Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
LEGAL TRENDS AND UPDATES ON SUPREME COURT
CASES AFFECTING PRIVATE HIGHER EDUCATION:
MANAGEMENT PREROGATIVES,
AND TERMINATION OF EMPLOYMENT
.ATTY. ADA D. ABAD
Managing Partner, Abad Abad & Associates Law Offices
Former Vice-Dean, Lyceum College of Law
A. INTRODUCTION: BASIC ASSUMPTIONS IN LABOR RELATIONS LAW
1.
Labor relations law has, for the most part, a HUMAN ELEMENT – which is its
basic element. It presupposes a relationship between the capitalist management
and its workers.
1.1. Management’s interest:
The employer is allowed to control the variables in business operations, to
enhance the chances of making a profit – otherwise termed as “the elbow
room in the quest for profits”.1 The Supreme Court, in a multitude of cases,
has thus held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes
to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, layoff of workers and discipline, dismissal, and
recall of workers. 2
1.2. Labor’s interest:
While labor recognizes the right of management to its profits, it contends
that since management cannot earn profit without labor’s efforts, they should
likewise share in the profits.
2. The law recognizes the INHERENT INEQUALITY of the status between
management and worker.
3. Because of this inherent inequality, the State, in the exercise of its police power
and in consonance with the concept of social justice, INTERVENES in the
relationship between management and labor by: (a) the promulgation of laws
relative to labor standards and labor relations; and (b) balancing the conflicting
yet interrelated and closely intertwined interests of both management and labor.3
How to balance conflicting interests between management and labor?
3.1 Burden of proof is always upon employer to show validity of its exercise
of management prerogatives, especially as regards termination of
employment.
3.2 There must exist substantial evidence to prove valid exercise of
management prerogatives, viz., just or authorized cause of termination.
Proof beyond reasonable doubt not required in administrative cases.
1
Chu vs. NLRC, 232 SCRA 764
Manila Jockey Club Employees Labor Union-PGTWO vs. Manila Jockey Club, G.R. No.
1667760, 07 March 2007; See also: Rural Bank of Cantilan vs. Julve, G.R. No. 169750, 27
February 2007).
3
Cebu Institute of Technology vs. Ople, 156 SCRA 620 (1987). Ponente: J. Irene Cortes.
1
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Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
Note: Failure of employer to submit documents which are
presumed to be in its possession, inspite of an Order to do so,
implies that the presentation of said documents is prejudicial to its
case. (De Guzman vs. NLRC, 540 SCRA 210 [Dec. 2007]).
3.3 Interpretation in favor of labor. – Article 1702 of the New Civil Code
provides that, in case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living of the laborer. Any
doubt or ambiguity in the contract between management and the uion
members should be resolved in favor or the latter. Therefore, there is no
doubt, in this case, that the welfare of the laborers stand supreme. (BPI vs.
BPI Employees Union – Metro Manila, G.R. No. 175678 [22 August 2012].
- It is high time that
employer and employee cease to view each other as adversaries and
instead recognize that there is a symbiotic relationship, wherein they must
rely on each other to ensure the success of the business. (Toyota Motor Phils.
3.4 Paradigm shift towards mutual cooperation
Workers vs. NLRC, 537 SCRA 171)
3.5 But management prerogatives are likewise to be equally protected
when circumstances show the validity of the exercise.
.
Mansion Printing Center vs. Bitara, Jr., G.R. No. 168120, 25 January
2012 citing Associate Justice Ma. Alicia Austria-Martinez in Philippine Long
Distance and Telephone Company, Inc. v. Balbastro, GR No. 157202, 28 March
2007: While it is true that compassion and human consideration should
guide the disposition of cases involving termination of employment since it
affects one's source or means of livelihood, it should not be overlooked that
the benefits accorded to labor do not include compelling an employer to
retain the services of an employee who has been shown to be a gross
liability to the employer. The law in protecting the rights of the
employees authorizes neither oppression nor self-destruction of the
employer. It should be made clear that when the law tilts the scale of
justice in favor of labor, it is but a recognition of the inherent economic
inequality between labor and management. The intent is to balance the
scale of justice; to put the two parties on relatively equal positions. There
may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result
is an injustice to the employer. Justitia nemini neganda est (Justice is to be
denied to none).
MANAGEMENT
VS.
LABOR

Capital

Work

Profit

Equitable share in the profits

Management prerogatives
- hiring, employee classification,
working methods, regulations

Worker’s rights
- minimum standards
- constitutional rights
security of tenure, unionize and
to collective bargaining, strike
STATE
Police power/social justice
Interpretation in favor of labor
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Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
B. MANAGEMENT PREROGATIVES:
1. GENERAL PRINCIPLE: Management is free to regulate, according to its
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees,
work supervision, lay-off of workers, and discipline, dismissal and recall of
workers. Julie’s Bakeshop vs. Arnaiz, 666 SCRA 1010 [2012]; see also:
Reyes-Rayal vs. Philippine Luen Thai Holdings, 676 SCRA 183 [2012].
2. ELEMENTS: Valid exercise of management prerogatives
The free will of the management to conduct its own affairs to achieve its purpose
cannot be denied, PROVIDED THAT THE SAME IS EXERCISED:
• IN GOOD FAITH (BONA-FIDE IN CHARACTER),
• FOR THE ADVANCEMENT OF THE EMPLOYER’S INTEREST;
AND
• NOT TO CIRCUMVENT THE RIGHTS OF THE EMPLOYEES.
(Capitol Medical Center vs. Meriz; San Miguel Brewery and Union
Carbide cases).
3. NEW CASES ON MANAGEMENT PREROGATIVES
3.1 QUESTION: IS THE MANAGEMENT’S DECISION TAKE OUT THE
CHAIRS OF EMPLOYEES IN AN ASSEMBLY LINE IN EXCHANGE FOR
ADDITIONAL PERIODS OF REST/BREAKS, A VALID EXERCISE OF
MANAGEMENT PREROGATIVES, OR IS IT A DIMINUTION OF BENEFIT
WHICH CANNOT BE WITHDRAWN WITHOUT EMPLOYEES’ CONSENT?
Royal Plant Workers Union vs. Coca-Cola Bottlers Phils., G.R. 198783,
15 April 2013.
Union’s position: The use of chairs by the operators had been a company
practice for 34 years, and cannot be withdrawn without consent of affected
employees. Having chairs are favourable to the assembly line operators who
get tired and exhausted; the frequency of the break period is not
advantageous to the operators because it cannot compensate for the time
they are made to stand throughout their working time.
Management position: The directive to take out the chairs is in line with the
“I Operate, I Maintain, I Clean” program of petitioner for bottling operators,
wherein every bottling operator is given the responsibility to keep the
machinery and equipment assigned to him clean and safe, and reinforces the
task of bottling operators to constantly move about in the performance of their
duties and responsibilities. The removal of the chairs was implemented so
that the bottling operators will avoid sleeping, thus, prevent injuries to their
persons.
Answer: For Management. Valid exercise of management prerogatives.
The decision to remove the chairs was done with good intentions as CCBPI
wanted to avoid instances of operators sleeping on the job while in the
performance of their duties and responsibilities and because of the fact that
the chairs were not necessary considering that the operators constantly move
about while working. In short, the removal of the chairs was designed to
increase work efficiency. Hence, CCBPI’s exercise of its management
prerogative was made in good faith without doing any harm to the workers’
rights.
The rights of the Union under any labor law were not violated. There is no law
that requires employers to provide chairs for bottling operators. The CA
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Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
correctly ruled that the Labor Code, specifically Article 132 thereof, only
requires employers to provide seats for women. No similar requirement is
mandated for men or male workers. It must be stressed that all concerned
bottling operators in this case are men.
The Union should not complain too much about standing and moving about
for one and one-half (1 ½) hours because studies show that sitting in
workplaces for a long time is hazardous to one’s health. The report of
VicHealth, Australia,12 disclosed that “prolonged workplace sitting is an
emerging public health and occupational health issue with serious
implications for the health of our working population. Importantly, prolonged
sitting is a risk factor for poor health and early death, even among those who
meet, or exceed, national activity guidelines.”
3.2 QUESTION: MAY MANAGEMENT VALIDLY IMPOSE A PROHIBITION
AGAINST ELECTIVE OFFICE?
Ymbong vs. ABS-CBN, G.R. 184885, 07 March 2012, J. Villarama -- In
the instant case, ABS-CBN validly justified the implementation of Policy No.
HR-ER-016. It is well within its rights to ensure that it maintains its
objectivity and credibility and freeing itself from any appearance of
impartiality so that the confidence of the viewing and listening public in it will
not be in any way eroded. ABS-CBN strongly believes that it is to the best
interest of the company to continuously remain apolitical. While it
encourages and supports its employees to have greater political awareness
and for them to exercise their right to suffrage, the company, however,
prefers to remain politically independent and unattached to any political
individual or entity.
3.3
MAY MANAGEMENT SEARCH OFFICE COMPUTER TO CHECK ON
MISCONDUCT? VS. NON-INFRINGEMENT OF RIGHT TO PRIVACY.
Briccio “Ricky” A. Pollo vs. Chairperson Karina Constantino-David, et
al., G.R. No. 181881. 18 October 2011, VILLARAMA. -- This case
involves a search of office computer assigned to a government employee
who was charged administratively and eventually dismissed from the
service. The employee’s personal files stored in the computer were used by
the government employer as evidence of misconduct.
Question: May the search conducted on employee’s office computer
and copying of personal files without his knowledge and consent, be
considered an infringement of the employee’s constitution right to
privacy?
Answer: No, it is not an infringement of the right to privacy..
Petitioner failed to prove that he had an actual (subjective) expectation of
privacy either in his office or government-issued computer which contained
his personal files. Petitioner did not allege that he had a separate enclosed
office which he did not share with anyone, or that his office was always
locked and not open to other employees or visitors. Neither did he allege
that he used passwords or adopted any means to prevent other employees
from accessing his computer files. On the contrary, he submits that being in
the public assistance office of the CSC, he normally would have visitors in
his office. Even assuming that petitioner had at least a subjective
expectation of privacy in his computer as he claims, the same is negated by
the presence of policy regulating the use ofoffice computers. The CSC had
implemented a policy that puts its employees on notice that they have no
expectation of privacy in anything they create, store, send or receive on the
office computers. Under this policy, the CSC may monitor the use of the
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Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
computer resources usingboth automated or human means. This implies
that on-the-spot inspections may be done toensure that computer
resources were used only for legitimate business purposes.
Question: May the search on the employee’s computer be considered
as reasonable?
Answer: Yes. The search of petitioner’s computer files was conducted in
connection with an investigation of work-related misconduct prompted by
an anonymous letter-complaint addressed to Commissioner David
regarding anomalies in the CSC-ROIV where the head of the Mamamayan
Muna Hindi Mamaya Na division is supposedly “lawyering” for individuals
with pending cases in the CSC. A search by a government employer of an
employee’s office is justified at inception when there are reasonable
grounds for suspecting that it will turn up evidence that the employee is
guilty of work-related misconduct. Under the facts obtaining, the search
conducted on petitioner’s computer was justified at its inception and
scope.
C. BASIC PRINCIPLES IN DISCIPLINARY CASES
1. Code of Conduct vs. security of tenure
Balancing of interests in disciplinary cases
1.1 Labor’s interests
A worker’s right to labor is recognized by the Constitution as a property
right. As such, an employee cannot be deprived of his work without just cause
or due process.
1.2
Management’s interests
On the other hand, the employer is allowed, in the exercise of its
management prerogatives, to promulgate rules and regulations, and to
enforce/implement them for the efficient operations of the business.
Moreover, the law also recognizes the right of the employer to expect from its
workers not only good performance, adequate work and diligence, but also
good conduct and loyalty.
1.3 Balancing of interests:
Thus, in the context of implementing the rules and regulations for the
conduct of human relationships and work performance within the business,
certain parameters will have to be observed:
a)
Burden of proof is upon the employer to show just cause for the
imposition of a penalty upon the employee. Hence, there must exist
substantial evidence to prove just or authorized cause of
termination. Proof beyond reasonable doubt not required in
administrative cases.
Note: Failure of employer to submit documents which are presumed
to be in its possession, inspite of an Order to do so, implies that the
presentation of said documents is prejudicial to its case. (De Guzman
vs. NLRC, 540 SCRA 210 [Dec. 2007]).
b)
In the imposition of penalty, whether suspension or termination, the
same must be commensurate to the offense committed. (Sagales v.
Rustan’s Commercial Corporation (G.R. No. 166554, November 27, 2008)
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Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
c)
Thus: for valid termination, there must both be JUST CAUSE AND
DUE PROCESS. (exception: Wenphil/Serrano/Agabon ruling, see
Section 4 hereunder)
MANAGEMENT

VS.
LABOR
 Security of tenure
Right to continuous
employment until termination
for just or authorized cause
Management prerogatives
Right to discipline employee in
accordance with rules and
regulations
STATE
Police power/social justice
Interpretation in favor of labor
2. GROUNDS FOR TERMINATION
2.1 TERMINATION OF EMPLOYEES ON PROBATIONARY STATUS, GUIDING
PRINCIPLES:
2.1.1 Grounds for termination of a probationary employee:
a) just causes under Article 282 of the Labor Code
b) authorized causes under Article 283 of the Labor Code
c) failure to qualify as a regular employee in accordance with
standards made known to them at the time of hiring, under Article
281 of the Labor Code. (Aliling vs. Feliciano, G.R. No. G.R.
No. 185829, 25 April 2012; See also: Carvajal vs. Luzon
Development Bank, G.R. No. 186169, 01 August 2012)
2.1.2 Burden of proof upon employer to show that the employee failed
to qualify as a regular employee in accordance with reasonable
standards made known to him at the time of engagement. If
employer failed to specify the reasonable standards, or that the
standards were made known to the probationar employee at the start of
employment, then the employee is deemed to have been hired from
DAY ONE as a regular employee. DUE PROCESS dictates that an
employee be apprised beforehand of the conditions of his employment
and of the advancement therein. (Hacienda Primera Devlpt Corp vs.
Villegas, G.R. No. 186243, 11 April 2011).
2.1.3
BUT while the probationary employee is required to be appraised of the
standards against which his performance shall be assessed, there is
however no need to inform the probationary employee that he has to
follow company rules and regulations – such requirement strains
credulity. (Philippine Daily Inquirer vs. Magtibay, 528 SCRA 355
[2007]).
Punctuality is a reasonable standard imposed on every employee,
whether in government or private sector. As a matter of fact, habitual
tardiness is a serious offense that may very well constitute gross or
habitual neglect of duty, a just cause to dismiss a regular employee.
Assuming that petitioner was not apprised of the standards
concomitant to her job, it is but common sense that she must abide
by the work hours imposed by the bank. As we have aptly stated
xxx, the rule on reasonable standards made known to the employee
prior to engagement should not be used to exculpate a probationary
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Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
employee who acts in a manner contrary to basic knowledge and
common sense, in regard to which there is no need to spell out a
policy or standard to be met. (Carvajal vs. Luzon Development
Bank, G.R. No. 186169, 01 August 2012)
2.1.4
QUESTION:
ARE THE ACADEMIC REQUIREMENTS IN THE
MANUAL OF REGULATIONS FOR PRIVATE SCHOOLS DEEMED
INCORPORATED
INTO
ANY
PROBATIONARY
FACULTY
EMPLOYMENT CONTRACT?
Jocelyn Herrera-Manaois vs. St. Scholastica’s College, G.R. No.
188914, 11 December 2013.
The mere completion of the three-year probation, even with an
above-average performance, does not guarantee that the employee
will automatically acquire a permanent employment status. Upon
conclusion of the probation period, the college or university, being the
employer, has the sole prerogative to make a decision on whether or
not to re-hire the probationer. The probationer cannot automatically
assert the acquisition of security of tenure and force the employer to
renew the employment contract. In the case at bar, Manaois failed to
comply with the stated academic qualifications required for the position
of a permanent full-time faculty member, for her failure to COMPLETE
her master’s degree prior to the lapse of her probationary period.
Notwithstanding the existence of the SSC Faculty Manual, Manaois still
cannot legally acquire a permanent status of employment. Private
educational institutions must still supplementarily refer to the
prevailing standards, qualifications, and conditions set by the
appropriate government agencies (presently the Department of
Education, the Commission on Higher Education, and the Technical
Education and Skills Development Authority).
Thus, pursuant to the 1992 Manual, private educational institutions in
the tertiary level may extend “full-time faculty” status only to those who
possess, inter alia, a master’s degree in the field of study that will be
taught.This minimum requirement is neither subject to the prerogative of
the school nor to the agreement between the parties. For all intents and
purposes, this qualification must be deemed impliedly written in the
employment contracts between private educational institutions and
prospective faculty members.
The issue of whether probationers were informed of this academic
requirement before they were engaged as probationary employees is
thus no longer material, as those who are seeking to be
educators are presumed to know these mandated
qualifications. Thus, all those who fail to meet the criteria under the
1992 Manual cannot legally attain the status of permanent full-time
faculty members, even if they have completed three years of
satisfactory service.
2.1.5 QUESTION:
MAY COLLEGE VALIDLY REFUSE TO GRANT
PERMANENT TENURE TO PROBATIONARY FACULTY WHO,
DESPITE ON EXTENDED PROBATIONARY PERIOD, FAIL TO
COMPLY WITH MASTERAL DEGREE REQUIREMENT?
University of the East, Dean Eleanor Javier et. al vs. Analiza
Pepanio and Mariti D. Bueno, G.R. No. 193891, 23 January 2013
ANSWER: YES. The requirement of a masteral degree for tertiary
education teachers is not unreasonable. The operation of educational
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Handouts for PACU HRD Cebu Seminar Jan2014
Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
institutions involves public interest. The government has a right to
ensure that only qualified persons, in the posession of sufficient
academic knowledge and teaching skills, are allowed to teach in such
institutions. Government regulation in this field of human activity is
desirable for protecting, not only the students but also the general
public from ill-prepared teachers who are lacking in the required
scientific or technical knowledge. They may be required to take an
examination or to possess post-graduate degrees as prerequisite to
employment.
Respondents were each given only semester-to-semester appointments
from the beginning of their employment with UE precisely because
they lacked the required master's degree. Here, UE gave
respondents Bueno and
Pepanio more than ample
opportunities to acquire the postgraduate degree required of them. But
they did not take advantage of such opportunities. Justice, fairness,
and due process demand that an employer should not be
penalized for situations where it had little or no participation or control.
2.1.6
NEW RULINGS ON PROBATIONARY EMPLOYMENT ON FIXEDTERM CONTRACT; EXPIRATION OF CONTRACT NO LONGER
VALID GROUND FOR TERMINATION OF PROBATIONARY
EMPLOYEE.
AS APPLIED TO TERTIARY EDUCATION: Yolanda Mercado, et al.
vs. AMA Computer College Parañaque City, Inc. 618 SCRA 218
[2010].)
In a petition for review, the Supreme Court stated that nothing is
illegitimate in defining the school-teacher on fixed term basis. The
school, however, cannot forget that its system of fixed-term
contract is a system that operates during the probationary period
and for this reason is subject to the terms of Article 281 of the
Labor Code. Unless this reconciliation is made, the requirements of this
Article on probationary status would be fully negated as the school may
freely choose not to renew contracts simply because their terms have
expired.
Given the clear constitutional and statutory intents, the Supreme Court
concluded that in a situation where the probationary status overlaps
with a fixed-term contract not specifically used for the fixed term it
offers, Article 281 should assume primacy and the fixed-period
character of the contract must give way.
NOTE: To highlight what the Supreme Court meant by a fixed-term
contract specifically used for the fixed term it offers, a replacement
teacher, for example, may be contracted for a period of one year to
temporarily take the place of a permanent teacher on a one-year study
leave. The expiration of the replacement teacher’s contracted term,
under the circumstances, leads to no probationary status implications
as she was never employed on probationary basis; her employment is
for a specific purpose with particular focus on the term and with every
intent to end her teaching relationship with the school upon expiration of
this term.
While the Supreme Court can grant that the standards were duly
communicated to the teachers and could be applied beginning the 1st
trimester of the school year 2000-2001, glaring and very basic gaps in
the school’s evidence still exist. The exact terms of the standards
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Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
were never introduced as evidence; neither does the evidence
show how these standards were applied to the teachers. Without
these pieces of evidence the Supreme Court had nothing to
consider and pass upon as valid or invalid for each of the
teachers.
Inevitably, the non-renewal (or effectively, the
termination of employment of employees on probationary status)
lacks the supporting finding of just cause that the law requires
and, hence, is illegal. (Mercado, et al. vs. AMA Computer College
Parañaque City, Inc. 618 SCRA 218 [2010]. Emphasis supplied.)
AS APPLIED TO BASIC EDUCATION SCHOOLS: (Colegio del
Santissimo Rosario vs. Rojo, G.R. No. 170388, 03 September 2013.)
Situation: High School teacher on probationary status with fixed term
contracts who was able to to complete three consecutive years of
service but no longer rehired on the ground that with the expiration of
their contract to teach, the employment contract would no longer be
renewed.
The fixed-term character of employment essentially refers to the period
agreed upon between the employer and the employee; employment
exists only for the duration of the term and ends on its own when the
term expires. In a sense, employment on probationary status also refers
to a period because of the technical meaning "probation" carries in
Philippine labor law – a maximum period of six months, or in the
academe, a period of three years for those engaged in teaching jobs.
Their similarity ends there, however, because of the overriding meaning
that being "on probation" connotes, i.e., a process of testing and
observing the character or abilities of a person who is new to a
role or job.
Understood in the above sense, the essentially protective character of
probationary status for management can readily be appreciated. But
this same protective character gives rise to the countervailing but
equally protective rule that the probationary period can only last for a
specific maximum period and under reasonable, well-laid and properly
communicated standards. Otherwise stated, within the period of the
probation, any employer move based on the probationary standards
and affecting the continuity of the employment must strictly conform to
the probationary rules.
However, for teachers on probationary employment, in which case
a fixed term contract is not specifically used for the fixed term it
offers, it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in
determining qualification for regular employment, the same must
have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period
when they were to be applied. These terms, in addition to those
expressly provided by the Labor Code, would serve as the just cause
for the termination of the probationary contract. The specific details of
this finding of just cause must be communicated to the affected
teachers as a matter of due process.42 Corollarily, should the teachers
not have been apprised of such reasonable standards at the time
specified above, they shall be deemed regular employees.
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2.2 JUST CAUSES FOR TERMINATION (Art. 282, LC)
2.2.1 SERIOUS MISCONDUCT
a) QUESTION: CAN A FACULTY EMPLOYEE BE TERMINATED FOR
FAILURE TO DISCLOSE EMPLOYMENT WITH OTHER SCHOOLS?
Dator vs. UST Rev. Tamerlane Lana, and Rev. Rodel Aligan, 31
Aug. 2006 -- Upon discovery of employment with the Ombudsman,
UST converted Dator’s full time faculty status into one of part-time.
Dator filed a case, alleging that deloading is in bad faith and in
contravention of his security of tenure rights and of CBA provisions.
Supreme Court ruled in favor of the School. Faculty Code explicity
states that all faculty members must submit each semester a
statement of number of teaching hours per week to be rendered in
other institutions and/or daily hours of work outside the university. The
rationale is unmistakably to maintain UST’s quality of education and to
ensure that government service is not jeopardized. Hence, there is
factual basis for deloading.
CONTRA: Moreno vs. San Sebastian College-Recoletos, Manila,
550 SCRA 415 [28 March 2008] -- Faculty admitted having failed to
secure prior permission before teaching in other schools, in violation of
Faculty Manual. Defense: need to augment income due to financial
difficulty. Records show that she was a 1st time offender; and there
was voluntary admission of guilt. However, Faculty Manual penalty is
dismissal. Question: May she be validly terminated on this account?
Supreme Court ruled in favour of the professor. This misconduct
FALLS BELOW the required level of gravity that would warrant
dismissal as a penalty. Moreover, willful disobedience of employer’s
lawful order as a just cause for termination must comply with the
element that the willfulness is characterized by a “wrongful and
perverse attitude.” The School failed to prove that the faculty member
indeed harbored perverse or corrupt motivations in violating the
aforesaid school policy.
b) THEFT OF COMPANY PROPERTY VS. PERSONAL PROPERTY OF
CO-EMPLOYEE.
General rule: If company property, valid termination on the ground of
serious misconduct.
Caltex (Phils.), Inc vs. Agad, G.R. No. 162017, 23 April 2010; Theft of
Company Property (scrap metal). – Even if considered as scrap
materials, the LPG cylinders still had monetary value which Agad cannot
appropriate for himself without Caltex’s consent. Considering these
findings, it is clear that Agad committed a serious infraction amounting to
theft of company property. This act is akin to a serious misconduct or
willful disobedience by the employee of the lawful orders of his employer
in connection with his work, a just cause for termination of employment
recognized under Article 282(a) of the Labor Code.”
Exception: If not company property but personal property of coemployee, Supreme Court has made divergent rulings.
b.1) Villamor Golf Club vs. Pehid, G.R. No. 166152, 04 October 2005.
-- Malversation of a “Paluwagan” or voluntary contribution to a common
fund by the employees which was not known by the employer, is not
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Updates for Schools: Supreme Court cases on
Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
serious misconduct. If ever there was misappropriation or loss of the said
mutual fund, the respondent will not and cannot be in any way “tend or
cause to prejudice the club.” Such mutual fund is a separate transaction
among the employees and is not in any way connected with the
employee’s work.
b.2) Cosmos Bottling Vs. Wilson Fermin, G.R. 193676 and Wilson
Fermin Vs. Cosmos Bottling, GR 194303, 20 June 2012 -- 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
“It must be noted that in the case at bar, all the lower tribunals were in
agreement that Fermin’s act of taking Braga’s cellphone amounted
to theft. Factual findings made by administrative agencies, if established
by substantial evidence as borne out by the records, are final and
binding on this Court, whose jurisdiction is limited to reviewing questions
of law.[25] The only disputed issue left for resolution is whether the
imposition of the penalty of dismissal was appropriate. We rule in the
affirmative.”
2.2.2 GROSS INSUBORDINATION
a)
QUESTION: MAY AN EMPLOYEE REFUSE TO COMPLY WITH
THE TRANSFER ORDER BY RAISING SAID TRANSFER ORDER
AS A GRIEVANCE? Manila Pavillion vs. Henry Delada, GR
189947, 25 January 2012
Supreme Court: NO!!! In this instance, Head Waiter of Fine Dining
restaurant ordered to transfer to Coffee Shop due to hotel
reorganization. The refusal to obey a valid transfer order constitutes
willful disobedience of a lawful order of an employer. Employees
may object to, negotiate and seek redress against employers for
rules or orders that they regard as unjust or illegal. However, until
and unless these rules or orders are declared illegal or improper
by competent authority, the employees ignore or disobey them
at their peril. In fact, Delada cannot hide under the legal cloak of the
grievance machinery of the CBA or the voluntary arbitration
proceedings to disobey a valid order of transfer from the
management of the hotel. While it is true that Delada’s transfer to
Seasons is the subject of the grievance machinery in
accordance with the provisions of their CBA, Delada is expected
to comply first with the said lawful directive while awaiting the
results of the decision in the grievance proceedings.
2.2.3 GROSS AND HABITUAL NEGLECT OF DUTIES
a) QUESTION:
MAY A COMPANY VALIDLY TERMINATE AN
EMPLOYEE UNDER A PROVISION IN THE EMPLOYEE
HANDBOOK WHICH STATES “COMMITTING OFFENSES
PENALIZED WITH THREE SUSPENSIONS WITHIN A TWELVEMONTH PERIOD”?
Yes, under the case of Samahan Ng Manggagawa Sa HyattNUHWRAIN Vs. Magsalin, GR No. 164939, 06 June 2011,
VILLARAMA where a union officer found guilty of several infractions
during negotiations stand-off. The company terminated the union
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Management Prerogatives and Termination of Employment
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officer on the basis of a specific provision in their employees
handbook, which provided that an employee may be terminated for
the commission of offenses meriting three suspensions within a
twelve-month period. The Supreme Court ruled that a series of
irregularities, when put together, may constitute serious misconduct
and hence, a just cause for termination. (See also: Mapili vs. Phil
Rabbit Bus Lines, 27 July )
b) Inefficiency of employee; condonation by employer; Bebina G.
Salvaloza vs. National Labor Relations Commission, Gulf Pacific
Security Agency, Inc., and Angel Quizon, G.R. No. 182086,
November 24, 2010. -- While it is acknowledged that petitioner
Gregorio’s service record shows that his performance as a security
guard was below par, respondent Gulf Pacific never issued any memo
citing him for the alleged repeated errors, inefficiency, and poor
performance while on duty, and instead continued to assign him to
various posts. This amounts to condonation by Gulf Pacific of
whatever infractions Gregorio may have committed. Even assuming
the reasons for relieving Gregorio of his position were true, it was
incumbent upon Gulf Pacific to be vigilant in its compliance with labor
laws.
2.2.4 FRAUD OR WILLFUL BREACH OF TRUST
a) QUESTION: MAY LENGTH OF SERVICE BE USED TO MITIGATE
PENALTY OF DISMISSAL FOR A FIRST TIME-OFFENDER OF AN
INFRACTION INVOLVING LOSS OF TRUST AND CONFIDENCE?
Answer: NO. The general rule is that an employee terminated for
just causes is not entitled to separation pay except on grounds of
“equity and social justice”. Where the dismissal is based on willful
breach by the employee of the trust reposed in him by the employer,
the supervisory employee Moya is outside the protective mantle of
the principle of social justice as his act of concealing the truth from the
company4 is a clear disloyalty to the company which has long
employed him. The defense of the infraction being his first offense,
and that he had no willful intention to conceal the truth or cover up the
mistake of his employee, is unavailing. His length of service should
be taken against him. Length of service is not a bargaining chip that
can simply be stacked against the employer. If an employer has
treated his employee well, has accorded him fairness and adequate
compensation as determined by law, it is only fair to expect a longtime employee to return such fairness with at least some respect and
honesty. Moya vs. First Solid Rubber, G.R. No. 184011, 18
September 2013
b) QUESTION: MAY AN EMPLOYEE BE DISMISSED FOR FRAUD IF
THE COMPANY DID NOT SUFFER FROM IT?
Answer: YES. In the case of Panuncillo vs. CAP, G.R. No. 161305,
09 February 2007 (Carpio-Morales), the employee caused the
double sale of her own child’s CAP educational plan to different
customers. Employee argued that she cannot be terminated for loss
of trust and confidence, because CAP was not itself defrauded or
been damaged by her actuations relative to the multiple sale of her
child’s educational plan to customers. The Supreme Court ruled that
4
Failure to report five tires damaged as a result of undercuring brought about by negligence of
another employee.
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she may still be terminated for loss of trust and confidence, because
deliberate disregard or disobedience of rules by the employees
cannot be countenanced. The lack of resulting damage was
unimportant. xxx.
Damage aggravates the charge but its
absence does not mitigate nor negate the employee’s liability."
c) QUESTION: MAY AN EMPLOYEE BE DISMISSED FOR FRAUD
AND/OR DISHONESTY, EVEN IF HE DID NOT PERSONALLY
BENEFIT FROM IT?
Answer: YES. Pecuniary gain is not a necessary element for
terminations due to loss of trust and confidence.
In the case of Dela Cruz V. Coca-Cola Bottlers (31 July 2009), an
employee was involved in a motor vehicle accident while driving
Coca-Cola vehicle without authorization. He was hospitalized in San
Fernando, La Union, where he was observed to have been under the
influence of alcohol. This was evidenced by a medical certificate and
police report secured by Coca-cola. Two friends of the employee
(one was a supervisor) secured a police report and medical certificate
omitting any reference to employee being drunk, for which they were
charged with DISHONESTY. After due process, they were dismissed
and they thereafter questioned the termination on the ground that: (a)
they did not occupy positions of trust and confidence; and (b) they did
not benefit from the fraud. The Supreme Court ruled that the
supervisor and friend were VALIDLY TERMINATED. ‘“By obtaining an
altered police report and medical certificate, petitioners deliberately
attempted to cover up the fact that Sales was under the influence of
liquor at the time of accident. In so doing, they committed acts inimical
to company interest – work-related wilful breach of trust and
confidence.
See also: Unilever vs. Ma. Ruby Rivera, G.R. No. 201701, 03
June 2013, where Unilever’s internal auditor conducted a random
audit and found out that there were fictitious billings and fabricated
receipts supposedly from Ventureslink amounting to P11,200,000.00.
It was also discovered that some funds were diverted from the original
intended projects. Upon further verification, Ventureslink reported that
the fund deviations were upon the instruction of Rivera. The
employee admitted the fund diversion but explained that such actions
were mere resourceful utilization of budget because of the difficulty of
procuring funds from the head office.
Supreme Court decision: “In this case, Rivera was dismissed from
work because she intentionally circumvented a strict company policy,
manipulated another entity to carry out her instructions without the
company’s knowledge and approval, and directed the diversion of
funds, which she even admitted doing under the guise of shortening
the laborious process of securing funds for promotional activities from
the head office. These transgressions were serious offenses that
warranted her dismissal from employment and proved that her
termination from work was for a just cause. Hence, she is not entitled
to a separation pay.”
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3. PROCEDURE FOR TERMINATION:
General Rule:
The twin requirements of NOTICE and HEARING are the essential
elements of due process in termination cases, which cannot be dispensed
with without violating the constitutional right to due process
King of Kings Transport vs. Mamac, 526 SCRA116 (29 Jun 2007). -- In
order to intelligently prepare the employees for their explanation and
defenses, the notice should contain a detailed narration of the facts &
circumstances that will serve as the basis for the charge against the
employee – a general description of the change will not suffice.
4. ON NOTICE AND HEARING
Dept. Order No. 10, Article V; IRR B5 R14 S1-11
4.1 Two notices required:
1st notice: Notice of appraisal, which is a written notice served on
the employee specifying the ground or grounds of termination, and
giving the employee reasonable opportunity within which to explain
his side

The first notice should contain a detailed narration of facts and
circumstances that will serve as basis for the charge against the
employee. A general description of the charge will not suffice.
The notice should specifically mention which company rules, if
any, are violated. (King of Kings Transport vs. Mamac, 526
SCRA 116 [29 June 2007]), and that the employer seeks
dismissal for the act or omission charged against the employee;
otherwise; the notice does not comply with the rules. (Magro
Placement vs. Hernandez, 526 SCRA 408 [04 July 2007])
NEW CASES MODIFYING THE KING OF KINGS AND MAGRO
2007 CASES:
QUESTION:
HOW SPECIFIC SHOULD THE SHOW
CAUSE/CHARGE SHEET (PLEASE EXPLAIN MEMO) BE?
Answer: It should be specific enough to allow the employee
to be informed of the charges against her.
Hence, in the case of Unilever vs. Ma. Ruby Rivera (ibid., G.R.
201701, 03 June 2013) where the Supreme Court found that
there were valid grounds to terminate her from employment, the
Court still awarded nominal damages to the employee for failure of
the employer Unilever to comply with the procedural requirements
of due process. Thus:
“In this case, Unilever was not direct and specific in
its first notice to Rivera. The words it used were
couched in general terms and were in noway
informative of the charges against her that may
result in her dismissal from employment. Evidently,
there was a violation of her right to statutory due
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process warranting the payment of indemnity in the
form of nominal damages.
QUESTION: IS THE EMPLOYER REQUIRED TO INFORM THE
EMPLOYEE IN THE APPRAISAL/CHARGE SHEET THAT HE
MAY BE TERMINATED FOR THE INFRACTION?
ANSWER: NO. Contrary to Esguerra’s allegation, the law does
not require that an intention to terminate one’s employment should
be included in the first notice. It is enough that employees are
properly apprised of the charges brought against them so they can
properly prepare their defenses; it is only during the second
notice that the intention to terminate one’s employment
should be explicitly stated. Dolores T. Esguerra vs. Valle
Verde Country Club et. al., G.R. No. 173012, 13 June 2012

On “Reasonable opportunity”: This means every kind of
assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should
be construed as a period of FIVE (5) CALENDAR DAYS from
receipt of notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather
data and evidence, and decide on the defenses they will raise
against the complaint. (King of Kings Transport, ibid.)
2nd notice:
Notice of termination, which is a written notice of
termination served upon the employee, indicating that upon due
consideration of all the circumstances, grounds have been
established to justify his termination.
4.2 The NEW doctrine of due process in termination cases; HEARING
OR CONFERENCE NOT NECESSARY. (Perez vs. Philippine
Telegraph and Telephone Company, 584 SCRA 110 [2009], En
Banc.;
Petitioners in this case contended that due process was not observed in
the absence of a hearing in which they could have explained their side
and refuted the evidence against them. The Supreme Court ruled that
there is no need for a hearing or conference, and noted:
“xxx a marked difference in the standards of due process to be
followed as prescribed in the Labor Code and its implementing
rules. The Labor Code, on one hand, provides that an
employer must provide the employee ample opportunity to be
heard and to defend himself with the assistance of his
representative if he so desires. The Omnibus Rules
implementing the Labor Code, on the other hand, require a
hearing and conference during which the employee concerned
is given the opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him.
Which one should be followed? Is a hearing (or conference)
mandatory in cases involving the dismissal of an employee?
Can the apparent conflict between the law and its IRR be
reconciled?
At the outset, it must be stated that the time-honored doctrine
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Management Prerogatives and Termination of Employment
Atty. Ada D. Abad
is that, in case of conflict, the law prevails over the
administrative regulations implementing it. The authority to
promulgate implementing rules proceeds from the law itself.
To be valid, a rule or regulation must conform to and be
consistent with the provisions of the enabling statute. As such,
it cannot amend the law either by abridging or expanding its
scope.” (Perez vs. Philippine Telegraph and Telephone
Company, 584 SCRA 110 [2009], En Banc.)
See also: Esguerra vs. Valle Verde Country Club, 672 SCRA 177
[2012]). -- The existence of a formal trial-type hearing, ALTHOUGH
PREFERRED, is NOT absolutely ecessary to satisfy an employee’s right
to be heard.
4.3 QUESTION: IS THE RIGHT TO COUNSEL ON THE PART OF THE
EMPLOYEE, MANDATORY AND INDISPENSABLE AS PART OF
DUE PROCESS?
ANSWER: NO. In the case of Lopez vs. Alturas Group, 11 April
2011, the Supreme Court ruled that the “right to counsel and the
assistance of one in investigations involving termination cases is neither
indispensable nor mandatory, except when the employee himself
requests for one or that he manifests that he wants a formal hearing on
the charges against him.”
Legal Updates on Management Prerogatives
And Termination of Employment for Schools
As of 28 January 2014
Ada D. Abad
0917-526-9732
ada.abad@gmail.com; ablelegal@gmail.com
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