TERMINATION OF EMPLOYMENT

By Employee
(a) An employee may terminate without just cause the employee-employer relationship by serving a written
notice on the employer at least one month in advance. The employer upon whom no such notice was served may
hold the employee liable for damages.
(b) An employee may put an end to the relationship without serving any notice on the employer for any of the
following just causes:
(1) Serious insult by the employer or his representative on the honor and person of the employee;
(2) Inhuman and unbearable treatment accorded the employee by the employer or his representative;
(3) Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and
(4) Other causes analogous to any of the foregoing.
(Article 285 of the Labor Code)
Resignation
The Court cannot uphold and give weight to private respondent's resignation letter which appears to have
been written and submitted at the instance of petitioner. Its form is of the company's and its wordings are more of
a waiver and quitclaim. Moreover, the supposed resignation was not acknowledged before a notary public.
Petitioner's failure to deny that Sugarland is its sister company and that petitioner absorbed Sugarland's security
contract and security personnel assumes overriding significance over the resignation theorized upon, evincing
petitioner's design to ignore or violate labor laws through the use of the veil of corporate personality. The Court
cannot sanction the practice of some companies which, shortly after a worker has become a regular employee,
effects the transfer of the same employee to another entity whose owners are the same, or identical, in order to
deprive subject employee of the benefits and protection he is entitled to under the law. (A' Prime Security
Services, Inc. vs. NLRC [G.R. No. 107320, 19 January 2000])
By Employer
Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, the dismissal of an
employee must be for a just or authorized cause and after due process.
The two requirements of this legal provision are:
1. The legality of the act of dismissal, that is, dismissal under the ground provided under Article 282 (Just
Causes) or Articles 283 and 284 (Authorized Causes) of the Labor Code; and
2. The legality in the manner of dismissal, that is, with observance of the procedural requirements of
notice and hearing.
Just Cause
An employer may terminate an employment for any of the following just causes:
(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 willful 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 authorized representative; and
(e) Other causes analogous to the foregoing.
(Article 282 of the Labor Code)
To be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation of a
means of livelihood. This is merely in keeping with the spirit of our Constitution and laws which lean over
backwards in favor of the working class, and mandate that every doubt must be resolved in their favor.
(Hongkong & Shanghai Banking Corp. vs. NLRC [G.R. No. 116542, 30 July 1996])
In labor-management relations, there can be no higher penalty than dismissal from employment. Dismissal
severs employment ties and could well be the economic death sentence of an employee. Dismissal prejudices the
socio-economic well being of the employee's family and threatens the industrial peace. Due to its far reaching

implications, our Labor Code decrees that an employee cannot be dismissed, except for the most serious causes.
The overly concern of our laws for the welfare of employees is in accord with the social justice philosophy of our
Constitution. (Cebu Filveneer vs. NLRC [G.R. No. 126601, 24 February 1998]
Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
[I]n order that an employer may terminate an employee on the ground of willful disobedience to the former's
orders, regulations or instructions, it must be established that the said orders, regulations or instructions are (a)
reasonable and lawful, (b) sufficiently known to the employee, and (c) in connection with the duties which the
employee has been engaged to discharge. (Manebo vs. NLRC [G.R. No. 107721, 10 January 1994])
Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. 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 employee's work to constitute just cause for his separation. In this case however, the
misconduct has no relation to the work of petitioners; hence, not a valid ground. (Cosep vs. NLRC [G.R. No.
124966, 16 June 1998])
Serious misconduct in the form of drunkenness and disorderly and violent behavior, habitual neglect of duty,
and insubordination or willful disobedience of the lawful order of his superior officer, are just causes for the
dismissal of an employee. [Seahorse Maritime Corporation vs. NLRC [173 SCRA 390, 1989])
[W]here 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 (Tide Water Associated Oil Co.
v. Victory Employees [85 PHIL 166, 1949])
The employee admits that she had asked someone to punch-in her time card because at that time she was
doing an errand for one of the companys officers, Richard Tan, and that was with the permission of William
Chua. She maintains that she did it in good faith believing that she was anyway accommodating the request of a
company executive and done for the benefit of the company with the acquiescence of her boss. Besides, the
practice was apparently tolerated as the employees were not getting any reprimand for doing so. (Philippine
Aeolus Automotive vs. NLRC [G.R. No. 124617, 29 April 2000])
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.
It is clear that 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.
(Permex vs. NLRC [G.R. No. 125031, 24 January 2000])
The act of private respondent in asking a co-employee to punch-in her time card although a violation of
company rules, likewise does not constitute serious misconduct. Firstly, it was done in good faith considering that
she was asked by an officer to perform a task outside the office, which is for the benefit of the company, with the
consent of the plant manager. Secondly, it eas her first time to commit such infraction during her five (5)-year
service in the company. Finally, the company did not lose anything by reason thereof as the offense was
immediately known and corrected. (Philippine Aeolus Automotive vs. NLRC [G.R. No. 124617, 29 April 2000])

An ordinary employee, quite understandably, examines her pay slip every time she receives her salary. But we
cannot always expect the employee to go further as to determine if her overtime pay, which is not much anyway,
was properly computed up to the last centavo or whether the overtime pay pertained to a particular day the work
was rendered. The amount in controversy was only P254.90. Considering the employees salary was not fixed as it
fluctuated from time to time due to varying amounts of tips, commissions and overtime pay received, it would not
have been right to assume always that the employee would examine every detail of the computation of her salary.
Needless to say, the same should not be laid solely on the employee because the mistake is not hers alone. The
mistake resulted from the collective laxity of petitioners accounting personnel and inadvertence on the part of the
respondent. (Shangri-La Hotel vs. Dialogo [G.R. No. 141900, 20 April 2001])
Gross and habitual neglect by the employee of his
duties;
Sleeping on the job
Petitioner's reliance on the authorities it cited that sleeping on the job is always a valid ground for dismissal,
is misplaced. The authorities cited involved security guards whose duty necessitates that they be awake and
watchful at all times inasmuch as their function, to use the words in Luzon Stevedoring Corp. v. CIR, is "to
protect the company from pilferage or loss." Accordingly, the doctrine laid down in those cases is not applicable
to the case at bar.
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. In the case at bar, the dismissal meted out on private respondent for allegedly sleeping on the job,
under the attendant circumstances, appears to be too harsh a penalty, considering that he was being held liable for
first time, after nine (9) long years of unblemished service, for an alleged offense which caused no prejudice to
the employer, aside from absence of substantiation of the alleged offense. The authorities cited by petitioner are
also irrelevant for the reason that there is no evidence on the depravity of conduct, willfulness of the
disobedience, or conclusiveness of guilt on the part of private respondent. Neither was it shown that private
respondent's alleged negligence or neglect of duty, if any, was gross and habitual. Thus, reinstatement is just and
proper.
(VH Manufacturing, Inc. vs. NLRC [G.R. No. 130957, 19 January 2000])
Abandonment
For abandonment to constitute a valid cause for termination of employment, there must be a deliberate
unjustified refusal of the employee to resume his employment. This refusal must be clearly shown. Mere absence
is not sufficient; it must be accompanied by overt acts pointing to the fact that the employee simply does not want
to work anymore. (Davies, Inc. vs. NLRC [G.R. No. 106915, 31 August 1993])
As found by the Labor Arbiter, private respondent's physician advised him to rest for 30 days before reporting
back for work in order to recuperate. Private respondent heeded this advise and even exceeded the number of days
recommended by his doctor for his recuperation. In fact, he reported back for work 50 days after his operation.
This would clearly show that private respondent was ready to assume his responsibilities considering that he had
fully recovered from the operation. Furthermore, the filing of a complaint for illegal dismissal by private
respondent is inconsistent with the allegation of petitioners that he had abandoned his job. Surely, an employee's
posture will be illogical if he abandons his work and then immediately files an action for his reinstatement
(Remerco Garments v. Minister, 135 SCRA 167 [1985]).
We have consistently ruled that a charge of abandonment is totally inconsistent with the immediate filing of a
complaint for illegal dismissal. (Icawat vs.NLRC [GR No. 133573, 2002])
Undeniable is the over-reliance of both the Labor Arbiter and the NLRC on the notion that the filing of a
complaint for illegal dismissal is inconsistent with the employer's defense of abandonment by the employee of his
work. While the burden of refuting a complaint for illegal dismissal is upon the employer, fair play as well
requires that, where the employer proffers substantial evidence of the fact that it had not, in the first place,
terminated the employee but simply laid him off due to valid reasons, neither the Labor Arbiter nor the NLRC
may simply ignore such evidence on the pretext that the employee would not have filed the complaint for illegal

dismissal if he had not indeed been dismissed. This is clearly a non sequitur reasoning that can never validly take
the place of the evidence of both the employer and the employee.
xxx

xxx

xxx

The Labor Arbiter and the NLRC similarly answered the question with the alleged truism: private respondent
filed the complaint for illegal dismissal because he was illegally dismissed. We, however, believe that private
respondent's motivation in filing the complaint for illegal dismissal despite his refusal to return to work, is
revealed by the following averment in his position paper before the Labor Arbiter:
Before delving into the issues of the above entitled case, complainant would like to request the
Honorable Commissioner to take judicial notice of the fabricated and manufactured criminal case filed by
the respondents in retaliation to the institution of this case and in fact the latter had confronted the former
to drop this case in exchange of the dropping of the fabricated and manufactured criminal case.
(Arc-Men Food Industries vs. NLRC [G.R. No. 113721, 07 May 1997])
In this case, the following circumstances clearly manifest private respondent's intention to sever his ties with
petitioners. First, private respondent even bragged to his co-workers his plan to quit his job at Cesar's Palace
Barbershop and Massage Clinic as borne out by the affidavit executed by his former co-workers. Second, he
surrendered the shop's keys and took away all his things from the shop. Third, he did not report anymore to the
shop without giving any valid and justifiable reason for his absence. Fourth, he immediately sought a regular
employment in another barbershop, despite previous assurance that he could remain in petitioners' employ. Fifth,
he filed a complaint for illegal dismissal without praying for reinstatement.
Moreover, public respondent's assertion that the institution of the complaint for illegal dismissal manifests
private respondent's lack of intention to abandon his job is untenable. The rule that abandonment of work is
inconsistent with the filing of a complainant for illegal dismissal is not applicable in this case. Such rule applies
where the complainant seeks reinstatement as a relief. Corollarily, it has no application where the complainant
does not pray for reinstatement and just asks for separation pay instead as in the present case. It goes without
saying that the prayer for separation pay, being the alternative remedy to reinstatement, contradicts private
respondent's stance. (Jo vs. NLRC [G.R. No. 121605, 02 February 2000])
[T]he evidence on record indubitably shows that Leonardo abandoned his work with the respondents. As
sufficiently established by respondents, complainant, after being pressed by respondent to present the customer
regarding his unauthorized solicitation of sideline work from the latter and whom he claims to be his aunt, he
never reported back to work anymore. This finding is further bolstered by the fact that after he left the respondent,
he got employed with Dennis Motors Corporation as Air-Con Mechanic.
It must be stressed that while Leonardo alleges that he was illegally dismissed from his employment by the
respondents, surprisingly he never stated any reason why the respondents would want to ease him out from his
job. Moreover, why did it take him ten (10) long months to file his case if he indeed was aggrieved by the
respondents. All the above facts clearly point that the filing of the case is a mere afterthought on the part of
complainant Leonardo.
(Leonardo vs. NLRC [G.R. No. 125303, 16 June 2000])
Excessive absences
In the case at bench, it is undisputed that respondent Edwin P. Sabuya had within a span of almost six (6)
years been repeatedly admonished, warned and suspended for incurring excessive unauthorized absences. Worse,
he was not at home but was out driving a pedicab to earn extra income when the company nurse visited his
residence after he filed an application for sick leave. Such conduct of respondent Edwin P. Sabuya undoubtedly
constitutes gross and habitual neglect of duties. (Worldwide Papermills vs. NLRC [G.R. No. 113081, 12 May
1995])
Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
Loss of confidence as a ground for dismissal does not entail proof beyond reasonable doubt of the employee's
misconduct. It is enough that there be "some basis" for such loss of confidence or that "the employer has
reasonable grounds to believe, if not to entertain the moral conviction that the employee concerned is responsible
for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of the trust
and confidence demanded by his position" (Reyes vs. Zamora, 90 SCRA 92, 111 [1979]; Galsim vs. PNB, 29
SCRA 293 [1969])

To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust. And,
as realistically stressed by the Solicitor General, unless based on a ground provided by law and supported by
substantial evidence, dismissal will be disallowed, for what is at stake is not only the employee's position, but also
his means of livelihood. Considering that private respondent was acting in good faith, his dismissal would run
counter to such established doctrinal rulings. (PCI Bank vs. NLRC [G.R. No. 114920, 23 August 1995])
The employees failure to detect and report to the respondent company the fraudulent activities in her division
as well as her failure to give a satisfactory explanation on the irregularities constitute fraud or willful breach of
trust reposed on her by her employer or duly authorized representative one of the just causes in terminating
employment as provided for under paragraph c, Article 283 of the Labor Code, as amended. Concomitantly, the
employees actuations betrayed the utmost trust and confidence reposed upon her by the respondent company. We
cannot, therefore, compel private respondents to retain the employment of the employee who is shown to be
lacking in candor, honesty and efficiency required of her position. (Nokom vs. NLRC [G.R. No. 140043, 18 July
2000])
We have consistently held that loss of confidence is a recognized ground for the discharge of an employee
from employment. But such ground must be founded on facts established by substantial evidence. The burden of
establishing such facts as reasonably cause loss of confidence in an employee such facts are reasonably generate
belief by the employer that the employee was connected with some misconduct and the nature of his participation
therein is such as to render him unworthy of trust and confidence demanded of his position is on the employer. In
this case, the records are bereft of any showing that private respondent Jemina is responsible, solely or partly, for
the loss of the P100,000.00 in the vault of petitioner Bank's Binondo Branch. Both the Labor Arbiter and the
NLRC analyzed the employer's proofs and came to the reasoned conclusion that they did not adequately
demonstrate Jemina's connection with the said loss. True, Jemina is a possible suspect. After all, the cash
operations of the branch were under his control and supervision. He had joint custody with the Branch Manager
over all cash and properties inside the vault. He had access to the vault where the monies of the bank were kept.
Indeed, petitioner Bank has every reason to suspect Jemina for the P100,000.00 shortage in its vault. But
suspicion has never been a valid ground for the dismissal of an employee. The employee's fate cannot, in justice,
be hinged upon conjectures and surmises. (Pilipinas Bank vs. NLRC [G.R. No. 101372, 13 November 1992])
That it was so can easily be seen from the memorandum sent to private respondent by Delia M. Oficial, the
branch supervisor of the company, with the reminder, in the words of the latter, that "you're fully aware that the
company is not accepting married women employee (sic), as it was verbally instructed to you." Again, in the
termination notice sent to her by the same branch supervisor, private respondent was made to understand that her
severance from the service was not only by reason of her concealment of her married status but, over and on top
of that, was her violation of the company's policy against marriage ("and even told you that married women
employees are not applicable [sic] or accepted in our company.") Parenthetically, this seems to be the curious
reason why it was made to appear in the initiatory pleadings that petitioner was represented in this case only by its
said supervisor and not by its highest ranking officers who would otherwise be solidarily liable with the
corporation.
Verily, private respondent's act of concealing the true nature of her status from PT & T could not be properly
characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to
retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal
company policy into misrepresenting her civil status for fear of being disqualified from work. While loss of
confidence is a just cause for termination of employment, it should not be simulated. It must rest on an actual
breach of duty committed by the employee and not on the employer's caprices. Furthermore, it should never be
used as a subterfuge for causes which are improper, illegal, or unjustified.
(PT&T vs. NLRC [G.R. No. 118978, 23 May 1997])
[T]he rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar
as managerial employees are concerned, are not necessarily the same as those applicable to termination of
employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in
terminating the employment of managerial personnel or those of similar rank performing functions which by their
nature require the employer's trust and confidence, than in the case of ordinary rank-and-file employees (Cruz vs.
Medina [1989]).
As regards a managerial employee, moreover, mere existence of a basis for believing that such employee has
breached the trust of his employer would suffice for dismissal. Proof beyond reasonable doubt is not required, it

being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable
ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded by his position.
In the case at bar, petitioner, is tasked to perform key functions; he is bound by an exacting work ethic. He
should have realized that his position requires the full trust and confidence of his employer in every exercise of
managerial discretion insofar as the conduct of his employer's business is concerned. However, as found a quo, he
committed acts which betrayed the trust and confidence reposed on him by tampering with very sensitive
equipment at the joint terminal facility. In doing so, he exposed the terminal complex and the residents in adjacent
communities to the danger of a major disaster that may be caused by tank explosions and conflagration. Verily, he
committed acts inimical to the interest of his employer which is mandated by law to observe extraordinary
diligence in its operations to ensure the safety of the public. Indeed, we are constrained to conclude that
petitioner's admitted infraction as well his past violation of safety regulations is more than sufficient ground for
respondent company to terminate the employment of petitioner.
(Deles vs. NLRC [G.R. No. 121348, 09 March 2000])
A perusal of RCPI's dismissal notice reveals that it merely stated a conclusion to the effect that the
withholding was deliberately done to hide alleged malversation or misappropriation without, however, stating the
circumstances in support thereof. It further mentioned that the position of cashier requires utmost trust and
confidence but failed to allege the breach of trust on the part of petitioner and how the alleged breach was
committed. On the assumption that there was indeed a breach, there is no evidence that petitioner was a
managerial employee of respondent RCPI. It should be facts noted that the term 'trust and managerial employees.
It may not even be presumed that when there is a shortage, there is also a corresponding breach of trust. Cash
shortages in a cashier's work may happen, and when there is no proof that the same was deliberately done for a
fraudulent or wrongful purpose, it cannot constitute breach of trust so as to render the dismissal from work
invalid. (Farrol vs. CA [G.R. No. 133259, 10 February 2000])
Commission of a crime or offense by the employee
against the person of his employer or any immediate
member of his family or his duly authorized
representative;
Petitioners cannot downgrade the seriousness of their offenses. They committed falsifications. These are
crimes punished by the Revised Penal Code itself. Their commission constitutes serious misconduct. Nor can
petitioners avoid liability by claiming that the SN Forms are not company records but SSS documents. Their use
is covered by Item No. 12 of the Schedule of Offenses and Penalties which provides ". . . knowingly using
falsified record or document." Petitioners knew that the commission of this offense is punishable by dismissal in
view of its seriousness. They cannot therefore complain of its harshness. (Farrol vs. NLRC [G.R. No. 133259, 10
February 2000])
Other causes analogous to the foregoing.
In the case of Nadura vs. Benguet Consolidated Inc., this Court speaking through Justice Arsenio Dizon held
inter alia that a cursory reading of Section 1, R.A. 1787, which enumerates the just causes for which an employer
may terminate an employment with a definite period, is sufficient to convince anyone that illness cannot be
included as an analogous cause "by any stretch of the imagination." (Soriano vs. PNR [G.R. No. L-43224, 23
August 1978)
'The employer cannot rightfully dismiss the employee who is sick even if he complies with the requirement of
the Act as to the service of the required notice or payment of the corresponding separation pay, because sickness
is not willful or voluntary on the part of the employee.' (Eugenio Nadura v. Benguet Consolidated, Inc. [G.R. No.
L-17780, 24 August 1962])
(Hence to constitute an analogous cause under Article 282 of the Labor Code, the act must be willful and
voluntary on the part of the employee [and illness is not])
We cannot but agree with PEPSI that "gross inefficiency" falls within the purview of "other causes analogous
to the foregoing," the constitutes, therefore, just cause to terminate an employee under Article 282 of the Labor
Code. One is analogous to another if it is susceptible of comparison with the latter either in general or in some

specific detail; or has a close relationship with the latter. "Gross inefficiency" is closely related to "gross
neglect," for both involve specific acts of omission on the part of the employee resulting in damage to the
employer or to his business. (Lim vs. NLRC [G.R. No. 118434,
26 July 1996])
Totality of Infractions
Petitioner also assails the severity of the penalty imposed upon him alleging that he should have merited a
suspension only considering his past performance.
Unfortunately, petitioner does not appear to be a first offender. Aside from the infractions he was found to
have committed, it appears that petitioner falsified the truth when he made a false report about the incident to
private respondent SMC to cover up for his misdeeds. Moreover on previous occasions, petitioner committed
violations of company rules and regulations concerning pricing as a salesman of the company in a way that is
detrimental to his employer. On one occasion, he failed to remit collections, so that in 1986, he was suspended for
thirty days. Thus, the totality of the infractions that petitioner has committed justifies the penalty of dismissal.
(Mendoza vs. NLRC [G.R. No. 94294, 22 March 1991])
Habituality
In other words, considerations of first offense and length of service are overshadowed by the seriousness of
the offense. As to whether an offense is minor or serious will have to be determined according to the peculiar facts
of each case. And to a shipping company engaged in the transportation of passengers and cargoes any delay of its
vessels may greatly affect its business and reputation and expose the company to unmitigated lawsuits for breach
of contract and damages. (Villeno vs. NLRC [G.R. No. 108153, 26 December 1995])
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. Under the law,
respondent Minister is duly mandated to equally protect and respect not only the labor or workers' side but also
the management and/or employers' side. The law, in protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer. (Colgate-Palmolive Philippines, Inc. v. Ople)
Sexual Harassment
REPUBLIC ACT NO. 7877
15 February 1995
AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN THE EMPLOYMENT, EDUCATION OR
TRAINING ENVIRONMENT, AND FOR OTHER PURPOSES
Section 1. Title. This Act shall be known as the "Anti-Sexual Harassment Act of 1995."
Section 2. Declaration of Policy. The State shall value the dignity of every individual, enhance the development of
its human resources, guarantee full respect for human rights, and uphold the dignity of workers, employees, applicants
for employment, students or those undergoing training, instruction or education. Towards this end, all forms of sexual
harassment in the employment, education or training environment are hereby declared unlawful.
Section 3. Work Education or Training-related Sexual Harassment Defined. Work, education of training-related
sexual harassment is committed by an employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over
another in a work or training or education environment, demands, requests or otherwise requires any sexual favor
from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of
said Act.
(1)

(a)
In a work-related or employment environment, sexual harassment is committed when:
The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued
employment of said individual, or in granting said individual favorable compensation, terms,
conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting,

(2)
(3)

segregating or classifying the employee which in any way would discriminate, deprive or diminish
employment opportunities or otherwise adversely affect said employee;
The above acts would impair the employee's rights or privileges under existing labor laws; or
The above acts would result in an intimidating, hostile, or offensive environment for the employee.

(b)
In an education or training environment, sexual harassment is committed:
Against one who is under the care, custody or supervision of the offender;
Against one whose education, training, apprenticeship or tutorship is entrusted to the offender;
When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors
and scholarships, or the payment of a stipend, allowance or other benefits, privileges or considerations;
or
(4) When the sexual advances result in an intimidating, hostile or offensive environment for the student,
training or apprentice.
Any person who directs or induces another to commit any act of sexual harassment as herein defined, or who
cooperates in the commission thereof by another without which it would not have been committed, shall also be held
liable under this Act.
(1)
(2)
(3)

Section 4. Duty of the Employer or Head of Office in a Work-related, Education or Training Environment. It shall
be the duty of the employer or the head of the work-related, educational or training environment or institution, to
prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution,
settlement or prosecution of acts of sexual harassment . Towards this end, the employer or head of office shall:
(a)
Promulgate appropriate rules and regulations in consultation with an jointly approved by the employees
or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation of
sexual harassment cases and the administrative sanctions therefor.
Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of sexual
harassment.
The said rules and regulations issued pursuant to this sub-section (a) shall include, among others, guidelines on
proper decorum in the workplace and educational or training institutions.
(b)
Create a committee on decorum and investigation of cases on sexual harassment. The committee shall
conduct meetings, as the case may be, with officers and employees, teachers, instructors, professors, coaches, trainors
and students or trainees to increase understanding and prevent incidents of sexual harassment. It shall also conduct the
investigation of alleged cases constituting sexual harassment.
In the case of a work-related environment, the committee shall be composed of at least one (1) representative each
from the management, the union, if any, the employees form the supervisory rank, and from the rank and file
employees.
In the case of the educational or training institution, the committee shall be composed of at least one (1)
representative from the administration, the trainors, teachers, instructors, professors or coaches and students or
trainees, as the case may be.
The employer or head of office, educational or training institution shall disseminate or post a copy of this Act for the
information of all concerned.
Section.
Liability of the Employer, Head of Office, Educational or Training Institution. The employer or head of
office, educational or training institution shall be solidarity liable for damages arising from the acts of sexual
harassment committed in the employment, education or training environment if the employer or head of office,
educational or training institution is informed of such acts by the offended party and no immediate action is taken
thereon.
Section 6. Independent Action for Damages. Nothing in this Act shall preclude the victim of work, education or
training-related sexual harassment from instituting a separate and independent action for damages and other
affirmative relief.
Section 7. Penalties. Any person who violates the provisions of this Act shall, upon conviction, be penalized by
imprisonment of not less than one (1) month nor more than six (6) months, or a fine of not less than Ten thousand
pesos (P10,000) nor more than Twenty thousand pesos (P20,000) or both such fine and imprisonment at the discretion
of the court.
Any action arising from the violation of the provisions of this Act shall prescribe in three (3) years.

With the finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged
violation of the Code of Ethics governing school teachers would have no basis. Private respondent utterly failed to
show that petitioner took advantage of her position to court her student. If the two eventually fell in love, despite
the disparity in their ages and academic levels, this only lends substance to the truism that the heart has reasons of
its own which reason does not know. But, definitely, yielding to this gentle and universal emotion is not to be so
casually equated with immorality. The deviation of the circumstances of their marriage from the usual societal
pattern cannot be considered as a defiance of contemporary social mores.
It would seem quite obvious that the avowed policy of the school in rearing and educating children is being
unnecessarily bannered to justify the dismissal of petitioner. This policy, however, is not at odds with and should
not be capitalized on to defeat the security of tenure granted by the Constitution to labor. In termination cases, the
burden of proving just and valid cause for dismissing an employee rests on the employer and his failure to do so
would result in a finding that the dismissal is unjustified.
(Chua-Qua vs. Clave [G.R. No. 49549, 30 August 1990])
Authorized Causes
Closure of establishment and reduction of personnel. - The employer may also terminate the employment of
any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this title, by serving a written notice on the workers and the Department of Labor
and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Article 283 of the Labor
Code)
Disease as ground for termination. - An employer may terminate the services of an employee who has been
found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to
his health as well as the health of his co-employees: Provided, That he is paid separation pay equivalent to at
least one month salary or to one-half month salary for every year of service, whichever is greater, a fraction of at
least six months being considered as one whole year. (Article 284 of the Labor Code)
Authorized causes for the termination of employment:
(a)
installation of labor-saving devices;
(b)
redundancy;
(c)
retrenchment to prevent losses; and
(d)
closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of law.
(e)
disease which renders continued employment prohibited by law or prejudicial to his health or to
the health of his fellow employees.
Installation of labor-saving devices
The installation of labor-saving devices contemplates the installation of machinery to effect economy and
efficiency in its method of production. (Edge Apparel, Inc. vs. NLRC [G.R. No. 121314, 12 February 1998] citing
Phil. Sheet Metal Workers' Union vs. Court of Industrial Relations [83 Phil. 453])
Redundancy
Redundancy exists where the services of an employee are in excess of what would reasonably be demanded
by the actual requirements of the enterprise. A position is redundant when it is superfluous, and superfluity of a
position or positions could be the result of a number of factors, such as the overhiring of workers, a decrease in
the volume of business or the dropping of a particular line or service previously manufactured or undertaken by
the enterprise. An employer has no legal obligation to keep on the payroll employees more than the number
needed for the operation of the business. (Edge Apparel, Inc. vs. NLRC [G.R. No. 121314, 12 February 1998])

The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied.
Management is at liberty, absent any malice on its part, to abolish positions which it deems no longer necessary
(Great Pacific Life vs. NLRC, 188 SCRA 139 [1990]).
Moreover, the records of the present case clearly show that respondent court's decision is amply supported by
evidence and it did not err in its findings, including the reason for the retrenchment:
When defendant-appellant was faced with the world-wide recession of the airline industry resulting
in a slow down in the company's growth particularly in the regional operation (Asian Area) where the
Airbus 300 operates. It had no choice but to adopt cost cutting measures, such as cutting down services,
number of frequencies of flights, and reduction of the number of flying points for the A-300 fleet. As a
result, defendant-appellant had to lay off A-300 pilots, including plaintiff-appellee, which it found to be
in excess of what is reasonably needed.
All these considered, we find sufficient factual and legal basis to conclude that petitioner's termination from
employment was for an authorized cause, for which he was given ample notice and opportunity to be heard, by
respondent company. No error nor grave abuse of discretion, therefore, could be attributed to respondent appellate
court.
(Laureano vs. CA [G.R. No. 114776, 02February 2000])
Retrenchment
Retrenchment, is used interchangeably with the term "lay-off." It is the termination of employment initiated
by the employer through no fault of the employee's and without prejudice to the latter, resorted to by management
during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by
lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of
new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing
employees because of losses in the operation of a business, lack of work, and considerable reduction on the
volume of his business, a right consistently recognized and affirmed by this Court. (Sebuguero vs. NLRC [G.R.
No. 115394, 27 September 1995])
[T]here are three basic requisites for a valid retrenchment:
(1) the retrenchment is necessary to prevent losses and such losses are proven;
(2) written notice to the employees and to the Department of Labor and Employment at least one
month prior to the intended date of retrenchment; and
(3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year of
service, whichever is higher.
As for the FIRST REQUISITE, whether or not an employer would imminently suffer serious or substantial
losses for economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to determine.
Here, both the Labor Arbiter and the NLRC found that the private respondent was suffering and would continue to
suffer serious losses, thereby justifying the retrenchment of some of its employees, including the petitioners. We
are not prepared to disregard this finding of fact. It is settled that findings of quasi-judicial agencies which have
acquired expertise in the matters entrusted to their jurisdiction are accorded by this Court not only with respect
but with finality if they are supported by Substantial Evidence. .
The REQUIREMENT OF NOTICE to both the employees concerned and the Department of Labor and
Employment (DOLE) is mandatory and must be written and given at least one month before the intended date of
retrenchment. In this case, it is undisputed that the petitioners were given notice of the temporary lay-off. There is,
however, no evidence that any written notice to permanently retrench them was given at least one month prior to
the date of the intended retrenchment. The NLRC found that GTI conveyed to the petitioners the impossibility of
recalling them due to the continued unavailability of work. But what the law requires is a written notice to the
employees concerned and that requirement is mandatory. The notice must also be given at least one month in
advance of the intended date of retrenchment to enable the employees to look for other means of employment and
therefore to ease the impact of the loss of their jobs and the corresponding income. That they were already on
temporary lay-off at the time notice should have been given to them is not an excuse to forego the one-month
written notice because by this time, their lay-off is to become permanent and they were definitely losing their
employment.

There is also nothing in the records to prove that a written notice was ever given to the DOLE as required by
law. GTI's position paper, offer of exhibits, Comment to the Petition, and Memorandum in this case do not
mention of any such written notice. The law requires two notices one to the employee/s concerned and another to
the DOLE not just one. The notice to the DOLE is essential because the right to retrench is not an absolute
prerogative of an employer but is subject to the requirement of law that retrenchment be done to prevent losses.
The DOLE is the agency that will determine whether the planned retrenchment is justified and adequately
supported by facts.
With respect to the PAYMENT OF SEPARATION PAY, the NLRC found that GTI offered to give the
petitioners their separation pay but that the latter rejected such offer which was accepted only by 22 out of the 38
original complainants in this case. As to when this offer was made was not, however, proven. All that the parties,
the Labor Arbiter and the NLRC stated in their respective pleadings and decisions was that the offer and payment
were made during the pendency of the illegal dismissal case with the Labor Arbiter. But with or without this offer
of separation pay, our conclusion would remain the same: that the retrenchment of the petitioners is defective in
the face of our finding that the required notices to both the petitioners and the DOLE were not given.
(Sebuguero vs. NLRC [G.R. No. 115394, 27 September 1995])
In its ordinary connotation, the phrase "TO PREVENT LOSSES" means that retrenchment or termination of
the services of some employees is authorized to be undertaken by the employer sometime before the anticipated
losses are actually sustained or realized. It is not, in other words, the intention of the lawmaker to compel the
employer to stay his hand and keep all his employees until after losses shall have in fact materialized. If such an
intent were expressly written into the law, that law may well be vulnerable to constitutional attack as unduly
taking property from one man to be given to another.
At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is sufficient
legal warrant for the reduction of personnel. In the nature of things, the possibility of incurring losses is constantly
present, in greater or lesser degree, in the carrying on of business operations, since some, indeed many, of the
factors which impact upon the profitability or viability of such operations may be substantially outside the control
of the employer.
(Revidad vs. NLRC [G.R. No. 111105, 27 June 1995])
Anent the mandatory written notice to be filed with the labor department one month before retrenchment, we
are of the considered opinion that the proceedings had before the voluntary arbitrator, where both parties were
given the opportunity to be heard and present evidence in their favor, constitute substantial compliance with the
requirement of the law. The purpose of this notice requirement is to enable the proper authorities to ascertain
whether the closure of the business is being done in good faith and is not just a pretext for evading compliance
with the just obligations of the employer to the affected employees. In fact, the voluntary arbitration proceedings
more than satisfied the intendment of the law considering that the parties were accorded the benefit of a hearing,
in addition to the right to present their respective position papers and documentary evidence. (Revidad vs. NLRC
[G.R. No. 111105, 27 June 1995])
Retrenchment, in contrast to redundancy, is an economic ground to reduce the number of employees. In order
to be justified, the termination of employment by reason of retrenchment must be due to business losses or
reverses which are serious, actual and real. Not every loss incurred or expected to be incurred by the employer
will justify retrenchment, since, in the nature of things, the possibility of incurring losses is constantly present, in
greater or lesser degree, in carrying on the business operations. Retrenchment is normally resorted to by
management during periods of business reverses and economic difficulties occasioned by such events as
recession, industrial depression, or seasonal fluctuations. It is an act of the employer of reducing the work force
because of losses in the operation of the enterprise, lack of work, or considerable reduction on the volume of
business. Retrenchment is, in many ways, a measure oflast resort when other less drastic means have been tried
and found to be inadequate. A lull caused by lack of orders or shortage of materials must be of such nature as
would severely affect the continued business operations of the employer to the detriment of all and sundry if not
properly addressed. The institution of "new methods or more efficient machinery, or of automation" is technically
a ground for termination of employment by reason of installation of labor-saving devices but where the
introduction of these methods is resorted to not merely to effect greater efficiency in the operations of the business
but principally because of serious business reverses and to avert further losses, the device could then verily be
considered one of retrenchment. (Edge Apparel, Inc. vs. NLRC [G.R. No. 121314, 12 February 1998])

Granting that the 16 May 1988 termination was a retrenchment scheme, and the 31 July 1988 and the 28
February 1989 were due to closure, the law requires the granting of the same amount of separation benefits to the
affected employees in any of the cases. The respondent argued that the giving of more separation benefit to the
second and third batches of employees separated was their expression of gratitude and benevolence to the
remaining employees who have tried to save and make the company viable in the remaining days of operations.
This justification is not plausible. There are workers in the first batch who have rendered more years of service
and could even be said to be more efficient than those separated subsequently, yet they did not receive the same
recognition. Understandably, their being retained longer in their job and be not included in the batch that was first
terminated, was a concession enough and may already be considered as favor granted by the respondents to the
prejudice of the complainants. As it happened, there are workers in the first batch who have rendered more years
in service but received lesser separation pay, because of that arrangement made by the respondents in paying their
termination benefits. . .
Clearly, there was impermissible discrimination against the private respondents in the payment of their
separation benefits. The law requires an employer to extend equal treatment to its employees. It may not, in the
guise of exercising management prerogatives, grant greater benefits to some and less to others. Management
prerogatives are not absolute prerogatives but are subject to legal limits, collective bargaining agreements, or
general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758). Article 283 of the Labor Code, as
amended, protects workers whose employment is terminated because of closure of the establishment or reduction
of personnel ((Businessday Information vs. NLRC [G.R. No. 103575, 05 April 1993])
Although, as a general rule, Respondent company has the prerogative and right to resort to temporary lay-off,
such right is likewise limited to a period of six (6) months applying Art. 286 of the Labor Code on suspension of
employer-employee relationship not exceeding six (6) months.
In this case, respondent company was justified in the temporary lay-off of some of its employees. However,
Respondent company should have recalled them after the end of the six month period or at the least reasonably
informed them (complainants) that the Respondent company is still not in a position to recall them due to the
continuous drop of demand in the export market (locally or internationally), thereby extending the temporary layoff with a definite period of recall and if the same cannot be met, then the company should implement
retrenchment and pay its employees separation pay. Failing in this regard, respondent company chose not to recall
nor send notice to the complainants after the lapse of the six (6) month period. Hence, there is in this complaint a
clear case of constructive dismissal. While there is a valid reason for the temporary lay-off, the same is also
limited to a duration of six months. Thereafter the employees, complainants herein, are entitled under the law
(Art. 286) to be recalled back to work. As result thereof, the temporary lay-off of the complainants from January
22, 1991 (date of lay-off) to July 22, 1991 is valid, however, thereafter complainants are already entitled to
backwages, in view of constructive dismissal, due to the fact that they were no longer recalled back to work.
Complainants cannot be placed on temporary lay-off forever. The limited period of six (6) months is based
provisionally too prevent circumvention on the right to security of tenure and to prevent grave abuse of discretion
on the part of the employer. However, since during the trial it was proven, as testified by the Vice-President for
marketing and personnel manager, that the lack of work and selection of personnel continued to persist and
considering the antagonism and hostility displayed by both litigants, as observed by this Arbiter, during the trial of
this case and in view of the strained relations between the parties, reinstatement of the complainants would not be
prudent.
(Sebuguero vs. NLRC [G.R. No. 115394, 27 September 1995])
Closure
Under Article 283 of the Labor Code, the closure of a business establishment or reduction of personnel is a
ground for the termination of the services of any employee unless the closing or retrenching is for the purpose of
circumventing the provision of the law. But while business reverses can be a just cause for terminating employees,
these must be sufficiently proved by the employer.
The case of Sugar Lopez Corporation v. Federation of Free Workers, lays down the general standards under
which an employer may retrench or reduce the number of his employees. FIRSTLY, the losses expected should be
substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is
clearly shown to be insubstantial and inconsequential in character, the bonafide nature of the retrenchment would
appear to be seriously in question. SECONDLY, the substantial loss apprehended must be reasonably imminent,
as such imminence can be perceived objectively and in good faith by the employer. There should, in other words,
be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences

for the livelihood of the employees retired or otherwise laid-off. Because of the far-reaching nature of the
retrenchment, it must, THIRDLY, be reasonably necessary and likely to effectively prevent the expected losses.
LASTLY, but certainly not the least important, the alleged losses if already incurred, and the expected
imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.
(Balasbas vs. NLRC [G.R. No. 85286, 24 August 1992])
Article 283 of the Labor Code, however, speaks of a permanent retrenchment as opposed to a temporary layoff as is the case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off
and provides for the requisites in effecting it or a period or duration therefor. These employees cannot forever be
temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to
set a specific period that employees may remain temporarily laid-off or in floating status. Six months is the period
set by law that the operation of a business or undertaking may be suspended thereby suspending the employment
of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not
last longer than six months. After six months, the employees should either be recalled to work or permanently
retrenched following the requirements of the law, and that failing to comply with this would be tantamount to
dismissing the employees and the employer would thus be liable for such dismissal. (Sebuguero vs. NLRC [G.R.
No. 115394, 27 September 1995])
We note that Section 2 of Rule XIV quoted above requires the notice to specify "the particular acts or
omissions constituting the ground for his dismissal", a requirement which is obviously applicable where the
ground for dismissal is the commission of some act or omission falling within Article 282 of the Labor Code.
Again, Section 5 gives the employee the right to answer and to defend himself against "the allegations stated
against him in the notice of dismissal". It is such allegations by the employer and any counter-allegations that the
employee may wish to make that need to be heard before dismissal is effected. Thus, Section 5 may be seen to
envisage charges against an employee constituting one or more of the just causes for dismissal listed in Article
282 of the Labor Code. Where, as in the instant case, the ground for dismissal or termination of services does not
relate to a blameworthy act or omission on the part of the employee, there appears to us no need for an
investigation and hearing to be conducted by the employer who does not, to begin with, allege any malfeasance or
non-feasance on the part of the employee. In such case, there are no allegations which the employee should refute
and defend himself from. Thus, to require petitioner Wiltshire to hold a hearing, at which private respondent
would have had the right to be present, on the business and financial circumstances compelling retrenchment and
resulting in redundancy, would be to impose upon the employer an unnecessary and inutile hearing as a condition
for legality of termination. (Wiltshire File Co., Inc. vs. NLRC [G.R. No. 82249, 07 February 1991])
Broadly speaking, there appears no complete dissolution of petitioner's business undertaking but the
relocation of petitioner's plant to Batangas, in our view, amounts to cessation of petitioner's business operations in
Makati. It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking
not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete
cessation of all business operations and the cessation of only part of a company's business. In Philippine Tobacco
Flue-Curing & Redrying Corp. vs. NLRC, a company transferred its tobacco processing plant in Balintawak,
Quezon City to Candon, Ilocos Sur. The company therein did not actually close its entire business but merely
relocated its tobacco processing and redrying operations to another place. Yet, this Court considered the transfer
as closure not due to serious business losses for which the workers are entitled to separation pay.
There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the
lease contract on the premises it occupied. That is its prerogative. But even though the transfer was due to a
reason beyond its control, petitioner has to accord its employees some relief in the form of severance pay. Thus, in
E. Razon, Inc. vs. Secretary, petitioner therein provides arrastre services in all piers in South Harbor, Manila,
under a management contract with the Philippine Ports Authority. Before the expiration of the term of the
contract, the PPA cancelled the said contract resulting in the termination of employment of workers engaged by
petitioner. Obviously, the cancellation was not sought, much less desired by petitioner. Nevertheless, this Court
required petitioner therein to pay its workers separation pay in view of the cessation of its arrastre operations.
(Cheniver Deco Print Technics Corporation vs. NLRC [G.R. No. 122876, 17 February 2000])
It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of
personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment
nor a reduction of personnel as contemplated under the aforesaid article. When the Patalon Coconut Estate was
closed because a large portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large

portion of the estate was precisely transferred to PEARA and ultimately to the petitioners as members thereof and
as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at bench.
Even assuming, arguendo, that the situation in this case were a closure of the business establishment called
Patalon Coconut Estate of private respondents, still the petitioners/employees are not entitled to separation pay.
The closure contemplated under Article 283 of the Labor Code is a unilateral and voluntary act on the part of the
employer to close the business establishment as may be gleaned from the wording of the said legal provision that
"The employer may also terminate the employment of any employee due to. . .". The use of the word "may," in a
statute, denotes that it is directory in nature and generally permissive only. The "plain meaning rule" or verba legis
in statutory construction is thus applicable in this case. Where the words of a statute are clear, plain and free from
ambiguity, it must be given its literal meaning and applied without attempted interpretation.
In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of the
business establishment is forced upon the employer and ultimately for the benefit of the employees.
(NFL vs. NLRC [G.R. No. 127718, 02 March 2000])
Broadly speaking, there appears no complete dissolution of petitioner's business undertaking but the
relocation of petitioner's plant to Batangas, in our view, amounts to cessation of petitioner's business operations in
Makati. It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking
not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete
cessation of all business operations and the cessation of only part of a company's business. In Philippine Tobacco
Flue-Curing & Redrying Corp. vs. NLRC, a company transferred its tobacco processing plant in Balintawak,
Quezon City to Candon, Ilocos Sur. The company therein did not actually close its entire business but merely
relocated its tobacco processing and redrying operations to another place. Yet, this Court considered the transfer
as closure not due to serious business losses for which the workers are entitled to separation pay. (Cheniver Deco
Print Technics Corporation vs. NLRC [G.R. No. 122876, 17 February 2000])
Disease
The applicable rule on the ground for dismissal invoked against him is Section 8, Rule I, Book VI, of the
Rules and Regulations Implementing the Labor Code reading as follows:
Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his coemployees, the employer shall not terminate his employment unless there is a certification by a
competent public health authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment. If the disease or ailment
can be cured within the period, the employer shall not terminate the employee but shall ask the
employee to take a leave. The employer shall reinstate such employee to his former position
immediately upon the restoration of his normal health.
The record does not contain the certification required by the above rule. The medical certificate offered by the
petitioner came from its own physician, who was not a "competent public health authority," and merely stated the
employee's disease, without more. We may surmise that if the required certification was not presented, it was
because the disease was not of such a nature or seriousness that it could not be cured within a period of six
months even with proper medical treatment. If so, dismissal was unquestionably a severe and unlawful sanction.
(Cebu Royal Plant vs. Deputy Minister Of Labor [G.R. No. L-58639, 12 August 1987])
Due Process
The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings,
an opportunity to explain one's side or an opportunity to seek a reconsideration of the action or ruling complained
of.
A formal or trial-type hearing is not at all times and in all instances essential. The requirements are satisfied
where the parties are fair and reasonable opportunity to explain their side of the controversy at hand. What is
frowned upon is the absolute lack of notice and hearing..
(Stayfast Philippines Corp. vs. NLRC [218 SCRA 596, 1993])
A formal trial-type hearing is not at all times and in all instances essential to due process. It is enough that the
parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to
present supporting evidence on which a fair decision can be based. According to Llora Motors Inc. vs. Drilon, this

type of hearing is not even mandatory in cases of complainants lodged before the Labor Arbiter. And in Sajonas
vs. NLRC, we observed as follows:
Finally, on the matter of due process which petitioners claim was denied them by private respondents
during the investigation which led to their dismissal, we agree with respondents that although the
aforesaid investigations were not conducted in the manner of a regular trial in court, the elements of due
process, namely the right to be informed of the charges, to be present and to be heard, were accorded
petitioners. In said investigations, petitioners freely and voluntarily answered the questions and even
made further statements in their defense during the concluding stages thereof.
(Aberia vs. NLRC [G.R. No. 102023, 06 November 1992])
"AMPLE OPPORTUNITY" connotes every kind of assistance that management must accord the employee to
enable him to prepare adequately for his defense including legal representation. (Manebo vs. NLRC [G.R. No.
107721, 10 January 1994])
The record of this case is bereft of any indication that a hearing or other gathering was in fact held where
private respondent Calangi was given a reasonable opportunity to confront his accuser(s) and to defend against
the charges made by the latter. Petitioner Corporation's "prior consultation" with the labor union with which
private respondent Calangi was affiliated, was legally insufficient. So far as the record shows, neither petitioner
nor the labor union actually advised Calangi of the matters at issue. The Memorandum of petitioner's Personnel
Manager certainly offered no helpful particulars. It is important to stress that the rights of an employee whose
services are sought to be terminated to be informed beforehand of his proposed dismissal (or suspension) as well
as of the reasons therefor, and to be afforded an adequate opportunity to defend himself from the charges levelled
against him, are rights PERSONAL TO THE EMPLOYEE. Those rights were not satisfied by petitioner
Corporation's obtaining the consent of or consulting with the labor union; such consultation or consent was not a
substitute for actual observance of those rights of private respondent Calangi. The employee can waive those
rights, if he so chooses, but the union cannot waive them for him. That the private respondent simply 'kept silent"
all the while, is not adequate to show an effective waiver of his rights. Notice and opportunity to be heard must
be accorded by an employer even though the employee does not affirmatively demand them. (Century Textile
Mills, Inc. vs. NLRC [G.R. No. 77859, 25 May 1988])
WENPHIL Doctrine
The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of
seniority and the payment of his wages during the period of his separation until his actual reinstatement but not
exceeding three (3) years without qualification or deduction, when it appears he was not afforded due process,
although his dismissal was found to be for just and authorized cause in an appropriate proceeding in the Ministry
of Labor and Employment, should be re-examined. It will be highly prejudicial to the interests of the employer to
impose on him the services of an employee who has been shown to be guilty of the charges that warranted his
dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable,
remains in the service.
Thus in the present case, where the private respondent, who appears to be of violent temper, caused trouble
during office hours and even defied his superiors as they tried to pacify him, should not be rewarded with reemployment and back wages. It may encourage him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe. Under the circumstances the dismissal of the private respondent
for just cause should be maintained. He has no right to return to his former employer.
However, the petitioner must nevertheless be held to account for failure to extend to private respondent his
right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an
employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the
second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from employment. Considering the circumstances of
this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award
depends on the facts of each case and the gravity of the omission committed by the employer. (WENPHIL vs.
NLRC [G.R. No. 80587, 08 February 1989])

WENPHIL Doctrine abandoned by Serrano vs. NLRC

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of
employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even
though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay
in accordance with Art. 283,
xxx

xxx

xxx

If the employee's separation is without cause, instead of being given separation pay, he should be reinstated.
In either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has
been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was
dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not
be reinstated. However, he must be paid backwages from the time his employment was terminated until it is
determined that the termination of employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect.
(Serrano vs. NLRC [G.R. No. 117040, 27 January 2000])
Violation of procedural due process not a violation of the Due Process Clause of the Constitution
Violation of Notice Requirement Not a Denial of Due Process
The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by the
State, which is not the case here. There are three reasons why, on the other hand, violation by the employer of the
notice requirement cannot be considered a denial of due process resulting in the nullity of the employee's
dismissal or layoff.
The FIRST is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does
not apply to the exercise of private power, such as the termination of employment under the Labor Code. This is
plain from the text of Art. III, 1 of the Constitution, viz.: "No person shall be deprived of life, liberty, or property
without due process of law. . . ." The reason is simple: Only the State has authority to take the life, liberty, or
property of the individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is
consistent with what are considered civilized methods.
The SECOND REASON is that notice and hearing are required under the Due Process Clause before the
power of organized society are brought to bear upon the individual. This is obviously not the case of termination
of employment under Art. 283. Here the employee is not faced with an aspect of the adversary system. The
purpose for requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to
be heard on any charge against him, for there is none. The purpose rather is to give him time to prepare for the
eventual loss of his job and the DOLE an opportunity to determine whether economic causes do exist justifying
the termination of his employment.
Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to
comply with Due Process Clause of the Constitution. The time for notice and hearing is at the trial stage. Then
that is the time we speak of notice and hearing as the essence of procedural due process. Thus, compliance by the
employer with the notice requirement before he dismisses an employee does not foreclose the right of the latter to
question the legality of his dismissal. As Art. 277(b) provides, "Any decision taken by the employer shall be
without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint
with the regional branch of the National Labor Relations Commission."
Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the
fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which gave either party to
the employer-employee relationship the right to terminate their relationship by giving notice to the other one
month in advance. In lieu of notice, an employee could be laid off by paying him a mesada equivalent to his
salary for one month. 28 This provision was repealed by Art. 2270 of the Civil Code, which took effect on August
30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted
reviving the mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of
advance notice or the payment of compensation at the rate of one-half month for every year of service.
The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of
which was to give the employer the opportunity to find a replacement or substitute, and the employee the equal
opportunity to look for another job or source of employment. Where the termination of employment was for a just
cause, no notice was required to be given to the, employee. 30 It was only on September 4, 1981 that notice was
required to be given even where the dismissal or termination of an employee was for cause. This was made in the

rules issued by the then Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor
Code. And it was still much later when the notice requirement was embodied in the law with the amendment of
Art. 277(b) by R.A. No. 6715 on March 2, 1989. It cannot be that the former regime denied due process to the
employee. Otherwise, there should now likewise be a rule that, in case an employee leaves his job without cause
and without prior notice to his employer, his act should be void instead of simply making him liable for damages.
The THIRD REASON why the notice requirement under Art. 283 can not be considered a requirement of the
Due Process Clause is that the employer cannot really be expected to be entirely an impartial judge of his own
cause. This is also the case in termination of employment for a just cause under Art. 282 (i.e., serious misconduct
or willful disobedience by the employee of the lawful orders of the employer, gross and habitual neglect of duties,
fraud or willful breach of trust of the employer, commission of crime against the employer or the latter's
immediate family or duly authorized representatives, or other analogous cases).
Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by
employees before the grievance committees manned by impartial judges of the company." The grievance
machinery is, however, different because it is established by agreement of the employer and the employees and
composed of representatives from both sides. That is why, in Batangas Laguna Tayabas Bus Co. v. Court of
Appeals, which Justice Puno cites, it was held that "Since the right of [an employee] to his labor is in itself a
property and that the labor agreement between him and [his employer] is the law between the parties, his
summary and arbitrary dismissal amounted to deprivation of his property without due process of law." But here
we are dealing with dismissals and layoffs by employers alone, without the intervention of any grievance
machinery. Accordingly in Montemayor v. Araneta University Foundation, although a professor was dismissed
without a hearing by his university, his dismissal for having made homosexual advances on a student was
sustained, it appearing that in the NLRC, the employee was fully heard in his defense.
(Serrano vs. NLRC [G.R. No. 117040, 27 January 2000])
Effect of Lack of Notice; Termination INEFFECTUAL
Lack of Notice Only Makes Termination Ineffectual
Not all notice requirements are requirements of due process. Some are simply part of a procedure to be
followed before a right granted to a party can be exercised. Others are simply an application of the Justinian
precept, embodied in the Civil Code, to act with justice, give everyone his due, and observe honesty and good
faith toward one's fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the failure
either of the employer or the employee to live up to this precept is to make him liable in damages, not to render
his act (dismissal or resignation, as the case may be) void. The measure of damages is the amount of wages the
employee should have received were it not for the termination of his employment without prior notice. If
warranted, nominal and moral damages may also be awarded.
We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employer's failure to comply with the
notice requirement does not constitute a denial of due process but a mere failure to observe a procedure for the
termination of employment which makes the termination of employment merely INEFFECTUAL. It is similar to
the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of the Civil Code in rescinding a
contract for the sale of immovable property. Under these provisions, while the power of a party to rescind a
contract is implied in reciprocal obligations, nonetheless, in cases involving the sale of immovable property, the
vendor cannot exercise this power even though the vendee defaults in the payment of the price, except by bringing
an action in court or giving notice of rescission by means of a notarial demand. Consequently, a notice of
rescission given in the letter of an attorney has no legal effect, and the vendee can make payment even after the
due date since no valid notice of rescission has been given.
Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make
the dismissal of an employee illegal.
xxx

xxx

xxx

Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and,
therefore, the employee should be reinstated and paid backwages. To contend, as Justices Puno and Panganiban
do, that even if the termination is for a just or authorized cause the employee concerned should be reinstated and
paid backwages would be to amend Art. 279 by adding another ground for considering a dismissal illegal. What is
more, it would ignore the fact that under Art. 285, if it is the employee who fails to give a written notice to the
employer that he is leaving the service of the latter, at least one month in advance, his failure to comply with the
legal requirement does not result in making his resignation void but only in making him liable for damages. This
disparity in legal treatment, which would result from the adoption of the theory of the minority cannot simply be
explained by invoking resident Ramon Magsaysay's motto that "he who has less in life should have more in law."

That would be a misapplication of this noble phrase originally from Professor Thomas Reed Powell of the
Harvard Law School.
Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC, in support of his view that an illegal dismissal
results not only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola case
actually involved a dismissal for an alleged loss of trust and confidence which, as found by the Court, was not
proven. The dismissal was, therefore, illegal, not because there was a denial of due process, but because the
dismissal was without cause. The statement that the failure of management to comply with the notice requirement
"taints the dismissal with illegality" was merely a dictum thrown in as additional grounds for holding the
dismissal to be illegal.
Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the
payment of backwages for the period when the employee is considered not to have been effectively dismissed or
his employment terminated. The sanction is not the payment alone of nominal damages as Justice Vitug contends.
(Serrano vs. NLRC [G.R. No. 117040, 27 January 2000])
Effect of Lack of Notice: backwages until determination of just cause
Validity of Petitioner's Layoff Not Affected by Lack of Notice
We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction of
fine for an employer's disregard of the notice requirement. We do not agree, however, that disregard of this
requirement by an employer renders the dismissal or termination of employment null and void. Such a stance is
actually a reversion to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid
backwages when it is shown that he has not been given notice and hearing although his dismissal or layoff is later
found to be for a just or authorized cause. Such rule was abandoned in Wenphil because it is really unjust to
require an employer to keep in his service one who is guilty, for example, of an attempt on the life of the
employer or the latter's family, or when the employer is precisely retrenching in order to prevent losses.
The need is for a rule which, while recognizing the employee's right to notice before he is dismissed or laid
off, at the same time acknowledges the right of the employer to dismiss for any of the just causes enumerated in
Art. 282 or to terminate employment for any of the authorized causes mentioned in Arts. 283-284. If the Wenphil
rule imposing a fine on an employer who is found to have dismissed an employee for cause without prior notice is
deemed ineffective in deterring employer violations of the notice requirement, the remedy is not to declare the
dismissal void if there are just or valid grounds for such dismissal or if the termination is for an authorized cause.
That would be to uphold the right of the employee but deny the right of the employer to dismiss for cause. Rather,
the remedy is to order the payment to the employee of full backwages from the time of his dismissal until the
court finds that the dismissal was for a just cause. But, otherwise, his dismissal must be upheld and he should not
be reinstated. This is because his dismissal is ineffectual.
For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a
labor-saving device, but the employer did not give him and the DOLE a 30-day written notice of termination in
advance, then the termination of his employment should be considered ineffectual and he should be paid
backwages. However, the termination of his employment should not be considered void but he should simply be
paid separation pay as provided in Art. 283 in addition to backwages.
(Serrano vs. NLRC [G.R. No. 117040, 27 January 2000])
Corporate Liability
A corporate officer is not personally liable for the money claims of discharged corporate employees unless he
acted with evident malice and bad faith in terminating their employment. There is no evidence in this case that
Locsin acted in bad faith or with malice in carrying out the retrenchment and eventual closure of the company,
hence, he may not be held personally and solidarily liable with the company for the satisfaction of the judgment in
favor of the retrenched employees. (Businessday vs. NLRC [G.R. No. 103575, 05 April 1993])
This is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of
TAN's not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to the Board,
and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the
relationship of a person to a corporation, whether as officer or agent or employee, is not determined by the nature
of the services performed, but by the incidents of the relationship as they actually exist.
We agree with petitioners, however, that the NLRC erred in holding Centeno jointly and severally liable with
MAM. A corporation, being a juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents, are not theirs but the direct accountabilities of the

corporation they represent. True, solidary liabilities may at times be incurred but only when exceptional
circumstances warrant such as, generally, in the following cases:
1.
When directors and trustees or, in appropriate cases, the officers of a corporation
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
(c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons.
2.
When a director or officer has consented to the issuance of watered stocks or who, having knowledge thereof,
did not forthwith file with the corporate secretary his written objection thereto.
3.
When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and
solidarily liable with the Corporation.
4
When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate
action.
In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or in bad faith.
(MAM Realty vs. NLRC [G.R. No. 114787, 02 June 1995])
The fact that complainant is a corporate officer, an elective position under the corporate by-laws and her nonelection is an intra-corporate controversy cognizable by the SEC and not by the NLRC, petitioner bank can no
longer raise the issue of jurisdiction under the principle of estoppel. The bank participated in the proceedings from
start to finish. It filed its position paper with the Labor Arbiter. When the decision of the Labor Arbiter was
adverse to it, the bank appealed to the NLRC. When the NLRC decided in its favor, the bank said nothing about
jurisdiction. Even before the CA, it never questioned the proceedings on the ground of lack of jurisdiction. It was
only when the CA ruled in favor of public respondent did it raise the issue of jurisdiction. The bank actively
participated in the proceedings before the Labor Arbiter, the NLRC and the CA. While it is true that jurisdiction
over the subject matter of a case may be raised at any time of the proceedings, this rule presupposes that laches or
estoppel never supervened. (Prudential Bank vs. Reyes [G.R. No. 141093, 20 February 2001
Sale/Merger or Consolidation
Where such transfer of ownership is in good faith, the transferee is under no legal duty to absorb the
transferor employees as there is no law compelling such absorption. The most that the transferee may do, for
reasons of public policy and social justice, is to give preference to the qualified separated employees in the filling
of vacancies in the facilities of the purchaser. (Manlimos vs. NLRC [G.R. No. 113337, 02 March 1995])
The rule is that unless expressly assumed, labor contracts such as employment contracts and collective
bargaining agreements are not enforceable against a transferee of an enterprise, labor contracts being in personam,
thus binding only between the parties. A labor contract merely creates an action in personally and does not create
any real right which should be respected by third parties. This conclusion draws its force from the right of an
employer to select his employees and to decide when to engage them as protected under our Constitution, and the
same can only be restricted by law through the exercise of the police power.
As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in
its employ the employees of the latter.
However, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the
employers of the seller of such assets or enterprise, the parties are liable to the employees if the transaction
between the parties is colored or clothed with bad faith.
(Sundowner Dev. Corp. vs. Drilon [G.R. No. 82341, 06 December 1989])

We disagree with the Labor Arbiter's reliance on the case of Mobil Employees Association vs. NLRC. The
NLRC was correct in holding that Mobil was not applicable because Mobil involved the termination of
employment under Article 283 (before Article 284) of the Labor Code and not termination of employment as a
result of the change of corporate ownership, as in the case of private respondent Super Mahogany Plywood
Corporation. In Mobil, the original employer; Mobil Oil Philippines, Inc., completely withdrew from business and
was even dissolved. In the case at bar, there was only a change of ownership of Super Mahogany Plywood
Corporation which resulted in a change of ownership. In short, the corporation itself, as a distinct and separate
juridical entity, continues to exist. The issue of whether there was a closing or cessation of business operations
which could have operated as a just cause for the termination of employment was not material. The change in
ownership of the management was done bona fide and the petitioners did not for any moment before the filing of
their complaints raise any doubt on the motive for the change. On the contrary, upon being informed thereof and
of their eventual termination from employment, they freely and voluntarily accepted their separation pay and
other benefits and individually executed the Release or Waiver which they acknowledged before no less than a
hearing officer of the DOLE. (Manlimos vs. NLRC [G.R. No. 113337, 02 March 1995])
Special Circumstances
Constructive Dismissal
CONSTRUCTIVE DISMISSAL as a quitting because continued employment is rendered impossible,
unreasonable or unlikely; as, an offer involving a demotion in rank and a diminution in pay. (Philippine Japan
Active Carbon Corporation vs. NLRC)
There is a constructive dismissal when the reassignment of an employee involves a demotion in rank or a
diminution in pay (Lemery Savings and Loan Bank v. National Labor Relations Commission, 205 SCRA 492
[1992]; Philippine Japan Active Carbon Corporation v. National Labor Relations Commission, 171 SCRA 164
[1989]).
In the case at bench, the demotion of private respondent is tantamount to constructive dismissal. One does not
need to stretch his imagination to distinguish the work of a security guard and that of a common agricultural
laborer in a sugar plantation. Likewise, there was a diminution of salary, for a security guard is paid on a monthly
basis while a laborer in the sugar plantation is paid either on a daily or piece work basis. Laborers do not work
year round but only when needed and on off-season months, they are not required to work at all.
(Oscar Ledesma & Co. vs. NLRC [G.R. No. 110930, 13 July 1995])

Preventive Suspension
Sections 3 and 4, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code, Termination of
Employment, provide:
Sec. 3. Preventive suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of the
employer or of his co-workers.
Sec. 4 Period of suspension. No preventive suspension shall last longer than 30 days. The employer
shall thereafter reinstate the worker in his former or in a substantially equivalent position of the employer
may extend the period of suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid
to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker.
Section 4, Rule XIV, Book V of the Omnibus Rules provides that preventive suspension cannot be more than
the maximum period of 30 days. Hence, after the 30-day period of suspension beyond the maximum period
amounts to constructive dismissal. (Hyatt Taxi Services vs. Catinoy [G.R. No. 143204, 26 June 2001])
Burden of Proof in Labor Cases

Private respondent's documentary evidence showing the culpability of petitioners should prevail over
petitioners' uncorroborated explanations and self-serving denials regarding their involvement in the pilferages. All
administrative determinations require only substantial proof and not clear and convincing evidence. Proof beyond
reasonable doubt of the employee's misconduct is not required, it being sufficient that there is some basis for the
same or that the employer has reasonable ground to believe that the employee is responsible for the misconduct,
and his participation therein renders him unworthy of the trust and confidence demanded by his position. Thus,
petitioners cannot assert that the public respondent closed its eyes to their evidence. The latter's findings are
supported by substantial evidence which goes beyond the minimum evidentiary support required by law.
(Segismundo vs. NLRC [G.R. No. 112203, 13 December 1994])
The fact that Santos neglected to substantiate his claim for night shift differentials is not prejudicial to his
cause. After all, the burden of proving payment rests on petitioner NSC. Santos' allegation of non-payment of this
benefit, to which he is by law entitled, is a negative allegation which need not be supported by evidence unless it
is an essential part of his cause of action. It must be noted that his main cause of action is his illegal dismissal, and
the claim for night shift differential is but an incident of the protest against such dismissal. Thus, the burden of
proving that payment of such benefit has been made rests upon the party who will suffer if no evidence at all is
presented by either party. National Semiconductor (HK) Distribution, Ltd. vs. NLRC [G.R. No. 123520, 26 June
1998])
The reason for this rule is that the pertinent personnel files, payrolls, records, remittance and other similar
documents which will show that overtime, differentials, service incentive leave and other claims of workers
have been paid are not in the possession of the worker but in the custody and absolute control of the employer.
Thus, in choosing not to present evidence to prove that it had paid all the monetary claims of petitioners, HITECH failed once again to discharge the onus probandi. Consequently, we have no choice but to award those
claims to petitioners. (Villar vs. NLRC [G.R. No. 130935, 11 May 2009])
Quitclaims
The requisites of a valid quitclaim are: That (a)
It was voluntarily entered into by the parties;
(b)
There was no fraud or deceit on the part of any of the parties;
(c)
The consideration of the quitclaim is credible and reasonable; and,
(d)
The contract is not contrary to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered
into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply
because of a change of mind. It is only where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in
to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily,
with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as a valid and binding undertaking. (Periquet v. NLRC)
"Dire necessity" is not an acceptable ground for annulling the releases, especially since it has not been shown
that the employees had been forced to execute them. It has not even been proven that the considerations for the
quitclaims were unconscionably low and that the petitioners had been tricked into accepting them. (Veloso v.
DOLE)
First, even if a clear majority of the union members agreed to a settlement with the employer, the union has no
authority to compromise the individual claims of members who did not consent to such settlement. Rule 138
Section 23 of the 1964 Revised Rules of Court requires a special authority before an attorney may compromise
his client's litigation. "The authority to compromise cannot lightly be presumed and should be duly established by
evidence."
In the case at bar, minority union members did not authorize the union to compromise their individual claims.
Absent a showing of the union's special authority to compromise the individual claims of private respondents for
reinstatement and back wages, there is no valid waiver of the aforesaid rights. As private respondents did not
authorize the union to represent them not bound by the terms thereof.
(Golden Donuts, Inc. vs. NLRC [G.R. Nos. 113666-68, 19 January 2000])

The mere fact that the employee was not physically coerced or intimidated does not necessarily imply that he
freely or voluntarily consented to the terms of the quitclaim. Under Article 1330 of the Civil Code, consent may
be vitiated not only through intimidation or violence but also by mistake, undue influence or fraud. Moreover, it is
the employer and not the employee who has the burden of proving that the quitclaim was voluntarily entered into.
(Philippine Carpet Employees Association vs. PCMC [G.R. No.140269-70, 14 September 2000])
Reliefs under the Labor Code
Reinstatement plus backwages
Since private respondent's dismissal was for just and valid cause, the order of public respondent for the
reinstatement of private respondent with award of backwages has no factual and legal basis. (PAL vs. NLRC
[G.R. No. 126805, 16 March 2000])
[A]n employee who is unjustly dismissed is entitled to his full backwages computed from the time his
compensation was withheld from him up to the time of his reinstatement. Mere offer to reinstate a dismissed
employee, given the circumstances in this case, is not enough. If petitioner were sincere in its intention to reinstate
private respondent, petitioner should have at the very least reinstated him in its payroll right away. We are thus
constrained to conclude that private respondent should be paid by petitioner not only the sum of P26,866.64
awarded by the NLRC, but the petitioner should be held liable for the entire amount of backwages due the private
respondent from the day he was illegally dismissed up to the date of his reinstatement. Only then could
observance of labor laws be promoted and social justice upheld. (Condo Suite Club Travel, Inc. vs. NLRC [G.R.
No. 125671, 28 January 2000])
We agree that no full backwages from the time their pay was withheld up to the time of actual reinstatement
can be ordered paid to petitioners. R.A. No. 6715, which amended Art. 279 of the Labor Code by requiring that an
employee who is illegally dismissed shall be paid "his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement," has no retroactive effect and does not apply to cases of illegal dismissal taking
place before its effectivity on March 21, 1989. Since petitioners were dismissed in 1987, they cannot demand
payment of full backwages until they were actually reinstated. BALLADARES vs. NLRC G.R. No. 111342 [19
June 1995]
Strained relations
"Strained relations," as amplified in Employee's Association of the Philippine American Life Insurance
Company v. NLRC, 199 SCRA 628 [1991], must be of such a nature or degree as to preclude reinstatement. But,
where the differences between the parties are neither personal nor physical, nor serious, then there is no reason
why the illegally dismissed employee should not be reinstated rather than simply given separation pay and
backwages. More so if the cause of the perceived 'strained relations' is the filing of a complaint for illegal
dismissal. (Kunting vs. NLRC [G.R. No. 101427, 08 November 1993])
A careful scrutiny of the records of the case at bench, however, readily discloses the existence of strained
relationship between the petitioner and private respondents.
Firstly, petitioner consistently refused to re-admit private respondents in his establishment. Petitioner even
replaced private respondents with a new set of workers to perform the tasks of private respondents; Moreover,
although petitioner ostensibly argued in his supplemental motion for reconsideration that reinstatement should
have been the proper remedy in the case at bench on his premise that the existence of strained relationship was not
adequately established, yet petitioner never sincerely intended to effect the actual reinstatement of private
respondents. For if petitioner were to pursue further the entire logic of his argument, the prayer in his
supplemental motion for reconsideration should have contained not just the mere deletion of the award of

separation pay, but precisely, the reinstatement of private respondents. Quite obviously then, notwithstanding
petitioner's argument for reinstatement he was only interested in the deletion of the award of separation pay to
private respondents.
xxx
xxx
xxx
And secondly, private respondents themselves, from the very start, had already indicated their aversion to
their continued employment in petitioner's establishment. The very filing of their second case before Labor.
(Congson vs. NLRC [G.R. No. 114250, 05 April 1995])
As the Court held in Globe-Mackay Cable and Radio Corporation v. NLRC, 206 SCRA 701 [1992], citing];
Sibal v. Notre Dame of Greater Manila, 182 SCRA 538 [1990]:Obviously, the principle of "strained relations"
cannot be applied indiscriminately. Otherwise reinstatement can never be possible simply because some hostility is
invariably engendered between the parties as a result of litigation. That is human nature.
Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an
employee who shall assert his right could be easily separated from the service, by merely paying his separation pay
on the pretext that his relationship with his employer had already been strained. (Anscor Transport and Terminals
v. NLRC [190 SCRA 147, 1990])
Moral and exemplary damages
Private respondent is not entitled to the recovery of moral damages since these are recoverable only where the
dismissal of the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public policy. (Spartan Security Detective Agency, Inc. v.
NLRC [213 SCRA 528, 1992])
Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are
inimical to the legitimate interests of both labor and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and
hinder the promotion of healthy and stable labor-management relations. As the conscience of the government, it is
the Court's sworn duty to ensure that none trifles with labor rights.
For this reason, we find it proper in this case to impose moral and exemplary damages on private respondent.
However, the damages awarded by the labor arbiter, to our mind, are excessive. In determining the amount of
damages recoverable, the business, social and financial position of the offended parties and the business and
financial position of the offender are taken into account. It is our view that herein private respondents had not
fully acted in good faith. However, we are cognizant that a cooperative promotes the welfare of its own members.
The economic benefits filter to the cooperative members. Either equally or proportionally, they are distributed
among members in correlation with the resources of the association utilized. Cooperatives help promote economic
democracy and support community development. Under these circumstances, we deem it proper to reduce moral
damages to only P10,000.00 payable by private respondent NEECO I to each individual petitioner. We also deem
it sufficient for private respondent NEECO I to pay each individual petitioner P5,000.00 to answer for exemplary
damages, based on the provisions of Articles 2229 and 2232 of the Civil Code.
(Nueva Ecija I Electric Cooperative, Inc. vs. NLRC [G.R. No. 116066, 24 January 2000])
Separation Pay
Finally, we hold that the contention of Sweet Lines that separation pay and back wages are inconsistent with
each other is not well-taken. Separation pay is granted where reinstatement is no longer advisable because of
strained relations between the employee and the employer. Back wages represent compensation that should have
been earned but were not collected because of the unjust dismissal. The bases for computing the two are different,
the first being usually the length of the employee's service and the second the actual period when he was
unlawfully prevented from working.

We have ordered the payment of both in proper case as otherwise the employee might be deprived of benefits
justly due him. Thus, if an employee who has worked only one year is sustained by the labor court after three
years from his unjust dismissal, granting him separation pay only would entitle him to only one month salary.
There is no reason why he should not also be paid three years back wages corresponding to the period when he
could not return to his work or could not find employment elsewhere. (Lim vs. NLRC [G.R. No. 79907, 16 March
1989])
There should be no question that where it comes to such valid but not iniquitous causes as failure to comply
with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate,
particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable
policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence,
which is an allowable ground. A working mother who has to be frequently absent because she has also to take care
of her child may also be removed because of her poor attendance, this being another authorized ground. It is not
the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company
cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be
validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay
would be sustainable under the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must
be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed
for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation
of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found
sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while
inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of
duty and in the company premises, the situation is changed completely. This is not only inefficiency but
immorality and the grant of separation pay would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on 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 relations 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.
A contrary rule would, as the petitioner correctly argues, have the effect of rewarding rather than punishing
the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the
separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who
steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will
commit a similar offense in his next employment because he thinks he can expect a little leniency if he is again
found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the
infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. (PLDT vs.
NLRC [G.R. No. 80609, 23 August 1988])
Thus, petitioner pointed out that the SEC's order suspending all claims against it pending before any other
court, tribunal or body was pursuant to the rehabilitation receivership proceedings. Such order was necessary to
enable the rehabilitation receiver to effectively exercise its powers free from any judicial or extra-judicial
interference that might unduly hinder the rescue of the distressed company. Since receivership proceedings have
ceased and petitioner's rehabilitation receiver and liquidator, Ledesma Saludo & Associates, has been given the
imprimatur to proceed with corporate liquidation, the cited order of the Securities and Exchange Commission has
been rendered functus officio. Thus, there is no legal impediment for the execution of the decision of the Labor
Arbiter for the payment of separation pay.
Considering that petitioner's monetary obligation to private respondent is long overdue and that petitioner has
signified its willingness to comply with such obligation by entering into an agreement with private respondent as
to the amount and manner of payment, petitioner can not delay satisfaction of private respondent's claim.
However, due to events subsequent to the filing of this petition, private respondent must present its claim with the
rehabilitation receiver and liquidator of petitioner, subject to the rules on preference of credits.
(Alemar's Sibal & Sons, Inc. vs. NLRC [G.R. No. 114761, 19 January 2000])
It must be emphasized that the right of employee to demand separation pay and backwages is always
premised on the fact that the employee was terminated either legally of illegally. The award of backwages belongs
to an illegally dismissed employee by direct provision of law and it is awarded on grounds of equity for earnings

which a worker or employee has lost due to illegal dismissal. Separation pay, on the other hand, is awarded as an
alternative to illegal dismissed employees where reinstatement is no longer possible. (Jo Cinema vs. Abellana
[G.R. No. 132837, 28 June 2001])
Financial Assistance
With regards to the award of financial assistance to petitioner, We find that the same is not justified.
Petitioner's willful disobedience of the orders of her employer constitutes serious misconduct. As We held in the
case of Del Monte Phils., Inc. vs. NLRC, "henceforth, separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character". Hence, the employer, CLUB, may not be required to give the
petitioner separation pay, or financial assistance, or whatever other name it is called, on the ground of social
justice. (Aguilar vs. NLRC [G.R. No. 100878, 02 December 1992])
Neither could we allow the award of P5,000.00 as financial assistance on equitable consideration as decreed
by the labor arbiter. As we have consistently held in previous cases, such monetary award is justified only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those adversely
affecting his moral character. Thus, if the reason for the valid dismissal is, for example, habitual intoxication or an
offense involving moral turpitude, like theft, fraud, falsification or illicit sexual relations with a fellow worker,
separation pay or financial assistance, or by whatever other name it is called, may not be allowed. (PAL vs. NLRC
[G.R. No. 126805, 16 March 2000])
Retirement
In the instant case, the complaints of private respondents were still being resolved on the labor arbiter level
when R.A. No. 7641 took effect. However, it was quite clear, and both the Labor Arbiter and the NLRC so held,
that private respondents had ceased to be employees of petitioner, by reason of voluntary resignation, before the
statute went into effect. Moreover, it appears that private respondents did not qualify for the benefits of R.A. No.
7641 under the terms of this law itself. The Court notes that when private respondents filed their complaints more
than one (1) year after they had been allegedly illegally dismissed, respondent Ausan, Jr. was fifty-seven (57)
years old while respondent Alanan was sixty (60) years old. That would make Ausan, Jr. fifty-five (55) years old
and Alanan fifty-eight (58) years old at the time their services with petitioner were ended by their resignation.
Since the record does not show any retirement plan or collective bargaining agreement providing for retirement
benefits to petitioner's employees, the applicable retirement age is the optional retirement age of sixty (60) years
according to Article 287, which would qualify the retiree to retirement benefits equivalent to one-half (1/2)
month's salary for every year of service. Unfortunately, at the time private respondents stopped working for
petitioner, they had not yet reached the age of sixty (60) years.
We stress, however, that there is nothing to prevent petitioner from voluntarily giving private respondents
some financial assistance on an ex gratia basis.
(CJC Trading, Inc. vs. NLRC [G.R. No. 115884, 20 July 1995])
Worker preference
Worker preference in case of bankruptcy. - In the event of bankruptcy or liquidation of an employer's
business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any
provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full
before the claims of the Government and other creditors may be paid. (Article 110 of the Labor Code)
(1) Article 110 of the Labor Code, as amended, must be viewed and read in conjunction with the provisions of
the Civil Code on concurrence and preferences of credits;
(2) The aforesaid provisions of the Civil Code, including Article 110 of the Labor Code, require judicial
proceedings in rem in adjudication of creditors' claims against the debtor's assets to become operative;

(3) Republic Act No. 6715 has the effect of expanding the "worker preference" to cover not only unpaid wages
but also other monetary claims of laborers, to which even claims of the Government must be deemed
subordinate; and
(4) The amendatory provisions of Republic Act 6715, which took effect on 21 March 1989, should only be given
prospective application.
(DBP vs. NLRC [G.R. No. 86227, 19 January 1994])
PD No. 902-A is clear that all actions for claims against corporations, partnerships or associations under
management or receivership pending before any court, tribunal, board or body shall be suspended accordingly.
The law did not make any exception in favor of labor claims.
The justification for the automatic stay of all pending actions for claims is to enable the management
committee or the rehabilitation receiver to effectively exercise its/his powers free from any judicial or
extrajudicial interference that might unduly hinder or prevent the rescue of the debtor company. To allow such
actions to continue would only add to the burden of the management committee or rehabilitation receiver, whose
time, effort and resources would be wasted in defending claims against the corporation instead of being directed
towards its restructuring and rehabilitation. Thus, the labor case would defeat the purpose of the automatic stay.
To rule otherwise would open the floodgates to numerous claims and would defeat the rescue efforts of the
management committee. (Rubberworld vs. NLRC [305 SCRA 721])
JURISDICTION
Regional Director
Recovery of wages, simple money claims and other benefits. Upon complaint of any interested party, the
Regional Director of the Department of Labor and Employment or any of the duly authorized hearing officers of
the Department is empowered, through summary proceeding and after due notice, to hear and decide any matter
involving the recovery of wages and other monetary claims and benefits, including legal interest, owing to an
employee or person employed in domestic or household service or househelper under this Code, arising from
employer-employee relations: Provided, That such complaint does not include a claim for reinstatement:
Provided, further, That the aggregate money claims of each employee or househelper do not exceed five thousand
pesos (P5,000). The Regional Director or hearing officer shall decide or resolve the complaint within thirty (30)
calendar days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or
househelper pursuant to this Article shall be held in a special deposit account by, and shall be paid, on order of the
Secretary of Labor and Employment or the Regional Director directly to the employee or househelper concerned.
Any such sum not paid to the employee or househelper, because he cannot be located after diligent and reasonable
effort to locate him within a period of three (3) years, shall be held as a special fund of the Department of Labor
and Employment to be used exclusively for the amelioration and benefit of workers.
Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be
appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from receipt of a
copy of said decision or resolution, to the National Labor Relations Commission which shall resolve the appeal
within ten (10) calendar days from the submission of the last pleading required or allowed under its rules.
The Secretary of Labor and Employment or his duly authorized representative may supervise the payment of
unpaid wages and other monetary claims and benefits, including legal interest, found owing to any employee or
househelper under this Code. (Article 129 of the Labor Code)
Labor Arbiter
Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code, the
Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or non-agricultural:
(1) Unfair labor practice cases;
(2) Termination disputes; (Subject to Art 261 - VA's jurisdiction over unbresolved grievance from
CBA/company personel policies)
(3) If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rate of pay, hours of work and other terms and conditions of employment;
(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;

(5)

Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and
(6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00), whether or not
accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those
arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said
agreements. (Article 217 of the Labor Code)
Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National
Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including
claims for actual, moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval.
The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may
be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or
partnership for the aforesaid claims and damages.
xxx

xxx

xxx

In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent
(12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months
for every year of the unexpired term, whichever is less.
xxx

xxx

xxx

(Section 10 of Republic Act No. 8042 [Migrant Workers and Overseas Filipinos Act of 1995])
Bureau of Labor Relations
The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of
Labor and Employment shall have original and exclusive authority to act, at their own initiative or upon request of
either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising
from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except
those arising from the implementation or interpretation of collective bargaining agreements which shall be the
subject of grievance procedure and/or voluntary arbitration.
The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by
agreement of the parties. (Article 226 of the Labor Code)
Clearly, the Secretary of Labor and Employment has no jurisdiction to entertain the appeal of ABBOTT. The
appellate jurisdiction of the Secretary of Labor and Employment is limited only to a review of cancellation
proceedings decided by the BLR in the exercise of its exclusive and original jurisdiction. The Secretary of Labor and
Employment has no jurisdiction over decisions of the BLR rendered in the exercise of its appellate power to review
the decision of the Regional Director in a petition to cancel the union's certificate of registration, said decisions being
final and inappealable.
xxx

xxx

xxx

It is clear then that the Secretary of Labor and Employment did not commit grave abuse of discretion in not acting
an ABBOTT's appeal. The decisions of the BLR on cases brought before it on appeal from the Regional Director are
final and executory. Hence, the remedy of the aggrieved party is to seasonably avail of the special civil action of
certiorari under Rule 65 of the Rules of Court.
(Abbott Laboratories vs. Abbott Laboratories Employees Union [G.R. No. 131374, 26 January 2000.)
Voluntary arbitrator

The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to
hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies
referred to in the immediately preceding Article. Accordingly, violations of a Collective Bargaining Agreement,
except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved
as grievances under the Collective Bargaining Agreement. For purposes of this Article, gross violations of a
Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the
voluntary arbitrator or panel of voluntary arbitrators and shall immediately dispose and refer the same to the
grievance machinery or voluntary arbitration provided in the collective bargaining agreement.
(Article 261 of the Labor Code)
Appeal
From Labor Arbiter to NLRC
Article 221 of the Labor Code mandates that technical rules of evidence in courts of law shall not be
controlling in any of the proceedings before the Commission or the Labor Arbiters. Further, the Commission is
required to use every reasonable means to ascertain the facts without regard to technicalities or procedure.
Technical rules may be relaxed to prevent miscarriage of justice. They must not be allowed to stand in the way of
equitably and completely resolving the rights and obligations of the parties.
In the case at bar, petitioner had the opportunity to rebut the truth of these additional documents. Respondent
NLRC, on appeal, correctly accorded weight to these documents considering their nature and character. These
were daily time records, certifications from the postmaster, etc., whose trustworthiness can be relied upon.
(Caete vs. NLRC [G.R. No. 114161, 23 November 1995])
Grounds for Appeal
(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
(b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;
(c) If made purely on questions of law; and
(d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or
injury to the appellant.
Grave Abuse of Discretion
The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the
jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the tribunal
exercising judicial or quasi-judicial power as to amount to lack of power. (Arroyo vs. De Venecia [277 SCRA 268,
(1997])
Private respondent, after receiving a copy of the labor arbiter's decision, wrote the labor arbiter who rendered
the decision and expressed dismay over the judgment. Neither notice of appeal was filed nor cash or surety bond
was posted by private respondent. Nevertheless, the labor tribunal took cognizance of the letter from private
respondent and treated said letter as private respondent's appeal. In a certiorari action before this Court, we ruled
that the labor tribunal acted with grave abuse of discretion in treating a mere letter from private respondent as
private respondent's appeal in clear violation of the rules on appeal prescribed under Section 3(a), Rule VI of the
Rules of Procedure of NLRC. (Garcia vs. NLRC [264 SCRA 261, 1996])
The labor arbiter committed grave abuse of discretion when he failed to resolve immediately by written order
a motion to dismiss on the ground of lack of jurisdiction and the supplemental motion to dismiss as mandated by
Section 15 of Rule V of the New Rules of Procedure of the NLRC. Philippine Airlines Inc. vs. NLRC [263 SCRA
638, 1996])

The NLRC gravely abused its discretion by allowing and deciding an appeal without an appeal bond having
been filed as required under Article 223 of the Labor Code. (Unicane Workers Union-CLUP vs. NLRC [261
SCRA 573, 1996])
The labor arbiter gravely abused its discretion in disregarding the rule governing position papers. In this case,
the parties have already filed their position papers and even agreed to consider the case submitted for decision, yet
the labor arbiter still admitted a supplemental position paper and memorandum, and by taking into consideration,
as basis for his decision, the alleged facts adduced therein and the documents attached thereto. (Maebo vs.
NLRC [229 SCRA 240, 1994])
The NLRC gravely abused its discretion in treating the motion to set aside judgment and writ of execution as
a petition for relief of judgment. In doing so, public respondent had, without sufficient basis, extended the
reglementary period for filing petition for relief from judgment contrary to prevailing rule and case law.
(Gesulgon vs. NLRC [219 SCRA 561, 1993])
Appeal Bond
Appeal. Decisions, awards, or orders of the Labor Artiber are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or
orders. Such appeal may be entertained only on any of the following grounds:
xxx

xxx

xxx

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from. (Article 223 of the Labor Code)
The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended
to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the
dismissal of the employer's appeal. It was intended to discourage employers from using an appeal to delay, or
even evade, their obligation to satisfy their employee's just and lawful claims. (Viron Garments Mfg., Co. vs.
NLRC [G.R. No. 97357, 18 March 1992])
There is a clear distinction between the filing of an appeal within the reglementary period and its perfection.
The latter may transpire after the end of the reglementary period for filing the appeal.
Under Article 223 of the Labor Code, an appeal to the NLRC from the decisions, awards or orders of the
Labor Arbiter must be made "within ten (10) calendar days from receipt of such decisions, awards or orders."
Under Section 3(a) of Rule VI of the New Rules of Procedure of the NLRC, the appeal fees must be paid and the
memorandum of appeal must be filed within the ten-day reglementary period.
Neither the Labor Code nor its implementing rules specifically provide for a situation where the appellant
moves for a reduction of the appeal bond.
Inasmuch as in practice the NLRC allows the reduction of the appeal bond upon motion of appellant and on
meritorious grounds, it follows that a motion to that effect may be filed within the reglementary period for
appealing. Such motion may be filed in lieu of a bond which amount is being contested. In the meantime, the
appeal is not deemed perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has acted
on the motion and appellant has filed the bond as fixed by the NLRC. (Star Angel Handicraft vs. NLRC [G.R. No.
108914, 20 September 1994])
The precipitate filing of this special civil action for certiorari without first moving for reconsideration of the
assailed judgment of NLRC warrants the outright dismissal of this case. As we consistently held in numerous
cases, a motion for reconsideration is indispensable for it affords the NLRC an opportunity to rectify errors or
mistakes it might have committed before resort to the courts can be had.
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in
the ordinary course of law against acts of public respondent. 5 In the case at bar, the plain and adequate remedy
expressly provided by law was a motion for reconsideration of the impugned decision, based on palpable or patent
errors, to be made under oath and filed within ten (10) days from receipt of the questioned judgment of the
NLRC, a procedure which is jurisdictional. Hence, original action of certiorari, as in this case will not prosper.
Further, not having filed a motion for reconsideration within the ten-day reglementary period, the questioned
order, resolution or decision of NLRC, becomes final and executory after ten (10) calendar days from receipt
thereof. Thus, as regards petitioner, the decision of NLRC became final and executory on December 7, 1995.

Consequently, the merits of the case can no longer be reviewed to determine if the respondent NLRC could be
faulted of grave abuse of discretion. (Lagera vs. NLRC [G.R. No. 123636, 31 March 2000])
Generally, certiorari as a special civil action will not lie unless a motion for reconsideration is filed before the
respondent tribunal to allow it an opportunity to correct its imputed errors. However, the following have been
recognized as exceptions to the rule: Where 1.
The order is a patent nullity, as where the court a quo has no jurisdiction;
2.
The questions raised in the certiorari proceedings have been duly raised and passed upon by the lower
court, or are the same as those raised and passed upon in the lower court;
3.
There is an urgent necessity for the resolution of the question and any further delay would prejudice
the Government or of the petitioner or the subject matter of the action is perishable;
4.
Under the circumstances, a motion for reconsideration would be useless;
5.
Petitioner is deprived of due process and there is extreme urgency of relief;
6.
In a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial
court is improbable;
7.
The proceedings in the lower court are a nullity for lack of due process;
8.
The proceedings was ex parte or on which the petitioner had no opportunity to object; and
9.
The issue raised is one purely of law or where public interest is involved.
(Abraham vs. NLRC [G.R. No. 143823, 06 March 2001])
From NLRC to Court of Appeals
A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may have been
an oversight in the course of the deliberations on the said Act or an imprecision in the terminology used therein. In
fine, Congress did intend to provide for judicial review of the adjudications of the NLRC in labor cases by the
Supreme Court, but there was an inaccuracy in the term used for the intended mode of review. This conclusion
which we have reluctantly but prudently arrived at has been drawn from the considerations extant in the records
of Congress, more particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No. 1495/H.
No. 10452.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the Supreme
Court were eliminated, the legislative intendment was that the special civil action of certiorari was and still is the
proper vehicle for judicial review of decisions of the NLRC. The use of the word "appeal" in relation thereto and
in the instances we have noted could have been a lapsus plumae because appeals by certiorari and the original
action for certiorari are both modes of judicial review addressed to the appellate courts. The important distinction
between them, however, and with which the Court is particularly concerned here is that the special civil action of
certiorari is within the concurrent original jurisdiction of this Court and the Court of Appeals; whereas to indulge
in the assumption that appeals by certiorari to the Supreme Court are allowed would not subserve, but would
subvert, the intention of Congress as expressed in the sponsorship speech on Senate Bill No. 1495.
Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of
the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.
(St. Martin Funeral Home vs. NLRC [G.R. No. 130866, 16 September 1998])
Miscellaneous
[C]OMPULSORY ARBITRATION has been defined both as "the process of settlement of labor disputes by a
government agency which has the authority to investigate and to make an award which is binding on all the
parties," and as mode of arbitration where the parties are "compelled to accept the resolution of their dispute
through arbitration by the a third party." (Reformist Union Of R.B. Liner vs. NLRC [G.R. No. 120482, 27 January
1997])

[C]OMPROMISE AGREEMENT, an agreement between two or more persons, who, for preventing or putting
an end to a lawsuit, adjust their difficulties by mutual consent in the manner which they agree on, and which
everyone of them prefers to the hope of gaining, balanced by the danger of losing. (Reformist Union Of R.B.
Liner vs. NLRC [G.R. No. 120482, 27 January 1997])
WAGE DISTORTION means a situation where an increase in prescribed wage rates results in the elimination
or severe contradiction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of differentiation. (Rules Implementing Republic Act
6727)
SUBSTANTIAL EVIDENCE means that amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion. (Sebuguero vs. NLRC [G.R. No. 115394, 27 September 1995])
MERCURY DRUG RULE which limited the award of back wages of illegally dismissed workers to three (3)
years "without deduction or qualification" to obviate the need for further proceedings in the course of execution.
(Mercury Drug Co., Inc. vs. Court of Industrial Relations, 56 SCRA 694 [1974])
HOLD OVER PRINCIPLE states that it shall be the duty of both parties to keep the status quo and continue in full force
and effect the terms and conditions of the existing CBA during the 60-day freedom period and/or until a new agreement is
reached by the parties. (Meralco vs. Secretary of Labor [G.R. No. 127598, 01 August 2000])