Cases: Analogous Causes

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What is a Labor Law Case or Labor Jurisprudence? A Labor Law Case or Labor Jurisprudence is a decision/resolution on a labor dispute by the Supreme Court of the Philippines. Per Article 8 of the Civil Code, judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines. 

Table of Contents

1. Failure to observe a continuing qualification

The failure to meet and observe a continuing qualification may be an analogous cause that could justify the dismissal of an employee.

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CASE STUDY

Yrasuegui v. Philipine Airlines, Inc.

G.R. No. 168081, 17 October 2008

[The employee – an International Flight Steward – was dismissed for having failed to maintain a weight requirement.]

THIS case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company.

x x x

A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight standards. The dismissal of the employee would thus fall under Article 282(e) of the Labor Code…

x x x

In fine, We [the Supreme Court] hold that the obesity of [the employee], when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the CA correctly puts it, “[v]oluntariness basically means that the just cause is solely attributable to the employee without any external force influencing or controlling his actions. This element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d).” (Emphasis supplied.)

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This analogous ground – failure to observe a continuing qualification – should be carefully applied as it requires that there should be justification for such requirement of employees and such is not contrary to law, morals, good customs, public order or public policy. For instance, a continuing qualification requiring women employees to avoid pregnancy will likely be declared invalid.

2. Gross inefficiency

Employees are expected to be productive and inefficient.

Should they be found lacking particularly in being grossly inefficient, the employer is justified in dismissing them as it is an analogous cause to gross neglect of duty.

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CASE STUDY

International School Manila v. Santos

G.R. No. 167286, 05 February 2014

On gross inefficiency, we ruled in Lim v. National Labor Relations Commission that:

[G]ross inefficiency falls within the purview of “other causes analogous to the foregoing,” and 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. In Buiser vs. Leogardo, this Court ruled that failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal.

Viewed in light of the above doctrines, the Court is not convinced that the actuations of Santos complained of by the [the employees] constituted gross and habitual neglect of her duties.

From the very beginning of her tenure as a teacher of the Filipino language, the recurring problem observed of Santos was that her lesson plans lacked details and coherent correlation to each other, to the course, and to the curriculum, which in turn affected how lessons and instructions were conveyed to the students. After Santos was placed in a Professional Growth Plan on March 29, 1996, [the employers] observed a noticeable improvement on her part. In his memo dated May 24, 1996, then Assistant Principal Loy even stated that Santos’s improvement was a result of her positive attitude in approaching her growth plan. Unfortunately, though, Santos could not sustain this progress. Not long after, the School administrators were again admonishing Santos for her vague lesson plans that lacked specifics.

What can be gathered from a thorough review of the records of this case is that the inadequacies of Santos as a teacher did not stem from a reckless disregard of the welfare of her students or of the issues raised by the School regarding her teaching. Far from being tainted with bad faith, Santos’s failings appeared to have resulted from her lack of necessary skills, in-depth knowledge, and expertise to teach the Filipino language at the standards required of her by the School.

Be that as it may, we find that the [the employers] had sufficiently proved the charge of gross inefficiency, which warranted the dismissal of Santos from the School.

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The employer’s policies on inefficiency can be a factor for applying this ground for dismissal. In Lim v. Pepsi-Cola Far East Trade Development Co., Inc., a staff accountant – was dismissed for gross inefficiency when her actions do not amount to such per the company policies itself.

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CASE STUDY

Lim v. Pepsi-Cola Far East Trade Development Co., Inc.

G.R. No. 118434, 26 July 1996

We cannot but agree with PEPSI that gross inefficiency falls within the purview of other causes analogous to the foregoing, and constitutes, therefore, just cause to terminate an employee under Article [296] of the Labor Code.

In the case at bench, however, prior to the issuance of the Termination Letter on 15 May 1991, PEPSI never called the [employee’s] attention to any alleged gross inefficiency on her part. Likewise, she was never warned of possible disciplinary action due to any alleged gross inefficiency. The evaluation report merely indicated her areas for improvement. Moreover, in PEPSI’s brochure entitled Managing Performance For the 90s, a BT rating does not merit dismissal from the service; as a matter of fact, the lower rating – Significantly Below Target (SB) – is not even a ground for termination of employment, but may only justify putting the employee on probation and [telling him] that improvement is a necessity.

Undoubtedly, the [employee’s] obtained an unfavorable rating, but not to the extent, under the company’s standards, to warrant even a probationary measure which is given to the lowest rating of Significantly Below Target (SB). If the company truly found the [employee’s]inefficiency to be of such a gross character, then it should have rated her even lower than SB, since the latter only requires that the employee be put on probation.

It is then quite clear that by its own acts, PEPSI had not characterized as gross inefficiency whatever failures, shortcomings, or deficiencies may have been attributable to the [employee]. The rule is of course doctrinally entrenched that in termination cases, the burden of proving that the employee’s dismissal from employment was for just cause rests upon the employer. (Emphasis supplied.)

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As may also be learned from the above case, the employer should take action and call the attention of the employees if they are being grossly inefficient. This is to let the employees know whether they are doing well or not.

3. Failure to reach a quota

The employees subject to a quota and are unable to meet them may be dismissed from employment for gross inefficiency. However, it should be noted that there are rules provided in jurisprudence to know whether the same is valid. As a management prerogative, the setting of a quota is subject to good faith and with due regard to the rights of the employees.

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CASE STUDY

Aliling v. Wide Wide World Express Corporation

G.R. No. 185829, 25 April 2012

In Lim v. National Labor Relations Commission, the Court considered inefficiency as an analogous just cause for termination of employment under Article [296] of the Labor Code:

x x x

It did so anew in Leonardo v. National Labor Relations Commission on the following rationale:

An employer is entitled to impose productivity standards for its workers, and in fact, non-compliance may be visited with a penalty even more severe than demotion. Thus, [t]he practice of a company in laying off workers because they failed to make the work quota has been recognized in this jurisdiction… In the case at bar, the [employees’] failure to meet the sales quota assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or probationary status of their employment. Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. This management prerogative of requiring standards may be availed of so long as they are exercised in good faith for the advancement of the employer’s interest.

In fine, an employee’s failure to meet sales or work quotas falls under the concept of gross inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal under Article [296] of the Code. However, in order for the quota imposed to be considered a valid productivity standard and thereby validate a dismissal, management’s prerogative of fixing the quota must be exercised in good faith for the advancement of its interest. The duty to prove good faith, however, rests with WWWEC as part of its burden to show that the dismissal was for a just cause. WWWEC must show that such quota was imposed in good faith. This WWWEC failed to do, perceptibly because it could not. The fact of the matter is that the alleged imposition of the quota was a desperate attempt to lend a semblance of validity to Aliling’s illegal dismissal. It must be stressed that even WWWEC’s sales manager, Eve Amador (Amador), in an internal e-mail to San Mateo, hedged on whether petitioner performed below or above expectation:

Could not quantify level of performance as he as was tasked to handle a new product (GX). Revenue report is not yet administered by IT on a month-to-month basis. Moreover, this in a way is an experimental activity. Practically you have a close monitoring with Armand with regards to his performance. Your assessment of him would be more accurate.

Being an experimental activity and having been launched for the first time, the sales of GX services could not be reasonably quantified. This would explain why Amador implied in her email that other bases besides sales figures will be used to determine Aliling’s performance. And yet, despite such a neutral observation, Aliling was still dismissed for his dismal sales of GX services. In any event, WWWEC failed to demonstrate the reasonableness and the bona fides on the quota imposition.

Employers must be reminded that while probationary employees do not enjoy permanent status, they enjoy the constitutional protection of security of tenure. They can only be terminated for cause or when they otherwise fail to meet the reasonable standards made known to them by the employer at the time of their engagement. Respondent WWWEC miserably failed to prove the termination of petitioner was for a just cause nor was there substantial evidence to demonstrate the standards were made known to the latter at the time of his engagement. Hence, petitioner’s right to security of tenure was breached. (Emphasis supplied.)

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4. Tardiness and absenteeism

Tardiness and absenteeism are generally a form of neglecting one’s duties.

In Cando v. Pilipinas Bank, the employee – a union officer – was validly dismissed after months of unjustified absences.

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CASE STUDY

Cando v. Pilipinas Bank

G.R. No. 91344, 14 September 1990

It appears that the dismissal of the [employee] is based on his unjustified absences for a number of months. As an employee, the [employee] is expected to be aware of the rules and regulations of the bank regarding leaves of absences. As observed by the [NLRC], the absences of the [employee] [was] not authorized. On this score, his dismissal appears to be warranted.

x x x

While the [employee] easily asserts that his absences were brought about by his having to attend to union matters, his testimony before the labor arbiter betrays otherwise. We quote, with approval the following portion of the decision of the labor arbiter:

Anent the second question of whether [the employee’s] … absences are justified, the undersigned finds that the reasons ‘union matter’ and ‘hearing’ were being alluded to by [the employee] as an anticipated shield against [the employer’s] reactions on his absences. Indeed, on cross-examination on the entries in his time cards, [the employee] grossly and glaringly betrayed his insincerity since he could not recall any single case, criminal, administrative or labor or any subject matter discussed and taken up in the reasoned out ‘union matter’or ‘hearing.’…

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Meanwhile, the act of habitual tardiness has also been considered as a justifiable ground for dismissing an employee, particularly if there are other violations committed by an employee.

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CASE STUDY

Sajonas v. Marsman & Co., Inc.

G.R. No. L-49286, 15 March 1990

[Supervisory employees were dismissed for habitual tardiness, among others.]

We agree with [the NLRC] that the acts of insubordination, coupled with habitual tardiness, are sufficient causes for [the employee’s] dismissal, especially considering the fact that the employees involved in this case were not mere rank and file employees but supervisors who owed more than the usual fealty to the organization and were, therefore, expected to adhere to its rules in an exemplary manner. [The employees] did not even reflect upon and consider the undesirable example that they were setting to those who were under their supervision.

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Where, however, an employee was consistently promoted in rank and salary, it indicates that “he must have been a highly efficient worker, who should be retained despite occasional lapses in punctuality and attendance. Perfection cannot after all be demanded.” (Rizal Empire Insurance Group v. Ruiz, G.R. No. 73140, 29 May 1987)

There is no black and white rule as to how many absence or tardiness would be sufficient to justify the dismissal of an employee. It is often adjudged from a case-to-case basis and depending on the circumstances.

Thus, in Cavite Apparel, Incorporated v. Marquez, a 6-year rank-and-file employee was declared illegally dismissed after taking 4 unauthorized absences over a period of 6 months.

“Based on what we see in the records, there simply cannot be a case of gross and habitual neglect of duty against [the employee]. Even assuming that she failed to present a medical certificate for her sick leave on May 8, 2000, the records are bereft of any indication that apart from the four occasions when she did not report for work, Michelle had been cited for any infraction since she started her employment with the company in 1994. Four absences in her six years of service, to our mind, cannot be considered gross and habitual neglect of duty, especially so since the absences were spread out over a six-month period.” (Cavite Apparel, Incorporated v. Marquez, G. R. No. 172044, 06 February 2013)

It would be prudent for the employer provided in the company policies what would constitute as gross and habitual neglect of duty in terms of number of absences and tardiness to create a basis and documentation for reference in case of disputes.

a. May include managers

Contrary to popular belief, managers – as employees – may also be subject to the company policies on absences and tardiness. While they are not covered by the rules on daily time record, this does not necessarily mean that they cannot be required to observe the rules against absences and tardiness.

5. Abandonment of work, AWOL

Abandonment of employment is analogous to gross and habitual neglect of duty.

It should be emphasized that abandonment is not presumed. “As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It constitutes neglect of duty and is a just cause for termination of employment under paragraph (b) of Article [296] of the Labor Code.” (Tan Brothers Corporation of Basilan City v. Escudero, G.R. No. 188711, 08 July 2013)

Consequently, to constitute abandonment, “there must be a clear and deliberate intent to discontinue one’s employment without any intention of returning back.” (Flores v. Nuestro, G.R. No. L-66890, 15 April 1988)

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CASE STUDY

Tan v. Garrido

G.R. No. 116807, 14 April 1997

[The employee – a Driver– was dismissed for abandonment. “… [the employee] alleged that on 28 January 1989 his right hand (little finger) was injured while he was lifting heavy boxes of concrete nails in the store of [the employer]. As a consequence, he had to stop working. Despite his injury however Emma Tan, General Manager and wife of [the employer], ordered him to continue lifting the heavy boxes. When he refused because his injured finger made the task extremely difficult and painful, besides being risky, Emma Tan promptly called up her lawyer. Atty. Roberto B. Arca arrived and demonstrated how Garrido could continue lifting the heavy boxes by using only his four (4) other fingers. When Garrido persistently refused as he wanted to have his injured finger treated first, Atty. Arca then and there served him with a letter directing him to explain why no disciplinary action should be taken against him for failing to obey a valid order of his employer. Upon his return three (3) working days later, after his finger was already treated, Emma Tan told him to “go to hell.” The remark notwithstanding, he loitered around the store premises for the next four (4) days but was treated like a leper. 5 He was eventually dismissed for alleged abandonment of work ten (10) days later.”]

The records disclose that respondent Romeo Garrido did not absent himself from work without leave for sixty-six (66) days. On the contrary, he was not able to report for work anymore because as early as nine (9) days after his job-related injury on 28 January 1989, his services were already terminated by Emma Tan, wife of [the employer], in her capacity as Manager of Carter’s General Sales through a letter dated 7 February 1989. In fact, when [the employee] first returned on 2 February 1989 after his injury he was made to feel by Emma Tan that his services were no longer desirable nor needed when he was told to “go to hell.” And when [the employee] persistently hang around the store premises for the next four (4) days hoping to be given some work, he was treated like a leper. [The employer] now attempts to convince us that [the employee] is guilty of job abandonment. Given the foregoing scenario, we are hardly convinced.

Besides, jurisprudence dictates that for abandonment to constitute a valid ground for dismissal there must be a clear, deliberate and unjustified refusal to resume employment and a clear intention to sever the employer-employee relationship on the part of the employee. It is emphatically stated that mere absence or failure to report for work is not enough to amount to such abandonment. Hence, [the employee’s] absences which were at first due to his job-related injury and, subsequently, the hostile treatment given him by [the employer’s] wife ever since the labor standards complaint was filed could hardly amount to abandonment of his work. It would be the height of injustice to allow an employer to claim as a ground for abandonment a situation which he himself had brought about. (Emphasis supplied.)

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Thus, the following are the requirements to constitute abandonment:

1) The failure to report for work or absence without valid or justifiable reason;

2) A clear intention to sever the employer-employee relationship.

NB: The second element is the more determinative factor and should be manifested by some overt acts. (Labor v. Gold City Commercial Complex, Inc., G.R. No. 110388, 14 September 1995)

To be clear, “absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. It has been ruled that the employer has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning.” (Ibid.)

In Labor v. Gold City Commercial Complex, Inc., the employer’s reliance on the employee’s absences were considered insufficient:

“Mere absence is not sufficient. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning. Gold City failed to discharge this burden. It did not adduce any proof of some overt act of the [employees] that clearly and unequivocally show their intention to abandon their posts. On the contrary, the [employees] lost no time in filing the case for illegal dismissal against them, taking only four days from the time most of them were prevented from entering their work place on 22 August 1991 to the filing of the complaint on 26 August 1991. They cannot, by any reasoning, be said to have abandoned their work, for as we have also previously ruled, the filing by an employee of a complaint for illegal dismissal is proof enough of his desire to return to work, thus negating the employer’s charge of abandonment. Furthermore, [employees] Labor and Bonita presented proof that during some of those days that they were supposedly on AWOL (absence without official leave), they were actually on official leave as approved by no less than [the Company President] Rudy Uy himself. Neither Gold City nor Rudy Uy had disputed this.” (Ibid.)

In general, the rule that the filing by an employee of a complaint for illegal dismissal shows that he/she did not abandon work – is not absolute. If the employer can establish by substantial evidence the fact of abandonment, then the employee would be considered to have been validly dismissed from employment due to abandonment.

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CASE STUDY

Labor v. Gold City Commercial Complex, Inc.

G.R. No. 110388, 14 September 1995

[After a temporary plant shutdown, the employee refused to return to work and thus was dismissed on the grounds of abandonment. The Labor Arbiter and the NLRC disregarded the documentary evidence submitted by the employer.]

First. 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…

Second. The Labor Arbiter and the NLRC, the records show, had taken note of (1) the Summary of Plant Operations indubitably showing that petitioner’s operations were shut down from December 2, 1989 to February 19, 1990; (2) the Temporary Cash Advance Slip signed by private respondent showing that he requested and received on January 29, 1990 “cash advance against salary deduction” for the amount of P700.00; (3) the return-to-work letter dated February 25, 1990  addressed to and directing private respondent to report for work on February 26, 1990; (4) the Affidavit executed by one Noli Paglinawan who thereby declared that he personally handed to private respondent the aforementioned return-to-work letter who however refused to receive or acknowledge the same; and (5) the letter request for cash advance of P700.00 dated January 23, 1990 signed by private respondent. All these documentary evidences sufficiently establish the veracity of [the employer’s] insistent claim that it did not terminate [the employee] but rather, the latter refused to return to work after his temporary lay-off due to [the employer’s] plant shutdown.

… The Labor Arbiter and the NLRC is thus guilty of misappreciating the facts and rendering judgment on dubious factual and legal basis. In other words, herein assailed decisions are illustrative of a patent case of grave abuse of discretion.

Employees who go on absence without leave (AWOL) and never comes back should not be disregarded. To be clear, do not allow the situation to continue – as they remain and continuous to be employed. Neither the employer nor the employee terminated the employment. Simply, the employer did not dismiss the employee. On the other hand, the employee did not resign.

Thus, there are cases when an employee wins an illegal dismissal case after being on AWOL and returning after two years of absence seeking to continue work. During this period, neither the employer nor the employee terminated the employment. Thus, if the employer refuses to allow the employee to continue work, it often leads to an illegal dismissal case considering that no due process termination was observed.

6. Attitude Problem

Attitude problem is analogous to loss of trust and confidence.

The employer should be able to present substantial evidence to prove that the employee’s attitude problem is affecting the workplace.

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CASE STUDY

Heavylift Manila, Inc. v. Galay

G.R. No. 154410, 20 October 2005

[The employee was dismissed due to negative feedback from her team members, among others.]

An employee who cannot get along with his co-employees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employee’s attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer.

However, we are not convinced that in the present case, [the employers] have shown sufficiently clear and convincing evidence to justify [the employee’s] termination. Though they are correct in saying that in this case, proof beyond reasonable doubt is not required, still there must be substantial evidence to support the termination on the ground of attitude. The mere mention of negative feedback from her team members, and the letter dated February 23, 1999, are not proof of her attitude problem. Likewise, her failure to refute [the employer’s] allegations of her negative attitude does not amount to admission…. Besides, the burden of proof is not on the employee but on the employer who must affirmatively show adequate evidence that the dismissal was for justifiable cause.

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In the Heavylift Manila case, the Supreme Court recognizes that attitude problem may be a just cause dismissal; however, the employer failed to show proof thereof.

7. Moral depravity

Moral depravity is similar to serious misconduct.

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CASE STUDY

John Hancock Life Insurance Corporation v. Davis

G.R. No. 169549, 03 September 2008

[The employee – an Agency Administration Officer – was dismissed after she stole and used the credit cards of her co-employee for shopping. With the assistance of the National Bureau of Investigation (NBI), a security video was secured from the shops showing the employee’s use of the cards.]

In this case, [the employer] dismissed [the employee] based on the NBI’s finding that the latter stole and used Yuseco’s credit cards. But since the theft was not committed against the employee itself but against one of its employees, the employers misconduct was not work-related and therefore, she could not be dismissed for serious misconduct.

Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail. For an employee to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the employee.

A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an employee’s moral depravity. Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct.

Did petitioner substantially prove the existence of valid cause for respondent’s separation? Yes. The labor arbiter and the NLRC relied not only on the affidavits of the NBI’s witnesses but also on that of respondent. They likewise considered petitioner’s own investigative findings. Clearly, they did not merely adopt the findings of the NBI but independently assessed evidence presented by the parties. Their conclusion (that there was valid cause for respondent’s separation from employment) was therefore supported by substantial evidence.

All things considered, petitioner validly dismissed respondent for cause analogous to serious misconduct.

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The above-rule makes sense considering that theft in the company by an employee against his co-employees could sow distrust in the workplace. This could ultimately affect the productivity and work performance of employees when they are constantly worrying and in fear that their properties might be stolen by a co-employee.

8. Theft of employee against co-employee

In Cosmos Bottling Corp. v. Fermin, an employee who stole a co-employee’s cellphone was dismissed from employment on the ground of serious misconduct. When he filed a labor complaint, he claimed that he was incorrectly dismissed as his conduct is not a serious misconduct against the employer. Thus:

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CASE STUDY

Cosmos Bottling Corp. v. Fermin

G.R. No. 193676, 29 June 2012

It must be noted that in the case at bar, all the lower tribunals were in agreement that [the employee’s] act of taking [his co-employee’s] cellphone amounted to theft… The only disputed issue left for resolution is whether the imposition of the penalty of dismissal was appropriate. We rule in the affirmative.

Theft committed against a co-employee is considered as a case analogous to serious misconduct, for which the penalty of dismissal from service may be meted out to the erring employee…

x x x

In this case, the LA has already made a factual finding, which was affirmed by both the NLRC and the CA, that [the employee] had committed theft when he took Bragas cellphone. Thus, this act is deemed analogous to serious misconduct, rendering [the employee] dismissal from service just and valid.

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If employees feel unsecure in the workplace, this could affect their productivity, efficiency, and performance. Accordingly, the employer is justified in dismissing employees who commit theft against co-employees.

9. Disloyalty

In one interesting case, the employee’s dismissal was premised on him having ownership interests of a company competing in the line of business of his employer. When he was dismissed on such ground, it was held that disloyalty may be a just cause for termination of employment.

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CASE STUDY

Elizalde International (Philippines) Inc. v. Galan

G.R. No. L40553, 26 February 1981

[The employee – a Sales Representative – was dismissed after it was found out that he had ownership interests in a company directly competing with the employer.]

One who asserts an interest, or performs acts adverse or disloyal to one’s employer commits a breach of an implied condition of the contract of employment which may warrant discharge, as, for example, where one secretly engages in a business which renders him a competitor and rival of his employer”… “Aside from any duties expressly imposed upon or undertaken by the employee in the contract of employment, the law implies various obligations and undertakings by an employee in entering into a contract of employment… An employer has the right to expect loyalty from his employees as long as the employment relationship continues”. “Implicit in the contract of employment is the undertaking that the employee shall be faithful to the interest of the employer during the term of the employment. When an employee deliberately acquires an interest adverse to his employer, he is disloyal, and his discharge is justified. And where an employee engages in a business which necessarily renders him a competitor and rival of his employer, no matter how much or how little time and attention he may devote to it, he is deemed to have an interest which conflicts with his duty to his employer, and for this cause may be dismissed… In the absence of a specific provision, the employee must be deemed to have been rightfully discharged where it appears that his activities tended to injure or endanger the business of his employer… On the other hand, where an occupation or business is conducted by a servant out of the hours of service, and is not inconsistent with his duties to the master or antagonistic to or competitive with the master’s business, it furnishes no ground for the discharge of the servant.

[The employee’s] act of engaging in a business in competition with [the employer] was not only an act of disloyalty but more specifically a willful breach of the trust reposed in him by [the Company] as his employer, which is a just cause for termination… which in its general signification is the “firm belief or confidence in the honesty, integrity, reliability, justice, etc. of another person or thing” (Webster’s New World Dictionary of the American Language, Second College Edition), is an essential element in the relationship of employer and employee, and a willful breach thereof entitles the employer to discharge the guilty employee.; As Sales Representative of [the employer], it was the duty of [the employee] to promote and sell the products of [the employer], which duty is incompatible with his undisclosed ownership of a company, found to be the source of the new product with the label “TDY RHUM” manufactured by the Mabuhay Distillery Inc., distributed and sold in Cebu, in competition with the “Tanduay Rhum” distributed by [the employer]. It was an act inimical to his employers’ interest and, therefore, a just cause for dismissal. (Emphasis supplied.)

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The Elizalde International case paved the way for this maxim: “An employer has the right to expect loyalty from his employees as long as the employment relationship continues.”

10. Union security clause

A union security clause is valid. If it is invoked by the union, the employer is required to observe it. However, this does not do away with due process in favor of the employee. The employer is obligated to conduct its own investigation and determine the existence of the basis for the invocation of the union security clause.

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CASE STUDY

Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Tawil

G.R. No. 113907, 28 February 2000

[The employees – Union Officers – were dismissed after their union recommended their dismissal to the company.]

… Although this Court has ruled that union security clauses embodied in the collective bargaining agreement may be validly enforced and that dismissals pursuant thereto may likewise be valid, this does not erode the fundamental requirement of due process. The reason behind the enforcement of union security clauses which is the sanctity and inviolability of contracts cannot override one’s right to due process.

In the case of Cariño vs. National Labor Relations Commission, this Court pronounced that while the company, under a maintenance of membership provision of the collective bargaining agreement, is bound to dismiss any employee expelled by the union for disloyalty upon its written request, this undertaking should not be done hastily and summarily. The company acts in bad faith in dismissing a worker without giving him the benefit of a hearing.

The power to dismiss is a normal prerogative of the employer. However, this is not without limitation. The employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement, … Dismissals must not be arbitrary and capricious. Due process must be observed in dismissing an employee because it affects not only his position but also his means of livelihood. Employers should respect and protect the rights of their employees, which include the right to labor.

In the case under scrutiny, [the employees-union officers] were expelled by the federation for allegedly committing acts of disloyalty and/or inimical to the interest of ULGWP and in violation of its Constitution and By-laws. Upon demand of the federation, the company terminated the [the employees] without conducting a separate and independent investigation. [The employer] company did not inquire into the cause of the expulsion and whether or not the federation had sufficient grounds to effect the same. Relying merely upon the federation’s allegations, [the employer] company terminated [the employees] from employment when a separate inquiry could have revealed if the federation had acted arbitrarily and capriciously in expelling the union officers. [The employer] company’s allegation that [the employees] were accorded due process is belied by the termination letters received by the [the employees] which state that the dismissal shall be immediately effective.

As held in the aforecited case of Cariño, “the right of an employee to be informed of the charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own union is not wiped away by a union security clause or a union shop clause in a collective bargaining agreement. An employee is entitled to be protected not only from a company which disregards his rights but also from his own union the leadership of which could yield to the temptation of swift and arbitrary expulsion from membership and mere dismissal from his job.

While [the employer] company may validly dismiss the employees expelled by the union for disloyalty under the union security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not be done hastily and summarily thereby eroding the employees’ right to due process, self-organization and security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not characterized by arbitrariness, and always with due process. Even on the assumption that the federation had valid grounds to expel the union officers, due process requires that these union officers be accorded a separate hearing by [the employer] company.

•••

A union security clause does not override nor do away with due process. 

11. Not analogous cause: Unsatisfactory performance

Unsatisfactory performance is not one of the grounds for dismissal under the Labor Code. It is also not considered as an analogous cause to the other just causes.

•••

CASE STUDY

Orient Express Placement Philippines v. Flores

G.R. No. 113713, 11 June 1997

[The probationary employee – Crane Operator – was dismissed after 1 month and 5 days of work abroad in Saudi Arabia for, among others, unsatisfactory performance.

… no standard whatsoever by which such probationary period could be hurdled was specified and made known to him. Due process dictates that an employee be apprised beforehand of the condition of his employment and of the terms of advancement therein. Precisely, implicit in Art. [294] of the Code is the requirement that reasonable standards be previously made known by the employer to the probationary employee at the time of his engagement… Obviously, such an essential requirement was not met by [the employer], even assuming that [the employee’s] alleged unsatisfactory performance was true. Besides, unsatisfactory performance is not one of the just causes for dismissal under the Labor Code.

If the unsatisfactory performance amounts to gross and habitual neglect of duty, then it can be a just cause for dismissal. By itself, unsatisfactory performance is insufficient.

12. Not analogous cause: Employment contract violation

A contract is the law between the parties. (Morla v. Belmonte, G.R. No. 171146, 07 December 2011)

While the contracting parties are free to agree to whatever terms and conditions they may consent following the principle of autonomy in contracts, there is a limitation: their agreement should not be contrary to law, morals, good customs, public order, or public policy. For employment contracts, Labor Law is one such limitation.

•••

CASE STUDY

Philippine National Bank v. Cabansag

G.R. No. 157010, 21 June 2005

[The employee – a Branch Credit Officer – was dismissed following a provision of an employment contract which read: “Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation, one month notice upon confirmation or the equivalent of one (1) day’s or month’s salary in lieu of notice.”]

[the] Labor Code provide[s] the valid grounds or causes for an employee’s dismissal. The employer has the burden of proving that it was done for any of those just or authorized causes. The failure to discharge this burden means that the dismissal was not justified, and that the employee is entitled to reinstatement and back wages.

Notably, [the employer] has not asserted any of the grounds provided by law as a valid reason for terminating the employment of respondent. It merely insists that her dismissal was validly effected pursuant to the provisions of her employment Contract, which she had voluntarily agreed to be bound to.

Truly, the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them. However, [the employer] overlooks the qualification that those terms and conditions agreed upon must not be contrary to law, morals, customs, public policy or public order. As explained earlier, the employment Contract between [the employer] and [the employee] is governed by Philippine labor laws. Hence, the stipulations, clauses, and terms and conditions of the Contract must not contravene our labor law provisions.

Moreover, a contract of employment is imbued with public interest. The Court has time and time again reminded parties that they “are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.” Also, while a contract is the law between the parties, the provisions of positive law that regulate such contracts are deemed included and shall limit and govern the relations between the parties.

Basic in our jurisprudence is the principle that when there is no showing of any clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal. (Emphasis supplied.)

•••

In addition, laws are deemed written into every contract – including Labor Law. (Heirs of Severina San Miguel v. San Miguel, G.R. No. 136054, 05 September 2001)

Thus, even if the parties do not have or may have a contrary stipulation on a matter, the law on employment will be followed. In the PNB case, the parties agreed to an at-will employment which is not a just cause for terminating the services of an employee. Accordingly, the employer was held liable for illegal dismissal when it exercised such stipulation as it violated the Labor Code.

13. Not analogous cause: Probability of getting in trouble

The employee’s continued employment cannot rest on a speculation of the probability of getting into trouble. A just cause presupposes that the employee had willfully and deliberately committed an offense justifying dismissal.

•••

CASE STUDY

Abacast Shipping and Management Agency, Inc. v. Modelo

G.R. No. 74187, 28 January 1988

[The employees – Ship Engineer and a Chief Cook – were dismissed based on the ship captain’s apprehension of them getting into trouble, among others.]

At that, even if the shipmaster’s report were to be admitted and considered, a close reading thereof will show that the [the employees] have not committed any act that would justify the termination of their services before the expiration of the contracts. All the shipmaster says in his report is that he considered Nelson Modelo to be hot-tempered and he was apprehensive the seaman might get into trouble. Such apprehension is, of course, not a ground for dismissal. Moreover, it contradicts his own statement that as shipmaster he could easily resolve differences between crew members on board the vessel. As for Rogelio Rapadas, the report merely says that he often drank liquor with Modelo and when intoxicated the two would go ashore together; but surely that is not an offense either. At any rate, there is no statement in the report that the two of them ever got into any serious trouble at any time in the course of their aborted employment. (Emphasis supplied.)

•••

In the above-cited case, the employer could have used the shipmaster’s report as corroborating evidence once the employees have committed violations and actually got into trouble. Without anything incident, speculation would be unfair to the employees.

14. Not analogous cause: Borrowing money from clients/patients

In a landmark case, the Supreme Court held that the act of borrowing money from clients/patients do not amount to a just cause ground for dismissal.

•••

CASE STUDY

Medical Doctors, Inc. (Makati Medical Center) v. Elona

G.R. No. L-56633, 24 April 1985, En Banc

[The employee – a Probationary Clerk – was dismissed after borrowing money from hospital patients.]

borrowing money is neither dishonest, nor immoral nor illegal, much less criminal. [The employee] paid the money she borrowed from the hospital patient. She was even recommended for permanent appointment from her probationary status, from clerk to secretary, by her immediate superior, Sis. Consolacion Briones.

It may be added that she must have been compelled to borrow P50.00 from her patient because of economic necessity, which circumstance should evoke sympathy from this Court, the very constitutional organ mandated by the fundamental law to implement the social justice guarantee for the protection of the lowly, efficient and honest employee, who is economically disadvantaged, like herein [employee]. (Emphasis supplied.)

•••

It should be pointed out that there are strong dissenting opinions in the above case by Supreme Court justices who do not agree to the above-finding.

Table of Contents

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