Illegal Dismissal for Applying to Another Company Under Philippine Labor Law

I. Introduction

Under Philippine labor law, security of tenure is a constitutionally protected right (Article XIII, Section 3, 1987 Constitution) and statutorily guaranteed under the Labor Code (Presidential Decree No. 442, as amended). An employee may only be terminated for just cause (Article 297 [formerly 282]), authorized cause (Article 298 [formerly 283]), or other grounds specifically allowed by law. Any dismissal that does not fall under these grounds is illegal.

One of the most commonly litigated but consistently invalidated grounds asserted by employers is the employee’s act of applying for employment with another company (or a competitor) while still employed. Philippine jurisprudence is unanimous: mere application to another employer, by itself, is not a just cause for dismissal. It does not constitute serious misconduct, willful disobedience, gross neglect of duty, fraud, willful breach of trust, or any analogous cause.

II. Why Mere Application Is Never a Just Cause

The Supreme Court has repeatedly ruled that the following grounds cannot be validly invoked when the only act committed by the employee is submitting an application or attending a job interview elsewhere:

1. Serious Misconduct
   Misconduct must be grave, serious in character, and must relate to the performance of duties in a way that shows wrongful intent. Applying for another job is a personal decision exercised outside the scope of duties and does not show depravity or willful wrongdoing.

2. Willful Disobedience
   There must be a lawful and reasonable order that was deliberately disobeyed. A company policy that prohibits “looking for another job” or treats job applications as automatic resignation is unlawful and unenforceable because it violates security of tenure and the employee’s constitutional right to livelihood.

3. Loss of Trust and Confidence
   Even for managerial or fiduciary positions, loss of trust must be based on a willful breach that is work-related and shows unfitness to continue working. The Supreme Court has consistently held that mere job application, without proof of divulging trade secrets, soliciting co-employees or customers, or sabotaging company operations, does not justify loss of trust.

   Key rulings:

   • Conrad S. Tiu v. Platinum Plans Philippines, Inc., G.R. No. 163512, February 28, 2007 – The employee applied to a competitor. The employer forced him to resign. The Supreme Court ruled it was illegal constructive dismissal.
   • Etcuban, Jr. v. Sulpicio Lines, Inc., G.R. No. 148410, January 17, 2005 – The act of applying to another company was held insufficient to warrant dismissal on the ground of loss of trust.
   • Philippine Geothermal, Inc. Employees Union v. Chevron, G.R. No. 151289, July 27, 2005 (and related cases) – Mere intention to seek greener pastures is not disloyalty.

4. Abandonment
   Abandonment requires (a) intent to sever employment and (b) overt acts (e.g., prolonged absence without notice). Applying elsewhere while still reporting for work and performing duties negates any intent to abandon.

III. When the Act May Become a Valid Ground (Exceptions That Are Rarely Sustained)

The dismissal becomes potentially valid only when the job application is accompanied by separate culpable acts that independently constitute just cause. These include:

• Using company time, equipment, or resources to job-hunt (e.g., printing résumés during office hours on a massive scale) → may be gross habitual neglect or serious misconduct.
• Divulging trade secrets or confidential information during the application process → willful breach of trust.
• Actively recruiting co-employees to jump ship → disloyalty.
• Accepting employment with a direct competitor while still on payroll and performing dual functions → moonlighting/conflict of interest (separate ground under some company policies and jurisprudence).

Even in these cases, the employer must still prove the specific culpable act with substantial evidence, not mere suspicion.

IV. Common Invalid Employer Practices Related to This Issue

1. Company policy stating that “applying elsewhere shall be deemed voluntary resignation” → void for being contrary to law.
2. Requiring employees to sign “loyalty clauses” that prohibit job applications → unenforceable.
3. Dismissing an employee after receiving a reference check call from the prospective employer → illegal dismissal (very common in practice).
4. Placing the employee on “floating status” or forced leave upon discovery of the application → constructive dismissal.

All the above have been struck down repeatedly by the NLRC, Labor Arbiters, Court of Appeals, and Supreme Court.

V. Remedies Available to Illegally Dismissed Employees

When dismissal is declared illegal on this ground, the employee is entitled to:

1. Full backwages from date of dismissal until finality of decision (inclusive of allowances and benefits, or their monetary equivalent).
2. Reinstatement without loss of seniority rights and privileges (or separation pay of at least one month per year of service if reinstatement is no longer feasible due to strained relations).
3. Moral and exemplary damages if dismissal was attended by bad faith, malice, or oppression (very common in these cases because employers often act out of spite).
4. Attorney’s fees of 10% of total monetary award (Article 111, Labor Code).
5. 13th-month pay, service incentive leave, holiday pay, etc., accrued during the illegal dismissal period.

VI. Burden of Proof

The employer bears the burden of proving, by substantial evidence, the validity of the dismissal. Failure to present clear, convincing proof that the application was accompanied by a separate just cause results in a ruling of illegal dismissal.

VII. Practical Advice

For Employees

• You are legally free to seek better opportunities at any time.
• Do not sign any document acknowledging “voluntary resignation” under pressure.
• If dismissed or forced to resign for this reason, file an illegal dismissal case within four (4) years from dismissal.

For Employers

• Never terminate solely because an employee applied elsewhere.
• If there is genuine conflict of interest or moonlighting, document it thoroughly and follow twin-notice requirement.
• The safest and most lawful response upon discovering a job application is to do nothing, or at most conduct a performance review unrelated to the application.

VIII. Conclusion

Philippine labor law and jurisprudence are crystal clear and consistent: an employee cannot be legally dismissed merely for applying to another company. Such dismissal is illegal per se, and courts will almost invariably rule in favor of the employee with full backwages, damages, and reinstatement or separation pay.

The right to seek greener pastures is an inherent part of the constitutional right to livelihood and security of tenure. Any attempt by employers to punish employees for exercising this right will be struck down with monetary awards that often reach millions of pesos in protracted cases.

This principle has been upheld without exception for decades and remains one of the strongest employee protections under Philippine labor law.