismissing an employee only if they are
related to the subsequent offense. However, it must be noted that such a discussion
was unnecessary since the theft, taken in isolation from Fermins other violations, was
in itself a valid cause for the termination of his employment. Finally, it must be
emphasized that the award of financial compensation or assistance to an employee
validly dismissed from service has no basis in law. Therefore, considering that
Fermins act of taking the cellphone of his co-employee is a case analogous to serious
misconduct, this Court is constrained to reverse the CAs ruling as regards the payment
of his full retirement benefits. In the same breath, neither can this Court grant his
prayer for backwages.
Jose Santos v NLRC
GR No. 115795 March 6 1998
Facts:
Petitioner, a married man, was employed as a teacher by the private respondent
Hagonoy Institute Inc. from June 1980 until his dismissal on June 1, 1991. Likewise
working as a teacher for the private respondent was Mrs. Arlene T. Martin, also
married. In the course of their employment, the couple fell in love. Thereafter, rumors
regarding the couples relationship spread, especially among the faculty members and
school officials. Concerned about the rumors, on November 3, 1990, the private
respondent advised Mrs. Martin to take a leave of absence which she ignored, as she
continued to report for work. Consequently, on November 9, 1990, she was barred
from reporting for work and was not allowed to enter the private respondents
premises, effectively dismissing her from her employment. In view of her termination
from the service, on November 13, 1990, Mrs. Martin filed a case for illegal dismissal
before the NLRC Regional Arbitration Branch No. III, San Fernando, Pampanga[2]
against the private respondent. After the parties had submitted their respective
evidence and position paper, Labor Arbiter Ariel Santos rendered a decision
dismissing the complaint. On appeal, the NLRC in a decision dated February 26,
1993, reversed the labor arbiters ruling. The reversal was anchored on the failure by
the private respondent, in dismissing Mrs. Martin, to accord her the necessary
procedural due process.[4] Meanwhile, private respondent set up a committee to
investigate the veracity of the rumors. After two weeks of inquiry, the committee
rendered its report confirming the illicit relationship between the petitioner and Mrs.
Martin.[5] In view of the committees finding, on December 19, 1990, petitioner was
charged administratively for immorality and was required to present his side on the
controversy. Five months later or in May 1991, petitioner was informed The reversal
was anchored on the failure by the private respondent, in dismissing Mrs. Martin, to
accord her the necessary procedural due process.[4] Meanwhile, private respondent
set up a committee to investigate the veracity of the rumors. After two weeks of
inquiry, the committee rendered its report confirming the illicit relationship between
the petitioner and Mrs. Martin. In view of the committees finding, on December 19,
1990, petitioner was charged administratively for immorality and was required to

present his side on the controversy. Five months later or in May 1991, petitioner was
informed by the private respondents Board of Directors of his dismissal effective June
1, 1991.[6] Unable to accept such verdict, petitioner filed a complaint for illegal
dismissal on August 12, 1991 before the NLRC Regional Arbitration Branch No. III,
San Fernando, Pampanga. After a full blown trial was conducted, Labor Arbiter
Quintin C. Mendoza rendered a decision dated January 12, 1993, dismissing
petitioners complaint but at the same time awarding monetary sums as financial
assistance, In an effort to seek the reversal of the labor arbiters decision, petitioner
filed an appeal before the NLRC, which, however, did not find any substantial reason
to overturn the labor arbiters ruling Petitioners motion for reconsideration suffered the
same fate.[8] Thus, this petition for certiorari under Rule 65 of the Rules of Court.
Issue:
whether the illicit relationship between the petitioner and Mrs. Martin could be
considered immoral as to constitute just cause to terminate an employee under Article
282 of the Labor Code
Held:
in order to constitute a valid dismissal, two requisites must concur: (a) the dismissal
must be for any of the causes expressed in Art. 282 of the Labor Code, and (b) the
employee must be accorded due process, basic of which are the opportunity to be
heard and defend himself.
Under Article 282 of the Labor Code, as amended, the following are deemed just
causes to terminate an employee:
(a) Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in connection
with his work;
(b) Gross and habitual neglect by the employee of his duties:
(c) Fraud or willfull breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or
his duly authorize representative; and
(e) Other causes analogous to the foregoing.
Moreover, it is provided inter alia under Section 94[10] of the Manual of Regulations
for Private Schools:
Section 94. Causes of Terminating Employment. In addition to the just cases
enumerated in the Labor Code, the employment of school personnels, including
faculty, may be terminated for any of the following causes:
xxx xxx xxx
E. Disgraceful or immoral conduct.
On the outset, it must be stressed that to constitute immorality, the circumstances of
each particular case must be holistically considered and evaluated in light of the
prevailing norms of conduct and applicable laws.[12] American jurisprudence has
defined immorality as a course of conduct which offends the morals of the community

and is a bad example to the youth whose ideals a teacher is supposed to foster and to
elevate,[13] the same including sexual misconduct.[14] Thus, in petitioners case, the
gravity and seriousness of the charges against him stem from his being a married man
and at the same time a teacher.having an extra-marital affair is an afront to the sanctity
of marriage, which is a basic institution of society. Xxxx
As a teacher, petitioner serves as an example to his pupils, especially during their
formative years[18] and stands in loco parentis to them.[19] To stress their
importance in our society, teachers are given substitute and special parental authority
under our laws.Consequently, it is but stating the obvious to assert that teachers must
adhere to the exacting standards of morality and decency. There is no dichotomy of
morality. A teacher, both in his official and personal conduct, must display exemplary
behavior. He must freely and willingly accept restrictions on his conduct that might be
viewed irksome by ordinary citizens. In other words, the personal behavior of
teachers, in and outside the classroom, must be beyond reproach. Accordingly,
teachers must abide by a standard of personal conduct which not only proscribes the
commission of immoral acts, but also prohibits behavior creating a suspicion of
immorality because of the harmful impression it might have on the students.[21]
Likewise, they must observe a high standard of integrity and honesty.[22] From the
foregoing, it seems obvious that when a teacher engages in extra-marital relationship,
especially when the parties are both married, such behavior amounts to immorality,
justifying his termination from employment Having concluded that immorality is a
just cause for dismissing petitioner, it is imperative that the private respondent prove
the same. Since the burden of proof rests upon the employer to show that the
dismissal was for a just and valid cause,[24] the same must be supported by
substantial evidence.[25] Undoubtedly, the question of immorality by the petitioner is
factual in nature. Thus, we reiterate the well-settled rule that factual findings by the
NLRC, particularly when it coincides with those by the Labor Arbiter, are accorded
respect, even finality, and will not be disturbed for as long as such findings are
supported by substantial evidence.[26]
petitioner indeed entered into an illicit relationship with his co-teacher. This fact was
attested to by the testimonies of nine witnesses (a fourth year student, a security
guard, a janitor and six co-teachers) which petitioner failed to rebut. In fact, the
petitioners only recourse was to deny the accusation and insinuate that these witnesses
were coerced by the private respondent to give their testimonies. However, under such
circumstances, it is not enough for petitioner to simply cast doubt on the motives of
the witnesses; he must present countervailing evidence to prove that no such affair
took place. In short, we cannot just ignore the witnesses affidavits and their
subsequent testimonies during the investigation as to the culpability of the petitioner
on the sole basis of the latters denial. In any event, we have held that denial, if
unsubstantiated by clear and convincing evidence, is a negative and self-serving
evidence which has no weight in law and cannot be given greater evidentiary value
over the testimony of credible witnesses who testified on affirmative matters.[27]
Further bolstering the witnesses testimonies is the the absence of any motive on their
part to falsely testify against the petitioner. Thus, since there is nothing to indicate that
the witnesses were moved by dubious or improper motives to testify falsely against
the petitioner, their testimonies are hereby accorded full faith and credit.Likewise,
petitioner cannot take comfort from the letter dated November 7, 1990 signed by 28
of his coteachers, expressing their unequivocal support for Mrs. Arlene Martin.[28] It

must be noted that the said letter did not in any way absolve Mrs. Martin from any
wrongdoing. It merely affirmed the fact that when she was forcibly asked to take a
leave of absence on November 3, 1990 the same was done in a precipitous manner,
without the benefit of due process. Moreover, it must be stressed that the expression
of support was personal to Mrs. Martin, and the same should not redound to the
benefit of the petitioner. Indeed, if petitioner really had the support of his peers, then it
should have been easy for him to obtain a similar letter from them in the course of his
administrative investigation. However, not only did he not get such support, but six of
his co-teachers even testified against him during the inquiry.Finally, petitioner cannot
invoke in his favor the ruling in the Arlene Martin case, wherein the NLRC ruled that
her dismissal was illegal. It must be noted that the reason for declaring Martins
dismissal as illegal was the failure by the private respondent to accord her the required
due process.[29]
As aptly observed by the NLRC in its decision:[30]
In the case at bar, the complainant was amply afforded the due
process requirements of law. He was dismissed only on June 1,
1991 after an exhaustive investigation. A committee was formed to
conduct an inquiry. (Rollo, pp. 43-44) An administrative charge for
immorality was filed against him. (Rollo, p. 45) He was even
required to testify in said case. (Rollo, p. 46) He was given the
opportunity to answer said accusation. (Rollo, p. 47) He was in fact
present during the hearing on January 17, 1991 and gave his side. x
x x In fine, herein complainant (petitioner) cannot successfully
seek refuge in the cited case of Martin. (Rollo, pp. 48-49)
In view of our finding that petitioners dismissal was for a just and valid cause, the
grant of financial assistance by the NLRC is without any factual and legal basis. In
PLDT v. NLRC, [31] we held that:
We hold henceforth separation pay shall be as a measure of social
justice only in these instances where the employee is validly
dismissed for cause other than serious misconduct or those
reflecting his moral character. Where the reason for the valid
dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relationship
with a fellow worker, the employer may not be required to give the
dismissed employee separation pay, or financial assistance, or
whatever other name it is called, on the ground of social justice.
The above ruling has consistently been applied in terminating an
employee when it involves his moral character.[32
Permex Inc v NLRC
GR No. 12503, January 24 2000
Facts:
Permex initially hired Emmanuel Filoteo on October 1, 1990, as a mechanic.
Eventually, Filoteo was promoted to water treatment operator, a position he held until
his termination. As water treatment operator, Filoteo did not have a fixed working
schedule. His hours of work were dependent upon the company's shifting production
schedules. Filoteo was scheduled for the night shift from 7:00 p.m. to 7:00 a.m. the

following day. That night he reported for work together with his co-workers, Felix
Pelayo and Manuel Manzan. They logged in at the main gate and guardhouse of the
petitioner's factory. Filoteo entered his time-in at 8:45 p.m. and since he was
scheduled to work until 7:00 a.m. the next day, he wrote 7:00 a.m. in his scheduled
time-out. This practice of indicating the time out at the moment they time in, was
customarily done by most workers for convenience and practicality since at the end of
their work shift, they were often tired and in a hurry to catch the available service
vehicle for their trip home, so they often forgot to log out. There were times also
when the Log Book was brought to the Office of the Personnel Manager and they
could not enter their time out. The company had tolerated the practice. On the evening
of July 31,1994, at around 9:20 p.m., Filoteo, together with Pelayo, went to see the
Assistant Production Manager inquire if "butchering" of fish would be done that
evening so they could start operating the boiler. They were advised to wait from
9:30 p.m. to 10:00 p.m. for confirmation. Scncm At or about 10:00 p.m., Filoteo and
Pelayo went back to the Assistant Production Manager's office. There they were
informed that there would be no "butchering" of tuna that night. Filoteo then sought
permission to go home, which was granted. Filoteo then hurriedly got his things and
dashed off to the exit gate to catch the service jeep provided by Permex. The next day,
August 1, 1994, Filoteo reported for work as usual. He then remembered that he had
to make a re-entry in his daily time record for the previous day. He proceeded to the
Office of the Personnel Manager to retime his DTR entry. Later, he received a
memorandum from the Assistant Personnel Officer asking him to explain, in writing,
the entry he made in his DTR. Filoteo complied and submitted his written explanation
that same evening.On August 8, 1994, Filoteo was suspended indefinitely. His
explanation was found unsatisfactory. He was dismissed from employment on August
23, 1994. The dismissal arose from Filoteo's alleged violation of Article 2 of the
company rules and regulations. The offense charged was entering in his DTR that he
had worked from 8:45 p.m. of July 31, 1994 to 7:00 a.m. of August 1,1994, when in
fact he had worked only up to 10:00 p.m. Filoteo filed a complaint for illegal
dismissal with claims for separation pay, damages, and attorney's feesworking
schedule. His hours of work were dependent upon the company's shifting production
schedules. Filoteo was scheduled for the night shift from 7:00 p.m. to 7:00 a.m. the
following day. That night he reported for work together with his co-workers, Felix
Pelayo and Manuel Manzan. They logged in at the main gate and guardhouse of the
petitioner's factory. Filoteo entered his time-in at 8:45 p.m. and since he was
scheduled to work until 7:00 a.m. the next day, he wrote 7:00 a.m. in his scheduled
time-out. This practice of indicating the time out at the moment they time in, was
customarily done by most workers for convenience and practicality since at the end of
their work shift, they were often tired and in a hurry to catch the available service
vehicle for their trip home, so they often forgot to log out. There were times also
when the Log Book was brought to the Office of the Personnel Manager and they
could not enter their time out. The company had tolerated the practice.
On the evening of July 31,1994, at around 9:20 p.m., Filoteo, together with Pelayo,
went to see the Assistant Production Manager to inquire if "butchering" of fish would
be done that evening so they could start operating the boiler. They were advised to
wait from 9:30 p.m. to 10:00 p.m. for confirmation. At or about 10:00 p.m., Filoteo
and Pelayo went back to the Assistant Production Manager's office. There they were
informed that there would be no "butchering" of tuna that night. Filoteo then sought
permission to go home, which was granted. Filoteo then hurriedly got his things and
dashed off to the exit gate to catch the service jeep provided by Permex. The next day,

August 1, 1994, Filoteo reported for work as usual. He then remembered that he had
to make a re-entry in his daily time record for the previous day. He proceeded to the
Office of the Personnel Manager to retime his DTR entry. Later, he received a
memorandum from the Assistant Personnel Officer asking him to explain, in writing,
the entry he made in his DTR. Filoteo complied and submitted his written explanation
that same evening. Filoteo was suspended indefinitely. His explanation was found
unsatisfactory. He was dismissed from Employment. The dismissal arose from
Filoteo's alleged violation of Article 2 of the company rules and regulations. The
offense charged was entering in his DTR that he had worked from 8:45 p.m. of July
31, 1994 to 7:00 a.m. of August 1,1994, when in fact he had worked only up to 10:00
p.m. Filoteo filed a complaint for illegal dismissal with claims for separation pay,
damages, and attorney's fees with the Labor Arbiter. the Labor Arbiter dismissed the
complaint. Filoteo appealed to the NLRC. Finding merit therein, the Commission's
Fifth Division promulgated its resolution, reversing and setting aside the Labor
Arbiter's decision.
Issue:
w/n filoteo was illegally dismissed?
Held:
To constitute a valid dismissal from employment, two requisites must concur: (a) the
dismissal must be for any of the causes provided for in Article 282 of the Labor Code;
and (b) the employee must be afforded an opportunity to be heard and defend himself.
[8] This means that an employer can terminate the services of an employee for just
and valid causes, which must be supported by clear and convincing evidence.[9] It
also means that, procedurally, the employee must be given notice, with adequate
opportunity to be heard,[10] before he is notified of his actual dismissal for cause. the
NLRC found that the two-fold requirements for a valid dismissal were not satisfied by
the petitioners. SccalrFirst, petitioner's charge of serious misconduct of falsification or
deliberate misrepresentation was not supported by the evidence on the record contrary
to Art. 277 of the Labor Code which provides that:
"Art. 277. Miscellaneous provisions. xxx
(b) Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just and authorized cause...The burden of
proving that the termination was for a valid or authorized cause shall rest on the
employer..."
Second, the private respondent was not afforded an opportunity to be heard. As found
by the NLRC: Calrsc
"... Aside from the fact that there was no valid and justifiable cause for his outright
dismissal from the service, complainant's dismissal as correctly held by the Labor
Arbiter was tainted with arbitrariness for failure of respondent company (petitioner
herein) to observe procedural due process in effecting his dismissal. Admittedly,
complainant was suspended indefinitely on August 8, 1994 and subsequently
dismissed on August 23, 1994 without any formal investigation to enable complainant
to defend himself."Such dismissal, in our view, was too harsh a penalty for an
unintentional infraction, not to mention that it was his first offense committed without

malice, and committed also by others who were not equally penalized.the alleged
false entry in private respondent's DTR was actually the result of having logged his
scheduled time-out in advance on July 31, 1994. But it appears that when he timed in,
he had no idea that his work schedule (night shift) would be cancelled. When it was
confirmed at 10:00 p.m. that there was no "butchering" of tuna to be done, those who
reported for work were allowed to go home, including private respondent. In fact,
Filoteo even obtained permission to leave from the Assistant Production Manager.
Considering the factory practice which management tolerated, we are persuaded that
Filoteo, in his rush to catch the service vehicle, merely forgot to correct his initial
time-out entry. Nothing is shown to prove he deliberately falsified his daily time
record to deceive the company. The NLRC found that even management's own
evidence reflected that a certain Felix Pelayo, a co-worker of private respondent, was
also allowed to go home that night and like private respondent logged in advance 7:00
a.m. as his time-out. This supports Filoteo's claim that it was common practice among
night-shift workers to log in their usual time-out in advance in the daily time record.
Sdjad
Moreover, as early as Tide Water Associated Oil Co. v. Victory Employees and
Laborers Association, 85 Phil. 166 (1949), wer uled that, where a violation of
company policy or breach of company rules and regulations was found to have been
tolerated by management, then the same could not serve as a basis for termination. All
told we see no reason to find that the NLRC gravely abused its discretion when it
ruled that private respondent was illegally dismissed. Hence we concur in that ruling.
Nonetheless, we find that the award of moral and exemplary damages by the public
respondent is not in order and must be deleted. Moral damages are recoverable only
where the dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary to morals, good
customs, or public policy.[13] Exemplary damages may be awarded only if the
dismissal was done in a wanton, oppressive, or malevolent manner.[14] None of these
circumstances exist in the present case.
RB Press v Galit
GR 153510 February 13 2008
Facts:
respondent was employed by petitioner R.B. Michael Press as an offset machine
operator, whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays to
Saturdays, and he was paid PhP 230 a day. During his employment, Galit was tardy
for a total of 190 times, totaling to 6,117 minutes, and was absent without leave for a
total of nine and a half days On February 22, 1999, respondent was ordered to render
overtime service in order to comply with a job order deadline, but he refused to do so.
The following day, February 23, 1999, respondent reported for work but petitioner
Escobia told him not to work, and to return later in the afternoon for a hearing. When
he returned, a copy of an Office Memorandum was served on him, On February 24,
1999, respondent was terminated from employment. The employer, through petitioner
Escobia, gave him his two-day salary and a termination letter. On January 3, 2000,
petitioners elevated the case to the NLRC the NLRC dismissed the appeal for lack of
merit. Not satisfied with the ruling of the NLRC, petitioners filed a Petition for
Certiorari with the CA. On November 14, 2001, the CA rendered its judgment
affirming with modification the NLRCs Decision The CA found that it was not the

tardiness and absences committed by respondent, but his refusal to render overtime
work on February 22, 1999 which caused the termination of his employment. It ruled
that the time frame in which respondent was afforded procedural due process is
dubitable; he could not have been afforded ample opportunity to explain his side and
to adduce evidence on his behalf. It further ruled that the basis for computing his
backwages should be his daily salary at the time of his dismissal which was PhP 230,
and that his backwages should be computed from the time of his dismissal up to the
finality of the CAs decision. On December 3, 2001, petitioners asked for
reconsideration but was denied in the CAs May 7, 2002 Resolution
Issue:
Was he illegally dismissed?
Held:
Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and
discipline to come to work on time everyday exhibit the employees deportment
towards work. Habitual and excessive tardiness is inimical to the general productivity
and business of the employer. This is especially true when the tardiness and/or
absenteeism occurred frequently and repeatedly within an extensive period of time.
The mere fact that the numerous infractions of respondent have not been immediately
subjected to sanctions cannot be interpreted as condonation of the offenses or waiver
of the company to enforce company rules. A waiver is a voluntary and intentional
relinquishment or abandonment of a known legal right or privilege. It has been ruled
that a waiver to be valid and effective must be couched in clear and unequivocal terms
which leave no doubt as to the intention of a party to give up a right or benefit which
legally pertains to him.
Hence, the management prerogative to discipline employees and impose punishment
is a legal right which cannot, as a general rule, be impliedly waived. In Cando v.
NLRC, the employee did not report for work for almost five months when he was
charged for absenteeism. The employee claimed that such absences due to his
handling of union matters were condoned. The Court held that the employee did not
adduce proof to show condonation coupled with the fact that the company eventually
instituted the administrative complaint relating to his company violations Thus it is
incumbent upon the employee to adduce substantial evidence to demonstrate
condonation or waiver on the part of management to forego the exercise of its right to
impose sanctions for breach of company rules.
xxx. In the case of Filipio v. The Honorable Minister Blas F. Ople, the Court, quoting
then Labor Minister Ople, ruled that past infractions for which the employee has
suffered the corresponding penalty for each violation cannot be used as a justification
for the employees dismissal for that would penalize him twice for the same offense.
At most, it was explained, these collective infractions could be used as supporting
justification to a subsequent similar offense. In contrast, the petitioners in the case at
bar did not impose any punishment for the numerous absences and tardiness of
respondent. Thus, said infractions can be used collectively by petitioners as a ground
for dismissal.

Respondent is admittedly a daily wage earner and hence is paid based on such
arrangement. For said daily paid workers, the principle of a days pay for a days work
is squarely applicable. Hence it cannot be construed in any wise that such nonpayment
of the daily wage on the days he was absent constitutes a penalty
While the CA is correct that the charge of serious misconduct was not substantiated,
the charge of insubordination however is meritorious. or willful disobedience to be a
valid cause for dismissal, these two elements must concur: (1) the employees assailed
conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to
the employee, and must pertain to the duties which he had been engaged to discharge.
In the present case, there is no question that petitioners order for respondent to render
overtime service to meet a production deadline complies with the second requisite.
Art. 89 of the Labor Code empowers the employer to legally compel his employees to
perform overtime work against their will to prevent serious loss or damage:
Art. 89. EMERGENCY OVERTIME WORK
Any employee may be required by the employer to perform overtime work in any of
the following cases:
xxxx
(c) When there is urgent work to be performed on machines, installations, or
equipment, in order to avoid serious loss or damage to the employer or some other
cause of similar nature;
xxxx
In the present case, petitioners business is a printing press whose production schedule
is sometimes flexible and varying. It is only reasonable that workers are sometimes
asked to render overtime work in order to meet production deadlines. Dennis Reyes,
in his Affidavit dated May 3, 1999, stated that in the morning of February 22, 1999,
he approached and asked respondent to render overtime work so as to meet a
production deadline on a printing job order, but respondent refused to do so for no
apparent reason. Respondent, on the other hand, claims that the reason why he refused
to render overtime work was because he was not feeling well that day. The issue now
is, whether respondents refusal or failure to render overtime work was willful; that is,
whether such refusal or failure was characterized by a wrongful and perverse attitude.
In Lakpue Drug Inc. v. Belga, willfulness was described as characterized by a
wrongful and perverse mental attitude rendering the employees act inconsistent with
proper subordination.
[14]
The fact that respondent refused to provide overtime work despite his knowledge that
there is a production deadline that needs to be met, and that without him, the offset
machine operator, no further printing can be had, shows his wrongful and perverse
mental attitude; thus, there is willfulness. Respondents excuse that he was not feeling
well that day is unbelievable and obviously an afterthought. He failed to present any
evidence other than his own assertion that he was sick. Also, if it was true that he was
then not feeling well, he would have taken the day off, or had gone home earlier, on
the contrary, he stayed and continued to work all day, and even tried to go to work the
next day, thus belying his excuse, which is, at most, a self-serving statement. After a
re-examination of the facts, we rule that respondent unjustifiably refused to render

overtime work despite a valid order to do so. The totality of his offenses against
petitioner R.B. Michael Press shows that he was a difficult employee. His refusal to
render overtime work was the final straw that broke the camels back, and, with his
gross and habitual tardiness and absences, would merit dismissal from service.
Under the twin notice requirement, the employees must be given two (2) notices
before his employment could be terminated: (1) a first notice to apprise the employees
of their fault, and (2) a second notice to communicate to the employees that their
employment is being terminated. Not to be taken lightly of course is the hearing or
opportunity for the employee to defend himself personally or by counsel of his choice
In addition, if the continued employment poses a serious and imminent threat to the
life or property of the employers or of other employees like theft or physical injuries,
and there is a need for preventive suspension, the employers can immediately suspend
the erring employees for a period of not more than 30 days. Notwithstanding the
suspension, the employers are tasked to comply with the twin notice requirement
under the law. The preventive suspension cannot replace the required notices.
Thus, there is still a need to comply with the twin notice requirement and the requisite
hearing or conference to ensure that the employees are afforded due process even
though they may have been caught in flagrante or whe the evidence of the
commission of the offense is strong. On the surface, it would seem that petitioners
observed due process (twin notice and hearing requirement):
On February 23, 1999 petitioner notified respondent of the hearing to be conducted
later that day. On the same day before the hearing, respondent was furnished a copy of
an office memorandum which contained a list of his offenses, and a notice of a
scheduled hearing in the afternoon of the same day. The next day, February 24, 1999,
he was notified that his employment with petitioner R.B. Michael Press had been
terminated. A scrutiny of the disciplinary process undertaken by petitioners leads us to
conclude that they only paid lip service to the due process requirements. The undue
haste in effecting respondents termination shows that the termination process was a
mere simulationthe required notices were given, a hearing was even scheduled and
held, but respondent was not really given a real opportunity to defend himself; and it
seems that petitioners had already decided to dismiss respondent from service, even
before the first notice had been given.
Anent the written notice of charges and hearing, it is plain to see that there was merely
a general description of the claimed offenses of respondent. The hearing was
immediately set in the afternoon of February 23, 1999the day respondent received the
first notice. Therefore, he was not given any opportunity at all to consult a union
official or lawyer, and, worse, to prepare for his defense. Regarding the February 23,
1999 afternoon hearing, it can be inferred that respondent, without any lawyer or
friend to counsel him, was not given any chance at all to adduce evidence in his
defense. At most, he was asked if he did not agree to render overtime work on
February 22, 1999 and if he was late for work for 197 days. He was never given any
real opportunity to justify his inability to perform work on those days. This is the only
explanation why petitioners assert that respondent admitted all the charges. In the
February 24, 1999 notice of dismissal, petitioners simply justified respondents
dismissal by citing his admission of the offenses charged. It did not specify the details
surrounding the offenses and the specific company rule or Labor Code provision upon

which the dismissal was grounded. In view of the infirmities in the proceedings, we
conclude that termination of respondent was railroaded in serious breach of his right
to due process. And as a consequence of the violation of his statutory right to due
process and following Agabon, petitioners are liable jointly and solidarily to pay
nominal damages to the respondent in the amount of PhP 30,000.
Mirant v Caro
GR 181490 April 23 2014
Issue:
that respondents omission amounted to "unjust refusal" because he could not
sufficiently support with convincing proof and evidence his defenses for failing to
take the random drug test.
Held:
corporations enforcement of its Anti-Drugs Policy is an exercise of its management
prerogative. respondent "failed" to take the random drug test as scheduled, and under
the said company policy, such failure metes the penalty of termination for the first
offense. A plain, simple and literal application of the said policy to the omission of
respondent would have warranted his outright dismissal from employment if the
facts were that simple in the case at bar. Beyond debate the facts of this case are not
and this disables the Court from permitting a straight application of an otherwise
prima facie straightforward rule if the ends of substantial justice have to be served.
xxx
While the adoption and enforcement by petitioner corporation of its Anti-Drugs
Policy is recognized as a valid exercise of its management prerogative as an
employer, such exercise is not absolute and unbridled. Managerial prerogatives are
subject to limitations provided by law, collective bargaining agreements, and the
general principles of fair play and justice.46 In the exercise of its management
prerogative, an employer must therefore ensure that the policies, rules and regulations
on work-related activities of the employees must always be fair and reasonable and
the corresponding penalties, when prescribed, commensurate to the offense involved
and to the degree of the infraction.47 The Anti-Drugs Policy of Mirant fell short of
these requirements. Petitioner corporations subject Anti-Drugs Policy fell short of
being fair and reasonable.
First. The policy was not clear on what constitutes "unjustified refusal" when the
subject drug policy prescribed that an employees "unjustified refusal" to submit to a
random drug test shall be punishable by the penalty of termination for the first
offense. To be sure, the term "unjustified refusal" could not possibly cover all forms
of "refusal" as the employees resistance, to be punishable by termination, must be
"unjustified." To the mind of the Court, it is on this area where petitioner corporation
had fallen short of making it clear to its employees as well as to management as to
what types of acts would fall under the purview of "unjustified refusal." Even
petitioner corporations own Investigating Panel recognized this ambiguity, viz.:
The Panel also recommends that Management review the Mirant Drug Policy
specifically "Unjustified [R]efusal to submit to random drug testing." The Panel

believes that the term "refusal" casts certain ambiguities and should be clearly
defined.48 The fact that petitioner corporations own Investigating Panel and its Vice
President for Operations, Sliman, differed in their recommendations regarding
respondents case are first-hand proof that there, indeed, is ambiguity in the
interpretation and application of the subject drug policy. The fact that petitioner
corporations own personnel had to dissect the intended meaning of "unjustified
refusal" is further proof that it is not clear on what context the term "unjustified
refusal" applies to. It is therefore not a surprise that the Labor Arbiter, the NLRC and
the CA have perceived the term "unjustified refusal" on different prisms due to the
lack of parameters as to what comes under its purview. To be sure, the fact that the
courts and entities involved in this case had to engage in semantics and come up
with different constructions is yet another glaring proof that the subject policy is not
clear creating doubt that respondents dismissal was a result of petitioner
corporations valid exercise of its management prerogative.
It is not a mere jurisprudential principle, but an enshrined provision of law, that all
doubts shall be resolved in favour of labor. Thus, in Article 4 of the Labor Code, as
amended, "[a]ll doubts in the implementation and interpretation of the provisions of
[the Labor] Code, including its implementing rules and regulations, shall be resolved
in favor of labor." In Article 1702 of the New Civil Code, a similar provision states
that "[i]n case of doubt, all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living for the laborer." Applying these provisions of
law to the circumstances in the case at bar, it is not fair for this Court to allow an
ambiguous policy to prejudice the rights of an employee against illegal dismissal. To
hold otherwise and sustain the stance of petitioner corporation would be to adopt an
interpretation that goes against the very grain of labor protection in this jurisdiction.
As correctly stated by the Labor Arbiter, "when a conflicting interest of labor and
capital are weighed on the scales of social justice, the heavier influence of the latter
must be counter-balanced by the sympathy and compassion the law must accord the
underprivileged worker."49
Second. The penalty of termination imposed by petitioner corporation upon
respondent fell short of being reasonable. Company policies and regulations are
generally valid and binding between the employer and the employee unless shown to
be grossly oppressive or contrary to law50 as in the case at bar. Recognizing the
own Investigating Panel over that of Sliman and the NLRC. The appellate court
succinctly but incisively pointed out, viz.:
x x x We find, as correctly pointed out by the investigating panel, that the [petitioner
corporations] Anti-Drug Policy is excessive in terminating an employee for his
"unjustified refusal" to subject himself to the random drug test on first offense,
without clearly defining what amounts to an "unjustified refusal." Thus, We find that
the recommended four (4) working weeks suspension without pay as the reasonable
penalty to be imposed on [respondent] for his disobedience. x x x51 (Additional
emphasis supplied.) To be sure, the unreasonableness of the penalty of termination as
imposed in this case is further highlighted by a fact admitted by petitioner corporation
itself: that for the ten-year period that respondent had been employed by petitioner
corporation, he did not have any record of a violation of its company policies. As to
the other issue relentlessly being raised by petitioner corporation that respondents
petition for certiorari before the CA should have been considered moot as respondent
had already previously executed a quitclaim discharging petitioner corporation from

all his monetary claims, we cannot agree. Quitclaims executed by laborers are
ineffective to bar claims for the full measure of their legal rights,52 especially in this
case where the evidence on record shows that the amount stated in the quitclaim
exactly corresponds to the amount claimed as unpaid wages by respondent under
Annex A53 of his Reply54 filed with the Labor Arbiter. Prima facie, this creates a
false impression that respondents claims have already been settled by petitioner
corporation discharging the latter from all of respondents monetary claims. In truth
and in fact, however, the amount paid under the subject quitclaim represented the
salaries of respondent that remained unpaid at the time of his termination not the
amounts being claimed in the case at bar.
xxxx
the alluded quitclaim, which was undated and not even notarized although signed by
the petitioner, was for the amount of P59,630.05. The said quitclaim was attached as
Annex 26 in the [petitioners] Position Paper filed before the Labor Arbiter. As fully
explained by [respondent] in his Reply filed with the Labor Arbiter, the amount stated
therein was his last pay due to him when he was terminated, not the amount
representing his legitimate claims in this labor suit x x x. To bolster his defense,
[respondent] submitted the pay form issued to him by the [petitioner corporation],
showing his net pay at P59,630.05 exactly the amount stated in the quitclaim x x x.
Then, too, as stated on the quitclaim itself, the intention of the waiver executed by the
[respondents] "full and final payment of [his] last salary/separation pay" x x x. It did
not in any way waive [respondents] right to pursue his legitimate claims regarding
his dismissal in a labor suit. Thus, We gave no credence to [petitioners] private
defense that alleged quitclaim rendered the instant petition moot.55 Finally, the
petition avers that petitioner Bautista should not be held personally liable for
respondents dismissal as he acted in good faith and within the scope of his official
functions as then president of petitioner corporation. We agree with
petitioners.1wphi1 Both decisions of the Labor Arbiter and the CA did not discuss
the basis of the personal liability of petitioner Bautista, and yet the dispositive portion
of the decision of the Labor Arbiter - which was affirmed by the appellate court - held
him jointly and severally liable with petitioner corporation, viz.:
xxxx
A corporation has a personality separate and distinct from its officers and board of
directors who may only be held personally liable for damages if it is proven that they
acted with malice or bad faith in the dismissal of an employee.57 Absent any evidence
on record that petitioner Bautista acted maliciously or in bad faith in effecting the
termination of respondent, plus the apparent lack of allegation in the pleadings of
respondent that petitioner Bautista acted in such manner, the doctrine of corporate
fiction dictates that only petitioner corporation should be held liable for the illegal
dismissal of respondent.
ePacific Global Contact Center Inc v Cabansay
GR No. 167345 November 23 2007
Facts:
Ma. Lourdes Cabansay (Cabansay) was hired as Senior Traning Manager of ePacific
Global Contact Center, Inc. with a monthly salary of P38,000.00 on April 18, 2001
and became a regular employee on August 1, 2001. In March 2002, respondent was

tasked to prepare a new training process for the companys Telesales Trainees. After
reviewing the training module prepared by respondent, Mr. Rosendo S. Ballesteros
(Ballesteros), the companys Senior Vice President-Business Development Group,
found that the same did not contain any changes and that they were not ready to
present it. He thus instructed respondent through an electronic mail (e-mail) to
postpone the presentation and the implementation of the new training process.
Ballesteros further emphasized that the Department needed more time to teach the
trainees on how to get leads, focus on developing their telemarketing skills and
acquire proper motivation.In response to Ballesteross e-mail instructions, Cabansay
wrotexxx (sic)
SPECIFICALLY told you that I WILL DISCUSS the new training
process and explain it to them in detail. Didnt you see the last past
(sic) of the 5- day classroom training, (sic) the last day includes
PROSPECTING, thats where the CCA trainees will be taught how
to get leads both local and abroad. The criteria for the evaluation?
Its already done by Richie, were going to distribute the hard copies
and discuss it in DETAIL in this afternoons briefing. This is a very
simple presentation and I WILL NOT POSTPONE it today, its
very easy to comprehend and as per YOUR NSTRUCTION we
will be implementing it next week, so when should we present this
to the TLs? ets not make SIMPLE THINGS COMPLICATED
Ballesteros sent Cabansay a memo on April 6, 2002, informing the latter that he found
her message to be a clear act of insubordination, causing him to lose his trust and
confidence in her as Manager of the Training Department. He then asked respondent
to explain in writing why she should not be terminated as a consequence of her acts.
Meanwhile, no presentation of the training module was made on April 5, 2002
because the Senior Manager for Telesales, Ms. Lorna Garcia, on instruction of
Ballesteros, informed all the participants that the same was postponed because
Management was not yet ready to present the module. Clarifying that this was merely
a case of miscommunication and that she had no intention to disregard the order to
postpone the implementation of the new training process, Cabansay submitted two
memoranda dated April 8 and 11, 2002. However, on April 11, 2002, the same day she
submitted her second explanation, Cabansay received a memorandum from the HR
Department/Office of the President notifying her that she had been terminated from
the service effective immediately for having committed an act of insubordination
resulting in the managements loss of trust and confidence in her. Respondent, thus,
filed a case for illegal dismissal
Issue:
w/n Cabansay was illegally dismissed?
Held:
The petitioners anchor their termination of respondents services on Article 282,
paragraphs (a) and (c), of the Labor Code, as amended.xxx Willful disobedience or
insubordination necessitates the concurrence of at least two requisites: (1) the
employees assailed conduct must have been willful, that is, characterized by a

wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been
engaged to discharge. On the other hand, loss of trust and confidence, to be a valid
ground for dismissal, must be based on a willful breach of trust and founded on
clearly established facts. A breach is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not
on the employers arbitrariness, whims, caprices or suspicion; otherwise, the employee
would eternally remain at the mercy of the employer. Loss of confidence must not
also be indiscriminately used as a shield by the employer against a claim that the
dismissal of an employee was arbitrary. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and show that the employee
concerned is unfit to continue working for the employer
In the case at bar, the reasonableness and lawfulness of Ballesteross order is not in
question, so is its relation to the duties of respondent. What is disputed herein is rather
its clarity. Respondent Cabansay contends that the directive was not clearly made
known to her: Ballesteross order was to postpone the implementation but not the
presentation of the new training process/module to the team leaders.
Respondents contention is untenable. It should be noted that what is involved in the
directive is the new training process, which logically cannot be implemented without
being presented or communicated to the team leaders of the company. Thus, when
Ballesteros ordered the cessation of its implementation, there can be no other
inference than that he wanted to postpone the presentation of the training process
which was then already scheduled. Evident further in Ballesteross e-mail is that he
did not find any changes in the new module; hence, he wanted the implementation
thereof to be deferred and instructed respondent to consult with the other managers to
gather more input. Be that as it may, respondent cannot belie the fact that she wellunderstood the directive for her to postpone the presentation of the module, as she
herself acknowledged in her e-mail reply to SVP Ballesteros that she would discuss
the new training process and explain it to them in detail in the afternoon on that day,
thus, she would not postpone the scheduled presentation. There is no doubt, therefore,
that the order of Ballesteros was clearly made known to respondent.
As to the willfulness of her conduct, the same is manifest in her e-mail reply, which,
as it is written, is characterized by abject aggressiveness and antagonism: the e-mail
has a begrudging tone and is replete with capitalized words eliciting her resolve to
indeed contravene the SVPs directive. Thus, she categorically said, This is a very
simple presentation and I WILL NOT POSTPONE it today, its very easy to
comprehend and as per YOUR INSTRUCTION we will be implementing it next week,
so when should we present this to the TLs? Lets not make SIMPLE THINGS
COMPLICATED. I will go on with the presentation this afternoon. While respondent
Cabansay was a managerial employee, a Senior Training Manager entrusted with the
delicate matter of molding the minds and characters of call center agents and team
leaders, and clothed with discretion to determine what was in the best interest of the
company, her managerial discretion was not without limits. Its parameters were
contained the moment her discretion was exercised and then opposed by the
immediate superior officer/employer for being against the policies and welfare of the

company. Hence, any action in pursuit of the discretion thus opposed ceased to be
discretionary and could be considered as willful disobedience.
[45]
Indeed, by refusing to postpone the presentation and implementation of the new
training process, respondent intentionally, knowingly and purposely, without
justifiable excuse, breached the trust and confidence reposed in her by her employer.
To present and discuss a training module, which is deemed by management as still
inadequate in its content, will certainly not only waste the time, effort and energy of
the participants in the discussion but will also entail losses on the part of the company.
The mere fact that respondent refused to obey the reasonable and lawful order to defer
the presentation and implementation of the module already gave a just cause for
petitioners to dismiss her. Verily, had it not been for the timely intervention of the
Telesales Senior Manager, under the instructions of the SVP, harm could have been
done to company resources. Let it be stressed that insofar as the application of the
doctrine of trust and confidence is concerned, jurisprudence has distinguished the
treatment of managerial employees or employees occupying positions of trust and
confidence from that of rank-and-file personnel. With respect to the latter, loss of trust
and confidence as a ground for dismissal requires proof of involvement in the alleged
events in question, but as regards managerial employees, the mere existence of a basis
for believing that such employee has breached the trust of his employer would suffice
for his or her dismissal.
[46]
For this purpose, there is no need to present proof beyond reasonable doubt. It is
sufficient that there is some basis for the loss of trust or that the employer has
reasonable ground to believe that the employee is responsible for the misconduct
which renders him unworthy of the trust and confidence demanded by his position.
[47]
Respondents conduct, in this case, is sufficient basis for the company to lose its trust
and confidence in her. Under the circumstances, the company cannot be expected to
retain its trust and confidence in and continue to employ a manager whose attitude is
perceived to be inimical to its interests. Unlike other just causes for dismissal, trust in
an employee, once lost, is difficult, if not impossible to regain.
[48
As to the respondents argument that petitioners failed to comply with the
requirements of statutory due process, we do not agree. Before the services of an
employee can be validly terminated, the employer must furnish him with two written
notices: (a) a written notice served on the employee specifying the ground or grounds
for termination, and giving to said employee reasonable opportunity within which to
explain his side; and, (b) 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.
[49]
In this case, the facts are clear that petitioners, through Ballesteros, informed
respondent in the April 6, 2002 memo that the company found her message to be a
clear act of insubordination leading to the companys loss of trust and confidence in
her as a manager of the training department. In the same memo, petitioners asked her
to explain her side in writing. After the respondent submitted her two
memorandaexplanations successively on April 8 and 11, 2002, petitioners served her
the notice of her termination. Verily, petitioners complied with the requirement of

statutory due process in the dismissal of respondent. The fact that the letter of
termination or the second notice was received by respondent on April 11, 2002, on the
same day she submitted her second explanation, does not put to naught petitioners
observance of the requirement of due process. It has to be noted that from April 8,
2002, when respondent had her chance to explain her side, petitioners were
contemplating for several days and presumably were considering her reasons before
they finally dismissed her. In any case, the essence of due process is that a party be
afforded a reasonable opportunity to be heard and to submit any evidence he may
have in support of his defense.
Imasen v Alcon and Papa
GR No. 194884 October 22 2014
Facts:
Imasen Philippine Manufacturing C orporation is a domestic corporation engaged in
the manufacture of auto seat-recliners and slide-adjusters. It hired the respondents as
manual welders in 2001. the respondents reported for work on the second shift - from
8:00 pm to 5:00 am of the following day. At around 12:40 am, C yrus A. Altiche,
Imasen's security guard on duty, went to patrol and inspect the production plant's
premises. When Altiche reached Imasen's Press Area, he heard the sound of a running
industrial fan. Intending to turn the fan off, he followed the sound that led him to the
plant's "Tool and Die" section. At the "Tool and Die" section, Altiche saw the
respondents having sexual intercourse on the floor, using a piece of carton as mattress.
Altiche immediately went back to the guard house and relayed what he saw to Danilo
S. Ogana, another security guard on duty. On Altiche's request, Ogana made a followup inspection. Ogana went to the "Tool and Die" section and saw several employees,
including the respondents, already leaving the area. He noticed, however, that Alcon
picked up the carton that Altiche claimed the respondents used as mattress during
their sexual act, and returned it to the place where the cartons were kept. Altiche then
submitted a handwritten report6 of the incident to Imasen's Finance and
Administration Manager. On October 14, 2002, Imasen issued the respondents
separate interoffice memoranda7 informing them of Altiche's report on the October 5,
2002 incident and directing them to submit their individual explanation. The
respondents complied with the directive; they claimed that they were merely sleeping
in the "Tool and Die" section at the time of the incident. They also claimed that other
employees were near the area, making the commission of the act charged impossible.
Imasen issued the respondents another interoffice memorandum8 directing them to
appear at the formal hearing of the administrative charge against them. The hearing
was conducted on October 30, 2002,9 presided by a mediator and attended by the
representatives of Imasen, the respondents, Altiche and Ogana. Altiche and Ogana
reiterated the narrations in Altiche's handwritten report.
On December 4, 2002, Imasen issued the respondents separate interoffice
memoranda1 0 terminating their services. It found the respondents guilty of the act
charged which it considered as "gross misconduct contrary to the existing policies,
rules and regulations of the company." On December 5, 2002, the respondents filedthe
complaint1 1 for illegal dismissal
Issue:

w/n they were illegally dismissed?

Held:
protecting the rights of the workers, the law, however, does not authorize the
oppression or self-destruction of the employer.2 3 The constitutional commitment to
the policy of social justice cannot be understood to mean that every labor dispute shall
automatically be decided in favor of labor.2 4 The constitutional and legal protection
equally recognize the employer's right and prerogative to manage its operation
according to reasonable standards and norms of fair play. Accordingly, except as
limited by special law, an employer is free to regulate, according to his own judgment
and discretion, all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of employees, worker
supervision, layoff of workers and the discipline, dismissal and recall of workers.2
5 As a general proposition, an employer has free reign over every aspect of its
business, including the dismissal of his employees as long as the exercise of its
management prerogative is done reasonably, in good faith, and in a manner not
otherwise intended to defeat or circumvent the rights of workers.
In these lights, the Court's task in the present petition is to balance the conflicting
rights of the respondents to security of tenure, on one hand, and of Imasen to dismiss
erring employees pursuant to the legitimate exercise of its management prerogative,
on the other.
xxx
The just causes for dismissing an employee are provided under Article 2822 6 (now
Article 296)2 7 of the Labor C ode. Under Article 282(a), serious misconduct by the
employee justifies the employer in terminating his or her employment. Misconduct is
defined as an improper or wrong conduct. It is a transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment.2 8 To constitute a valid cause
for the dismissal within the text and meaning of Article 282 of the Labor C ode, the
employee's misconduct must be serious, i.e., of such grave and aggravated
character and not merely trivial or unimportant.2 9 cralawred Additionally, the
misconduct must be related to the performance of the employee's duties showing
him to be unfit to continue working for the employer.3 0 Further, and equally
important and required, the act or conduct must have been performed with
wrongful intent.To summarize, for misconduct or improper behavior to be a just
cause for dismissal, the following elements must concur: (a) the misconduct must be
serious; (b) it must relate to the performance of the employee's duties showing that the
employee has become unfit to continue working for the employer;3 2 and (c) it must
have been performed with wrongful intent.
Xxx
Dismissal situations (on the ground of serious misconduct) involving sexual acts,
particularly sexual intercourse committed by employees inside company premises and
during work hours, are not usual violations3 3 and are not found in abundance under
jurisprudence. Thus, in resolving the present petition, we are largely guided by the
principles we discussed above, as applied to the totality of the circumstances that
surrounded the petitioners' dismissal. In other words, we view the petitioners' act from

the prism of the elements that must concur for an act to constitute serious misconduct,
analyzed and understood within the context of the overall circumstances of the case.
In taking this approach, we are guided, too, by the jurisdictional limitations that a
Rule 45 review of the C A's Rule 65 decision in labor cases imposes on our
discretion.3 4 In addressing the situation that we are faced with in this petition, we
determine whether Imasen validly exercised its prerogative as employer to dismiss the
respondents-employees who, within premises and during work hours, engaged in
sexual intercourse. As framed within our limited Rule 45 jurisdiction, the question
that we ask is: whether the NLRC committed grave abuse of discretion in finding that
the respondents' act amounted to what Article 282 of the Labor Code textually
considers as serious misconduct to warrant their dismissal.
the NLRC legally correct and well within its jurisdiction when it affirmed the validity
of the respondents' dismissal on the ground of serious misconduct. Sexual acts and
intimacies between two consenting adults belong, as a principled ideal, to the realm of
purely private relations. Whether aroused by lust or inflamed by sincere affection,
sexual acts should be carried out at such place, time and circumstance that, by the
generally accepted norms of conduct, will not offend public decency nor disturb the
generally held or accepted social morals. Under these parameters, sexual acts between
two consenting adults do not have a place in the work environment. Indisputably, the
respondents engaged in sexual intercourse inside company premises and during work
hours. These circumstances, by themselves, are already punishable misconduct.
Added to these considerations, however, is the implication that the respondents did
not only disregard company rules but flaunted their disregard in a manner that could
reflect adversely on the status of ethics and morality in the company.
Additionally, the respondents engaged in sexual intercourse in an area where coemployees or other company personnel have ready and available access. The
respondents likewise committed their act at a time when the employees were expected
to be and had, in fact, been at thei respective posts, and when they themselves were
supposed to be, as all other employees had in fact been, working. Under these factual
premises and in the context of legal parameters we discussed, we cannot help but
consider the respondents' misconduct to be of grave and aggravated character so that
the company was justified in imposing the highest penalty available dismissal.
Their infraction transgressed the bounds of socially and morally accepted human
public behavior, and at the same time showed brazen disregard for the respect that
their employer expected of them as employees. By their misconduct, the respondents,
in effect, issued an open invitation for others to commit the same infraction, with like
disregard for their employer's rules, for the respect owed to their employer, and for
their co-employees' sensitivities. Taken together, these considerations reveal a
depraved disposition that the C ourt cannot but consider as a valid cause for dismissal.
xx., we have to rule against their tenurial rights in favour of the employer's
management rights. All told, the respondents' misconduct, under the circumstances of
this case, fell within the terms of Article 282 (now Article 296) of the Labor C ode. C
onsequently, we reverse the C A's decision for its failure to recognize that no grave
abuse of discretion attended the NLRC 's decision to support the respondents'
dismissal for serious misconduct.

Leus vs SSC
GR No 187226 January 28 2015
Facts:
Sometime in 2003, the petitioner and her boyfriend conceived a child out of wedlock.
When SSCW learned of the petitioners pregnancy, Sr. Edna Quiambao (Sr.
Quiambao), SSCWs Directress, advised her to file a resignation letter effective June
1, 2003. In response, the petitioner informed Sr. Quiambao that she would not resign
from her employment just because she got pregnant without the benefit of marriage.5
chanRoblesvirtualLawlibrary
On May 28, 2003, Sr. Quiambao formally directed the petitioner to explain in writing
why she should not be dismissed for engaging in pre-marital sexual relations and
getting pregnant as a result thereof which amounts to serious misconduct and conduct
unbecoming of an employee of a C atholic school.6 In a letter7 dated May 31, 2003,
the petitioner explained that her pregnancy out of wedlock does not amount to serious
misconduct or conduct unbecoming of an employee. She averred that she is unaware
of any school policy stating that being pregnant out of wedlock is considered as a
serious misconduct and, thus, a ground for dismissal. Further, the petitioner requested
a copy of SSCWs policy and guidelines so that she may better respond to the charge
against her. Sr. Quiambao informed the petitioner that, pending the promulgation of a
Support Staff Handbook, SSCW follows the 1992 Manual of Regulations for
Private Schools (1992 MRPS) on the causes for termination of employments; that
Section 94(e) of the 1992 MRPS cites disgraceful or immoral conduct as a ground
for dismissal in addition to the just causes for termination of employment provided
under Article 282 of the Labor Code.8 cha
nRoblesvirtualLawlibrary
On June 4, 2003, the petitioner, through counsel, sent Sr. Quiambao a letter,9 which,
in part, reads:chanroblesvirtuallawlibrary
To us, pre-marital sex between two consenting adults without legal
impediment to marry each other who later on married each other
does not fall within the contemplation of disgraceful or immoral
conduct and serious misconduct of the Manual of Regulations
for Private Schools and the Labor C ode of the Philippines. Your
argument that what happened to our client would set a bad example
to the students and other employees of your school is speculative
and is more imaginary than real. To dismiss her on that sole ground
constitutes grave abuse of management prerogatives. Considering
her untarnished service for two years, dismissing her with her
present condition would also mean depriving her to be more secure
in terms of financial capacity to sustain maternal needs.1 0
In a letter1 1 dated June 6, 2003, SSCW, through counsel, maintained that pre-marital
sexual relations, even if between two consenting adults without legal impediment to
marry, is considered a disgraceful and immoral conduct or a serious misconduct,
which are grounds for the termination of employment under the 1992 MRPS and the
Labor C ode. That SSCW, as a C atholic institution of learning, has the right to uphold

the teaching of the C atholic C hurch and expect its employees to abide by the same.
They further asserted that the petitioners indiscretion is further aggravated by the fact
that she is the Assistant to the Director of the Lay Apostolate and C ommunity
Outreach Directorate, a position of responsibility that the students look up to as role
model. The petitioner was again directed to submit a written explanation on why she
should not be dismissed. On June 9, 2003, the petitioner informed Sr. Quiambao that
she adopts her counsels letter dated June 4, 2003 as her written explanation.1 2
chanRoblesvirtualLawlibrary
Consequently, in her letter1 3 dated June 11, 2003, Sr. Quiambao informed the
petitioner that her employment with SSCW is terminated on the ground of serious
misconduct. She stressed that premarital sexual relations between two consenting
adults with no impediment to marry, even if they subsequently married, amounts to
immoral conduct. She further pointed out that SSCW finds unacceptable the scandal
brought about by the petitioners pregnancy out of wedlock as it ran counter to the
moral principles that SSCW stands for and teaches its students. Thereupon, the
petitioner filed a complaint for illegal dismissal
Issue:
w/n she is illegally dismissed?/
held:
xxxx.
The 1992 MRPS, the regulation in force at the time of the instant controversy, was
issued by the Secretary of Education pursuant to BP 232. Section 702 9 of BP 232
vests the Secretary of Education with the authority to issue rules and regulations to
implement the provisions of BP 232. Concomitantly, Section 573 0 specifically
empowers the Department of Education to promulgate rules and regulations necessary
for the administration, supervision and regulation of the educational system in
accordance with the declared policy of BP 232. The qualifications of teaching and
non-teaching personnel of private schools, as well as the causes for the termination of
their employment, are an integral aspect of the educational system of private schools.
Indubitably, ensuring that the teaching and non-teaching personnel of private schools
are not only qualified, but competent and efficient as well goes hand in hand with the
declared objective of BP 232 establishing and maintaining relevant quality
education.3 1 It is thus within the authority of the Secretary of Education to issue a
rule, which provides for the dismissal of teaching and non-teaching personnel of
private schools based on their incompetence, inefficiency, or some other
disqualification. Moreover, Section 69 of BP 232 specifically authorizes the Secretary
of Education to prescribe and impose such administrative sanction as he may deem
reasonable and appropriate in the implementing rules and regulations for the [g]ross
inefficiency of the teaching or non-teaching personnel of private schools.3 2
Accordingly, contrary to the petitioners claim, the C ourt sees no reason to invalidate
the provisions of the 1992 MRPS, specifically Section 94 thereof.cralawred
However, the C ourt finds no substantial evidence to support the aforementioned
conclusion arrived at by the labor tribunals. The fact of the petitioners pregnancy out

of wedlock, without more, is not enough to characterize the petitioners conduct as

disgraceful or immoral. There must be substantial evidence to establish that premarital sexual relations and, consequently, pregnancy out of wedlock are indeed
considered disgraceful or immoral.
xxx
In Chua-Qua v. Clave,3 7 the C ourt stressed that to constitute immorality, the
circumstances of each particular case must be holistically considered and evaluated
in light of the prevailing norms of conduct and applicable laws.3 8 Otherwise
stated, it is not the totality of the circumstances surrounding the conduct per se that
determines whether the same is disgraceful or immoral, but the conduct that is
generally accepted by society as respectable or moral. If the conduct does not conform
to what society generally views as respectable or moral, then the conduct is
considered as disgraceful or immoral. Tersely put, substantial evidence must be
presented, which would establish that a particular conduct, viewed in light of the
prevailing norms of conduct, is considered disgraceful or immoral.
Thus, the determination of whether a conduct is disgraceful or immoral involves a
two-step process:
first, a consideration of the totality of the circumstances surrounding the conduct; and
second, an assessment of the said circumstances vis--vis the prevailing norms of
conduct, i.e., what the society generally considers moral and respectable.
the petitioner was employed by a Catholic educational institution per se does not
absolutely determine whether her pregnancy out of wedlock is disgraceful or immoral.
There is still a necessity to determine whether the petitioners pregnancy out of
wedlock is considered disgraceful or immoral in accordance with the prevailing
norms of conduct.
However, determining what the prevailing norms of conduct are considered
disgraceful or immoral is not an easy task. An individuals perception of what is moral
or respectable is a confluence of a myriad of influences, such as religion, family,
social status, and a cacophony of others. In this regard, the C ourts ratiocination in
Estrada v. Escritor3 9 is instructive.
xxxxx
The morality referred to in the law is public and necessarily
secular, not religious x x x. Religious teachings as expressed in
public debate may influence the civil public order but public moral
disputes may be resolved only on grounds articulable in secular
terms. Otherwise, if government relies upon religious beliefs in
formulating public policies and morals, the resulting policies
and morals would require conformity to what some might
regard as religious programs or agenda. The non-believers
would therefore be compelled to conform to a standard of conduct
buttressed by a religious belief, i.e., to a compelled religion,
anathema to religious freedom. Likewise, if government based its
actions upon religious beliefs, it would tacitly approve or endorse
that belief and thereby also tacitly disapprove contrary religious or
non-religious views that would not support the policy. As a result,
government will not provide full religious freedom for all its
citizens, or even make it appear that those whose beliefs are

disapproved are second-class citizens. Expansive religious freedom

therefore requires that government be neutral in matters of
religion; governmental reliance upon religious justification is
inconsistent with this policy of neutrality. In other words,
government action, including its proscription of immorality as
expressed in criminal law like concubinage, must have a
secular purpose. That is, the government proscribes this
conduct because it is detrimental (or dangerous) to those
conditions upon which depend the existence and progress of
human society and not because the conduct is proscribed by
the beliefs of one religion or the other. xxx. Succinctly put, a
law could be religious or Kantian or Aquinian or utilitarian in
its deepest roots, but it must have an articulable and
discernible secular purpose and justification to pass scrutiny of
the religion clauses. x x x.4 2 (C itations omitted and emphases
ours)
Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it
pertains to public and secular morality; it refers to those conducts which are
proscribed because they are detrimental to conditions upon which depend the
existence and progress of human society. Thus, in Anonymous v. Radam,4 3 an
administrative case involving a court utility worker likewise charged with disgraceful
and immoral conduct, applying the doctrines laid down in Estrada, the C ourt held
that:
For a particular conduct to constitute disgraceful and
immoral behaviour under civil service laws, it must be
regulated on account of the concerns of public and secular
morality. It cannot be judged based on personal bias,
specifically those colored by particular mores. Nor should it be
grounded on cultural values not convincingly demonstrated
to have been recognized in the realm of public policy expressed
in the Constitution and the laws. At the same time, the
constitutionally guaranteed rights (such as the right to privacy)
should be observed to the extent that they protect behavior that
may be frowned upon by the Under these tests, two things may be
concluded from the fact that an unmarried woman gives birth out
of wedlock:
(1) if the father of the child is himself unmarried, the woman is
not ordinarily administratively liable for disgraceful and
immoral conduct. It may be a not-so-ideal situation and may
cause complications for both mother and child but it does not give
cause for administrative sanction. There is no law which
penalizes an unmarried mother under those circumstances by
reason of her sexual conduct or proscribes the consensual
sexual activity between two unmarried persons. Neither does
the situation contravene any fundamental state policy as
expressed in the Constitution, a document that accommodates
various belief systems irrespective of dogmatic origins.
(2) if the father of the child born out of wedlock is himself
married to a woman other than the mother, then there is a

cause for administrative sanction against either the father or

the mother. In such a case, the disgraceful and immoral
conduct consists of having extramarital relations with a
married person. The sanctity of marriage is constitutionally
recognized and likewise affirmed by our statutes as a special
contract of permanent union. Accordingly, judicial employees have
been sanctioned for their dalliances with married persons or for
their own betrayals of the marital vow of fidelity. In this case, it
was not disputed that, like respondent, the father of her child was
unmarried. Therefore, respondent cannot be held liable for
disgraceful and immoral conduct simply because she gave birth to
the child C hristian Jeon out of wedlock.4 4
(C itations omitted and emphases ours)
Both Estrada and Radam are administrative cases against employees in the civil
service. The C ourt, however, sees no reason not to apply the doctrines enunciated in
Estrada and Radam in the instant case. Estrada and Radam also required the C ourt to
delineate what conducts are considered disgraceful and/or immoral as would
constitute a ground for dismissal. More importantly, as in the said administrative
cases, the instant case involves an employees security of tenure; this case likewise
concerns employment, which is not merely a specie of property right, but also the
means by which the employee and those who depend on him live. It bears stressing
that the right of an employee to security of tenure is protected by the C onstitution.
Perfunctorily, a regular employee may not be dismissed unless for cause provided
under the Labor C ode and other relevant laws, in this case, the 1992 MRPS. As stated
above, when the law refers to morality, it necessarily pertains to public and secular
morality and not religious morality. Thus, the proscription against disgraceful or
immoral conduct under Section 94(e) of the 1992 MRPS, which is made as a cause
for dismissal, must necessarily refer to public and secular morality. Accordingly, in
order for a conduct to be considered as disgraceful or immoral, it must be
detrimental (or dangerous) to those conditions upon which depend the existence and
progress of human society and not because the conduct is proscribed by the beliefs of
one religion or the other. Thus, in Santos v. NLRC,4 6 the C ourt upheld the dismissal
of a teacher who had an extra-marital affair with his co-teacher, who is likewise
married, on the ground of disgraceful and immoral conduct under Section 94(e) of the
1992 MRPS. The C ourt pointed out that extra-marital affair is considered as a
disgraceful and immoral conduct is an afront to the sanctity of marriage, which is a
basic institution of society,xxx
We cannot overemphasize that having an extra-marital affair is an afront to the
sanctity of marriage, which is a basic institution of society. Even our Family C ode
provides that husband and wife must live together, observe mutual love, respect and
fidelity. This is rooted in the fact that both our C onstitution and our laws cherish the
validity of marriage and unity of the family. Our laws, in implementing this
constitutional edict on marriage and the family underscore their permanence,
inviolability and solidarity.4 7
xxx
In stark contrast to Santos, the C ourt does not find any circumstance in this case
which would lead the C ourt to conclude that the petitioner committed a disgraceful or
immoral conduct. It bears stressing that the petitioner and her boyfriend, at the time

they conceived a child, had no legal impediment to marry. Indeed, even prior to her
dismissal, the petitioner married her boyfriend, the father of her child. As the C ourt
held in Radam, there is no law which penalizes an unmarried mother by reason of her
sexual conduct or proscribes the consensual sexual activity between two unmarried
persons; that neither does such situation contravene any fundamental state policy
enshrined in the C onstitution. Admittedly, the petitioner is employed in an
educational institution where the teachings and doctrines of the C atholic C hurch,
including that on pre-marital sexual relations, is strictly upheld and taught to the
students. That her indiscretion, which resulted in her pregnancy out of wedlock, is
anathema to the doctrines of the C atholic C hurch. However, viewed against the
prevailing norms of conduct, the petitioners conduct cannot be considered as
disgraceful or immoral; such conduct is not denounced by public and secular morality.
It may be an unusual arrangement, but it certainly is not disgraceful or immoral within
the contemplation of the law.
To stress, pre-marital sexual relations between two consenting adults who have no
impediment to marry each other, and, consequently, conceiving a child out of
wedlock, gauged from a purely public and secular view of morality, does not amount
to a disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS.
Accordingly, the labor tribunals erred in upholding the validity of the petitioners
dismissal
the C ourt finds that SSCW failed to adduce substantial evidence to prove that the
petitioners indiscretion indeed caused grave scandal to SSCW and its students. Other
than the SSCWs bare allegation, the records are bereft of any evidence that would
convincingly prove that the petitioners conduct indeed adversely affected SSCWs
integrity in teaching the moral doctrines, which it stands for. The petitioner is only a
non-teaching personnel; her interaction with SSCWs students is very limited. It is
thus quite impossible that her pregnancy out of wedlock caused such a grave scandal,
as claimed by SSCW, as to warrant her dismissal.
Settled is the rule that in termination cases, the burden of proving that the dismissal of
the employees was for a valid and authorized cause rests on the employer. It is
incumbent upon the employer to show by substantial evidence that the termination of
the employment of the employees was validly made and failure to discharge that duty
would mean that the dismissal is not justified and therefore illegal.5 0 Substantial
evidence is more than a mere scintilla of evidence. It means such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even
if other minds equally reasonable might conceivably opine otherwise.
Indubitably, bare allegations do not amount to substantial evidence. C onsidering that
the respondents failed to adduce substantial evidence to prove their asserted cause for
the petitioners dismissal, the labor tribunals should not have upheld their allegations
hook, line and sinker. The labor tribunals respective findings, which were arrived at
sans any substantial evidence, amounts to a grave abuse of discretion, which the C A
should have rectified. Security of tenure is a right which may not be denied on mere
speculation of any unclear and nebulous basis.5 2

The C ourt has held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay off of workers and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not absolute as it must be exercised
in good faith and with due regard to the rights of labor. Management cannot exercise
its prerogative in a cruel, repressive, or despotic manner.5 3
xxx
In sum, the C ourt finds that the petitioner was illegally dismissed as there was no just
cause for the termination of her employment. SSCW failed to adduce substantial
evidence to establish that the petitioners conduct, i.e., engaging in pre-marital sexual
relations and conceiving a child out of wedlock, assessed in light of the prevailing
norms of conduct, is considered disgraceful or immoral.
.
xxxx
In view of the particular circumstances of this case, it would be more prudent to direct
SSCW to pay the petitioner separation pay in lieu of actual reinstatement. The
continued employment of the petitioner with SSCW would only serve to intensify the
atmosphere of antipathy and antagonism between the parties. C onsequently, the C
ourt awards separation pay to the petitioner equivalent to one (1) month pay for every
year of service, with a fraction of at least six (6) months considered as one (1) whole
year, from the time of her illegal dismissal up to the finality of this judgment, as an
alternative to reinstatement.
Also, employees who are illegally dismissed are entitled to full backwages, inclusive
of allowances= and other benefits or their monetary equivalent, computed from the
time their actual compensation was withheld from them up to the time of their actual
reinstatement but if reinstatement is no longer possible, the backwages shall be
computed from the time of their illegal termination up to the finality
f the decision.6 0 Accordingly, the petitioner is entitled to an award of full
backwages from the time she was illegally dismissed up to the finality of this
decision. Nevertheless, the petitioner is not entitled to moral and exemplary damages.
A dismissed employee is entitled to moral damages when the dismissal is attended
by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner
contrary to good morals, good customs or public policy
Benitz v Santa Fe Moving
GR No 208163 April 20 2015
Facts:
Roque V. Benitez (Benitez) and Santa Fe Labor Union (union) filed a complaint for
unfair labor practice and illegal dismissal, with money claims,4 against respondents
Santa Fe Moving and Relocation Services (company) and its Managing Director,
Vedit Kurangil (Kurangil), an Australian citizen. The company is engaged in
providing relocation and moving services, including visa, immigration and real estate
services. Benitez (the unions Vice-President at the time), was its former packing and
moving operator (crew leader)since June 2001.5 on December 20,2010, the company
served him a memorandum6 advising him not to report for work effective

immediately, thereby terminating his employment, supposedly on grounds of serious

misconduct or willful disobedience. He allegedly uttered abusive words against
Kurangil during the companys Christmas Party
on December 18, 2010. He bewailed that he was not given the opportunity to defend
himself. Benitez claimed that during the party, he noticed that the raffle committee
members were putting back the names of those who were already drawn, giving them
more chances of winning. He appealed to the committee to put a stop to what they
were doing, but they replied they would not "in the spirit of Christmas." He denied
having verbally abused Kurangil. He presented the affidavits of co-employees Jhun
Bulan, Romualdo Elib, Carlos Morata and Raul Ramirez,7 attesting that Benitez, who
was with them at one table, did not commit the offense which led to his dismissal.
Benitez argued that his dismissal constituted an unfair labor practice as he was a
union officer and that it was undertaken to derail the conclusion of a collective
bargaining agreement with the company. He further argued that the penalty of
dismissal is disproportionate to his alleged offense, considering that it was committed
during a casual gathering and had no connection to his work.
The company and Kurangil denied liability. They maintained that the company has
developed a world-renowned reputation for unsurpassed customer service and quality
in its line of business. They averred that during the Christmas Party on December
18,2010, Benitez berated and maligned Kurangil by throwing foul and offensive
words at him, such as "putang ina mo ka VK, gago ka! "Benitezs tirade, they added,
included the company and it officers. Moreover, the incident happened in front of the
companys employees, their families, as well as company clients and guests. The
company confirmed Benitezs claim that the incident involved the conduct of the
Christmas raffle. However, they differed on what triggered his unruly behavior. It
alleged that while the raffle was going on, Benitez climbed up the stage and
questioned the managements decision to allow contractual employees to join the
raffle. This resulted in only 80% of the employees winning raffle prizes. Benitez then
started hurling invectives and foul language while still on stage, mostly directed at
Kurangil. The company further alleged that even when Benitez stormed out of the
stage, he kept on berating Kurangil, such that people he passed by overheard him
cursing Kurangil and the company and that he even attempted to a throw a beer bottle
at Kurangil,but he was restrained by other employees.
Issue:
w/n they were illegally dismissed?
Held:
Serious misconduct is a just cause for termination of employment under the law.29
Article 282 of the Labor Code provides: "An employer may terminate an employment
for any of the following causes: (a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection with his
work. x x x." Despite his denial, there is substantial evidence that Benitez maligned
the companys managing director and the company itself during their Christmas Party
on December 18, 2010. Substantial evidence is such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds equally

reasonable might conceivably opine otherwise.30 Benitez presented the affidavits31

of four company employees
Bulan, Elib, Morata and Ramirez who stated under oath that Benitez was seated
with them at one table and that he did not cause any disturbance during the party. The
testimony of these four employees were belied by their coemployees Afos and Atienza
who executed a joint affidavit,32 stating that Benitez was seated with them at a
different table and that they witnessed him going to the stage where he lost his temper
and verbally abused Kurangil in connection with the conduct of the Christmas raffle.
Delavin,33 a company employee and guest Urmeneta34 corroborated Kurangils
statement35 regarding Benitezs outburst on the stage, particularly the invectives he
threw at him "Putang ina mo ka VK, gago ka."Urmeneta, fo instance, deposed that
when Benitez left the stage angrily and walked past her and others sitting at the table,
she heard him say "Putang-ina mo ka VK, gago ka."36
xxxx There was no need for the guards to intervene because Benitez was restrained by
people near the stage and who escorted him outside the premises where the party was
going on as attested to by Kurangil himself,37 as well as by Afos and Atienza.38
Under the circumstances, Benitezs tirade against Kurangil, the company and other
company officers indeed happened. Significantly, the Christmas Party was attended
not only by company officers and employees and their families, but also by company
clients and guests. With such a big audience in front of him, we cannot imagine how
Benitez could get away with his claim that hedid not malign and disrespect Kurangil
and the others. Samsons outburst occurred during an informal Christmas gathering of
company sales officials and staff and his maligned superior was not present during the
gathering. On the other hand, Benitez went up the stage and confronted his superior
with a verbal abuse.xxxx
The instant case should be distinguished from the previous cases where we held that
the use of insulting and offensive language constituted gross misconduct justifying an
employees dismissal. In De la Cruz vs. NLRC, the dismissed employee shouted
"saying ang pagka-professional mo!" and "putang ina mo" at the company physician
when the latter refused togive him a referral slip. In Autobus Workers Union (AWU)
v. NLRC, the dismissed employee called his supervisor "gago ka"and taunted the
latter by saying "bakit anong gusto mo tang ina mo." In these cases, the dismissed
employees personally subjected their respective superiors to the foregoing verbal
abuses.1wphi1 The utter lack of respect for their superiors was patent. In contrast,
when petitioner was heard to have uttered the alleged offensive words against
respondent companys president and general manager, the latter was not around.
(Emphases and underscoring ours.)42
Further, it appears that in Samson, the company was ambivalent for a while on what
to do with Samsons offense as it took several weeks after the last incident on January
3, 1994 before it asked him to explain. Moreover, the company official maligned
merely admonished Samson during a meeting on January 4, 1994. In contrast, the
company acted swiftly, and decisively in Benitez's case, obviously and
understandably, because of the gravity and high visibility of his offense, which not
only constituted a frontal verbal, and nearly physical (the attempted beer bottle
throwing), assault against Kurangil. Needless to say, Benitez's outburst also caused
grave embarrassment for the audience who witnessed the incident, including company
officials whom he likewise maligned, as well as company clients and guests. Under
the foregoing circumstances, we are convinced - as the Labor Arbiter, the NLRC and

the CA had been - that Benitez's offense constituted a serious misconduct as defined
by law. His display of insolent and disrespectful behavior, in utter disregard of the
time and place of its occurrence, had very much to do with his work. He set a bad
example as a union officer and as a crew leader of a vital division of the company. His
actuations during the company's Christmas Party on December 18, 2010, to our mind,
could have had negative repercussions for his employer had he been allowed to stay
on the job. His standing before those clients who witnessed the incident and those
who would hear of it would surely be diminished, to the detriment of the company.
Rio v Colegio De Sta Rosa Makati
GR 189629 August 6 2014
Facts:
Petitioner was hired by respondent Colegio De Sta. Rosa-Makati as a part-time school
physician in June 1993. Petitioner was required to report for work for four (4) hours
every week witha salary of P12,640.00 per month. In February 2002 or after almost
ten (10) years of service, petitioner received a Contract of Appointment from Sr.
Marilyn B. Gustilo (respondent Gustilo), Directress/Principal, requiringpetitioner to
reportfrom Monday to Friday, from 8:00 a.m. to 3:00 p.m., with a salary of
P12,500.00 per month. Due to the substantial change in the work schedule and
decrease in her salary, petitioner declined the Contract of Appointment. On 24 June
2002, through a Memorandum from respondent Gustilo, petitioner was informed of a
new workschedule. The Memorandum required petitioner to report daily during the
work week, to wit: Mondays, Wednesdays, Fridays from 8:00 a.m. to11:00 a.m.;
Tuesdays and Thursdays at 1:00 p.m. to 4:00 p.m.
In opposition, petitioner wrote respondent Gustilo a letter refusing the unilateral
change in her work schedule. In response, respondent Gustilo revised the new work
schedule to every Tuesdays from 7:00 a.m. to 11:00 a.m. In a letter dated 30 July
2002, respondent Gustilo charged petitioner and Mrs. Neneth Alonzo (Alonzo), the
school nurse, of "grave misconduct, dishonesty and/or gross neglect of duty
detrimental not only to the school but, principally, to the health and well-being of the
pupils based on the Manual of Regulations for Private Schools and Section 94 (a) and
(b) and Article 282 (a), (b) and (c) of the LaborCode." In the same letter, petitioner
and Alonzo were preventively suspended for a period of thirty (30) days, effective 30
July 2002. Petitioner was made to answer for the following: (1) nine (9) students have
medical records for school years during which they were not in the school yet, thus
could not havebeen the subject of medical examination/evaluation; (2) seventy-nine
(79) students of several classes/sections during certain school years were not given
any medical/health evaluation/examination; and (3) failure to conduct medical/health
examination on all students of several classes of different grade levels for the school
year 2001-2002.3 Petitioner denied the charges through a letter to respondent on 2
August 2002. On 9 August 2002 petitioner filed a complaint for constructive dismissal
and illegal suspension against respondents Colegio de Sta. RosaMakati and
Gustilo before the Labor Arbiter. Respondent Gustilo would later file a criminal
complaint for falsification of private documents against petitioner before the Makati
Prosecutors Office on 6 February 2003. To investigate the charges against petitioner,
respondent Gustilo created an investigation committee, which issued a Memorandum,
instructing petitioner to appearbefore it on 30 August 2002. On 8 October 2002, upon

the recommendation of the investigation committee, the services of petitioner and

Alonzo were terminated for their grave misconduct, dishonesty and gross neglect of
duty.
Issue:
w/n they are illegally dismissed?
Held:
Schools,16 petitioner was legally dismissed on the ground of gross inefficiency and
incompetence, and negligence in the keeping of school or student records, or
tampering with or falsification of records.As we already held, gross inefficiency is
closely related to gross neglect because both involve specific acts of omission
resulting in damage to another.17 Gross neglect of duty or gross negligence refers to
negligence characterized by the want of even slight care, acting or omitting to act in a
situation where there is a duty to act, not inadvertently but willfully and intentionally,
with a conscious indifference to consequences insofar as other persons may be
affected.18 As borne by the records, petitioners actions fall within the purview of the
abovedefinitions. Petitioner failed to diligently perform her duties. It was unrefuted
that: (1) there were dates when a medical examination was supposed to have been
conducted and yet the dates fell on weekends; (2) failure to conduct medical
examination on all students for two (2) to five (5) consecutive years; (3) lack of
medical records on all students; and (4) students having medical records prior to their
enrollment.
As her defense, petitioner maintains that the discrepancies were due to the loss of the
cabinet key, which was misplaced by Sr. Zenaida, the personin-charge.1wphi1
Because the cabinet, which contains the official medical records, could not be opened,
Alonzo had to record the medical examinations temporarily. Due to pressure and time
constraints, Alonzo erroneously transferred the entries of the medical examinations
tothe official records. However, petitioner waited for two (2) years to finally have the
cabinet opened. As correctly found by the CA: x x x If petitioner had beenattentive to
her work as she claims, this cabinet could not have been left dormant for two years as
she would have been regularly updating her records and checking on them. x x x
Assuming that the cabinet was indeed locked, the fact that she did not bother to have
it opened for two years only showed that she had no need to use the files contained
therein because she had not been maintaining and updating the medical records as she
had not been performing her job actively conducting routine physical examination on
the students as required of her.19 x x x
The CA went further, stating, "even assuming that petit10ner was telling the truth, the
fact remains that she had been grossly inefficient and negligent for failing to provide a
proper system of maintaining and updating the students' niedical records over the
years of her employment with respondent." Indeed, petitioner was grossly inefficient
and negligent in performing her duties.
PJ Lhuillier v Velayo
GR 198620 November 12 2014
Facts

PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity) hired FLORDELIZ M.

ABATAYO [sic] as Accounting Clerk at the LH-4, Cagayan de Oro City Branch with
a basic monthly salary of P9,353.00. On February 9, 2008 appellant (herein private
respondent) was served with a Show Cause Memo by MARIO RAMON LUDEA,
Area Operations Manager of PJ Lhuillier (herein petitioner), ordering her to explain
within 48 hours why no disciplinary action should be taken against her for dishonesty,
misappropriation, theft or embezz[le]ment of company funds inviolation of Item 11,
Rule V of the Company Code of Conduct. Thereafter, (s)he was placed under
preventive suspension from February 9 to March 8, 2008 while her case was under
investigation. The charges against the appellant (herein private respondent) were
based on the Audit Findings conducted on October 29, 2007, where the overage
amount of P540.00 was not reported immediately to the supervisor, not recorded atthe
end of that day. On February 11, 2008, complainant (herein private respondent)
submitted her reply and admitted that she was not able to report the overage to the
supervisor since the latter was on leave on that day and that she was still tracing the
overage; and that the omission or failure to report immediately the overage (sic) was
just a simple mistake without intent to defraud her employer. On March 10, 2008,
after the conduct of a formal investigation and after finding complainants (herein
private respondents) [explanations] without merit, PJ LHUILLIER (herein petitioner)
terminated her employment as per Notice of Termination on grounds of serious
misconduct and breach of trust.4 On March 14, 2008, the respondent filed a complaint
for illegal dismissal, separation pay and other damages against P.J. Lhuillier, Inc.
(PJLI) and Mario Ramon Ludea, Area Operations Manager (petitioners).:
Issue:
Was he illegally dismissed?
Held:
xxx the nature or extent of the penalty imposed on an erring employee must be
commensurate to the gravity of the offense as weighed against the degree of
responsibility and trust expected of the employees position. On the other hand,the
respondent is not just charged with a misdeed, but with loss of trust and confidence
under Article 282(c) of the Labor Code, a cause premised on the fact that the
employee holds a position whose functions may only be performed by someone who
enjoys the trust and confidence of management. Needless to say, such an employee
bears a greater burden of trustworthiness than ordinary workers, and the betrayal of
the trust reposed is the essence of the loss of trust and confidence which is a ground
for the employees dismissal.15
The respondents misconduct must be viewed in light of the strictly fiduciary nature
of her position. In addition to its pawnshop operations, the PJLI offers its "Pera
Padala" cash remittance service whereby, for a fee or "sending charge," a customer
may remit money to a consignee through its network of pawnshop branches all over
the country. On October 29, 2007, a customer sent P500.00 through its branch in
Capistrano, Cagayan de Oro City, and paid a remittance fee of P40.00. Inexplicably,
however, no corresponding entry was made to recognize the cash receipt of P540.00
in the computerized accounting system (operating system) ofthe PJLI. The respondent
claimed that she tried very hard but could not trace the source of her unexplained cash

surplus of P540.00, but a branch audit conducted sometime in December 2007

showed that it came from a "Pera Padala" customer.
To be sure, no significant financial injury was sustained by the PJLI in the loss of a
mere P540.00 in cash, which, according to the respondent she sincerely wanted to
account for except that she was pre-empted by fear of what her branch manager might
do once she learned of it. But in treating the respondents misconduct as a simple
negligence or a simple mistake, both the CA and the NLRC grossly failed to consider
that she held a position of utmost trust and confidence in the company. There are two
classes of corporate positions of trust: on the one hand are the managerial
employees whose primary duty consists of the management of the establishment
in which they are employed or of a department or a subdivision thereof, and
other officers or members of the managerial staff;on the other hand are the
fiduciary rank-and-file employees, such as cashiers, auditors, property
custodians, or those who, in the normal exercise of their functions, regularly
handle significant amounts of money or property. These employees, though rankand-file, are routinely charged with the care and custody of the employers money or
property, and are thus classified as occupying positions of trust and confidence.16 The
respondent was first hired by the petitioners as an accounting clerk on June 13, 2003,
for which she received a basic monthly salary of P9,353.00. On October 29, 2007, the
date of the subject incident, she performed the function of vault custodian and cashier
in the petitioners Branch 4 pawnshop in Capistrano, Cagayan de Oro City. In addition
to her custodial duties, it was the respondent who electronically posted the days
transactions in the books of accounts of the branch, a function that is essentially
separate from that of cashier or custodian. It is plain to see then that when both
functions are assigned to one person to perform, a very risky situation of conflicting
interests is created whereby the cashier can purloin the money in her custody and
effectively cover her tracks, at least temporarily, by simply not recording in the books
the cash receipt she misappropriated. This is commonly referred to as lapping of
accounts.17 Only a most trusted clerk would be allowed to perform the two functions,
and the respondent enjoyed this trust. The series of willful misconduct committed by
the respondent in mishandling the unaccounted cash receipt exposes her as unworthy
of the utmost trust inherent in her position as branch cashier and vault custodian and
bookkeeper
Granting arguendothat for some reason not due to her fault, the respondent could not
trace the source of the cash surplus, she nonetheless well knew and understood the
companys policy that unexplained cash must be treated as miscellaneous income
under the account "Other Income," and that the same must be so recognized and
recorded at the end of the day in the branch books or "operating system." No such
entry was made by the respondent, resulting in unrecorded cash in her possession of
P540.00, which the company learned about only two months thereafter through a
branch audit. Significantly, when Tuling returned on November 3, 2007 from her
leave of absence, the respondent did not just withhold from her the fact that she had
an unaccounted overage, but she refused to seek her help on what to do about it,
despite having had five days to mull over the matter until Tulings return.
In order that an employer may invoke loss of trust and confidence in terminating an
employee under Article 282(c) of the Labor Code, certain requirements must be
complied with, namely: (1) the employee must be holding a position of trust and

confidence; and (2) there must be an act that would justify the loss of trust and
confidence.18 While loss of trust and confidence should be genuine, it does notrequire
proof beyond reasonable doubt,19 it being sufficient that there issome basis to believe
that the employee concerned is responsible for the misconduct and thatthe nature of
the employees participation therein rendered him unworthy of trust and confidence
demanded by his position.20
The petitioners are fully justified in claiming loss of trust and confidence in the
respondent. While it is natural and understandable that the respondent should feel
apprehensive about Tulings reaction concerning her cash overage, considering that it
was their first time to be working together in the same branch, we must keep in mind
thatthe unaccounted cash can only be imputed to the respondents own negligence in
failing to keep track of the transaction from which the money came. A subsequent
branch audit revealed that it came from a "Pera Padala"\ remittance, implying that
although the amount had been duly remitted to the consignee, the sending branch
failed to record the payment received from the consigning customer. For days
following the overage, the respondent tried but failed to reconcile her records, and for
this inept handling of a "Pera Padala" remittance, she already deserved to be
sanctioned. Further, as a matter of strict company policy, unexplained cash is
recognized at the end of the day as miscellaneous income. Inexplicably, despite being
with the company for four years as accounting clerk and cashier, the respondent failed
to makethe required entry in the branch operating system recognizing miscellaneous
income. Such an entry could have been easily reversedonce it became clear how the
overage came about.
Mere substantial evidence is sufficient to establish loss of trust and confidence The
respondents actuations were willful and deliberate. A cashier who, through
carelessness, lost a document open in browser PRO version Are you a developer? Try
out the HTML to PDF API pdfcrowd.com evidencing a cash receipt, and then wilfully
chose not to record the excess cash as miscellaneous income and instead took it home
and spent it on herself, and later repeatedly denied or concealed the cash overage
when confronted, deserves to be dismissed. Article 28222 of the Labor Code allows
an employer to dismiss an employee for willful breach of trust or loss of confidence.
It has been held that a special and unique employment relationship exists between a
corporation and its cashier. Truly, more than most key positions, that of a cashier calls
for utmost trust and confidence,23 and it is the breach of this trust that results in an
employers loss of confidence in the employee.24 In San Miguel Corporation v.
NLRC, et al.,25 the Court held:
As a rule this Court leans over backwards to help workers and
employees continue in their employment.1wphi1 We have
mitigated penalties imposed by management on erring employees
and ordered employers to reinstate workers who have been
punished enough through suspension. However, breach of trust and
confidence and actsof dishonesty and infidelity in the handling of
funds and properties are an entirely different matter.26 (Emphasis
ours)
It has been held that in dismissing a cashier on the ground of loss of confidence, it is
sufficientthat there is some basis for the same or that the employer has a reasonable
ground tobelieve that the employee is responsible for the misconduct, thus making

him unworthy of the trust and confidence reposed in him.27 Therefore, if there
issufficient evidence to show that the employer has ample reason to distrust the
employee, the labor tribunalncannot justly deny the employer the authority to dismiss
him.28 Indeed, employers are allowed wider latitude in dismissing an employee for
loss of trust and confidence,as the Court held in Atlas Fertilizer Corporation v.
NLRC:29
As a general rule, employers are allowed a wider latitude of
discretion in terminating the services of employees who perform
functions which by their nature require the employers full trust
and confidence. Mere existence of basis for believingthat the
employee has breached the trust of the employer is sufficient and
does not require proof beyond reasonable doubt. Thus, when an
employee has been guilty of breach of trust or his employer has
ample reason to distrust him, a labor tribunal cannot deny the
employer the authority to dismiss him. x x x.30
(Citations omitted)
Furthermore, it must also be stressed that only substantial evidence is required in
order to support a finding that an employers trust and confidence accorded to its
employee had been breached. As explained in Lopez v. Altura Group of Companies
[T]he language of Article 282(c) of the Labor Code states that the loss of trust and
confidence must be based on willful breach of the trust reposed in the employee by
his employer. Such breach is willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial
evidence and not on the employers whims or caprices or suspicions otherwise, the
employee would eternally remain at the mercy of the employer. Loss of confidence
must not be indiscriminately used as a shield by the employer against a claim that the
dismissal of an employee was arbitrary. And, in order to constitute a just cause for
dismissal, the act complained of must be workrelated and shows that the employee
concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on the fact that
the employee concerned holds a position of responsibility, trust and confidence or that
the employee concerned is entrusted withconfidence with respect to delicate matters,
such as the handling or care and protection of the property and assets of the employer.
The betrayal of this trust is the essence of the offense for which an employee is
penalized.32 (Emphasis and underscoring in the original) In holding a position
requiring full trust and confidence, the respondent gave up some of the rigid
guarantees available to ordinary employees. She insisted that her misconduct was just
an "innocent mistake," and maybe it was, had it been committed by other employees.
But surely not as to the respondent who precisely because of the special trust and
confidence given her by her employer mustbe penalized with a more severe
sanction.33 A cashiers inability to safeguard and account for missing cash is
sufficient cause to dismiss her. The respondent insisted that she never intended to
misappropriate the missing fund, but in Santos v. San Miguel Corp.,34 the Court held
that misappropriation of company funds, notwithstanding that the shortage has been
estituted, is a valid ground to terminate the services of an employee for loss of trust
and confidence.35 Also, in Caeda v. Philippine Airlines, Inc.,36 the Court held that it
is immaterial what the respondents intent was concerning the missing fund, for the
undisputed fact is that cash which she held in trust for the company was missing in

her custody. At the very least, she was negligent and failed to meet the degree of care
and fidelity demanded of her as cashier. Her excuses and failure to give a satisfactory
explanation for the missing cash only gavethe petitioners sufficient reason to lose
confidence in her.37 As it was held in Metro Drug Corporation v. NLRC:38It would
be most unfair to require an employer to continue employing as its cashiera person
whom it reasonably believes is no longer capable of giving full and whole hearted
trustworthiness in the stewardship of company funds.
St Lukes v Maria Theresa V. Sanchez
GR 212054 March 11 2015
Facts:
Sanchez was hired by petitioner St. Lukes Medical C enter, Inc. (SLMC ) as a Staff
Nurse, and was eventually assigned at SLMC , Quezon C itys Pediatric Unit until her
termination on July 6, 2011 for her purported violation of SLMC s C ode of
Discipline, particularly Section 1, Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft,
Pilferage, and Misappropriation of Funds. At the end of her shift on May 29, 2011,
Sanchez passed through the SLMC Centralization Entrance/Exit where she was
subjected to the standard inspection procedure by the security personnel. In the course
thereof, the Security Guard on-duty, Jaime Manzanade (SG Manzanade), noticed a
pouch in her bag and asked her to open the same.7 When opened, said pouch
contained the following assortment of medical stocks which were subsequently
confiscated: (a) Syringe 10cl [4 pieces]; (b) Syringe 5cl [3 pieces]; (c) Syringe 3cl [3
pieces]; (d) Micropore [1 piece]; (e) C otton Balls [1 pack]; (f) Neoflon g26 [1 piece];
(g) Venofix 25 [2 pieces]; and (h) Gloves [4 pieces] (questioned items).
8 Sanchez asked SG Manzanade if she could just return the pouch inside the treatment
room; however, she was not allowed to do so.9 Instead, she was brought to the SLMC
In-House Security Department (IHSD) where she was directed to write an Incident
Report explaining why she had the questioned items in her possession.1 0 She
complied1 1 with the directive and also submitted an undated handwritten letter of
apology. In a memorandum1 4 of even date, the IHSD, C ustomer Affairs Division,
through Duty Officer Hernani R. Janayon, apprised SLMC of the incident,
highlighting that Sanchez expressly admitted that she intentionally brought out the
questioned items. An initial investigation was also conducted by the SLMC Division
of Nursing1 5 which thereafter served Sanchez a notice to explain, Sanchez submitted
an Incident Report Addendum1 7 (May 31, 2011 letter), explaining that the
questioned items came from the medication drawers of patients who had already been
discharged, and, as similarly practiced by the other staff members, she started saving
these items as excess stocks in her pouch, along with other basic items that she uses
during her shift. She then put the pouch inside the lowest drawer of the bedside table
in the treatment room for use in immediate procedures in case replenishment of stocks
gets delayed. However, on the day of the incident, she failed to return the pouch
inside the medication drawer upon getting her tri-colored pen and calculator and,
instead, placed it inside her bag. Eventually, she forgot about the same as she got
caught up in work, until it was noticed by the guard on duty on her way out of SMLC
s premises.Consequently, Sanchez was placed under preventive suspension effective
June 3, 2011 until the conclusion of the investigation by SLMC s Employee and
Labor Relations Department (ELRD)1 9 which, thereafter, required her to explain

why she should not be terminated from service for acts o dishonesty due to her
possession of the questioned items in violation of Section 1, Rule I of the SLMC C
ode of Discipline.2 0 In response, she submitted a letter2 1 dated June 13, 2011,
which merely reiterated her claims in her previous May 31, 2011 letter. She likewise
requested for a case conference,2 2 which SLMC granted.2 3 After hearing her side,
SLMC , on July 4, 2011, informed Sanchez of its decision to terminate her
employment effective closing hours of July 6, 2011. 2 4 This prompted her to file a
complaint for illegal.
Issue:
Was she illegally dismissed?
Held:
The right of an employer to regulate all aspects of employment, aptly called
management prerogative, gives employers the freedom to regulate, according to
their discretion and best judgment, all aspects of employment, including work
assignment, working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of workers.5 5 In this light, courts often decline to interfere in
legitimate business decisions of employers. In fact, labor laws discourage interference
in employers judgment concerning the conduct of their business.Among the
employers management prerogatives is the right to prescribe reasonable rules and
regulations necessary or proper for the conduct of its business or concern, to provide
certain disciplinary measures to implement said rules and to assure that the same
would be complied with. At the same time, the employee has the corollary duty to
obey all reasonable rules, orders, and instructions of the employer; and willful or
intentional disobedience thereto, as a general rule, justifies termination of the contract
of service and the dismissal of the employee.Article 296 (formerly Article 282) of the
Labor C ode provides:
Article 296. Termination by Employer. - An employer may
terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee
of the lawful
orders of his employer or his representative in connection with
his
work; x x x x
Note that for an employee to be validly dismissed on this ground, the employers
orders, regulations, or instructions must be: (1) reasonable and lawful, (2)
sufficiently known to the employee, and (3) in connection with the duties which
the employee has been engaged to discharge.Tested against the foregoing, the C
ourt finds that Sanchez was validly dismissed by SLMC for her willful disregard and
disobedience of Section 1, Rule I of the SLMC C ode of Discipline, which reasonably
punishes acts of dishonesty, i.e., theft, pilferage of hospital or co-employee property,
x x x or its attempt in any form or manner from the hospital, co-employees, doctors,
visitors, [and] customers (external and internal) with termination from employment.6
0 Such act is obviously connected with Sanchezs work, who, as a staff nurse, is
tasked with the proper stewardship of medical supplies. Significantly, records show

that Sanchez made a categorical admission6 1 in her handwritten letter6 2 i.e.,

[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] ng gamit6 3 that despite
her knowledge of its express prohibition under the SLMC C ode of Discipline, she
still knowingly brought out the subject medical items with her. It is apt to clarify that
SLMC cannot be faulted in construing the taking of the questioned items as an act of
dishonesty (particularly, as theft, pilferage, or its attempt in any form or manner)
considering that the intent to gain may be reasonably presumed from the furtive
taking of useful property appertaining to another.6 4 Note that Section 1, Rule 1 of the
SLMC C ode of Discipline is further supplemented by the company policy requiring
the turn-over of excess medical supplies/items for proper handling6 5 and providing a
restriction on taking and bringing such items out of the SLMC premises without the
proper authorization or pass from the official concerned,6 6 which Sanchez was
equally aware thereof.Nevertheless, Sanchez failed to turn-over the questioned items
and, instead, hoarded them, as purportedly practiced by the other staff members in
the Pediatric Unit. As it is clear that the company policies subject of this case are
reasonable and lawful, sufficiently known to the employee, and evidently connected
with the latters work, the C ourt concludes that SLMC dismissed Sanchez for a just
cause.
On a related point, the C ourt observes that there lies no competent basis to support
the common observation of the NLRC and the C A that the retention of excess
medical supplies was a tolerated practice among the nurses at the Pediatric Unit.
While there were previous incidents of hoarding, it appears that such acts were in
similar fashion furtively made and the items secretly kept, as any excess items
found in the concerned nurses possession would have to be confiscated.6 8 Hence,
the fact that no one was caught and/or sanctioned for transgressing the prohibition
therefor does not mean that the so-called hoarding practice was tolerated by
SLMC . Besides, whatever maybe the justification behind the violation of the
company rules regarding excess medical supplies is immaterial since it has been
established that an infraction was deliberately committed.6 9 Doubtless, the deliberate
disregard or disobedience of rules by the employee cannot be countenanced as it may
encourage him or her to do even worse and will render a mockery of the rules of
discipline that employees are required to observe.Finally, the C ourt finds it
inconsequential that SLMC has not suffered any actual damage. While damage
aggravates the charge, its absence does not mitigate nor negate the employees
liability.Neither is SLMC s non-filing of the appropriate criminal charges relevant to
this analysis. An employees guilt or innocence in a criminal case is not determinative
of the existence of a just or
authorized cause for his or her dismissal.7 2 It is well-settled that conviction in a
criminal case is not necessary to find just cause for termination of employment,7 3 as
in this case. C riminal and labor cases involving an employee arising from the same
infraction are separate and distinct proceedings which should not arrest any judgment
from one to the other.
As it stands, the C ourt thus holds that the dismissal of Sanchez was for a just cause,
supported by substantial evidence, and is therefore in order. By declaring otherwise,
bereft of any substantial bases, the NLRC issued a patently and grossly erroneous
ruling tantamount to grave abuse of discretion, which, in turn, means that the C A
erred when it affirmed the same. In consequence, the grant of the present petition is
warranted.
Vilchez v Free Port Service

GR 183735 July 6 2015

Facts:
Free Port Service Corporation (FSC) is a whollyowned subsidiary of the Subic Bay
Metropolitan Authority (SBMA) engaged in the business of providing general services
such as security and safety services for the protection of properties and property
custodianship exclusively within the Subic Bay Freeport Zone. Respondent Atty. Roel
John T. Kabigting was the former FSC President. Petitioner Segifredo T. Vilchez was
respondent FSC's Physical Security Department Manager appointed on January 22,
1999.3 As Manager, petitioner was in-charge of overseeing the successful
operation/management of the Physical Security Department as well as maintaining
effective measures in providing better security services.
In March 1999, petitioner advised the respondent FSC management o the need to
secure PNP SOSIA licenses for its 159 physical security officers and volunteered to
take full responsibility for procuring the said licenses and other requirements. He
required the amount of P127,200.00 for the payment of licenses, NBI clearances,
psychiatric tests and drug tests for the 159 security officers. Thus, upon petitioners
advice and recommendation, respondent FSC prepared Disbursement Voucher No.
043084 dated March 25, 1999 in the amount of P127,200.00 payable to a certain Col.
Angelito Gerangco which petitioner certified that the expenses were necessary an
incurred under his direct supervision. To cover the amount advanced by respondent
FSC, all the security personnel concerned were deducted, on the same month, the sum
amounting to P800.00 each. the Commission on Audit (COA) issued a Notice of
Suspension of the P127,200.00 transaction after finding that Gerangco was not a
designated disbursing officer and, therefore, should not be given a cash advance.5 The
COA further directed the petitioner to promptly settle the suspension notice as items
not settled within 90 days after receipt shall become disallowed, pursuant to Section
82 of Presidential Decree (PD) No. 1445. Despite the lapse of one (1) year, however,
no settlement was made.
In a Memorandum dated April 16, 2001 addressed to petitioner, then FSC President,
respondent Kabigting, wrote that an administrative action was being initiated against
him for the offense of serious misconduct resulting to loss of trust and confidence,
which offense constituted a ground for termination of employment under the Rules on
Administration of Discipline of Freeport Service Corporation, as well as Article 282
of the Labor Code. Petitioner asked for an extension of thirty (30) days time to file
his reply. In a Memorandum dated April 23, 2001, respondents granted petitioner a ten
(10)-day extension and placed petitioner under preventive suspension for thirty (30)
days to have an impartial and objective investigation. Petitioner, however, failed to
file his Answer.respondents issued a Notice of Dismissal7 of petitioner effective as of
that date. petitioner filed a Complaint for illegal dismissal, non-payment of salaries,
allowances and 13th month pay with claims for damages and attorney's fees against
respondents.
Issue:
w/n he was illegally dismissed?
Held:

Loss of trust and confidence will validate an employees dismissal only upon
compliance with certain requirements, namely: (1) the employee concerned must be
holding a position of trust and confidence; and (2) there must be an act that would
justify the loss of trust and confidence.15 And in order to constitute a just cause for
dismissal, the act complained of must be work-related such as would show employee
concerned to be unfit to continue working for the employer.16 The first requisite for
dismissal on the ground of loss of trust and confidence is that the employee concerned
must be holding a position of trust and confidence. In this case, there is no doubt that
petitioner held a position of trust and confidence as respondents' Physical Security
Department Manager responsible for the department's operation and administration
and with about 800 people under his charge. The second requisite is that there must be
an act that would justify the loss of trust and confidence. Here, petitioner was incharge of respondents' Physical Security Department, operationally and
administratively, and he was the one who advised respondents of the necessity of
securing the licenses of the 159 physical security personnel. As such, he assumed to
take full responsibility for procuring the said licenses and other requirements. Hence,
Disbursement Voucher No. 04308 in the amount of P127,200.00 was prepared in the
name of a certain Col. Angelito Gerangco and a check was issued under the same
name. However, two years had already elapsed from the issuance of the check but not
all the licenses of the 159 security personnel which petitioner volunteered to take
responsibility for were released. Petitioner's failure to produce the licenses of the 100
security personnel for two years and to account for the money received, is definitely
an important aspect of his work as respondents' Department Manager. He failed to
perform what he had represented or what was expected of him, thus, respondents had
a valid reason in losing confidence in him which justified his termination.
We also find worthy to mention the CA's finding that further established petitioner's
willful breach of the trust reposed on him by respondents, to wit:
It must be borne in mind that as early as 20 August 1999, petitioner
already knew of the COAs notice of suspension regarding the
deficiency in the issuance of the P127,200.00 check to Col.
Angelito Gerangco who was not a designated disbursing officer
and in that notice of suspension, petitioner was found to be the
payee or person responsible. Moreover, a Memorandum dated 29
November 2000 was issued by private respondent Kabigtings
predecessor, then FSC President Manuel Aurelio Jr., for all
concerned administrative personnel including herein petitioner, to
settle not later than 05 December 2000 the COA notice of
suspension. In fact, he failed to account and produce the licenses of
the FSC Security personnel after two (2) years from the date of
issuance of the check. This act alone by the petitioner constitutes
gross misconduct and disobedience which is already a sufficient
ground for his dismissal. Furthermore, the loss of confidence was
justified in the light of petitioners continued refusal to comply
with the Memoranda issued to him. The evidence presented by the
private respondents were overwhelming to justify his dismissal.
Petitioner insists that the subject amount of P127,200.00 was duly
approved by the former President of the private respondent

corporation, without informing him of the rules and regulations of

the Commission on Audit to first secure their approval /clearance
before the issuance of the said check. However, it is the very same
reason why petitioner was given the chance to account for the
expenses incurred. If only he did not defy the orders of the private
respondent and immediately upon receipt of the Memorandum
directing him to do so, he undertook to prepare the same, maybe he
would not have been dismissed. Besides, the two years that has
elapsed was already more than enough for him to explain his
side.17
Col. Gerangco is not an employee of the respondents and it was petitioner who
advised respondents of the need to secure the licenses. As the NLRC found, petitioner,
as head of the security recommending and choosing contractor Col. Gerangco to
undertake the procurement of licenses of the security guards. Notably, in the
disbursement voucher where Col. Gerangco's name was written, petitioner had affixed
his signature certifying that the expenses/cash advance was necessary, lawful
and incurred under his direct supervision and also signed his name therein as the one
who received the check. Thus, he could not just place the blame on Col. Gerangco
when it was petitioner who had the obligation to secure the licenses as represented.
Moreover, there was no showing that petitioner had exerted efforts for the immediate
release of the licenses. Petitioner claims that he wrote Col. Gerangco a letter dated
April 17, 2001 asking the latter to liquidate the remaining licenses, however, such
letter was written only after his receipt of respondents' notice of administrative action
on his failure to secure the licenses. Such belated action showed his lack of fidelity to
his duty and his breach of the trust and confidence reposed on him by respondents.
Petitioner was terminated as Manager on May 10, 2001, and consequently, filed a case
for illegal dismissal against respondents. The LA found his dismissal illegal and
awarded him backwages and ordered his reinstatement. During the pendency of
respondents' appeal with the NLRC, petitioner, whom respondents had earlier
reinstated, reached the mandatory retirement age of 65, thus, he was sent a
memorandum19 notifying him of his retirement pursuant to Article 287 of the Labor
Code and to report to respondents' Human Resources Management for the processing
of his retirement papers and claims. Petitioner's mandatory retirement during the
pendency of the case would not absolve him of his wrongdoings committed while he
was still in the service. The validity of petitioner's dismissal must be ruled upon with
finality\ as it would bear importance on whether he is entitled to the award of
backwages, or to his retirement benefits under the law. Under the Labo Code, only
unjustly dismissed employees are entitled to retirement benefits and other privileges
including reinstatement and backwages.20 And since petitioner's termination on May
10, 2001 was valid, there can be no award for backwages, and there was no basis for
his reinstatement and, therefore, there can be no earned retirement benefits under the
law to speak of.
Cavite Apparel v Marquez
GR 172044 February 6 2013
Facts:

Cavite Apparel is a domestic corporation engaged in the manufacture of garments for

export. On August 22, 1994, it hired Michelle as a regular employee in its Finishing
Department. Michelle enjoyed, among other benefits, vacation and sick leaves of
seven (7) days each per annum. Prior to her dismissal on June 8, 2000, Michelle
committed the following infractions (with their corresponding penalties):
a. First Offense: Absence without leave (AWOL) on December 6, 1999 written
warning b. Second Offense: AWOL on January 12, 2000 stern warning with three
(3) days suspension c. Third Offense: AWOL on April 27, 2000 suspension for six
(6) days.6
On May 8, 2000, Michelle got sick and did not report for work. When she returned,
she submitted a medical certificate. Cavite Apparel, however, denied receipt of the
certificate.7 Michelle did not report for work on May 15- 27, 2000 due to illness.
When she reported back to work, she submitted the necessary medical certificates.
Nonetheless, Cavite Apparel suspended Michelle for six (6) days (June 1-7, 2000).
When Michelle returned on June 8, 2000, Cavite Apparel terminated her employment
for habitual absenteeism. Michelle filed a complaint for illegal dismissal with prayer
for reinstatement, backwages and attorneys fees
Issue:
Was he illegally dismissed?
Held:
Neglect of duty, to be a ground for dismissal under Article 282 of the Labor Code,
must be both gross and habitual.22 Gross negligence implies want of care in the
performance of ones duties. Habitual neglect imparts repeated failure to perform
ones duties for a period of time, depending on the circumstances.23 Under these
standards and the circumstances obtaining in the case, Michelle is not guilty of gross
and habitual neglect of duties.
xxx. Based on what we see in the records, there simply cannot be a case of gross and
habitual neglect of duty against Michelle. Even assuming that she failed to present a
medical certificate for her sick leave on May 8, 2000, the records are bereft of any
indication that apart from the four occasions when she did not report for work,
Michelle had been cited for any infraction since she started her employment with the
company in 1994. Four absences in her six years of service, to our mind, cannot be
considered gross and habitual neglect of duty, especially so since the absences were
spread out over a six-month period.
Although Michelle was fully aware of the company rules regarding leaves of absence,
and her dismissal might have been in accordance with the rules, it is well to stress that
we are not bound by such rules. In Caltex Refinery Employees Association v. NLRC24
and in the subsequent case of Gutierrez v. Singer Sewing Machine Company,25 we
held that "[e]ven when there exist some rules agreed upon between the employer and
employee on the subject of dismissal, x x x the same cannot preclude the State from
inquiring on whether [their] rigid application would work too harshly on the
employee." This Court will not hesitate to disregard a penalty that is manifestly
disproportionate to the infraction committed.

Michelle might have been guilty of violating company rules on leaves of absence and
employee discipline, still we find the penalty of dismissal imposed on her unjustified
under the circumstances.
As earlier mentioned, Michelle had been in Cavite Apparels employ for six years,
with no derogatory record other than the four absences without official leave in
question, not to mention that she had already been penalized for the first three
absences, the most serious penalty being a six-day suspension for her third absence on
April 27, 2000. While previous infractions may be used to support an employees
dismissal from work in connection with a subsequent similar offense,26 we cautioned
employers in an earlier case that although they enjoy a wide latitude of discretion in
the formulation of work-related policies, rules and regulations, their directives and the
implemtation of their policies must be fair and reasonable; at the very least, penalties
must be commensurate to the offense involved and to the degree of the infraction.27
As we earlier expressed, we do not consider Michelles dismissal to be commensurate
to the four absences she incurred for her six years of service with the company, even
granting that she failed to submit on time a medical certificate for her May 8, 2000
absence. We note that she again did not report for work on May 15 to 27, 2000 due to
illness. When she reported back for work, she submitted the necessary medical
certificates. The reason for her absence on May 8, 2000 due to illness and not for
her personal convenience all the more rendered her dismissal unreasonable as it is
clearly disproportionate to the infraction she committed.
Finally, we find no evidence supporting Cavite Apparels claim that Michelles
absences prejudiced its operations; there is no indication in the records of any damage
it sustained because of Michelles absences. Also, we are not convinced that allowing
Michelle to remain in employment even after her fourth absence or the imposition of a
lighter penalty would result in a breakdown of discipline in the employee ranks. What
the company fails to grasp is that, given the unreasonableness of Michelles dismissal
i.e., one made after she had already been penalized for her three previous absences,
with the fourth absence imputed to illness confirming the validity of her dismissal
could possibly have the opposite effect. It could give rise to belief that the company is
heavy-handed and may only give rise to sentiments against it. In fine, we hold that
Cavite Apparel failed to discharge the burden of proving that Michelles dismissal was
for a lawful cause.28 We, therefore, find her to have been illegally dismissed.
As a final point, we reiterate that while we recognize managements prerogative to
discipline its employees, the exercise of this prerogative should at all times be
reasonable and should be tempered with compassion and understanding.29 Dismissal
is the ultimate penalty that can be imposed on an employee. Where a penalty less
punitive may suffice, whatever missteps may be committed by labor ought not to be
visited with a consequence so severe for what is at stake is not merely the employees
position but his very livelihood and perhaps the life and subsistence of his family.
SME Bank v San Miguel Corporation
GR No 184517/ 186641 October 8 2013
Facts:

Respondent employees Elicerio Gaspar (Elicerio), Ricardo Gaspar, Jr.(Ricardo),

Eufemia Rosete (Eufemia), Fidel Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.),
and Liberato Mangoba (Liberato) were employees of Small and Medium Enterprise
Bank, Incorporated (SME Bank).Originally, the principal shareholders and corporate
directors of the bank were Eduardo M. Agustin, Jr. (Agustin) and Peregrin de
Guzman, Jr. (De Guzman). In June 2001, SME Bank experienced financial
difficulties. To remedy the situation, the bank officials proposed its sale to Abelardo
Samson(Samson).Accordingly, negotiations ensued, and a formal offer was made to
Samson. Through his attorney-in-fact, Tomas S. Gomez IV, Samson then sent formal
letters (Letter Agreements) to Agustin and De Guzman, demanding the following as
preconditions for the sale of SME Banks shares of stock:
4. You shall guarantee the peaceful turn over of all assets as well as
the peaceful transition of management of the bank and shall
terminate/retire the employees we mutually agree upon, upon
transfer of shares in favor of our groups nominees;
xxxx
7. All retirement benefits, if any of the above
officers/stockholders/board of directors are hereby waived upon
consummation [sic] of the above sale. The retirement benefits of
the rank and file employees including the managers shall be
honored by the new
management in accordance with B.R. No. 10, S. 1997.9
Agustin and De Guzman accepted the terms and conditions proposed by Samson and
signed the conforme portion of the Letter Agreements.Simeon Espiritu (Espiritu), then
the general manager of SME Bank, held a meeting with all the employees of the
resignations,11 with the promise that they would be rehired upon reapplication. His
directive was allegedly done at the behest of petitioner Olga Samson.12 Relying on
this representation, Elicerio,13 Ricardo,14 Fidel,15 Simeon, Jr.,16 and Liberato17
tendered their resignations. As for Eufemia, the records show that she first tendered a
resignation letter dated27 August 2001,18 and then a retirement letter dated
September 2001.19 Elicerio,20 Ricardo,21 Fidel,22 Simeon, Jr.,23 and Liberato24
submitted application letters on 11 September 2001. Both the resignation letters and
copies of respondent employees application letters were transmitted by Espiritu to
Samsons representative on 11 September 2001.25 On 11 September 2001, Agustin
and De Guzman signified their conformity to the Letter Agreements and sold
86.365% of the shares of stock of SME Bank to spouses Abelardo and Olga Samson.
Spouses Samson then became the principal shareholders of SME Bank, while Aurelio
Villaflor, Jr. was appointed bank president. As it turned out, respondent employees,
except for Simeon, Jr.,26 were not rehired. After a month in service, Simeon, Jr. again
resigned on October 2001.27 Respondent-employees demanded the payment of their
respective separation pays, but their requests were deniedAggrieved by the loss of
their jobs, respondent employees filed a Complaint for unfair labor practice; illegal
dismissal; illegal deductions; underpayment; and nonpayment of allowances,
separation pay and 13th month pay.
Issue:
Were they illegally dismissed?

Held:
While resignation letters containing words of gratitude may indicate that the
employees were not coerced into resignation,40 this fact alone is not conclusive
proof that they intelligently, freely and voluntarily resigned. To rule that
resignation letters couched in terms of gratitude are, by themselves, conclusive proof
that the employees intended to relinquish their posts would open the floodgates to
possible abuse. In order to withstand the test of validity, resignations must be
made voluntarily and with the intention of relinquishing the office, coupled with
an act of relinquishment.41 Therefore, in order to determine whether the employees
truly intended to resign from their respective posts, we cannot merely rely on the
tenor of the resignation letters, but must take into consideration the totality of
circumstances in each particular case.
Here, the records show that Elicerio, Ricardo, Fidel, and Liberato only tendered
resignation letters because they were led to believe that, upon reapplication, they
would be reemployed by the new management.42 As it turned out, except for Simeon,
Jr., they were not rehired by the new management. Their reliance on the
representation that they would be reemployed gives credence to their argument that
they merely submitted courtesy resignation letters because it was demanded of them,
and that they had no real intention of leaving their posts. We therefore conclude that
Elicerio, Ricardo, Fidel, and Liberato did not voluntarily resign from their work;
rather, they were terminated from their employment.
xxx
However, a review of the records shows that, unlike her co-employees, she did not
resign; rather, she submitted a letter indicating that she was retiring from her former
position.The fact that Eufemia retired and did not resign, however, does not change
our conclusion that illegal dismissal took place.
Retirement, like resignation, should be an act completely voluntary on the part of the
employee. If the intent to retire is not clearly established or if the retirement is
involuntary, it is to be treated as a discharge.44 In this case, the facts show that
Eufemias retirement was not of her own volition. The circumstances could not be
more telling. The facts show that Eufemia was likewise given the option to resign or
retire in order to fulfill the precondition in the Letter Agreements that the seller should
"terminate/retire the employees [mutually agreed upon] upon transfer of shares" to the
buyers.45 Thus, like her other co-employees, she first submitted a letter of resignation
dated 27 August 2001.46 For one reason or another, instead of resigning, she chose to
retire and submitted a retirement letter to that effect.47 It was this letter that was
subsequently transmitted to the representative of the Samson Group on 11 September
2001.48
In San Miguel Corporation v. NLRC,49 we have explained that involuntary retirement
is tantamount to dismissal, as employees can only choose the means and methods of
terminating their employment, but are powerless as to the status of their employment
and have no choice but to leave the company. This rule squarely applies to Eufemias
case. Indeed, she could only choose between resignation and retirement, but was
made to understand that she had no choice but to leave SME Bank. Thus, we conclude
that, similar to her other co-employees, she was illegally dismissed from employment.

The law permits an employer to dismiss its employees in the event of closure of the
business establishment.52 However, the employer is required to serve written notices
on the worker and the Department of Labor at least one month before the intended
date of closure.53 Moreover, the dismissed employees are entitled to separation pay,
except if the closure was due to serious business losses or financial reverses.54
However, to be exempt from making such payment, the employer must justify the
closure by presenting convincing evidence that it actually suffered serious financial
reverses.55
In this case, the records do not support the contention of SME Bank that it intended to
close the business establishment. On the contrary, the intention of the parties to keep it
in operation is confirmed by the provisions of the Letter Agreements requiring
Agustin and De Guzman to guarantee the "peaceful transition of management of the
bank" and to appoint "a manager of [the Samson Groups] choice x x x to oversee
bank operations." Even assuming that the parties intended to close the bank, the
records do not show that the employees and the Department of Labor were given
written notices at least one month before the dismissal took place. Moreover, aside
from their bare assertions, the parties failed to substantiate their claim that SME Bank
was suffering from serious financial reverses.
In fine, the argument that the dismissal was due to an authorized cause holds no water.
Contrary to petitioner banks argument, there was no transfer of the business
establishment to speak of, but merely a change in the new majority shareholders of
the corporation. There are two types of corporate acquisitions: asset sales and stock
sales.58 In asset sales, the corporate entity59 sells all or substantially all of its
assets60 to another entity. In stock sales, the individual or corporate shareholders61
sell a controlling block of stock62 to new or existing shareholders. In asset sales, the
rule is that the seller in good faith is authorized to dismiss the affected employees, but
is liable for the payment of separation pay under the law.63 The buyer in good faith,
on the other hand, is not obliged to absorb the employees affected by the sale, nor is it
liable for the payment of their claims.64 The most that it may do, for reasons of public
policy and social justice, is to give preference to the qualified separated personnel of
the selling firm. transaction in stock sales takes place at the shareholder level.
Because the corporation possesses a personality separate and distinct from that of its
shareholders, a shift in the composition of its shareholders will not affect its existence
and continuity. Thus, notwithstanding the stock sale, the corporation continues to be
the employer of its people and continues to be liable for the payment of their just
claims. Furthermore, the corporation or its new majority share holders are not entitled
to lawfully dismiss corporate employees absent a just or authorized cause.
In the case at bar, the Letter Agreements show that their main object is the acquisition
by the Samson Group of 86.365% of the shares of stock of SME Bank.66 Hence, this
case involves a stock sale, whereby the transferee acquires the controlling shares of
stock of the corporation. Thus, following the rule in stock sales, respondent
employees may not be dismissed except for just or authorized causes under the Labor
Code. Manlimos dealt with a stock sale in which a new owner or management group
acquired complete ownership of the corporation at the shareholder level.69 The
employees of the corporation were later "considered terminated, with their
conformity"70 by the new majority shareholders. The employees then re-applied for
their jobs and were rehired on a probationary basis. After about six months, the new
management dismissed two of the employees for having abandoned their work, and it

dismissed the rest for committing "acts prejudicial to the interest of the new
management."71 Thereafter, the employees sought reinstatement, arguing that their
dismissal was illegal, since they "remained regular employees of the corporation
regardless of the change of management."72 In disposing of the merits of the case, we
upheld the validity of the second termination, ruling that "the parties are free to renew
the contract or not [upon the expiration of the period provided for in their
probationary contract of employment]."73
xxxx
The right to security of tenure guarantees the right of employees to continue in their
employment absent a just or authorized cause for termination. This guarantee
proscribes a situation in which the corporation procures the severance of the
employment of its employees who patently still desire to work for the corporation
only because new majority stockholders and a new management have come into the
picture. This situation is a clear circumvention of the employees constitutionally
guaranteed right to security of tenure, an act that cannot be countenanced by this
Court.
It is thus erroneous on the part of the corporation to consider the employees as
terminated from their employment when the sole reason for so doing is a change of
management by reason of the stock sale. The conformity of the employees to the
corporations act of considering them as terminated and their subsequent acceptance
of separation pay does not remove the taint of illegal dismissal. Acceptance of
separation pay does not bar the employees from subsequently contesting the legality
of their dismissal, nor does it estop them from challenging the legality of their
separation from the service.77 We therefore see it fit to expressly reverse our ruling in
Manlimos insofar as it upheld that, in a stock sale, the buyer in good faith has no
obligation to retain the employees of the selling corporation; and that the dismissal of
the affected employees is lawful, even absent a just or authorized cause.
Similar to our earlier discussion, we find that his first courtesy resignation letter was
also executed involuntarily. Thus, it cannot be the basis of a valid resignation; and
thus, at that point, he was illegally terminated from his employment. He was,
however, rehired by SME Bank under new management, although based on his
allegations, he was not reinstated to his former position or to a substantially
equivalent one.83 Rather, he even suffered a reduction in benefits and a demotion in
rank.84 These led to his submission of another resignation letter. We rule that these
circumstances show that Simeon, Jr. was constructively dismissed. In Peaflor v.
Outdoor Clothing Manufacturing Corporation,86 we have defined constructive
dismissal as follows:
Constructive dismissal is an involuntary resignation by the
employee due to the harsh, hostile, and unfavourable conditions set
by the employer and which arises when a clear discrimination,
insensibility, or disdain by an employer exists and has become
unbearable to the employee.87
Constructive dismissal exists where there is cessation of work, because "continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a

demotion in rank or a diminution in pay" and other benefits.88 These circumstances

are clearly availing in Simeon, Jr.s case. He was made to resign, then rehired under
conditions that were substantially less than what he was enjoying before the illegal
termination occurred. Thus, for the second time, he involuntarily resigned from his
employment. Clearly, this case is illustrative of constructive dismissal, an act
prohibited under our labor laws.
SME Bank, Eduardo M. Agustin, Jr. and Peregrin de Guzman, Jr. are liable for illegal
dismissal. Having ruled on the illegality of the dismissal, we now discuss the issue of
liability and determine who among the parties are liable for the claims of the illegally
dismissed employees. The settled rule is that an employer who terminates the
employment of its employees without lawful cause or due process of law is liable for
illegal dismissal.89 None of the parties dispute that SME Bank was the employer of
respondent employees. The fact that there was a change in the composition of its
shareholders did not affect the employer-employee relationship between the
employees and the corporation, because an equity transfer affects neither the existence
nor the liabilities of a corporation. Thus, SME Bank continued to be the employer of
respondent employees notwithstanding the equity change in the corporation. This
outcome is in line with the rule that a corporation has a personality separate and
distinct from that of its individual shareholders or members, such that a change in the
composition of its shareholders or members would not affect its corporate liabilities.
xxxas the employer of the illegally dismissed employees before and after the equity
transfer, petitioner SME Bank is liable for the satisfaction of their claims.
Turning now to the liability of Agustin, De Guzman and the Samson Group for illegal
dismissal, at the outset we point out that there is no privity of employment contracts
between Agustin, De Guzman and the Samson Group, on the one hand, and
respondent employees on the other. Rather, the employment contracts were between
SME Bank and the employees. However, this fact does not mean that Agustin, De
Guzman and the Samson Group may not be held liable for illegal dismissal as
corporate directors or officers. In Bogo-Medellin Sugarcane Planters Association, Inc.
v. NLRC,90 we laid down the rule as regards the liability of corporate directors and
officers in illegal dismissal cases, as follows:
Unless they have exceeded their authority, corporate officers are,
as a general rule, not personally liable for their official acts,
because a corporation, by legal fiction, has a personality separate
and distinct from its officers, stockholders and members. However,
this fictional veil may be pierced whenever the corporate
personality is used as a means of perpetuating a fraud or an illegal
act, evading an existing obligation, or confusing a legitimate issue.
In cases of illegal dismissal, corporate directors and officers are
solidarily liable with the corporation, where terminations of
employment are done with malice or in bad faith.91 (Citations
omitted)
Thus, in order to determine the respective liabilities of Agustin, De Guzman and the
Samson Group under the afore-quoted rule, we must determine, first, whether they
may be considered as corporate directors or officers; and, second, whether the

terminations were done maliciously or in bad faith. There is no question that both
Agustin and De Guzman were corporate directors of SME Bank. An analysis of the
facts likewise reveals that the dismissal of the employees was done in bad faith.
Motivated by their desire to dispose of their shares of stock to Samson, they agreed to
and later implemented the precondition in the Letter Agreements as to the termination
or retirement of SME Banks employees. However, instead of going through the
proper procedure, the bank manager induced respondent employees to resign or retire
from their respective employments, while promising that they would be rehired by the
new management. Fully relying on that promise, they tendered courtesy resignations
or retirements and eventually found themselves jobless. Clearly, this sequence of
events constituted a gross circumvention of our labor laws and a violation of the
employees constitutionally guaranteed right to security of tenure. We therefore rule
that, as Agustin and De Guzman are corporate directors who have acted in bad faith,
they may be held solidarily liable with SME Bank for the satisfaction of the
employees lawful claims.
As to spouses Samson, we find that nowhere in the records does it appear that they
were either corporate directors or officers of SME Bank at the time the illegal
termination occurred, except that the Samson Group ha already taken over as new
management when Simeon, Jr. was constructively dismissed. Not being corporate
directors or officers, spouses Samson were not in legal control of the bank and
consequently had no power to dismiss its employees.
xxxThe records show that it was Espiritu who asked the employees to tender their
resignation and or retirement letters, and that these letters were actually tendered to
him.94 He then transmitted these letters to the representative of the Samson Group.95
That the spouses Samson had to ask Espiritu to require the employees to resign shows
that they were not in control of the corporation, and that the former shareholders
through Espiritu were still in charge thereof. As the spouses Samson were neither
corporate officers nor directors at the time the illegal dismissal took place, we find
that there is no legal basis in the present case to hold them in their personal capacities
solidarily liable with SME Bank for illegally dismissing respondent employees,
without prejudice to any liabilities that may have attached under other provisions of
law. Furthermore, even if spouses Samson were already in control of the corporation
at the time that Simeon, Jr. was constructively dismissed, we refuse to pierce the
corporate veil and find them liable in their individual steads. There is no showing that
his constructive dismissal amounted to more than a corporate act by SME Bank, or
that spouses Samson acted maliciously or in bad faith in bringing about his
constructive dismissal.
Finally, as regards Aurelio Villaflor, while he may be considered as a corporate
officer, being the president of SME Bank, the records are bereft of any evidence that
indicates his actual participation in the termination of respondent employees. Not
having participated at all in the illegal act, he may not be held individually liable for
the satisfaction of their claims.
illegally dismissed employees are entitled to (1) either reinstatement, if viable, or
separation pay if reinstatement is no longer viable; and (2) backwages.96
Courts may grant separation pay in lieu of reinstatement when the relations between
the employer and the employee have been so severely strained; when reinstatement is

not in the best interest of the parties; when it is no longer advisable or practical to
order reinstatement; or when the employee decides not to be reinstated.97 In this
case, respondent employees expressly pray for a grant of separation pay in lieu of
reinstatement. Thus, following a finding of illegal dismissal, we rule that they are
entitled to the payment of separation pay equivalent to their one-month salary for
every year of service as an alternative to reinstatement. Respondent employees are
likewise entitled to full backwages notwithstanding the grant of separation pay. In
Santos v. NLRC,98 we explained that an award of backwages restores the income that
was lost by reason of the unlawful dismissal, while separation pay "provides the
employee with 'the wherewithal during the period that he is looking for another
employment."99 Thus, separation pay is a proper substitute only for reinstatement; it
is not an adequate substitute for both reinstatement and backwages.100 Hence,
respondent employees are entitled to the grant of full backwages in addition to
separation pay.
Naguit v San Miguel Corporation
GR No. 188839 June 22 2015
Facts:
Petitioner was employed as a machine operator of San Miguel C orporation Metal C
losure and Lithography Plant, a division of herein respondent corporation which is
engaged in the business of manufacturing printed metal caps and crowns for beer,
beverage and pharmaceutical products. Sometime in the afternoon of September 23,
2002, petitioner and one Renato Regala (Regala), also an employee of respondent
corporation, got involved in an altercation in respondent corporation's C anlubang
Plant. In his Position Paper, petitioner claimed that Regala went to the C anlubang
Plant to distribute anti-union materials that are libelous and defamatory and that, as
union steward, petitioner confronted Regala, which confrontation developed to a
heated exchange of words. Petitioner then elbowed Regala, hitting him in the face,
causing him to lose his balance and fall to the ground. As a consequence, Regala filed
a complaint with respondent corporation's Human Resources Department. Respondent
corporation then conducted an administrative investigation giving both parties the
opportunity to defend themselves. However, petitioner opted to remain silent and did
not address the charges against him. On January 29, 2003, the company-designated
investigator submitted his report and recommendation finding petitioner guilty of
willful injury to another employee within company premises, which is an infraction of
the company's rules and regulations. respondent corporation served upon petitioner a
letter informing him of the termination of his employment on the basis of the findings
and recommendation of the investigator. Petitioner then filed a complaint for illegal
dismissal against respondent corporation
Issue:
Was he illegally dismissed?
Held:
the C ourt does not agree with petitioner's argument that the penalty of dismissal
imposed upon him is too harsh and is not commensurate to the infraction he has

committed, considering that he has been in respondent's employ for fifteen years and
that this is just his first offense of this nature. The settled rule is that fighting within
company premises is a valid ground for the dismissal of an employee.2 7 Moreover,
the act of assaulting another employee is serious misconduct which justifies the
termination of employment.2 8 Also, the C ourt agrees with respondent's contention
that if petitioner's long years of service would be regarded as a justification for
moderating the penalty of dismissal, it will actually become a prize for disloyalty,
perverting the meaning of social justice and undermining the efforts of labor to
cleanse its ranks of all undesirables.2 9 In addition, where the totality of the evidence
was sufficient to warrant the dismissal of the employees, the law warrants their
dismissal without making any distinction between a first offender and a habitual
delinquent.3 0 In the present case, all the more should petitioner's years of service be
taken against him in light of the finding of the lower tribunals that his violation of an
established company rule was shown to be willful and such willfulness was
characterized by a wrongful attitude. Moreover, petitioner has never shown any
feelings of remorse for what he has done, considering that the lower tribunals found
no justification on his part in inflicting injury upon a co-employee. To make matters
worse, petitioner even exhibited a seemingly arrogant attitude in insisting to remain
silent and rejecting requests for him to explain his side despite having been given
numerous opportunities to do so.