The Supreme Court (SC) has held that there are various laws imposing all kinds of burdens and obligations upon the employer in relation to his employees, and yet as a rule it has always upheld the employer’s prerogative to regulate all aspects of employment relating to the employees’ work assignment, the working methods and the place and manner of work. Indeed, labor laws discourage interference with an employer’s judgment in the conduct of his business. (Tinio vs. Court of Appeals, G.R. No. 171764, June 8, 2007, 524 SCRA 533, 539.)

In Rural Bank of Cantilan, Inc. vs. Julve, the SC had occasion to summarize the general jurisprudential guidelines affecting the right of the employer to regulate employment, including the transfer of its employees.

Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations to the exercise of this prerogative are those imposed by labor laws and the principles of equity and substantial justice.

While the law imposes many obligations upon the employer, nonetheless, it also protects the employer’s right to expect from its employees not only good performance, adequate work, and diligence, but also good conduct and loyalty. In fact, the Labor Code does not excuse employees from complying with valid

company policies and reasonable regulations for their governance and guidance.

Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a movement from one position to another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank or salary; (b) the employer has the inherent right to transfer or reassign an employee for legitimate business purposes; (c) a transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause; (d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee.

In Philippine Japan Active Carbon Corporation v. NLRC, it was held that the exercise of management’s prerogative concerning the employees’ work assignments is based on its assessment of the qualifications, aptitudes and competence of its employees, and by moving them around in the various areas of its business operations it can ascertain where they will function with maximum benefit to the company.

It is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications, aptitudes, and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. An employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful.

When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.

As a privilege inherent in the employer’s right to control and manage its enterprise effectively, its freedom to conduct its business operations to achieve its purpose cannot be denied.

If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the employee may not complain that it amounts to a constructive dismissal.

The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised.

Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.

Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay.

Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment.

As further held in Philippine Japan Active Carbon Corporation, when the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the employee may not complain that it amounts to a constructive dismissal.

But like all other rights, there are limits to the exercise of managerial prerogative to transfer personnel, and on the employer is laid the burden to show that the same is without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Indeed, management prerogative may not be used as a subterfuge by the employer to rid himself of an undesirable worker. (Peckson vs. Robinsons Supermarket Corporation, G.R. No. 198534, July 3, 2013)

See here the procedure to observe when the employee refuses to receive employer’s notice.

In addition, the company should send another copy by registered mail and keep the registry receipt for future reference.

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The Supreme Court (SC), in the case of GMA Network, Inc. vs. Pabriga, [G.R. No. 176419., November 27, 2013], it is evidently important to become clear about the meaning and scope of the term “project” in the present context.

The “project” for the carrying out of which “project employees” are hired would ordinarily have some relationship to the usual business of the employer.  Exceptionally, the “project” undertaking might not have an ordinary or normal relationship to the usual business of the employer.  In this latter case, the determination of the scope and parameters of the “project” becomes fairly easy.

According to the SC, it is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding and production of fish or the cultivation of vegetables.

From the viewpoint, however, of the legal characterization problem here presented to the Court, there

should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as “project employees,” as distinguished from ordinary or “regular employees,” so long as the duration and scope of the project were determined or specified at the time of engagement of the “project employees.”

For, as is evident from the provisions of Article 295 of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as “project employees” as distinguished from “regular employees,” is whether or not the “project employees” were assigned to carry out a “specific project or undertaking,” the duration (and scope) of which were specified at the time the employees were engaged for that project.

In the realm of business and industry, the SC noted that “project” could refer to one or the other of at least two (2) distinguishable types of activities.  Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company.  Such job or

undertaking begins and ends at determined or determinable times.

The typical example of this first type of project is a particular construction job or project of a construction company.  A construction company ordinarily carries out two or more [distinct] identifiable construction projects: e.g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City.  Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as “project employees,” and their services may be lawfully terminated at completion of the project.

The term “project” could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation.  Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer.  The job or undertaking also begins and ends at determined or determinable times.

Thus, in order to safeguard the rights of workers against the arbitrary use of the word “project” to prevent employees from attaining the status of regular employees, employers claiming that their workers are project employees should not only prove that the duration and scope of the employment was specified at the time they were engaged, but also that there was indeed a project.

The project could either be (1) a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the corporation.

As it was with regard to the distinction between a regular and casual employee, the purpose of this requirement is to delineate whether or not the employer is in constant need of the services of the specified employee.  If the particular job or undertaking is within the regular or usual business of the employer company and it is not identifiably distinct or separate from the other undertakings of the company, there is clearly a constant necessity for the performance of the task in question, and therefore said job or undertaking should not be considered a project.

Brief examples of what may or may not be considered identifiably distinct from the business of the employer are in order.  In Philippine Long Distance Telephone Company vs. Ylagan, [537 Phil. 840 (2006)] the SC held that accounting duties were not shown as distinct, separate and identifiable from the usual undertakings of therein petitioner PLDT. Although essentially a telephone company, PLDT maintains its own accounting department to which respondent was assigned.  This was one of the reasons why the Court held that respondent in said case was not a project employee.

On the other hand, in San Miguel Corporation v. National Labor Relations Commission, [357 Phil. 954 (1998)] the employee was hired to repair furnaces, which are needed by San Miguel Corporation to manufacture glass, an integral component of its packaging and manufacturing business.

The SC, finding that he was a project employee, explained that San Miguel Corporation is not engaged in the business of repairing furnaces.  Although the activity was necessary to enable the company to continue manufacturing glass, the necessity for such repairs arose only when a particular furnace reached the end of its life or operating cycle.  The complainant therein was therefore considered a project employee.

See here the procedure to observe when the employee refuses to receive employer’s notice.

In addition, the company should send another copy by registered mail and keep the registry receipt for future reference.

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There must be some evidence to substantiate the claim and form a legal basis for loss of confidence. The employer cannot exercise arbitrarily and without just cause the right to dismiss an employee for loss of trust and confidence.

While it is true that loss of trust and confidence is a just cause for termination, it must not be simulated or concocted but must be supported by substantial evidence.

The evidence must be substantial and must establish clearly and convincingly the facts on which the loss of confidence rests and not on the employer’s arbitrariness, whims, caprices and suspicion. Substantial evidence is of critical importance and the burden rests on the employer to prove it.

The loss of trust and confidence must have some basis. Proof beyond reasonable doubt is not required. Thus, it is sufficient that there is reasonable ground to believe if not to entertain the moral conviction that the concerned employee is responsible for the misconduct and the nature of his participation therein rendered him absolutely unworthy of trust and confidence demanded by his position. (See the cases of Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg, G.R. No. 145800, January 22, 2003, Sagales vs. Rustan’s Commercial Corp., supra; Uniwide Sales Warehouse Club vs. NLRC, G.R.

No. 154503, February 29, 2008, Norsk Hydro (Phils.), Inc., et al. vs. B. S. Rosales, et al., G.R. No. 162871, January 31, 2007 and Alcazaren vs. Univet Agricultural Products, Inc., G.R. No. 149628, November 22, 2005.)

Applying such rule, the dismissal of a managerial employee who sent e-mails to her company’s client informing the latter of her employer’s inefficient operations and poor services was justified. Her act exposed the company’s shortcomings which act is prejudicial to her employer’s business. She was expected to exercise her judgment and discretion with utmost care and concern for her employer’s business.

It is thus a settled rule that the mere existence of a basis for believing that a managerial employee has breached the trust of the employer justifies dismissal.

Simple allegation alone, without proven facts to back it up, could not and did not suffice as a basis for a finding of willful breach of trust. There was failure to prove the existence of a valid cause for the dismissal of respondent.

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However, AWOL can lead to abandonment of work. This happens when the employee being directed to report for work after being on AWOL refuses to report for work.

Thus, the employer usually escalates the violation to abandonment of work. Notably, abandonment of work is a ground for dismissal since it falls within the gross and habitual neglect of duty under Article 297 of the Labor Code, as amended.

The employer has to address the AWOL issue immediately as it happens. Otherwise, it can lead to issues on punctuality.

An employee can be on AWOL due to several instances. An employee who fails to report to work without filing the vacation leave (VL) form or obtaining an approval for it. An employee can be on AWOL if, after the VL application was granted, extended the leave but without prior approval. This is common for employees who filed VL and went on vacation far away from the place of work.

An employee who got sick but failed to comply with the requirements for sick leave such as medical

certificate, etc.

Below is a sample Notice to Explain (NTE) for AWOL with directive to report for work:

To:             MA. ABSENCIA

From:         HR

Date:          __________________

Subject:     NOTICE TO EXPLAIN (NTE) AND RETURN TO WORK ORDER

It appears in our record that you have been absent for the past three (3) days, or from ____ May 20___ to ____ May 20___. Upon verification of the records no prior VL has been filed. You have also failed inform the office about your absence pursuant to our policy on call-in sick, where applicable.

In this regard, please explain in writing within five (5) calendar days from receipt of this notice why no disciplinary action should be taken against you for the above.

Likewise, you are hereby being directed to report for work immediately upon receipt of this notice.

AYA O. SAPALA-LIVAN

HR Manager

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A common situation involving this ground is when a superior gives an order to a subordinate but the latter refuses to comply.

However, for insubordination to arise, the order given must be lawful. There is no duty to perform an illegal act even if the one demanding is a boss. Hence, a superior cannot charge his staff with insubordination if the task he wants done is illegal.

If the willful disobedience by an employee is committed against an unreasonable order or one not connected with his duties, such act cannot be a valid ground for dismissal.

To be valid, the order mentioned here must be:

(1) Reasonable and lawful,

(2) Known to the employee, and

(3) Pertains to the duties which the employee has been engaged to discharge.

What is reasonable depends on the circumstances. The reasonableness and lawfulness of a rule, order or instruction depend on the circumstances availing in each case.

Reasonableness pertains to the kind or character of directives and commands and to the manner in

which they are made.

However, when the law requires that the order must be lawful and reasonable, it does not end there. The act of the employee disregarding such order must also be intentional.

Thus, in order for the ground of “willful disobedience” to be considered a just cause to terminate employment, the following requisites must concur:

(1) The employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and

(2) The order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.

In Lakpue Drug Inc. v. Belga, willfulness is described as one that is “characterized by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination.

While it is true that the employer may promulgate rules and regulations and enforce the same to the point of dismissal of violators, such prerogative is limited by the standards of good faith and consideration of the plight of worker and circumstances.

As held by the Court, it is true that an employer is given wide latitude of discretion in managing its own affairs. The broad discretion includes the implementation of company rules and regulations and the imposition of disciplinary measures on its employees.

But the exercise of a management prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the rights of the worker. In this light, the management prerogative will be upheld for as long as it is not wielded as an implement to circumvent the laws and oppress labor.

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Sexual harassment is an imposition of misplaced “superiority” which is enough to dampen an employee’s spirit and her capacity for advancement. It affects her sense of judgment; it changes her life.

Justice Puno wrote in the case of Villarama vs. NLRC and Golden Donuts, Inc. that sexual harassment abounds in all sick societies. It is reprehensible enough but more so when inflicted by those with moral ascendancy over their victims.

Republic Act 7877 or the “Anti-Sexual Harassment Act of 1995” governs the cases of sexual harassment. In section 3 of the law, it provides that:

“Section 3. Work, Education or Training- Related, Sexual Harassment Defined.—Work, education or training-related sexual harassment is commit ted by an employer, employee, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment,

demands, requests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said act.

(a) In a work-related or employment environ- ment, sexual harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the employment, re- employment or continued employment of said individual, or in granting said individual favorable compensation, terms of conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in any way would dis- criminate, deprive or diminish employment opportunities or otherwise adversely affect said employee;

(2) The above acts would impair the employee’s rights or privileges under existing labor laws; or

(3) The above acts would result in an intimidating, hostile, or offensive environment for the employee.

(b) In an education or training environment, sexual harassment is committed:

(1) Against one who is under the care, custody or supervision of the offender;

(2) Against one whose education, training, apprenticeship or tutorship is entrusted to the offender;

(3) When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other bene- fits, privileges, or consideration; or

(4) When the sexual advances result in an intimidating, hostile or offensive environment for the student, trainee or apprentice.

Any person who directs or induces another to commit any act of sexual harassment as herein de- fined, or who cooperates in the commission thereof by another without which it would not have been commit- ted, shall also be held liable under this Act.”

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“Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.”

Misconduct involves the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.

The misconduct, to be serious within the meaning of the Labor Code must be of such grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee’s work to constitute just cause for his separation.

In the case of Eden Llamas vs. Ocean Gateway Maritime and Management, Inc., the Court held that

deliberate misdeclaration of the accountant of the gross income of the company for the renewal of municipal license constitutes serious misconduct. In this case, the account- ant reasons that:

“I believe that I did something good for our office when our declaration of gross income submitted to City Hall for the renewal of our municipal license was lower than our actual gross income for which the office had paid a lower amount.”

However, the Court was not convinced and held further that for her act of understating the company’s profits or financial position was willful and not a mere error of judgment, committed as it was in order to “save” costs, which to her warped mind, was supposed to benefit her employer.

It was not merely a violation of company policy, but of the law itself, and put the company at risk of being made legally liable. Verily, it warrants her dismissal from employment as the company’s Accounting Manager, for as correctly ruled by the appellate court, an employer cannot be compelled to retain in its employ someone whose service is inimical to its interests.

Thus, for misconduct or improper behavior to be a just cause for dismissal, it envisages the concurrence of at least three requisites:

(1) It must be serious;

(2) Must relate to the performance of the employee’s duties; and

(3) Must show that the employee has become unfit

However serious such misconduct, it must, nevertheless, be in connection with the employee’s work to constitute just cause for his separation. The act complained of must be related to the performance of the employee’s duties such as would show him to be unfit to continue working for the employer.

In a case decided by the Supreme Court, the act of an employee of sending a scathing e-mail in support of his superior cannot be considered as serious misconduct since it is in itself not related to his duty.

The Court said: “It can hardly be characterized as serious misconduct as to merit the penalty of dismissal. There is no showing that the sending of such e-mail message had any bearing or relation on employee’s competence and proficiency in his job. To reiterate, in order to consider it a serious misconduct that would justify dismissal under the law, the act must have been done in relation to the performance of his duties as would show him to be unfit to continue working for his employer.”

In another case, the employee threw a stapler upon the plant manager and uttered abusive language. She was charged with serious misconduct, among others. The Court did not agree that the act constituted serious misconduct because her act has no relation to her work of being a nurse. Thus:

“The Supreme Court, in a litany of decisions on serious misconduct warranting dismissal of an employee, has ruled that for misconduct or improper behavior to be a just cause for dismissal (a) it must be serious; (b) must relate to the performance of the employee’s duties; and, (c) must show that the employee has become unfit to continue working for the employer. The act of private respondent in throwing a stapler and uttering abusive language upon the per- son of the plant manager may be considered, from a layman’s perspective, as a serious misconduct. How- ever, in order to consider it a serious misconduct that would justify dismissal under the law, it must have been done in relation to the performance of her duties as would show her to be unfit to continue working for her employer. The acts complained of, under the circumstances they were done, did not in any way pertain to her duties as a nurse. Her employment identification card discloses the nature of her employment as a nurse and no other. Also, the memorandum informing her that she was being preventively suspended pending investigation of her case was addressed to her as a nurse.”

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View the PDF copies of Proclamation No. 1236 (original file not mine).

The Department of Labor and Employment (DOLE) issued Labor Advisory (LA) No. 11, Series of 2022 governing the rules on payment for this holiday. Please see the PDF copy of Labor Advisory 11, Series of 2022 below (original file not mine):

It presupposes that the employee has committed an offense against the company, person of the employer or his representative. It also covers gross and habitual neglect or omission of the employee to do his duty.

Just causes for dismissal are those found in Article 297 of the Labor Code which states that an employer may terminate an employment for any of the following causes:

1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
2. Gross and habitual neglect by the employee of his duties;
3. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
4. Commission of a crime or offense by the employee against the person of his employer or any

   

   immediate member of his family or his duly authorized representatives; and

5. Other causes analogous to the foregoing.”

Read related topic: Constructive Dismissal Definition and Concept

But bear in mind that the said provision indicates only the grounds in general. Thus, it is better for the company to come up with specific offenses related to the enumeration in Article 297.

If the company desires, it may also work with its employees in crafting certain penalties for offenses in their personnel policies, Code of Conduct, or the CBA. Companies that have labor union most often stipulate on penalties to be imposed on certain offenses. However, it bears stressing that design and implementation of company rules and regulations are within management prerogatives.

For instance, a company provides in its Code of Conduct that playing of computer games during office hours is punishable by reprimand on the first offense. While installation of unauthorized software carries a penalty of dismissal.

Take note that the said offenses are not specifically mentioned in Article 297 but were included in the company rules and regulations (CRR) which the union duly recognize as well.

Further, companies may prohibit access to social networking sites like Facebook, Instagram, Twitter, or Pinterest, during work hours or totally ban them from the office environment. These should be clearly set out in the company rules and the employer should have proof or evidence that the employees know about them. These proofs may be in the form of receipt of the CRR indicating the employee’s print name and signature.

Nonetheless, provisions in the CRR may be valid as ones falling under “analogous causes” of Article 297.

In such case, Article 297 applies in suppletory character to the agreed terms by the parties provided the stipulation is not contrary to law, moral, good order or public policy. Besides, the law is deemed written in every contract or agreement. Employment contracts are tied with the employer’s power to impose discipline through its company rules and regulations.

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Twin Requirements of Notice and Hearing

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Notice to Explain: Contents and Requirements