Gross and Habitual Negligence as Just Cause for Dismissal in Philippine Labor Law

In Philippine labor law, "gross and habitual negligence" is a recognized just cause for dismissal. This ground is designed to protect employers from employees whose repeated and serious neglect of duty jeopardizes business operations.

However, the law and jurisprudence set a high bar: not every mistake or act of carelessness amounts to gross negligence, and not every instance of neglect is habitual.

What Constitutes Gross and Habitual Negligence?

Article 297 (formerly Article 282) of the Labor Code of the Philippines, as amended, specifically provides that: "An employer may terminate an employment for any of the following just causes: ... (b) Gross and habitual neglect by the employee of his duties."

Gross Negligence

Gross negligence is more than ordinary carelessness or inadvertence. It is the want or absence of even slight care or diligence, amounting to a reckless disregard of the consequences. It is characterized by a willful and intentional omission to perform a duty, with conscious indifference to the consequences as they affect other persons or property.

Habitual Neglect

Habitual neglect, on the other hand, means repeated failure to perform one's duties over a period of time.

Both elements (grossness and habituality) must usually be present for this ground to be validly invoked. However, in exceptional cases, even a single act of gross negligence may justify dismissal if it results in substantial losses to the employer.

Selected Cases on Gross and Habitual Negligence

Below are a few interesting cases illustrating how the Supreme Court applies the law on gross and habitual negligence:

Valiao v. Court of Appeals, et al. (2004)

Here, the Court affirmed an employee's dismissal for gross and habitual neglect where the employee repeatedly incurred absences without leave and frequent tardiness despite warnings, emphasizing the totality of repeated violations over time. This case illustrates how gross and habitual neglect of duty can apply to two of the most common forms of employee misconduct: absenteeism and tardiness.

Systems and Plan Integrator and Development Corporation v. Ballesteros (2022)

The Court considered illegal an employee's dismissal for gross and habitual neglect where the supposed “habitual absences” were 12.5 days over a six-month period, consisting of approved vacation and sick leaves charged to earned leave credits. The Court stressed that only habitual absenteeism without leave may constitute gross negligence, and the few approved leaves could not establish the “gross” or “habitual” elements. The Court also agreed that habitual tardiness can be a just cause for dismissal and observed that "[p]unctuality is a reasonable standard imposed on every employee." However, the Court found the unauthenticated documentary evidence presented by the employer as insufficient to prove habitual tardiness.

Villanueva v. Ganco Resort and Recreation, Inc. (2020)

The Supreme Court reiterated that neglect of duties must be both gross and habitual. In this case, the employee’s four-day absence without leave was not considered gross nor habitual. The Court explained that habitual neglect imparts "repeated failure" to perform one's duties "for a period of time," depending on the circumstances. The language used by the Court implies that both the frequency and duration of the neglect might be critical factors to establishing the element of habituality.

Sy v. Neat, Inc. (2017)

The Court found that the five infractions imputed against the employee—wearing improper uniform, insubordination, and poor performance—could not collectively be deemed as gross and habitual negligence. The Court stressed that several minor infractions do not meet the threshold for dismissal on this ground.

The Substantial Losses Exception

As discussed above, habitual neglect connotes repeated failure to perform one's duties for a period of time, depending upon the circumstances, which should not be limited to a single or isolated act of negligence.

However, the Court has departed from this requirement in several cases where the employer suffered substantial losses because of the gravity of negligence displayed by the employee.

Fuentes v. National Labor Relations Commission, et al. (1988)

Here, a bank teller filed a complaint against the employer bank for illegal dismissal after being terminated for a single act of gross negligence when she left a large sum of money unattended and violated bank procedures. The Court upheld the dismissal, finding that her negligence caused substantial losses for the bank.

Philippine Airlines, Inc. v. National Labor Relations Commission (1991)

The complainant was employed as a ground equipment and tug operator by Philippine Airlines. His duties included towing aircraft within the airport premises. The employee was dismissed after an incident where, while towing a Boeing 747, the aircraft collided with a bridge at the Manila International Airport. The Court found that the employee's reliance on another crew member’s signals, his failure to observe proper parking procedures, and towing the aircraft at a speed beyond normal limits constituted gross negligence. The Court emphasized that, although the general rule is that neglect of duty must be both gross and habitual to justify dismissal, this requirement is not absolute. In this case, the gravity of the offense and the substantial risk and damage caused by the employee's actions were sufficient to warrant dismissal even if the negligence was not habitual, thus upholding the employer’s decision to terminate his employment for just cause under the law.

School of the Holy Spirit of Quezon City v. Taguiam (2008)

The dismissed employee was a Grade 5 class adviser/teacher responsible for supervising a sanctioned year-end activity that included swimming. She allowed a pupil to join despite an unsigned parental permit, failed to ensure adequate adult supervision and safety measures (e.g., first aid, sufficient personnel), and left pupils without proper oversight, leading to the pupil’s drowning. The Court held these acts amounted to gross negligence and breach of trust justifying dismissal, even if it was her first offense. The Court reaffirmed that the element of habituality may be dispensed with when the single grossly negligent act causes significant or grave damage to the employer—in this case, the loss of a child’s life and the attendant institutional harm—thus upholding the termination for just cause despite the absence of repeated neglect.

LBC Express - Metro Manila, Inc., et al. v. Mateo (2009)

The Court upheld the dismissal of a customer associate, an employee tasked with delivery and pickup of packages, for gross negligence after he parked a company motorcycle in front of the office, switched off the engine, took the key, but failed to lock the steering wheel despite clear instructions. He left the vehicle unattended for three to five minutes and it was stolen, causing substantial loss. The Court ruled that even a single act of gross negligence can justify dismissal when it results in significant damage.

Rustan Commercial Corporation v. Raysag (2021)

This case dealt with the dismissal of "Inventory Specialists" for gross neglect of duty after 58 pieces of high-value merchandise went missing over a 10‑month span under their watch. The Court found their lapses—failure to safeguard stocks, enforce and document controls, and detect anomalies despite clear custodial responsibilities—constituted gross neglect warranting termination. While it noted the losses occurred over months (hence habitual), the Court stressed that even a single or non-habitual infraction may justify dismissal when circumstances show grave negligence and substantial loss.

Lafuente v. Davao Central Warehouse Club, Inc. (2021)

In this case, the Supreme Court affirmed the dismissal of dispatchers (whose primary duties were to control, verify, and inspect every disposal of items coming from the warehouse) for gross and habitual neglect of duty after finding that their repeated failure to perform their duties of conducting inventory and reporting losses resulted in substantial losses to the employer. The Court also noted that, in exceptional cases, even a single act of gross negligence may justify dismissal if it results in significant damage to the employer.

Author's Commentary on the Substantial Losses Exception

It is the author's humble observation that in all these "exceptional cases," the erring employee held a position of trust and confidence, i.e.:

• A bank teller entrusted with the funds of the company and its customers;

• A ground equipment and tug operator entrusted with the towing of aircraft;

• An elementary school teacher entrusted with the care of students;

• A customer associate entrusted with a company vehicle and the packages of its customers; and

• Warehousemen entrusted with the care, custody, and accounting of the company's merchandise.

The fiduciary aspect of each employee's position naturally heightened the duty of care expected from the employee. The concept of "care," of course, is directly related to the concept of "negligence." Hence, it is no surprise that when an employee, who is required to observe a higher degree of care, commits an act of gross negligence resulting in substantial losses, such an act can justify his dismissal. Interestingly, it may be argued that this single act of gross negligence also resulted in a "loss of trust and confidence" which is another just cause for dismissal under Art. 297(c) of the Labor Code.

The author also respectfully observes that the substantial losses exception appears to be jurisprudential creation based on Fuentes. There appears to be no statutory basis for this exception since the Labor Code and its implementing rules expressly require the employee's negligence to be gross and habitual.

As stated, Fuentes appears to be the first case which applies the substantial losses exception. However, the case clearly involved an employee holding a position of trust and confidence as a bank teller. In discussing the importance of this fiduciary relationship, the Supreme Court observed that, "A teller's relationship with the bank is necessarily one of trust and confidence. The teller as a trustee is expected to possess a high degree of fidelity to trust and must exercise utmost diligence and care in handling cash. A teller cannot afford to relax vigilance in the performance of his duties." Id.

While the Court eventually upheld the teller's dismissal based on "gross negligence," such a dismissal would have been just as valid had it been based on "loss of trust and confidence." In fact, the Court held that: "Although petitioner's infraction was not habitual, we took into account the substantial amount lost x x x x It would be most unfair to compel the bank to continue employing petitioner. In Galsim v. PNB, we upheld the dismissal of a bank teller who was found to have given money to a co-employee in violation of bank rules and regulations. Said act, which caused prejudiced to the bank, was a justifiable basis for the bank to lose confidence in the employee." Id.

Thereafter, Fuentes was repeatedly cited to justify later rulings. As already stated, however, these later cases also involved employees holding positions of trust.

Hence, we come to a series of questions.

In these "exceptional cases," should the dismissals have based on Art. 297(b) (gross and habitual neglect) or Art. 297(c) (loss of trust and confidence)? What is the difference between the two?

Assuming that the dismissals could have been based on either just cause, should the Court abandon the substantial losses exception considering its lack of statutory basis (just as it did when it abandoned the "condonation doctrine," which was effective from 1959 to 2015, when the Court uncovered its lack of statutory basis and considered the doctrine obsolete)?

What happens when an employee, who does not hold a position of trust, commits a grossly negligent act which results in substantial losses to the employer?

Let us examine these issues in a future blog post.

Disclaimer: This article was prepared with the assistance of artificial intelligence and may contain errors. It is intended solely for educational and informational purposes. It does not constitute legal advice, nor does it create an attorney-client relationship. Readers should note that the applicable laws and jurisprudence may vary depending on the specific facts of each case.

For advice regarding your particular circumstances, please consult our qualified legal professionals at Sun Law Office.