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PHILIPPINE ASSOCIATION OF LAW SCHOOLS

BAR OPS PILIPINAS


2016

LABOR
LAW
Prepared by: Dean Ana Maria D. Abad and
Adamson University

BAR REVIEW NOTES FOR


2016 LABOR BAR EXAMS
Ada D. Abad
Dean, Adamson University College of Law
with doctrinal digests by Dean Antonio H. Abad, Jr.
Far Eastern University Institute of Law
and Adamson University College of Law
A. GENERAL CONCEPTS
1. Employer-Employee relationship
1.1 Four tests to determine the existence of an employer-employee relationship
(MEMORY AID: SOUTH WEST DISASTER CONTROL)
a. Selection and hiring;
b. payment of Wages;
c. power of Dismissal;
d. Control test.

Of these four tests however, the most important test is the element of
control, which has been defined as [MEMORIZE THIS] one where
the employer has reserved the right to control not only the work
to be achieved, but the manner and method by which such work
is to be achieved.. (LVN Pictures vs. LVN Musicians Guild, 1 SCRA
132).

Important VELASCO cases on the power of control;


Navarette vs. Manila Intl Frieght Forwarders, G.R. No. 200580, 11
Feb 2015. -- Where all the four tests are not present, or where not
exercised by a single entity, the determinative factor for establishing
empoyer-employee relationship is the control test.
Raul Locsin et. al. vs PLDT, G.R. No. 185251, 02 October 2009. -Locsin and Tomaquin were security guards of SSCP, a security
agency, who were assigned to PLDT as principal. When the security
service agreement between PLDT and SSCP ended, Locsin and
Tomaquin were allowed to continue working for one more year; their
wages were still however paid by SSCP. Thereafter, they were
eventually terminated, for which reason, Locsin and Tomaquin filed
this illegal termination case plus monetary claims.
Issue: Whether or not; complainants extended services to the
respondent for one (1) year from October 1, 2001, the effectivity of the
termination of the contract of complainants agency SSCP, up to
September 30, 2002, without a renewed contract, constitutes an
employer-employee relationship between respondent and the
complainants.
SC Decision: Locsin and Tomaquin are employees of PLDT.

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While respondent and SSCP no longer had any legal relationship with the
termination of the Agreement, petitioners remained at their post securing the
premises of respondent while receiving their salaries, allegedly from SSCP.
Clearly, such a situation makes no sense, and the denials proffered by
respondent do not shed any light to the situation. It is but reasonable to
conclude that, with the behest and, presumably, directive of respondent,
petitioners continued with their services. Evidently, such are indicia of
control that respondent exercised over petitioners. With the conclusion that
respondent directed petitioners to remain at their posts and continue with
their duties, it is clear that respondent exercised the power of control over
them; thus, the existence of an employer-employee relationship.

Distinguish between rules that fix methodology vs. rules that are
mere guidelines.

Example: insurance agents; two cases:


Insurance agents are not employees of the insurance companies, in
the absence of evidence that rules or regulations were promulgated or
issued which effectively controlled or restricted the agents choice of
methods or the methods themselves of selling insurance.
(Insular Life Assurance Co., Ltd., vs. NLRC and Melecio Basiao, G.R.
84484, 15 November 1989, 179 SCRA 459).
But this is not to say that ALL insurance agents are NOT employees
of the insurance company. As the Supreme Court clarified in the case
of Tongko vs. Manufacturers' Life Insurance Company (Phils.) Inc.
(G.R. No. 167622, 29 June 2010, En Banc; VELASCO PONENTE),
the Insular Life ruling above was tempered with the qualification that
had there been evidence that the company promulgated rules or
regulations that effectively controlled or restricted an insurance
agent's choice of methods or the methods themselves in selling
insurance, an employer-employee relationship would have existed. In
other words, the Court in Insular in no way definitively held that
insurance agents are not employees of insurance companies, but
rather made the same on a case-to-case basis.

1.2 Existence of an employer-employee relationship is a condition sine qua non for


the application of labor laws.

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There must be a REASONABLE CAUSAL CONNECTION between the parties


and the claim.

Under this rule, if there is a reasonable causal connection between the


claim asserted and the employer-employee relations, then the case is
within the jurisdiction of our labor courts. In the absence of such nexus,
it is the regular courts that have jurisdiction.
GOOD EXAMPLE: Indophil Textile Mills Vs. Adviento, G.R. No. 171212, 04
August 2014
Facts: Adviento was hired as Civil Engineer (for maintenance of facilities) of
Indophil, whose primary business is the manufacture of textiles. Adviento
developed a chronic allergy on account of the textile dust. He was eventually
dismissed from employment, for which reason he filed two cases against the
company, viz: (a) NLRC for illegal termination; and (b) Regional Trial Court
for damages arising from gross negligence and failure of company to provide a
safe, workable and healthy environment. Company sought to dismiss the RTC
case on account of litis pendencia and lack of jurisdiction, considering that the
claim arises from an employer-employee relationship.
Question: Whether or not RTC has jurisdiction?
Answer: YES. No reasonable causal connection between claim and employeremployee relationship.
Although Adviento contracted the occupational disease during his employment
with the company, there is no reasonable causal connection between the claim
asserted and the employer-employee relations. As such, the case does not fall
within the jurisdiction of the labor courts; but rather with the regular courts that
have jurisdiction. While the maintenance of a safe and healthy workplace may
be a subject of a labor case, note that the cause of action is one for torts/quasidelict and that relief prayed for is the payment for damages arising from
alleged gross negligence on the part of the company to provide a safe, healthy
and workable environment for its employees.

Important VELASCO case on jurisdiction to determine er-ee


relationship; Peoples Broadcasting Service [Bombo Radio Phils. Inc.]
vs. The Secretary of Labor, etc., G.R. No. 179652, 06 March 2012 En
Banc. -- In the exercise of the DOLEs visitorial and enforcement power,
the Labor Secretary or the latters authorized representative shall have
the power to determine the existence of an employer-employee
relationship to the exclusion of the NLRC.

2. Burden of proof is always upon employer to show validity of its exercise of


management prerogatives, especially as regards termination of employment.
NOTE: HOWEVER COMPLAINANT EMPLOYEE INITIALLY HAS
THE BURDEN OF PROVING THAT HE IS AN EMPLOYEE OF THE
COMPANY. (Danilo Bitoy Javier vs. CA, G.R. No. 192558, 15
February 2012)

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3.

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.
QUESTION: Are sworn statements of relatives and friends of respondent
attesting to the existence of an extra-marital affair considered sufficient
evidence to prove immorality, as a just cause for termination?
Answer: YES. The employers evidence consists of sworn statements of
either relatives or friends of Thelma and respondent. They either had
direct personal knowledge of the illicit relationship or revealed
circumstances indicating the existence of such relationship. (Alilem Credit
Cooperative vs. Bandiola, G.R. No. 173489, 25 February 2013)

4. In cases of ambiguity, interpretation shall be made in favor of labor.


National Union Of Workers In Hotel Restaurant And Allied Industries (NUWHRAIN) Philippine Plaza Chapter Vs. Philippines Plaza Inc., G.R. No. 177524, 23 July 2014.
The Union anchors its claim for unpaid services charges on Sections 68 and 69 of the
CBA, in relation with Article 96 of the Labor Code. Section 68 states that the sale of
food, beverage, transportation, laundry and rooms are subject to service charge at the rate
of ten percent (10%). Excepted from the coverage of the 10% service charge are the socalled negotiated contracts and special rates.
Issue: Can the Union validly claim proportionate share of service charges from nonsales (example: free benefits from hotel and credit cards; and similar arrangements)?
Answer: NO. Hotel does not have any obligation to the Union, inasmuch as their claims
arises from non-sale transactions like Westin Gold Cards Revenue and Maxi Media
Barter to be negotiated contracts or contracts under special rates, and the entries
Business Promotions and Gift Certificates as contracts that did not involve a sale of
food, beverage, etc. Jurisprudence settles that a CBA is the law between the contracting
parties who are obliged under the law to comply with its provisions. Thus, if the terms of
the CBA are plain, clear and leave no doubt on the intention of the contracting parties, the
literal meaning of its stipulations, as they appear on the face of the contract, shall
prevail. Only when the words used are ambiguous and doubtful or leading to several
interpretations of the parties agreement that a resort to interpretation and construction is
called for.
Philippine Journalist Inc. vs.Journal Employees Union, G.R. No. 192601, 26 June 2013
CBA provision states:
SECTION 4. Funeral/ Bereavement Aid. The COMPANY agrees to grant a
funeral/bereavement aid in the following instances:
a. Death of a regular employee in line of duty P50,000
b. Death of a regular employee not in line of duty P40,000
c. Death of legal dependent of a regular employee P15,000.
Issue: In the availment of funeral and bereavement aid under the CBA, may the Company
interpret legal dependent in accordance with the SSS definition of beneficiary and
hence, refuse payment of the benefit?
SUPREME COURT DECISION: NO, the Company cannot do so.
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The coverage of the term legal dependent as used in a stipulation in a collective


bargaining agreement (CBA) granting funeral or bereavement benefit to a regular
employee for the death of a legal dependent, if the CBA is silent about it, is to be
construed as similar to the meaning that contemporaneous social legislations have set.
This is because the terms of such social legislations are deemed incorporated in or
adopted by the CBA. The Court defined a dependent as "one who derives his or her main
support from another. Meaning, relying on, or subject to, someone else for support; not
able to exist or sustain oneself, or to perform anything without the will, power, or aid of
someone else."
Citing statutory definitions, the Supreme Court concluded that the civil status of the
employee as either married or single is not the controlling consideration in order that a
person may qualify as the employees legal dependent. What is rather decidedly
controlling is the fact that the spouse, child, or parent is actually dependent for support
upon the employee.

5.

In the imposition of penalty, whether suspension or termination, the same must be


commensurate to the offense committed.
(Sagales v. Rustans Commercial
Corporation (G.R. No. 166554, 27 November 2008)

6. But management prerogatives are likewise to be equally protected when


circumstances show the validity of the exercise.
MEMORIZE 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:

7.

IN GOOD FAITH (BONA-FIDE IN CHARACTER),


FOR THE ADVANCEMENT OF THE EMPLOYERS INTEREST;
AND
NOT TO CIRCUMVENT THE RIGHTS OF THE EMPLOYEES.
(Capitol Medical Center vs. Meriz; San Miguel Brewery and Union
Carbide cases).

Paradigm shift towards mutual cooperation - 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. Workers vs. NLRC, 537 SCRA 171)

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. Julies Bakeshop vs. Arnaiz,
666 SCRA 1010 [2012]; see also: Reyes-Rayal vs. Philippine Luen Thai Holdings, 676
SCRA 183 [2012].
2. 2013-2015 CASES:

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Jurisprudential guidelines in the transfer of employees: [outside coverage but principles


good to remember for the Bar Exam] ICT Marketing Services, Inc., etc. vs. Mariphil L.
Sales, G.R. No. 202090, 09 September 2015.
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 affected 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.

G.J.T. Rebuilders Machine Shop et al. vs. Ricardo Ambos et. al., G.R. No. 174184, 28
January 2015. Although the employer may close its business as an exercise of
management prerogative that courts cannot interfere with, it failed to sufficiently prove
its alleged serious business losses. Thus, it must pay respondents their separation pay
equivalent to one-month pay or at least one-half-month pay for every year of service,
whichever is higher.
Mirant Philippines vs. Joselito A. Caro, G.R. No. 181490, 23 April 2014. While the
adoption and enforcement by petitioner corporation of its Anti-Drugs Policy is
recognized as a valid exercise of its management prerogative as an employer, such
exercise is not absolute and unbridled. In the exercise of its management prerogative, an
employer must therefore ensure that the policies, rules and regulations on work-related
activities of the employees must always be fair and reasonable and the corresponding
penalties, when prescribed, commensurate to the offense involved and to the degree of
the infraction. The Anti-Drugs Policy of Mirant fell short of these requirements.
Royal Plant Workers Union vs. Coca-Cola Bottlers Phils., G.R. 198783, 15 April 2013 - Question: Is the decision of Coca-Cola Bottlers to 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?
Answer: For Management. Valid exercise of management prerogatives. The decision to
remove the chairs was done with good intentions as Company 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, companys 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 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.

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The Union should also not complain too much about standing and moving about for one
and one-half (1 ) hours because studies show that sitting in workplaces for a long time
is hazardous to ones health. The report of VicHealth, Australia 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.

C. KINDS OF EMPLOYMENT
1.

REGULAR EMPLOYEES those who are hired for activities which are necessary
or desirable in the usual trade or business of the employer.
2015 CASES:
Nelson Begino, et al., vs. ABS-CBN , etc., G.R. No. 199166, 20 April 2015. -- The
Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or
Project Assignment Forms and the terms and conditions embodied therein,
petitioners are regular employees of ABS-CBN. As cameraman/editors and
reporters, petitioners were performing functions necessary and essential to ABSCBNs business of broadcasting television and radio content. It matters little that
petitioners services were engaged for specified periods for TV Patrol Bicol and that
they were paid according to the budget allocated therefor. Respondents repeated
rehiring of petitioners for its long-running news program positively indicates that the
latter were ABS-CBNs regular employees.
Romeo Basau, et al., vs. Coca-Cola Bottlers Philippines, G.R. No. 174365-66, 04
February 2015. -- Route helpers are regular employees; their nature of work are
necessary and desirable in the usual trade or business of the employer; hence,
entitled to security of tenure.

2.

PROBATIONARY EMPLOYEES those who are hired generally for regular


positions but are placed on a probationary status for a period of 6 months (as a
general rule). May become regular once he has qualified as such in accordance with
reasonable standards made known to him at the time of hiring. They are considered
regular if they are allowed to work beyond the probationary period.
2014-2015 CASES ON PROBATIONARY EMPLOYEES:
Universidad de Sta. Isabel vs. Sambajon, G.R. Nos. 196280 & 196286, 02 April
2014 . It is the Manual of Regulations for Private Schools, and not the Labor Code,
that determines whether or not a faculty member in an educational institution has
attained regular or permanent status.
Abbot Laboratories, Philippines, et al., vs. Pearlie Ann Alcaraz, G.R. No. 192571,
22 April 2014. En Banc. - If a probationary employee was apprised of the
performance standards for his regularization, his failure to perform the duties and
responsibilities which have been clearly made known to him constitutes a justifiable
basis for a probationary employees non-regularization.
The determination of
adequate performance is not in all cases, measurable by quantitative specification.
It also hinges on the qualitative assessment of the employees work; by its nature,
this largely rests on the reasonable exercise of the employers management
prerogative.

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In the ultimate analysis, the communication of performance standards should


be perceived within the context of the nature of the probationary employees
duties and responsibilities. The performance standard contemplated by law
should not, in all cases, be contained in a specialized system of feedbacks or
evaluation. In fact, even if a system of such kind is employed and the
procedures for its implementation are NOT followed, once an employer
determines that the probationary employee fails to meet the standards
required for his regularization, the former is not precluded from dismissing
the latter. The rule is that when a valid cause for termination exists, the
procedural infirmity attending the termination only warrants the payment of
nominal damages. (Agabon vs. NLRC & Jaka vs. Pacot.)

TERMINATION OF EMPLOYEES ON PROBATIONARY STATUS, GUIDING


PRINCIPLES:
2.1

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.

2.2 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]).
2.3

Ruling on Probationary employment on fixed-term contract; expiration


of contract NO LONGER valid ground. (Colegio del Santissimo
Rosario vs. Rojo, G.R. No. 170388, 03 September 2013, reiterating
Yolanda Mercado vs. AMA Computer College-Paranaque 618 SCRA
218 [2010].)
Situation: High School teacher on probationary status with fixed term
contracts who was able to complete three consecutive years of
service. Teacher no longer rehired on the ground that with the
expiration of the contract to teach, the employment contract would no
longer be renewed.
Issue: May the probationary teacher be validly dismissed for
expiration of the contract to teach?
Answer: NO! Termination of a probationary employee must be for
his/her failure to comply with the reasonable standards for regular

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employment made known at the time of the engagement, and NOT


simply because the probationary period has expired.
SC rationale: Citing Yolanda Mercado vs. AMA Computer CenterParanaque case In a petition for review for the said Mercado case,
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.

3.

TERM EMPLOYEES those who are hired for a specific period, the arrival of the
date specified in the contract of which automatically terminates the employeremployee relationship. (Brent School vs. NLRC, 181 SCRA 702 [1989], reiterated in
AMA Computer Paranaque vs. Austria, 538 SCRA 438 [November 2007]).
3.1 A contract of employment for a definite period terminates by its own terms at the
end of such period
3.2 The decisive determinant in term employment should not be the activities that
the employee is called upon to perform, but the day certain agreed upon by the
parties for the commencement and the termination of their employment relation.
3.3 Criteria for fixed term employment contracts so that the same will not circumvent
security of tenure:
A. The fixed period of employment was KNOWINGLY AND
VOLUNTARILY AGREED UPON by the parties, without any force,
duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent;
AND
B. It satisfactorily appears that the employer and employee DEALT WITH
EACH OTHER ON MORE OR LESS EQUAL TERMS with no moral
dominance whatever being exercised by the former on the latter.(PNOC vs.
NLRC [G.R. No. 97747, 31 March 1993] and Brent School vs. NRLC, 181
SCRA 702]

4. PROJECT EMPLOYEES 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.
4.1

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The length of service or the re-hiring of construction workers on a project-toproject basis does not confer upon them regular employment status, since their
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re-hiring is only a natural consequence of the fact that experienced construction


workers are preferred. Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth
Division, et al., G.R. No. 174792, 07 March 2012
4.2

Indicators of Project Employment is found in Section 2.2(e) and (f) of DOLE


Department Order No. 19, Series of 1993, entitled Guidelines Governing the
Employment of Workers in the Construction Industry, to wit:
2.2 Indicators of project employment. - Either one or more of the following
circumstances, among others, may be considered as indicators that an employee
is a project employee.
(a) The duration of the specific/identified undertaking for which
the worker is engaged is reasonably determinable.
(b) Such duration, as well as the specific work/service to be
performed, is defined in an employment agreement and is made
clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection
with the particular project/undertaking for which he is
engaged.
(d) The employee, while not employed and awaiting engagement, is
free to offer his services to any other employer.
(e) The termination of his employment in the particular
project/undertaking is reported to the Department of Labor
and Employment (DOLE) Regional Office having jurisdiction
over the workplace within 30 days following the date of his
separation from work, using the prescribed form on employees'
terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to
pay completion bonus to the project employee as practiced by
most construction companies.

4.5 Report of termination of project employers compulsory. Failure to file


termination reports, particularly on the cessation of petitioners employment,
was an indication that the petitioner was not a project employee but a regular
employee. Goma vs. Pamplona Plantation, Inc., 557 SCRA 124 (2007)
4.6 2014-2015 CASES ON PROJECT EMPLOYMENT:
Ma. Charito C. Gadia, et al. vs. Sykes Asia, Inc. et al., G.R. No. 209499, 28
January 2015. - Requisites for an employee to be considered project-based BPO
employee: (a) the employee was assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time
they were engaged for such project.

In this case, Gadia is properly a project employee: (a) Sykes BPO informed the
petitioner of their employment status at the time of their engagement, as
evidenced by their employment contracts which provided that they were hired in
connection with the Alltel Project, and that their positions were project-based
and as such is co-terminus to the project; and (b) Sykes duly submitted an
Establishment Employment Report and an Establishment Termination Report to
the DOLE Makati Field Office regarding the cessation of the Alltel Project and
the list of employees affected thereby. Case law deems such submission as an
indication that the employment was indeed project-based.
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.
Omni Hauling Services, Inc., et al vs. Bernardo Bon, et al., G.R. No. 199388,
03 September 2014. - A project employee is assigned to a project which begins
and ends at determined or determinable times (Goma v. Pamplona Plantation,
Incorporated, 579 Phil. 402, 412 [2008]). Unlike regular employees who may
only be dismissed for just and/or authorized causes under the Labor Code, the
services of employees who are hired as project employees may be lawfully
terminated at the completion of the project. (GMA Network, Inc. v. Pabriga,
G.R. No. 176419, November 27, 2013, 710 SCRA 690,703).
In this case, records are bereft of any evidence to show that respondents were
made to sign employment contracts explicitly stating that they were going to be
hired as project employees, with the period of their employment to be coterminus with the original period of Omnis service contract with the Quezon
City government. Neither is petitioners allegation that respondents were duly
apprised of the project-based nature of their employment supported by any other
evidentiary proof. Thus, the logical conclusion is that respondents were not
clearly and knowingly informed of their employment.
MacArthur Malicdem and Hermenigildo Flores vs. Marulas Industrial
Corporation, et al., G.R. No. 204406, 26 February 2014. -- Malicdem and
Flores were hired as extruder operators (operate the machines that produces the
sacks) for a period of one (1) year under a Project Employment Contract
which stipulates a probationary period of six (6) months from its
commencement, wherein they would be reclassified as project employees with
respect to the remaining period of the effectivity of the contract. Every year
thereafter, they would sign a Resignation/Quitclaim in favor of Marulas a day
after their contracts ended, then sign another contract for another year, and so
on. Malicdem and Flores are regular employees for the following reasons:
a. An employee who is allowed to work after a probationary period
shall be considered a regular employee. (Article 281, Labor Code.)
b. A project or work pool employee, who has been continuously, as
opposed to intermittently, rehired by the same employer for the
same tasks or nature of tasks; and whose task are vital, necessary
and indispensable to the usual trade or business of the employer,
must be deemed a regular employee. (Maraguimot, Jr. v. NLRC, 248
Phil. 580 [1998].)
c. There is no actual project; hence, Marulas cannot invoke the
exception in Art. 280 of the Labor Code.
5.

SEASONAL EMPLOYEES -- those hired for work or services which is seasonal in


nature, and the employment is for the duration of the season.
IMPORTANT NOTE ON EMERGING TREND OF SUPREME COURT CASES
CIRCA 2013-2015: REGULAR SEASONAL WORKERS. -- Where the seasonal
employees had been hired repeatedly and continuously to perform the same tasks or
activities for several seasons or even after the cessation of the season, this length of
time may likewise serve as badge of regular employment. In fact, even though
denominated as seasonal workers, if these workers are called to work from time
to time and are only temporarily laid off during the offseason, the law does not
consider them separated from the service during the off-season period. The law
simply considers these seasonal workers on leave until re-employed.

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Gapayao vs. Fulo and SSS, G.R. No. 193493, 13 June 2013 (Sereno, C.J.) -- Farm
workers generally fall under the definition of seasonal employees. We have
consistently held that seasonal employees may be considered as regular employees.
Regular seasonal employees are those called to work from time to time. The nature
of their relationship with the employer is such that during the off season, they are
temporarily laid off; but reemployed during the summer season or when their
services may be needed. They are in regular employment because of the nature of
their job, and not because of the length of time they have worked.
Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. 15
January 2014. -- The respondents are neither project, seasonal nor fixed-term
employees, but regular seasonal workers of URSUMCO.xxx THEIR SEASONAL
WORK, HOWEVER, DOES NOT DETRACT FROM CONSIDERING THEM IN
REGULAR EMPLOYMENT since in a litany of cases, this Court has already
settled that seasonal workers who are called to work from time to time and are
temporarily laid off during the off-season are not separated from the service in said
period, but are merely considered on leave until re-employment
Be this as it may, REGULAR SEASONAL EMPLOYEES, LIKE THE
RESPONDENTS IN THIS CASE, SHOULD NOT BE CONFUSED WITH THE
REGULAR EMPLOYEES OF THE SUGAR MILL such as the administrative or
office personnel who perform their tasks for the entire year regardless of the season.
The NLRC, therefore, gravely erred when it declared the respondents regular
employees of URSUMCO without qualification and that they were entitled to the
benefits granted, under the CBA, to URSUMCOS regular employees.
Hacienda Cataywa, et al. vs. Rosario Lorezo, G.R. No. 179640, 18 March 2015. -Farm workers generally are seasonal workers. Seasonal employees may become
regular employees when they are called to work from time to time. They acquire
regular employment because of the nature of their work, not because of the length
of time they have worked. However, seasonal workers who work only for one
season, cannot become regular employees. (Hacienda Fatima vs. NFSW, 444 Phil.
587[2003].) Respondent performed hacienda work, such as planting sugarcane
point, fertilizing, weeding, replanting dead sugarcane fields and routine
miscellaneous hacienda work. Thus, he is considered a regular seasonal worker.
Since cultivation of sugarcane is only for six months, he cannot be considered a
regular employee during the months when there is no cultivation.
6.

CASUAL EMPLOYEES those who are hired to perform work or service which is
merely incidental to the business of the employer. Any casual employee who has
rendered at least one (1) year of service, whether it be continuous or broken, shall
be considered a regular employee with respect to the activity for which he is
employed, and his employment shall continue while such activity exists.

EMPLOYEE CLASSIFICATION AS TO RANK


7.

MANAGERIAL EMPLOYEES those vested with powers or prerogatives to lay


down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall employees. (Art. 212, par. m, Labor Code)
7.1 CONFIDENTIAL EMPLOYEES: Doctrine of necessary implication and/or
confidential employee rule reiterated.

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Confidential employees are those who: (1) assist or act in a confidential


capacity, (2) to persons who formulate, determine, and effectuate management
policies in the field of labor relations. The two criteria are cumulative, and
both must be met if an employee is to be considered a confidential employee
e.g., the confidential relationship must exist between the employee and his
supervisor, and the supervisor must handle the prescribed responsibilities
relating to labor relations. The exclusion from bargaining units of the
employees who, in the normal course of their duties, become aware of
management policies relating to labor relations is a principal objective sought
to be accomplished by the confidential employee rule. Tunay na Pagkakaisa
ng Manggagawa sa Asia Brewery vs. Asia Brewery, G.R. No. 162025, 03
August 2010.; See also: San Miguel Corporation Supervisors and Exempt
Employees Union vs. Laguesma, 277 SCRA 370 [1997].
8.

SUPERVISORY EMPLOYEES those who, in the interest of management,


effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature, but requires use of independent judgment.
(Art. 212, par. N, Labor Code). Note: Supervisory employees form part of the
managerial staff, which are not covered by the rules on hours of work, viz., night
shift differentials, overtime pay, etc. (See Art. 82, Labor Code cf. Art. 212 [m]).

9.

RANK-AND-FILE EMPLOYEES - All other employees not falling within the


definition of managerial or supervisory employees, are considered rank-and-file
employees for purposes of Book V of the Labor Code.

FRAMEWORK:
General rule: Employment is deemed regular
Exception:

Probationary
Term
Project

Seasonal
Casual

Exception to exception:
Probationary employees allowed to work after probn. period
Casual workers rendering service for more than one year
Term employee allowed to work after term has expired/ended
Project employee allowed to work after project without any contract; or project
employee allowed to work project after project but no termination reports.

D. INDEPENDENT CONTRACTORSHIP ARRANGEMENTS


VS. LABOR ONLY CONTRACTING
For VALID JOB CONTRACTING --

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Fuji Television Network, Inc. vs. Arlene S. Espiritu G.R. No. 204944-45,

03

December 2014 citing DOLE D.O. 18-A [2011], sec. 5 (b); Sonza vs. ABS-CBN,
supra, see page __ hereof. -- There are different kinds of independent contractors:
those engaged in legitimate job contracting, and those who have unique skills and
talents that set them apart from ordinary employees. Since no employer-employee
exist between independent contractors and their principals, their contracts are
governed by the Civil Code provisions on contracts and other applicable laws.
ADAS NOTE: In the above 2014 case of Fuji Television Network vs. Arlene Espiritu, the
Supreme Court made an exhaustive distinction between Independent Contractor vs. Fixedterm employment and/or regular employment. The main factor that distinguishes
independent contracting from fixed-term or regular employment is that of CONTROL.
Where the alleged employer has no actual control over the conduct of the work of the
complainant, then there is no employer-employee relationship. However, if control over
the conduct of work can be established, then this is one of fixed-term or regular
employment depending on the circumstances of the case..

D.1 VALID INDEPENDENT CONTRACTING


OR SUB-CONTRACTING ARRANGEMENTS
Article 106, LB; IRR S8R8B3;
ELEMENTS: (MEMORY AID: I ARM FREE CAPITAL TEMWORK R&B)

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There is a job-contracting permissible by law where the contractor/agency


carries on an INDEPENDENT business and undertakes the contract work on
his ACCOUNT, under his own RESPONSIBILITY, using his own MANNER
AND METHODS, FREE from the control of the principal in all matters
connected with the performance of work excepting the results thereof.

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He has his own CAPITAL in the form of TOOLS, EQUIPMENT,


MACHINERY, WORK PREMISES, and that the agreement between the
contractor and principal assures the formers employees of ALL RIGHTS
AND BENEFITS under the law.

D.2

ELEMENTS OF LABOR-ONLY CONTRACTING PROHIBITED UNDER THE


LAW -- Philippine Airlines vs. Ligan, 548 SCRA 181 (2008).
There is labor-only contracting where the contractor or sub-contractor merely
recruits, supplies or places workers to perform a job, work or service for a
principal.
TWO WAYS OF PROVING LABOR-ONLY CONTRACTING:
(Memory Aid: No Cap Direct OR No Control)
For labor-only to exist, Sec. 5 of Department Order No. 18-02 requires any
two of the elements to be present, viz.:

The contractor or sub-contractor DOES NOT HAVE SUBSTANTIAL


CAPITAL or investment to actually perform the job, work or service
under its own account and responsibility; and the employees recruited,
supplied or placed by such contractors are performing activities which are
DIRECTLY RELATED to the main business of the principal;

OR

D.3

The CONTRACTOR has NO CONTROL over the conduct of the work to


be done by his employees.

EFFECT OF LABOR-ONLY CONTRACTING AND VALID JOB


CONTRACTING AGREEMENTS -- San Miguel Corp. vs. MAERC Integrated
Systems, 405 SCRA 579 [10 July 2003]

If labor only contracting: ILLEGAL. The employer is deemed the DIRECT


employer and is made liable to the employees of the contractor for a more
comprehensive purpose (wages, monetary claims, and all other benefits in the
Labor Code such as SSS/Medicare/Pag-Ibig). The labor-only contractor is
deemed merely an agent.

If job-contracting: LEGAL. The employer is considered an INDIRECT


EMPLOYER, and is made solidarily liable with the contractor to the employees
of the latterr for a more limited purpose, viz.: payment of unpaid wages and
other monetary claims, including 13th month pay, service incentive leave pay.
(New Golden Builders case)

D.4 SYNTHESIS AND CLARIFICATION OF DOCTRINES


ON JOB-CONTRACTING PER 2013-2015 CASES
4.1

Job contracting is a trilateral work arrangement arising out of two different


contracts:
a) Contract between Principal and the Agency: CIVIL CONTRACT

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b) Contract between Agency and its employees: LABOR CONTRACT


But note that there should be NO CONTROL between Principal and Agency or
Principal and employees of the agency; otherwise, an employer-employee
relationship is established in either case.
4.2

Contracting out is valid as an exercise of management prerogative for as long


as it complies with the limits and standards provided by the Labor Code.
Essentially, there must be proof of capitalization, and of control over his
employees on the part of the independent contractor. The law allows
contracting and subcontracting involving services but closely regulates these
activities for the protection of workers. Thus, an employer can contract out part
of its operations, provided it complies with the limits and standards provided in
the Code and in its implementing rules. xxx In strictly laymans terms, a
manufacturer can sell its products on its own, or allow contractors,
independently operating on their own, to sell and distribute these products in a
manner that does not violate the regulations. From the terms of the abovequoted D.O. 18-02, the legitimate job contractor must have the capitalization
and equipment to undertake the sale and distribution of the manufacturers
products, and must do it on its own using its own means and selling
methods.xxx [COCA-COLA BOTTLERS VS. DELA CRUZ ET AL, G.R.
No. 184977, 07 December 2009.

4.3 The right of management to outsource parts of its operations is within the
purview of management prerogative, but said right may limited by law, CBA
provisions or the general principles of fair play and justice. Goya Inc. vs. Goya
Employees Union FFW, G.R. No. 170054 21 January 2013.
4.4

The law and its implementing rules recognize that management may rightfully
exercise its prerogatives in determining what activities may be contracted out,
REGARDLESS OF WHETHER SUCH ACTIVITY IS PERIPHERAL OR
CORE IN NATURE. (Alviado et. al. vs. Procter & Gamble, and Promm
Gemm, G.R. No. 160506, 09 March 2010, Del Castillo, J).

4.5

HOWEVER, PRELIMINARY PRESUMPTION IS THAT CONTRACTOR IS


LABOR-ONLY CONTRACTING UNLESS such contractor overcomes the
burden of proving that it has substantial capital, investment, tools and the like.
The employer has the burden of proof to show that the person concerned is an
independent contractor rather than a regular employee. IMPT 2014 CASE: Fuji
Television Network, Inc. vs. Arlene S. Espiritu G.R. No. 204944-45, 03
December 2014 -

4.6 General Rule: The DOLE certification simply gives rise to a presumption that
the contractor is a legitimate one. It does NOT prohibit the Supreme Court, in
the exercise of its plenary judicial powers of review, to determine sufficiency of
evidence other than the certification, in ruling that one is, or is not, an
independent contractor. RAMY GALLEGO VS. BAYER PHILS. G.R. No.
179807, 31 July 2009,
Exception: Even where there is a DOLE Certificate of Registration, Supreme
Court may still may consider other factors in the determination of whether or not
a contractor complies with the requisite elements of a legitimate sub-contracting
as enumerated in the Labor Code and the Dept. Order No. 18-02. This may be
done, especially in instances where there are contradictory findings between the
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PALS BAR OPS PILIPINAS 2016

Court of Appeals and the NLRC/Labor Arbiter. [COCA COLA BOTTLERS VS.
RICKY DELA CRUZ, ET AL. (G.R. No. 184977, 07 December 2009) and
COCA COLA BOTTLERS VS. AGITO ET AL (G.R. 179546, 13 Feb 2009, J.
Chico-Nazario]
4.7 IMPORTANT VELASCO CASE: Fonterra Brands Phils. Vs. Largado and
Estrellado, G.R. No. 205300, 18 March 2015
Question: Whether or not fixed-term employees who were repeatedly hired by a
contractor, but had resigned and transferred to another contractor to work with
the same principal, may claim regular employment status and illegal dismissal?
Answer: NO. Not regular ees. As correctly held by the Labor Arbiter and the
NLRC, the termination of respondents employment with Zytron was brought
about by the cessation of their contracts with the latter. We give credence to the
Labor Arbiters conclusion that respondents were the ones who refused to renew
their contracts with Zytron, and the NLRCs finding that they themselves
acquiesced to their transfer to A.C. Sicat.
By refusing to renew their contracts with Zytron, respondents effectively
resigned from the latter. Resignation is the voluntary act of employees who are
compelled by personal reasons to dissociate themselves from their employment,
done with the intention of relinquishing an office, accompanied by the act of
abandonment.
Here, it is obvious that respondents were no longer interested in continuing their
employment with Zytron. Their voluntary refusal to renew their contracts was
brought about by their desire to continue their assignment in Fonterra which
could not happen in view of the conclusion of Zytrons contract with Fonterra.
Hence, to be able to continue with their assignment, they applied for work with
A.C. Sicat with the hope that they will be able to continue rendering services as
TMRs at Fonterra since A.C. Sicat is Fonterras new manpower supplier.

E. SPECIFIC ISSUES ON LABOR STANDARDS


1. WAGES; SOME GOVERNING RULES:
FAIR AND REASONABLE VALUE shall not include any profit to the employer,
or to any person affiliated with the employer.
NO WORK NO PAY PRINCIPLE. -- If there is no work performed by the
employee, there can be no wage or pay unless the laborer was able, willing, and
ready to work but was prevented by management or was illegally locked out,
suspended or dismissed. But where the failure of employees to work was not due to
the employers fault, the burden of economic loss suffered by the employers should
not be shifted to the employer. Each party must bear his own loss.
EQUAL PAY FOR EQUAL WORK. -- Employees who work with substantially
equal qualifications, skill, effort and responsibility, under similar conditions should
be paid similar salaries (International School Alliance of Educators vs. Quisumbing,
GR No.128845, June 1, 2000).
CIVIL CODE PROVISIONS:
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Art. 1705. The laborers wages shall be paid in legal currency.


Art. 1706. Withholding of the wages, except for a debt due, shall not be made by the
employer.
Art. 1707. The laborers wages shall be a lien
work done.

on the goods manufactured or the

Art. 1708. The laborers wages shall not be subject to execution or attachment except
for debts incurred for food, shelter, clothing, and medical attendance.
Art. 1709. The employer shall neither seize nor retain any tool or other articles
belonging to the laborer.

1.1 WAGE AND WAGE-RELATED BENEFITS

Minimum wages must always be complied with.


Wage Order No. NCR-20 eff. 02 June 2016

SECTOR/
INDUSTRY

BASIC
WAGE

COLA
INTEGR
ATION

NEW
BASIC
WAGE

NEW
COLA

NEW
MINIM
UM
WAGE
RATES

Non-agricultural
(Incl hospitals
P466.00
P15.00
P481.00
P10.00
P491.00
with 100 bed
capacity or less)
Agriculture
429.00
15.00
444.00
10.00
454.00
(plantation and
non-plantation
Retail/Service
establishmts
429.00
15.00
444.00
10.00
454.00
employing 15
persons or less
Manufacturing
establishments
429.00
15.00
444.00
10.00
454.00
E
regularly
X less
employing
C workers
than 10
L
USIONS:
Kasambahay
Persons in the personal service of another, including family drivers
Workers registered in Barangay Micro-Business Enterprises (BMBE)
with Certificates of Authority per R.A. 9178

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Hours of work: Hours of worked shall include: (a) all time during which an
employee is required to be on duty or to be at the prescribed workplace, and
(b) all time during which an employee is suffered or permitted to work. The
normal working hours shall be no more than eight (8) hours a day. Meal
PALS BAR OPS PILIPINAS 2016

and rest period: meal break of less than one (1) hour and short rest periods
shall be considered compensable working time

Holiday pay. -- The employee is entitled to the payment of his regular daily
basic wage (100%) during said holidays, even if the worker did not report
for work on said days; PROVIDED THAT HE WAS PRESENT OR WAS
ON LEAVE OF ABSENCE WITH PAY ON THE WORK DAY
IMMEDIATELY PRECEDING THE HOLIDAY. If the employee was
suffered to work during the said holidays, they will be entitled to payment of
holiday premium of 200% of his basic wage (100% of basic wage PLUS
100%).

Premium pay for work within 8 hours on a:


1.Special or rest day: plus 30% of basic daily rate (BDR)
2.Rest day falling on a special day: plus 50% of BDR
3.Rest day falling on a regular holiday: plus 30% of 200% of BDR
Overtime pay for work in excess of 8 hours on:
1. Ordinary days: plus 25% of the basic hourly rate
2. Special days, rest days and holidays: plus 30% of the regular hourly
rate on said days
Nightshift differential pay: plus 10% of the basic/regular rate for work
between 10PM 6AM
Service incentive leave: 5 days with pay per year of service
.
Service charges: 85% for distribution to rank-and-file employees; 15% for
losses, breakages, or distribution to managerial employees (applicable only in
establishments collecting service charges)
1.2

GENERAL RULE: WAGE DEDUCTIONS ARE NOT ALLOWED


EXCEPTIONS:
ALLOWABLE DEDUCTIONS WITHOUT EMPLOYEES CONSENT:

a. SSS, Philhealth and PAG-IBIG contributions;


b. Withholding taxes on income
c. Where the employer is authorized by law or regulations issued by
the Secretary of Labor;
d. Agency fees, where the employee who is not a member of the
exclusive bargaining agent but a member of the appropriate
bargaining unit, may be assessed a reasonable fee for benefits
received under a CBA.
ALLOWABLE DEDUCTIONS WITH THE EMPLOYEES CONSENT:

a.
b.
c.
Page | 19

Reasonable value of meals and other facilities;


Payment of union dues, which may or may not be under an
automatic charging-off arrangement
Debt payments to the employer or third persons with employees
explicit written consent
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d.

Workers insurance acquired by the employer with employees


consent;

2015 CASE: Emer Milan, et al. vs. NLRC, et al., G.R. No. 202961, February
04, 2015. -- An employer can withhold terminal pay and benefits pending the
employees return of its properties. An employer is allowed to withhold
terminal pay and benefits pending the employees return of its properties. The
return of the propertys possession became an obligation or liability on the
part of the employees when the employer-employee relationship ceased. The
NLRC has jurisdiction to determine, preliminarily, the parties right over a
property, when it is necessary to determine an issue related to rights or claims
arising from an employer-employee relationship.

1.3 NON-DIMINUTION OF BENEFITS, EXPLAINED:

Art. 100, Labor Code.


diminution of benefits.
construed to eliminate or in
other employee benefits
promulgation of this Code.

Prohibition against elimination or


Nothing in this Book shall be
any way diminish supplements, or
being enjoyed at the time of

General Rule: No diminution of salary or benefits


Exceptions:
(a) When employee consents to the deduction
(b) To correct an error (TSPIC vs. Tspic Employees Union, G.R. No. 163419,
Feb2008; [VELASCO CASE]
Exception to the exception:
If the error is left uncorrected for a reasonable period of time, it ripens into a
company policy and employees can demand for it as a matter of right.

Requisites for voluntary employer practice such that the same cannot be
unilaterally withdrawn anymore: (a) It should have been practiced over a
long period of time; and (b) It must be shown to have been consistent and
deliberate. (Sevilla Trading Company vs. Semana, 428 SCRA 239 [2004],
citing Globe Mackay Cable and Radio Corp. vs. NLRC, 163 SCRA 71
[1988].

As to length of time required to ripen into a corporate policy:


The Supreme Court has not laid down any specific rule requiring a specific
minimum number of years. Rather, the test of long practice has been
enunciated thus: where the company agreed to continue giving a benefit
knowing fully well that said employees are not covered by the law
requiring payment of said. (Oceanic Pharmacal Employees Union (FFW)
vs. Inciong, 94 SCRA 270 [1979]).
Hence, the Supreme Court has ruled in specific cases as follows:
a. Davao Fruits Corporation vs. Associated Labor Unions (225 SCRA 562
[1993]): six (6) years.

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b. Davao Integrated Port Stevedoring Services vs. Abarquez (220 SCRA 197
[1983]): three (3) years and nine (9) months
c. Sevilla Trading Company vs. Semana, (428 SCRA 239 [2004]: two (2) years.

Elements for diminution of benefits:


(1) the grant or benefit is founded on a policy or has ripened into a practice over a
long period of time;
(2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of a doubtful
or difficult question of law; and
(4) the diminution or discontinuance is done unilaterally by the employer. Vergara
vs. Coca Cola Bottlers, G.R. No. 176985, 01 April 2013

Question: When can a policy be considered to have ripened into a regular


company practice?

Answer:

The employee must prove by substantial evidence that the

giving of the benefit is done over a long period of time, and that it has
been made consistently and deliberately. Jurisprudence has not laid down
any hard-and-fast rule as to the length of time that company practice
should have been exercised in order to constitute voluntary employer
practice. The common denominator in previously decided cases appears
to be the regularity and deliberateness of the grant of benefits over a
significant period of time. It requires an indubitable showing that the
employer agreed to continue giving the benefit knowing well that the
employees are not covered by any provision of the law or agreement
requiring payment thereof. In sum, the benefit must be characterized by
regularity, voluntary and deliberate intent of the employer to grant the
benefit over a considerable period of time.

2. THIRTEENTH MONTH PAY


2.1 How much: 1/12th of the basic salary of an employee within a calendar year.
2.2 COVERAGE
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All employers are required to pay all their rank-and-file employees a 13th month
pay not later than December 24 of every year.

Such employees are entitled to the benefit regardless of their designation or


employment status and irrespective of the method by which their wages are paid,
provided that they have worked for at least 1 month during a calendar year;

2.3 EXCLUSIONS or EXEMPTIONS FROM COVERAGE


1. Government and any of its political subdivisions, including GOCCs with original
charters. (If GOCC without original charter, then considered part of private
sector)
2. Employers already paying their employees 13th month pay or more in a calendar
year or its equivalent at the time of issuance of PD 851;

Its equivalent includes Christmas bonus, mid-year bonus, cash


bonuses and other payments amounting to not less than 1/12 of the
basic salary but shall not include cash and stock dividends, COLA and
all other allowances regularly enjoyed by the employees as well as
non-monetary benefits.

3. Employers of household helpers and persons in the personal service of another in


relation to such workers;
4. Distressed employers:
a. currently incurring substantial losses or
b. in the case of non-profit institutions and organizations, where their
income, whether from donations, contributions, grants and other
earnings from any source, has consistently declined by more than forty
(40%) percent of their normal income for the last two (2) years, subject
to the provision of Section 7 of this issuance;

5. Employers of those who are paid on commission, boundary, or task basis, and
those who are paid a fixed amount for performance of a specific work,
irrespective of the time consumed in the performance thereof.
Exception: Where the workers are paid on a piece-rate basis, in which case the
employer shall grant the required 13th month pay to such workers.

3.

Piece Rate employees who are paid a standard amount for every
piece or unit of work produced that is more or less regularly
replicated, without regard to the time spent in producing the same.

BONUS
3.1 Nature of a bonus: a prerogative, not an obligation. -- The matter of giving a bonus
over and above the workers lawful salaries and allowances is entirely dependent on
the financial capability of the employer to give it. (Traders Royal Bank vs. NLRC,
189 SCRA 274 [1990]).
EXCEPTION: When demandable under a contract.

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PALS BAR OPS PILIPINAS 2016

3.2 Are commissions included in computing 13th month pay?


a. If the commission form part of the employees basic salary, then this will
likewise be included in the computation of 13th month pay. (Philippine
Duplicators, Inc. vs. NLRC, 241 SCRA 380 [1995]).
b)

If the commissions were in the nature of profit-sharing bonuses (productivity


bonuses), then these do not form part of the basic salary and should not
included in the computation of the 13th month pay. (Boie-Takeda Chemicals,
Inc. vs. Dela Serna 228 SCRA 329 [1993]).

4. HOURS OF WORK.
4.1 Hours of worked shall include: (a) all time during which an employee is required to
be on duty or to be at the prescribed workplace, and (b) all time during which an
employee is suffered or permitted to work. (Art. 84, Labor Code; See also Rada vs.
NLRC, 205 SCRA 69 [1992].)
4.2 Rest period of short duration during working hours shall be counted as hours
worked. (Art. 84, Labor Code.) Example: coffee break of 15 minutes; meal period
of less than one hour, e.g., 30 minutes.
4.3 Exemptions. (See Art. 82, Labor Code.) . -- The following employees are not
covered by the Labor Code provisions on hours of work:
a)
b)
c)
d)
e)
f)

5.

Government employees;
Managerial employees (International Pharmaceuticals, Inc. vs. NLRC, 287
SCRA 213 [1998].);
Field Personnel;
Members of the employer who are dependent upon him for support;
Domestic helpers and persons in the personal service of another;
Workers who are paid by results, e.g., piece workers. (Red V Coconut
Products, Ltd. vs. CIR, 17 SCRA 553 [1966], citing Lara vs. del Rosario, 94
Phil. 780) (Note: Reason is that workers who are paid by the result are
compensated on the basis of the work completed, and NOT in respect of the
time spent working on it).

EMPLOYMENT OF HOUSEHELPERS VS. HOMEWORKERS


(See also KASAMBAHAY LAW)
5.1

Page | 23

Domestic helper or househelpers or domestic servant defined. -- shall refer to any


person, whether male or female, who renders services in and about the employers
home and which services are usually necessary or desirable for the maintenance
and enjoyment thereof, and ministers exclusively to the personal comfort and
enjoyment of the employers family.

Such definition covers family drivers, domestic servants, laundry women,


yayas, gardeners, houseboys and other similar househelps. (Apex Mining
Company, Inc. vs. NLRC, 196 SCRA 251 [1991]). NOTE DISCREPANCY
BETWEEN LAW AND IMPLEMENTING RULES WHICH EXCLUDED
THE DRIVERS FROM COVERAGE.

If the househelp or laundrywomen is suffered to work in staffhouses of a


PALS BAR OPS PILIPINAS 2016

company to attend to the needs of the companys guest and other persons
availing of said facilities, then they are NOT household helpers as defined by
law but employees of the company. (Apex Mining Company, Inc. vs. NLRC,
ibid.)
BENEFITS ACCORDED TO HOUSE-HELPERS (Book III, Title 3, Chapter
III, LC)
1. Not to be assigned to non-household work;
2. Reasonable compensation (minimum cash wage);
3. Lodging, food and medical attendance;
4. If under 18 years, an opportunity for elementary education (cost of which
shall be part of househelpers compensation);
5. Contract for household service shall not exceed 2 years (renewable from
year to year);
6. Just and humane treatment;
7. Right not to be required to work for more than 10 hrs. a day (if the
househelper agrees to work overtime and there is additional compensation,
the same is permissible);
8. Right to 4 days vacation each month with pay (if the helper does not ask for
the vacation, the number of vacation days cannot be accumulated, he is
only entitled only to its monetary equivalent);
9. Funeral expenses must be paid by the employer if the house-helper has no
relatives with sufficient means in the place where the head of the family
lives;
10. Termination only for just cause;
11. Indemnity for unjust termination of service;
12. Employment certification as to nature and duration of service and
efficiency and conduct of the house-helper.
5.2

Homeworker, defined.-- one who performs in or about his home any processing
of goods or materials, in whole or in part, which have been furnished directly or
indirectly, by an employer and thereafter to be returned to the latter. (Book III,
Rule XIV, Section 1 of the Omnibus Rules Implementing the Labor Code.)

HOUSEHELPERS
Minister to the personal needs and
comfort of his employer in the latters
home

HOME WORKERS
Performs in or about his own home any
processing or fabrication of goods or
materials, in whole or in part, which have
been furnished directly or indirectly, by
an employer and sold thereafter to the
latter.

RIGHTS and BENEFITS ACCORDED TO HOMEWORKERS (Department


Order No. 5, replacing Rule XIV of the Rules Implementing Book III of the Labor
Code):
1) Formation and registration of labor organization of industrial homeworkers.
2) It also makes explicit the employers duty to pay and remit SSS, Philhealth and ECC
premiums.
3) Prohibitions for Homework
explosives, fireworks and articles of like character;

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PALS BAR OPS PILIPINAS 2016

drugs and poisons;


other articles, the processing of which requires exposure to toxic substance.

6.

EMPLOYMENT OF MINORS: (Sec. 12, R.A. 7610, as amended by R.A. 9231).


Article 139. Minimum employable age. -(a)
No child below fifteen (15) years of age shall be employed, except when
he works directly under the sole responsibility of his parents or guardian, and his
employment does not in any way interfere with his schooling.
(b)
Any person between fifteen (15) and eighteen (18) years of age may be
employed for such number of hours and such periods of the day as determined by the
Secretary of Labor in appropriate regulations.
(c)
The foregoing provisions shall in no case allow the employment of a
person below eighteen (18) years of age in an undertaking which is hazardous or
deleterious in nature as determined by the Secretary of Labor.
Article 140. Prohibition against child discrimination..-- No employer shall
discriminate against any person in respect to terms and conditions of employment on
account of his age.
6.1 GENERAL RULE: Employment of any child below fifteen (15) years of age is
prohibited
Note1: Any person between 15 and 18 may be employed in any nonhazardous work.
Note2: Any person above 18 NO PROHIBITION.
EXCEPT:
1. When he works directly under the sole responsibility of his parents or guardian,
and his employment does not in any way interfere with his schooling. The
following conditions must be met:

2.

The employment does not endanger the childs life, safety, health and morals;
The employment does not impair the childs normal development;
The employer parent or legal guardian provides the child with the primary
and/or secondary education prescribed by the Department of Education

Where the childs employment or participation in public entertainment or


information through cinema, theater, radio or TV is essential provided that:
The employment does not involve ads or commercials promoting ALCOHOLIC
BEVERAGES, INTOXICATING DRINKS, TOBACCO AND ITS BYPRODUCTS OR EXHIBITING VIOLENCE;
There is a written contract approved by the DOLE; and
the following requirements are strictly complied with:
employer shall ensure protection, health, morals, and normal
development of the child;
employer shall institute measures to prevent childs exploitation /
discrimination taking into account the system and level of
remuneration, duration, and arrangement of working time;
employer shall formulate and implement a continuing program for
training and skills acquisition of the child, subject to approval and

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PALS BAR OPS PILIPINAS 2016

supervision of competent authorities. (as amended by Rep. Act No.


9231)
6.2 NOTE: In the above-exceptional cases where any such child may be employed, the
employer shall first secure, before engaging such child, a work permit from the
Department of Labor and Employment which shall ensure observance of the above
requirements. (Rep. Act. No. 9231).
ON HAZARDOUS WORK. -- Any person between fifteen (15) and eighteen (18)
years of age may be employed for NON-HAZARDOUS WORK for such number of
hours and such periods of the day as determined by the Secretary of Labor in
appropriate regulations. No such prohibition if eighteen (18) years old and above.
PROHIBITION AGAINST CHILD DISCRIMINATION. -- No employer shall
discriminate against any person in respect to terms and conditions of employment on
account of his age.
6.3 Comparisons: (Rep. Act No. 9231)
Allowed to work for not more than 20 hours a week.
Provided, the work shall not be more than 4 hours
in a day.
Shall not be allowed to work between 8pm and 6am
of the following day.
A child above 15 Shall not be allowed to work for more than 8 hours
years of age but
a day, and in no case beyond 40 hours a week.
below 18
Shall not be allowed to work between 10 pm and
6am the following day
A child below 15

7. APPRENTICESHIP AND LEARNER


7.1 Apprenticeship is the practical on-the-job training as supplemented by related
theoretical instruction (Art. 58 (a), LC).
7.2 Learners are persons hired as trainees in semi-skilled and other industrial occupations
which are non-apprenticeable and may be learned through practical training on the
job in a relatively short period of time which shall not exceed three months.

APPRENTICESHIP
NATURE

highly-technical

PERIOD

SIX (6) months

COMITMT
TO HIRE

At option of
employer

LEARNERSHIP

semi-skill; nonapprenticeable

THREE (3) months

At option of learner

Must always be paid; 75%


of minimum

WAGES
DOLE
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May be paid or

PALS BAR OPS PILIPINAS 2016

Approval

DEDUCTIO
N for
Expenses

not; if paid, 75%


of minimum
Yes, DOLE
approval is
essential

No, DOLE approval not


required; inspection only.

None.

Yes, expenses for


training deductible
from income tax

8. DISABLED WORKERS
8.1

8.2

Equal opportunity for employment.


No disabled person shall be denied access to opportunities for suitable
employment. [R.A. 7277, Sec. 5: Magna Carta for Disabled Persons]

Qualified disabled employees shall be subject to the same terms and conditions
of employment and the same compensation, privileges, benefits, fringe
benefits, incentives or allowances as a qualified able-bodied person.

A worker is not necessarily considered as a handicapped worker if he is


capable, as an able-bodied worker, to function suitably in relation to the work
to which he was hired. (i.e. one-legged transcriptionist)

Incentives for employment of disabled workers (Sec. 2, RA 7277).

1. Private entities that employ disabled persons who meet the required skills or
qualifications either as regular employee, apprentice or learner, shall be entitled
to an additional deduction from their gross income, equivalent to 25% of the
total amount paid as salaries and wages to disabled persons; Provided, that the
following are complied with:
a. Presentation of proof certified by DOLE that disabled persons are
under their employ; and
b. Disabled employee is accredited with DOLE and DOH as to his
disability, skills and qualifications.
2. Private entities that improve or modify their physical facilities to provide
reasonable accommodation for disabled persons shall also be entitled to an
additional deduction from their taxable income, equivalent to 50% of the direct
costs of the improvements or modifications. This does not apply to
improvements required under B.P. Blg. 344.

9. EMPLOYEE BENEFITS; RETIREMENT.


9.1 RETIREMENT AGE
GENERAL RULE: R.A. 7641
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PALS BAR OPS PILIPINAS 2016

a. OPTIONAL at 60 years with minimum 5 years of service


b. MANDATORY at 65 years, no service requirement
EXCEPTION:
Where the company provides for a Retirement Plan with earlier retirement age,
then the companys Retirement Plan will apply
9.2 RETIREMENT BENEFITS
GENERAL RULE: R.A. 7641
month for every year of service (expanded concept per Sec 1, RA 7641)
Expanded concept: 22.5 days (basis: Capitol Wireless vs. Confesor)
15 days + 5 days service incentive leave + 2.5 days prorated 13th month pay
EXCEPTION:
Where the company provides for a Retirement Plan with better benefits, then the
companys Retirement Plan will apply

9.3 CASES:
a) Question: Is an employee who was terminated for authorized causes
(redundancy), also entitled to avail of early retirement benefits? Otherwise
stated, may an employee be paid both retirement and separation pay benefits?
Answer: YES, as a general rule. Exception: When there is an explicit
provision in the company rules prohibiting the availment of both .
Goodyear vs. Marina Angus, G.R. No. 185499, 14 November 2014. -Employees are legally entitled to recover both separation pay and retirement
benefits in the absence of a specific prohibition in the Retirement Plan or
CBA. In such an instance where both the company rules or CBA and the
retirement plan are silent, an employee is not barred from claiming his early
retirement benefits, even if he/she had already received his retrenchment pay,
and has executed a Quitclaim to that effect. This must be so because he is
legally entitled thereto as a general rule.

See also: Difference between separation pay arising from termination of


employment and retirement.
General Milling Corporation vs. Viajar, G.R. No. 181738, 30 January 2013,
Citing Quevedo vs. Benguet Electric Cooperative, Inc., 599 SCRA 438
[2009]. -- While termination of employment and retirement from service are
common modes of ending employment, they are mutually exclusive, with
varying judicial bases and resulting benefits. Retirement from the service is
contractual (i.e. based on the bilateral agreement of the employer and
employee), while termination of employment is statutory (i.e. governed by
the Labor Code and other related laws as to its grounds, benefits and
procedure. The benefits resulting from termination vary, depending on the
cause. For retirement, Article 287 of the Labor Code gives leeway to the
parties to stipulate above a floor of benefits.

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PALS BAR OPS PILIPINAS 2016

b.
DIFFERENCE BETWEEN VOLUNTARY AND INVOLUNTARY
RETIREMENT.
Voluntary retirement cuts employment ties leaving no residual employer
liability; involuntary retirement amounts to a discharge, rendering the
employer liable for termination without cause. The employees intent is the
focal point of analysis. In determining such intent, the fairness of the process
governing the retirement decision, the payment of stipulated benefits, and the
absence of badges of intimidation or coercion are relevant parameters. (ibid.)
2015 CASE: Zenaida Paz vs. Northern Tobacco Redrying Co., Inc., et al.,
G.R. No. 199554,
18 February 2015. -- If optional retirement is
involuntary, the employee shall be deemed to be illegally dismissed.
c.

RESIGNATIONS vs. TERMINATION vs STRAINED RELATIONS vs


RETIREMENT
2013 CASE:
IN TERMINATION OF EMPLOYMENT BY THE
EMPLOYEE VIA RESIGNATION. -- The intent to relinquish must concur
with the overt act of relinquishment. (Mendoza vs. HMS Credit Corp., et. al.,
G.R. No. 187232, 17 April 2013; citing San Miguel Properties vs. Gucaban,
654 SCRA 18 [2011])
2013 CASE:
DIFFERENCE BETWEEN TERMINATION OF
EMPLOYMENT AND RETIREMENT. -- While termination of employment
and retirement from service are common modes of ending employment, they
are mutually exclusive, with varying judicial bases and resulting benefits
from the service is contractual (i.e. based on the bilateral agreement of the
employer and employee), while termination of employment is statutory (i.e.
governed by the Labor Code and other related laws as to its grounds, benefits
and procedure). The benefits resulting from termination vary, depending on
the cause. For retirement, Article 287 of the Labor Code gives leeway to the
parties to stipulate above or floor benefits. (General Milling Corporation vs.
Viajar, G.R. No. 181783, 30 January 2013; Citing Quevedo vs. Benguet
Electric Cooperative, Inc., 599 SCRA 438 [2009])
RESIGNATION It is the voluntary act of employees who are compelled
by reasons to disassociate themselves from their employment. It must be
done with intention of relinquishing the office, accompanied by the act of
abandonment. Where evidence reveals otherwise, then illegal dismissal.
STRAINED RELATIONS Where reinstatement is no longer desirable or
viable in view of strained relations between the parties, then separation pay is
an acceptable alterative to reinstatement. Computation: one month for every
year of service, computed from date of hiring until finality of the Decision
finding for illegal termination.

d. Early retirement is the option of the EMPLOYEE. Eastern Shipping Lines,


Inc. vs. Ferrer D. Antonio, G.R. No. 171587, 13 October 2009.
The age of retirement is primarily determined by the existing agreement or
employment contract. In the absence of such agreement, the retirement age
shall be fixed by law. Under the aforecited law, the mandated compulsory
retirement age is set at 65 years, while the minimum age for optional
retirement is set at 60 years. Under Paragraph B of the retirement plan, a
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PALS BAR OPS PILIPINAS 2016

shipboard employee, upon his written request, may retire from service if he
has reached the eligibility age of 60 years. In this case, the option to retire
lies with the employee. Records show that respondent was only 41 years old
when he applied for optional retirement, which was 19 years short of the
required eligibility age. Thus, he cannot claim optional retirement benefits as
a matter of right.
e.

IMPORTANT CASE: MAY THE EMPLOYER DEDUCT COST OF


TRAINING FROM THE RETIREMENT BENEFITS OF THE EMPLOYEE?
Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, 16 July 2012.
ANSWER: YES! By carrying over the same stipulation in the present CBA,
both PAL and ALPAP recognized that the companys effort in sending pilots
for training abroad is an investment which necessarily expects a reasonable
return in the form of service for a period of at least three (3) years. This
stipulation had been repeatedly adopted by the parties in the succeeding
renewals of their CBA, thus validating the impression that it is a reasonable
and acceptable term to both PAL and ALPAP. Consequently, the petitioner
cannot conveniently disregard this stipulation by simply raising the absence of
a contract expressly requiring the pilot to remain within PALs employ within
a period of 3 years after he has been sent on training. The supposed absence of
contract being raised by the petitioner cannot stand as the CBA clearly
covered the petitioners obligation to render service to PAL within 3 years to
enable it to recoup the costs of its investment. Further, to allow the petitioner
to leave the company before it has fulfilled the reasonable expectation of
service on his part will amount to unjust enrichment.

F. THE RIGHT TO UNIONIZE AND THE


APPROPRIATE BARGAINING UNIT
1. Existence of ER-EE relationship is essential for the determination of whether or not one
may exercise right of self-organization for purposes of collective bargaining
2. Who may unionize for purposes of collective bargaining negotiations?
2.1

General Rule: Any employee may be eligible to join and be a member of a labor
union, beginning on his first day of service, whether employed for a definite period
or not. (Article 277 [c], Labor Code; See also: UST Faculty Union vs. Bitonio)

2.2

Exceptions: Who may NOT unionize

Page | 30

Managerial employees
Confidential employees
Government Employees, including GOCCs WITH original charter

Employees who are members of a cooperative (because akin to


owners themselves)
However: SSS VS. ASIAPRO COOPERATIVE: While members
of a cooperative cannot form unions and bargain with themselves,
they are to be considered as employees with respect to SSS
coverage because the Cooperative acts as an independent
contractor vis--vis principal clients they secure.
PALS BAR OPS PILIPINAS 2016

3.

Employees of International Organizations or Specialized Agencies


which are registered with the United Nations and which enjoys
diplomatic immunity. (International Catholic Migration Commission vs.
Calleja; and Kapisanan ng Manggagawa at TAC sa IRRI, etc. vs.
Secretary of Labor.)
Aliens with valid working permits (Department Order No. 9 [1997], Rule
II, Sec. 2)

SALIENT FEATURES OF REPUBLIC ACT NO. 9481: AN ACT


STRENGTHENING THE WORKERS' CONSTITUTIONAL RIGHT TO SELFORGANIZATION, AMENDING FOR THESE PURPOSE PRES. DECREE 442,
OTHERWISE KNOWN AS THE LABOR CODE
3.1 Modified previous Supreme Court rulings prohibiting supervisors unions from
joining with the same federation as the rank and file. Law now explicity
ALLOWS for the commingling of the two.
Section 8 of new law provides: Article 245 of the Labor Code is hereby amended
to read as follows -ART. 245. Ineligibility of Managerial Employees to Join any Labor
Organization; Right of Supervisory Employees. - Managerial
employees are not eligible to join, assist or form any labor
organization. Supervisory employees shall not be eligible for
membership in the collective bargaining unit of the rank-and-file
employees but may join, assist or form separate collective bargaining
units and/or legitimate labor organizations of their own. The rank
and file union and the supervisors union operating within the
same establishment may join the same federation or national
union.

3.2 REQUIREMENTS FOR REGISTRATION


3.2.1 Independent Union or Federations/National Unions will acquire legal
personality upon issuance of certificate of registration
ART. 234. Requirements of Registration. - A federation, national union or
industry or trade union center or an independent union shall acquire legal
personality and shall be entitled to the rights and privileges granted by law
to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the
list of the workers who participated in such meetings;
(c) In case the applicant is an independent union, the names of all its
members comprising at least twenty percent (20%) of all the employees
in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years,
copies of its annual financial reports; and
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PALS BAR OPS PILIPINAS 2016

(e) Four copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.
3.2.2 Local or a of Chapter Federations/National Unions will acquire legal
personality only for the purpose of filing a petition for certificate of
registration upon issuance of the CHARTER CERTIFICATE by the
registered Federation/National Union. The Chapter/Local shall be entitled
to all other rights appurtenant thereto ONLY upon submission of the
following other documents.
ART. 234-A. Chartering and Creation of a Local Chapter. - A duly
registered federation or national union may directly create a local chapter
by issuing a charter certificate indicating the establishment of the local
chapter. The chapter shall acquire legal personality only for purposes of
filing a petition for certification election from the date it was issued a
charter certificate. The chapter shall be entitled to all other rights and
privileges of a legitimate labor organization only upon the submission of
the following documents in addition to its charter certificate:
(a) The names of the chapters officers, their addresses, and the principal
office of the chapter; and
(b) The chapters constitution and by-laws: Provided, That where the
chapters constitution and by-laws are the same as that of the
federation or the national union, this fact shall be indicated
accordingly.
The additional supporting requirements shall be certified under oath by the
secretary or treasurer of the chapter and attested by its president.
ADAS NOTES: For purposes of filing a petition for certification
election, the charter certificate is already sufficient to vest the local chapter
with legal personality. In short, once a charter certificate is issued by the
Federation, the LLO may already file a petition for CE. However, the local
chapter/union will not be considered to have legal personality for purposes
of other rights and privileges (e.g., to bargain, to enter into contracts, etc.)
UNLESS the other documents (a) and (b) as adverted
above are
SUBMITTED to the DOLE Regional Office or Bureau of Labor Relations,
and a certificate of registration having been issued thereafter.
3.3

Failure to comply with reportorial requirements shall no longer be a ground for


cancellation of union registration, but shall subject errant officers/members to
penalty.

3.4

There are ONLY THREE GROUNDS allowed, whereas the old law provides for
at least seventeen (17) different grounds for cancellation.
ART. 239. Grounds for cancellation of union registration. - The following
may constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list of members who took part in
the ratification;

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PALS BAR OPS PILIPINAS 2016

(b) Misrepresentation, false statements or fraud in connection with the


election of officers, minutes of the election of officers, and the list of
voters;
(c) Voluntary dissolution by the members. (new mode)
3.6

The inclusion of union members of employees outside the bargaining unit no


longer a ground for cancellation of union registration. Note that this is contrary to
the implication in previous supreme court decisions in Toyota Motor and
Tagaytay Highlands Cases.
Republic Act No. 9481, Sec. 9. -- A new provision, Article 245-A is inserted into
the Labor Code to read as follows:
ART. 245-A. Effect of Inclusion as Members of Employees Outside
the Bargaining Unit. - The inclusion as union members of employees
outside the bargaining unit shall not be a ground for the cancellation of
the registration of the union. Said employees are automatically
deemed removed from the list of membership of said union.

3.7

REQUIREMENTS FOR VOLUNTARY CANCELLATION OF UNION


REGISTRATION 2/3 VOTE OF GENERAL MEMBERSHIP
ART. 239-A. Voluntary Cancellation of Registration. - The registration
of a legitimate labor organization may be cancelled by the organization
itself. Provided, That at LEAST TWO-THIRDS of its general
membership votes, in a meeting duly called for that purpose to dissolve
the organization: Provided, further, That an application to cancel
registration is thereafter submitted by the board of the organization,
attested to by the president thereof.

3.8 EXPLICIT PROVISION THAT EMPLOYER IS SIMPLY A BY-STANDER AND


CAN NO LONGER OPPOSE OR PARTICIPATE IN THE CERTIFICATION
PROCEEDINGS.
ART. 258-A. Employer as Bystander. - In all cases, whether the petition
for certification election is filed by an employer or a legitimate labor
organization, the employer shall not be considered a party thereto with a
concomitant right to oppose a petition for certification election. The
employers participation in such proceedings shall be limited to: (1)
being notified or informed of petitions of such nature; and (2)
submitting the list of employees during the pre-election conference
should the Med-Arbiter act favorably on the petition

4. 2014-2015 CASES:
4.1

Page | 33

IMPORTANT: Issue: Must there be an attendance of at least 20% of the total


membership in the appropriate bargaining unit during the organizational meeting;
otherwise, ground for cancellation on account of fraud or misrepresentation?
Takata (Philippines) vs. Bureau of Labor Relations and Samahang Lakas
Manggagawa Ng Takata (Salamat), G.R. No. 196276, 04 June 2014. --

PALS BAR OPS PILIPINAS 2016

Answer: NO! For fraud and misrepresentation to be grounds for cancellation


of union registration under Art. 239 of the Labor Code, the nature of the fraud
and misrepresentation must be grave and compelling enough to vitiate the
consent of a majority of union members. There is nothing in the Labor Code that
requires presence of at least 20% of the total membership in the appropriate
bargaining unit during the organizational meeting. What is required for registration
of a union as a legitimate labor organization is that there must be at members
totaling at least twenty percent of all of the employees in the appropriate bargaining
unit at the time of the application.
4.2 Question: Is a registered union required to submit financial statements and/or keep
membership representing 20% of the appropriate bargaining unit throughout its
lifetime, or risk cancellation of its registration?
Answer: NO. The constitutionally guaranteed freedom of association and right of
workers to self-organization outweighs respondents noncompliance with the
statutory requirements to maintain its status as a legitimate labor organization.
There is nothing essentially mysterious or irregular about the fact that only 127
members ratified the unions constitution and by-laws when 128 signed the
attendance sheet. It cannot be assumed that all those who attended approved of the
constitution and by-laws. Any member had the right to hold out and refrain from
ratifying those documents or to simply ignore the process. AT ANY RATE, THE
LABOR CODE AND ITS IMPLEMENTING RULES DO NOT REQUIRE THAT
THE NUMBER OF MEMBERS APPEARING ON THE DOCUMENTS IN
QUESTION SHOULD COMPLETELY DOVETAIL. For as long as the documents
and signatures are shown to be genuine and regular and the constitution and by-laws
democratically ratified, the union is deemed to have complied with registration
requirements. (The Heritage Hotel Manila, acting through its owner, Grand Plaza
Hotel, Corp. vs. National Union of Workers in the Hotel, Restaurant and Allied
Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAINHHMSC), G.R. No. 178296, 12 January 2011.)
See also similar case of Mariwasa Siam Ceramics vs. Secretary of Labor et al., GR
No. 183317, 21 Dec 2009., where a substantial number of members allegedly
recanted their membership in the union and this was made a ground for cancellation
of union registration. We cannot give full credence to these affidavits which were
executed under suspicious circumstances, and which contain allegations
unsupported by evidence. At best, these affidavits are self-serving. They possess no
probative value. Nevertheless, even assuming the veracity of said affidavits, the
legitimacy of the respondent Union as a labor organization must be affirmed.
While it is true that withdrawal of support may be considered as resignation from
the union, THE FACT REMAINS THAT AT THE TIME OF THE UNIONS
APPLICATION FOR REGISTRATION, THE AFFIANTS WERE MEMBERS OF
THE UNION AND COMPRISED MORE THAN THE REQUIRED 20%
MEMBERSHIP FOR PURPOSES OF REGISTRATION AS A UNION. ART. 234
MERELY REQUIRES A MINIMUM OF 20% MEMBERSHIP DURING
APPLICATION FOR UNION REGISTRATION. IT DOES NOT MANDATE
THAT A UNION MUST MAINTAIN THE 20% MINIMUM MEMBERSHIP
REQUIREMENT ALL THROUGHOUT ITS EXISTENCE.

G. APPROPRIATE BARGAINING UNIT


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PALS BAR OPS PILIPINAS 2016

1. Bargaining unit, defined. - A "bargaining unit" has been defined as a group of employees
of a given employer, comprised of all or less than all of the entire body of employees,
which the collective interest of all the employees, consistent with equity to the
employer, indicate to be the best suited to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions of the law. (Golden Farms vs. Calleja,
supra.)
2. What is a proper bargaining unit?
A proper bargaining unit may be said to be a group of employees of a given
employer, comprised of all or less than all of the entire body of employees, which
the collective interest of all of the employees indicate to be best suited to serve
the reciprocal rights and duties of the parties under the Collective bargaining
provisions of the law. (Golden Farms vs. Calleja, supra.) It is that group of jobs
that serves as the election constituency in the enterprise.
3. General Rule: community or mutuality of interests.
The most efficacious bargaining unit is one which is comprised of workers
enjoying community of interests. This is so because the basic test of a
bargaining units acceptability is whether it will best assure to all employees
concerned of the exercise of their collective bargaining rights.
Factors to be considered: (a) similarity in scale and manner of determining earnings;
(b) similarity in employment benefits, hours of work, other terms and conditions of
employment; (c) similarity in kind of work performed; (d) similarity in qualifications,
skills, training of employees; (e) frequency of contact or interchange between
employees; (f) geographic proximity; (g) continuity or integration of production
processes; (h) common supervision and determination of collective bargaining; etc.

H. CERTIFICATION ELECTION (FRAMEWORK)


1. Definition and nature of certification election
1.1 Definition: It is the process of determining the sole and exclusive bargaining agent
of the employees in an appropriate bargaining unit for purposes of collective
bargaining. (Sec. [n], Rule I, Book V, Implementing Rules.)
1.2

Nature of certification election: A certification election is not a litigation but


merely an investigation of a non-adversarial fact-finding character in which the
Bureau of Labor Relations plays the part of a disinterested investigator seeking
merely to ascertain the desires of the employees as to the matter of their
representation. (Airline Pilots Assn. Of the Philippines vs. CIR, 76 SCRA 274.)

2. Role of Employer during certification elections


General Rule: The employer is not a party in a certification election, which activity is the
sole concern of the workers. It is improper for the employer to be present at all during the
proceedings, even as an observer, let alone sit and participate therein thru a
representative.
Thus, Republic Act No. 9481 explicitly mandates that the employer is to be a
BYSTANDER in the certification election proceedings. Hence:

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PALS BAR OPS PILIPINAS 2016

Art. 258-A, LC. -- In all cases, whether the petition for certification
election is filed by an employer or a legitimate labor organization, the
employer shall not be considered a party thereto with a concomitant right
to oppose a petition for certification election. The employers participation
in such proceedings shall be limited to: (1) being notified or informed of
petitions of such nature; and (2) submitting the list of employees during
the pre-election conference should the Med-Arbiter act favorably on the
petition
Exception: Where the employer has to file a petition for certification election pursuant to
Art. 258 of the Labor Code because it was requested to bargain collectively. Even then,
it becomes a neutral bystander.

3. CERTIFICATION ELECTION AND PROCEDURE


Art. 256-257, LC; BR R5 S1-9, IRR; Dept. Order No. 9 s1-9, Dept. Order No. 40-03
Rule VIII s1-25.
3.1

Who may and where to file petition for CE


B5 R5 S1-2, IRR; Dept Order No. 40-03, R8, secs 1-25

Who may file: General rule - any legitimate labor organization


Exception Employer, if requested to bargain collectively
and the majority status of the labor organization
is questionable

Where to file: Mediation-Arbitration Branch, through the Regional Office


which has jurisdiction over the principal office of the employer. Officer who
will hear the petition is called the Med-Arbiter.

When to file petition for CE


3.3.1 If unorganized establishment (B5 R5 S3-6, IRR)

Petition for certification election may be filed at any time by a


legitimate labor organization

Note that the 25% signature requirement is not applicable.


Why? Literal interpration of law in favor of labor. The Labor
Code merely provides that it may be filed by any legitimate labor
organization.

3.3.2 If organized establishment (with existing CBA)

No duly registered CBA Petition for certification election may be


filed at any time

With duly registered CBA - only during freedom period (60 days
prior to the expiration of the 5-yr representation term of the
CBA)

3.2 Denial of the petition; Grounds. The Med-Arbiter may dismiss the petition
on any of the following grounds:
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PALS BAR OPS PILIPINAS 2016

o the PETITIONER UNION IS NOT LISTED in the Departments registry of


legitimate labor unions or that ITS LEGAL PERSONALITY HAS BEEN
REVOKED OR CANCELLED WITH FINALITY in accordance with Rule
XIV of these Rules;
o CONTRACT BAR RULE: the petition was filed before or after the freedom
period of a duly registered collective bargaining agreement; provided that
the sixty-day period based on the original collective bargaining
agreement shall not be affected by any amendment, extension or renewal
of the collective bargaining agreement
o ONE YEAR BAR RULE: the petition was filed within one (1) year from
entry of voluntary recognition or a valid certification, consent or run-off
election and no appeal on the results of the certification, consent or runoff election is pending;
o DEADLOCK BAR RULE: a duly certified union has commenced and
sustained negotiations with the employer in accordance with Article 250
of the Labor Code within the one-year period referred to in Section 14.c
of this Rule, or there exists a bargaining deadlock which had been
submitted to conciliation or arbitration or had become the subject of a
valid notice of strike or lockout to which an incumbent or certified
bargaining agent is a party

4. REQUIREMENTS FOR VALID CERTIFICATION ELECTION


(Dept. Order No.9, Section 12, Rule XIII; Dept Order No. 40-03 Rule 9)
4.1 To have a valid election, a majority of all eligible voters in the appropriate
bargaining unit must have CAST their votes (FIRST MAJORITY RULE -JUST COUNT HOW MANY VOTED).
4.2 The Union obtaining a majority of ALL VALID VOTES cast shall be certified
as sole and exclusive bargaining representative of the workers in the
appropriate bargaining unit. (SECOND MAJORITY RULE JUST COUNT
IF THERE IS A UNION THAT GARNERED A MAJORITY OF THE VALID
VOTES CAST)
4.3 RUN-OFF ELECTION, REQUISITES (Dept. Order No. 9, Rule XIII):
a)
b)
c)
d)
e)

There is a valid election (FIRST MAJORITY RULE COMPLIED).


Between three or more choices
No choice receiving a majority of the valid votes cast (SECOND
MAJORITY RULE NOT COMPLIED);
The total number of votes for all contending unions is at least 50% of the
number of votes cast
Between the two labor unions receiving the two highest number of votes.

I. INTER-UNION AND INTRA-UNION DISPUTES


(DOLE Dept. Order No. 40-03, series of 2003)

1. WHAT ARE INTER OR INTRA-UNION DISPUTES: (sec 1&2)

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(a) cancellation of registration of a labor organization filed by its


members or by another labor organization;
(b) conduct of election of union and workers association
officers/nullification of election of union and workers association
officers;
(c) audit/accounts examination of union or workers association funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union
membership;
(g) validity/invalidity of impeachment/expulsion of union and workers
association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or
workers association constitution and by-laws;
(k) disagreements over chartering or registration of
labor
organizations and collective bargaining agreements;
(l) violations of the rights and conditions of union or workers
association membership;
(m) violations of the rights of legitimate labor organizations, except
interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to selforganization, union membership and collective bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers
association.
Other related labor relations disputes shall include any conflict between a labor
union and the employer or any individual, entity or group that is not a labor
organization or workers association. This includes: (1) cancellation of
registration of unions and workers associations; and (2) a petition for
interpleader.
2. WHAT ARE THE EFFECTS OF PENDENCY OF INTER/INTRA-UNION
DISPUTE? (Sec 3)
PARTIES TO REMAIN STATUS QUO ANTE. -- The rights, relationships and
obligations of the parties litigants against each other and other parties-ininterest prior to the institution of the petition shall continue to remain during
the pendency of the petition and until the date of finality of the decision
rendered therein. Thereafter, the rights, relationships and obligations of the
parties litigants against each other and other parties-in-interest shall be
governed by the decision so ordered.
INTER/INTRA-UNION DISPUTE SHALL NOT BE CONSIDERED
PREJUDICIAL QUESTION. -- The filing or pendency of any inter/intra-union
dispute and other related labor relations dispute is not a prejudicial question
to any petition for certification election and shall not be a ground for the
dismissal of a petition for certification election or suspension of proceedings
for certification election.
3. WHO MAY FILE INTER OR INTRA-UNION DISPUTE (Sec 4):

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Any legitimate labor organization or member(s) thereof specially concerned


may file a complaint or petition involving disputes or issues enumerated in (a)
to (n) of Section 1.
Any party-in-interest may file a complaint or petition involving disputes or
issues regarding cancellation of registration of unions and workers
associations; and/or a petition for interpleader
Where the issue involves the entire membership of the labor organization, the
complaint or petition shall be supported by at least thirty percent (30%) of its
members.
4. WHERE TO FILE INTER/INTRA-UNION DISPUTES.
4.1 With Regional Office that issued the certificate of registration or certificate of
creation of chartered local, for the following complaints - Complaints or petitions involving labor unions with independent
registrations, chartered locals, workers associations, its officers or
members
Petitions for cancellation of registration of labor unions with independent
registration, chartered locals and workers association shall be resolved
by the Regional Director. He/She may appoint a Hearing Officer from
the Labor Relations Division.
petitions for deregistration of collective bargaining agreements
Other inter/intra-union disputes and related labor relations disputes shall
be heard and resolved by the Med-Arbiter in the Regional Office.

4.2 With Bureau of Labor Relations, for the following complaints - Complaints or petitioners involving federations, national or industry unions,
trade union centers and their chartered locals, affiliates or member
organizations, its officers or member organizations. (Note, if filed with the
Regional Office, the complaint/petition shall stil be heard and resolved by
the Bureau).
When two or more petitions involving the same parties and the same causes of
action are filed, the same shall be automatically consolidated.

J. COLLECTIVE BARGAINING: NEGOTATIONS


AND AGREEMENT (PLEASE SEE CHART/DIAGRAM C)

1. COLLECTIVE BARGAINING DEFINED:


Collective bargaining which is defined as negotiations towards a collective agreement,
is one of the democratic frameworks under the New Labor Code, designed to stabilize the
relation between labor and management, and to create a climate of sound and stable
industrial peace. It is a mutual responsibility of the employer and the union, and is
characterized as a legal obligation.
Labor Code, Article 252. Meaning of duty to bargain
collectively. -- The duty to bargain collectively means the
performance of a mutual obligation to meet and
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PALS BAR OPS PILIPINAS 2016

convene promptly and expeditiously in good faith for


the purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions of
employment including proposals for adjusting any
grievance or question arising under such agreement and
executing a contract incorporating such agreements if
requested by either party, but such duty does not compel
any party to agree to a proposal or to make any
concession. (Underscoring supplied.)

Labor Code. Art. 254. Duty to bargain collectively


when there exists a collective bargaining agreement.
When there is a collective bargaining agreement, the
duty to bargain collectively shall also mean that neither
party shall terminate or modify the agreement at least
sixty (60) days prior to its expiration date. It shall be the
duty of both parties to keep the status quo and to continue
in full force and effect the terms and conditions of the
existing agreement during the 60-day period and/or until a
new agreement is reached by the parties.

2. GENERAL PRINCIPLES IN BARGAINING:


2.1 Standard of conduct: GOOD FAITH IN BARGAINING.
ADAS NOTES: This implies earnest efforts exerted by the parties toward a
reasonable compromise or agreement acceptable to both parties. Contrast
this with the following concepts:
a) surface bargaining, which has been defined as "going through
motions of negotiating" without any legal intent to reach
agreement. (Standard Chartered Bank Employees Union (NUBE)
Secretary Nieves Confesor and Standard Chartered Bank, GR
11497, 16 June 2004).

the
an
vs.
No.

b) individual bargaining. considered ULP for an employer operating under a


collective bargaining agreement to negotiate or to attempt to negotiate with his
employees individually in connection with changes in the agreement. The basis
of the prohibition regarding individual bargaining with the strikers is that
although the union is on strike, the employer is still under obligation to bargain
with the union as the employees' bargaining representative. (Insular Life
Assurance Co., Ltd., Employees-NATO vs. Insular Life Ass. Co. Ltd., 76 SCRA
50 citing Melo Photo Supply Corporation vs. National Labor Relations Board,
321 U.S. 332).
2.2 DUTY TO BARGAIN collectively does NOT compel any party to agree to any
proposal nor to make any concession by virtue thereof (Article 253, Labor
Code), nor are the parties obliged to reach an agreement. (Union of Filipro
Employees vs. Nestle Philippines, G.R. Nos. 158930-31, 03 March 2008).
When there is a collective bargaining agreement, the duty to bargain collectively
shall also mean that neither party shall terminate or modify such agreement during
its lifetime, EXCEPT during the freedom period of at least sixty (60) days prior to
the expiration day (freedom period).
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Note AUTOMATIC RENEWAL CLAUSE as regards expired CBA. Under this


clause, the terms and conditions of the existing CBA shall continue to be in full
force and effect during the sixty-day freedom period (Union of Filipro Ees. vs.
NLRC, 192 SCRA 414), or until a new CBA is reached. Thus, despite the lapse of
the effectivity of the old CBA, the law considers the same as continuing in full
force and effect until a new CBA is negotiated and entered into. (Lopez Sugar
Corporation vs. FFW, G.R. Nos. 75700-01, 30 Aug. 1990).
Mandatory provisions which must be included in the negotiations; otherwise, the
CBA will not be registered: (a) no strike-no lockout clause; (b) grievance
machinery. Note further that minimum standards must likewise be complied
with; otherwise, the DOLE will not allow its registration.

3. UNION SECURITY CLAUSES. -- applied to and comprehends "closed shop,"


"union shop," "maintenance of membership," or any other form of agreement
which imposes upon employees the obligation to acquire or retain union
membership as a condition affecting employment. (PICOP Resources, Inc.
(PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010).
3.1 General rule on coverage of union security clause:
All employees in the bargaining unit covered by a Union Shop Clause in their
CBA with management are subject to its terms.
Exception:
However, under law and jurisprudence, the following kinds of
employees are exempted from its coverage, namely:
a) employees who at the time the union shop agreement takes effect are bona
fide members of a religious organization which prohibits its members from
joining labor unions on religious grounds (Elizalde Rope Workers case);
b) employees already in the service and already members of a union other than
the majority at the time the union shop agreement took effect (Art. 248 [e]);
c) confidential employees who are excluded from the rank and file bargaining
unit; and
d) employees excluded from the union shop by express terms of the agreement.
(Bank of the Philippine Islands vs. BPI Employees Union - Davao Chapter Federation of Unions in BPI Unibank, G.R. No. 164301, 10 August 2010; En
Banc.).

3.2 Kinds of union security clauses:


o Closed Shop. A form of union security whereby only union members
can be hired and the workers must remain union members as a
condition of continued employment. (Juat vs. Court of Industrial
Relations, 122 Phil. 794, cited in Philippine Law Dictionary by Moreno,
2nd Edition.) It is one where no person may be employed in any or
certain agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a member in
good standing of a union entirely comprised of or of which the
employees in interest are a part. (PICOP Resources, Inc. (PRI) vs.
Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010).

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PALS BAR OPS PILIPINAS 2016

o Union Shop. There is union shop where an employer may hire new
employees, but once they become regular employees, they are required to join
the union within a certain period as a condition for their continued
employment. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al.,
G.R. No. 160828, 09 August 2010).
o Modified Union Shop Agreement. -- A union shop agreement with a
provision exempting certain employee groups from its operation, such
as old employees already with the company at a designated date, key
personnel, persons with religious scruples in joining labor unions.
(Ibid.)
o Maintenance of membership shop. -- There is maintenance of membership
shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted
or transferred out of the bargaining unit, or the agreement is terminated.
(PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No.
160828, 09 August 2010; see also: Bank of Philippine Islands vs. BPI
Employees Union Davao Chapter Federation of Unions in BPI Unibank,
G.R, No. 164301, 10 August 2010, En Banc.)
o Open shop -- An arrangement on recruitment whereby an employer may hire
any employee, union member or not, but the new employee must join the
union within a specified time and remain a member in good standing.
(LABSTAT Updates of the Department of Labor and Employment, Vol. 1 No.
12, August 1997).
o Agency shop -- An arrangement whereby non-members of the contracting
union must pay the union a sum equal to union dues known as agency fees for
the benefits they received as a consequence of the bargaining negotiations
effected through the efforts of the union. (LABSTAT Updates of the
Department of Labor and Employment, Vol. 1 No. 12, August 1997).

4. ULP IN COLLECTIVE BARGAINING:


a.

Bargaining in bad faith.


Individual bargaining see previous notes
Surface bargaining see previous notes.

b.

Refusal to bargain. -- The employer, by its refusal to bargain, is guilty


of violating the duty to bargain collectively in good faith. Hence, the
Unions draft CBA proposal may unilaterally be imposed upon the
employer as the collective bargaining agreement to govern their
relationship. (Divine World vs. Secretary of Labor, 213 SCRA 759
[1992].)

c.

Gross violation of CBA provisions.

5. 2010-2014 CASES:
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PALS BAR OPS PILIPINAS 2016

5.1

Philippine Electric Corporation (Philec) vs. CA, G.R. No. 168612, 10 December
2014. -- nature of collective bargaining agreements; training allowance
increases. The refusal by management of the Unions demand for payment of
training allowance is not malicious or flagrant refusal as to be considered as ULP.
Management had questions on the applicability of the training allowance to Lipo
and Ignacio, who had already been promoted as supervisory employees.
Considering that at the time that they were selected for training, Lipio and Ignacio
were admittedly rank-and-file employees and as such, entitled to the payment of the
increased training allowances under the new CBA. Thus, it is clear that training is a
condition precedent for promotion. Selection for training does not mean automatic
transfer OUT of the bargaining unit of the rank-and-file.

5.2 IMPT 2014 ULP CASE NOT ASKED IN 2015 BAR: WHERE THE EMPLOYER
HAS ORCHESTRATED ACTIVITIES TO SUBVERT CERTIFICATION
ELECTIONS. (T & H Shopfitters Corporation/ Gin Queen Corporation et. al. vs. T
& H Shopfitters Corporation/Gin Queen Workers Union, et. al., G.R. No. 191714,
26 February 2014, J. Mendoza).
The various questioned acts of petitioners show interference in the right to selforganization by the employees, namely: 1) sponsoring a field trip to Zambales for
its employees, to the exclusion of union members, before the scheduled certification
election; 2) the active campaign by the sales officer of petitioners against the union
prevailing as a bargaining agent during the field trip; 3) escorting its employees
after the field trip to the polling center; 4) the continuous hiring of subcontractors
performing respondents functions; 5) assigning union members to the Cabangan
site to work as grass cutters; and 6) the enforcement of work on a rotational basis
for union members.
Indubitably, the various acts of petitioners, taken together, reasonably support an
inference that, indeed, such were all orchestrated to restrict respondents free
exercise of their right to self-organization. The Court is of the considered view that
petitioners undisputed actions prior and immediately before the scheduled
certification election, while seemingly innocuous, unduly meddled in the affairs of
its employees in selecting their exclusive bargaining representative.
5.3 IMPORTANT: IS SUSPENSION OF CBA NEGOTIATION AN UNFAIR LABOR
PRACTICE? (Manila Mining Corp. Employees Association, et al. vs.. Manila
Mining corp, et al., G.R. Nos. 178222-23, 29 September 2010)
Answer: NO. Article 2521 of the Labor Code defines the phrase duty to bargain
collectively. For a charge of unfair labor practice to prosper, it must be shown that
the employer was motivated by ill-will, bad faith or fraud, or was oppressive to
labor. The employer must have acted in a manner contrary to morals, good
customs, or public policy causing social humiliation, wounded feelings or grave
anxiety. In this case, it cannot be said that MMC deliberately avoided the
negotiation. It merely sought a suspension and even expressed its willingness to
negotiate once the mining operations resume. There was valid reliance on the
suspension of mining operations for the suspension of the CBA negotiation. The
Union failed to prove bad faith.
1

Renumbered as Article 262, Labor Code.

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PALS BAR OPS PILIPINAS 2016

5.4

QUESTION: MAY THE PARTIES AGREE TO EXTEND THE EXCLUSIVE


BARGAINING STATUS BEYOND FIVE YEAR PERIOD? -- FVC Labor UnionPhilippine Transport and General Workers Organization (FVCLU-PTGWO) Vs.
Sama-samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independebt and
General Labor Organization (SANAMA-FVC-SIGLO), G.R. No. 176249,
November 27, 2009.
ANSWER: NO. While the parties may agree to extend the CBAs original fiveyear term together with all other CBA provisions, any such amendment or term in
excess of five years will not carry with it a change in the unions exclusive
collective bargaining status.
By express provision of the above-quoted Article 253-A, the exclusive bargaining
status cannot go beyond five years and the representation status is a legal matter not
for the workplace parties (management and union) to agree upon. In other words,
despite an agreement for a CBA with a life of more than five years, either as an
original provision or by amendment, the bargaining unions exclusive bargaining
status is effective only for five years and can be challenged within sixty (60) days
prior to the expiration of the CBAs first five years.
The negotiated extension of the CBA term has no legal effect on the FVCLUPTGWOs exclusive bargaining representation status which remained effective only
for five years ending on the original expiry date of January 30, 2003. Thus, sixty
days prior to this date, or starting December 2, 2002, SANAMA-SIGLO could
properly file a petition for certification election. Its petition, filed on January 21,
2003 or nine (9) days before the expiration of the CBA and of FVCLU-PTGWOs
exclusive bargaining status, was seasonably filed.

K. STRIKES, PICKETING AND LOCK-OUTS


1.

Who may declare a strike or lock-out? (B5,R13, S2, IRR)


General Rule: Any certified or duly recognized bargaining representative may
declare a strike in cases of bargaining deadlocks or ULP.
Exception: In the absence of a certfied or duly recognized bargaining representative, any
legitimate labor organization may declare a strike, BUT ONLY ON THE GROUND OF
ULP.

2.

Requisites of a valid strike: (a) Must have a lawful purpose; (b) conducted through
lawful means; and (c) must be in compliance with the procedural requirements under
the Labor Code
2.1

Lawful purpose
(a) Economic strike - is intended to force wage and other concessions
from the employer which is not required by law to grant. Usually, the
consequence of a deadlock in collective bargaining negotiations; and

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PALS BAR OPS PILIPINAS 2016

(b) ULP strike - is called against the unfair labor practices of the
employer, usually for the purpose of making him desist from further
committing such practices.

Note 1 - Examples of ULP under Articles 248-249, LC: (1)


interference, restraint or coercion of the employees in their exercise
of right to self-organization; (2) yellow-dog contracts, e.g.,
stipulation requiring employee not to join unions, or for employee to
withdraw from union as condition for continued employment; (3)
refusal to collectively bargain; (4) economic inducement and/or
discrimination in regard to wages, hours of work, in order to
encourage/discourage union membership; (5) contracting out of
services/functions being performed by union members, where such
will interfere in the exercise of right to self-org., among others.

Note 2 - All other forms of strikes, viz.: lightning strike, sit-down


strike; sympathetic strike, slowdown strike; wildcat strike;
intermittent strike, are all prohibited for lack of valid purpose or
failure to comply with procedural requirements (discussion below).

Note 3 - What are non-strikeable issues? Article 263 (b); Dept.


Order No. 9, Rule 12, Sec. 2
(a) Violations of CBA which are not gross in character shall be
resolved via the Grievance Machinery;
(b) Inter-union or intra-union disputes;
(c) Labor standards cases such as wage orders (Guidelines
governing Labor Relations [19 Oct. 1987] issued by Sec. Drilon;
See: Appendix Y of Fozs Labor Code; See also: Article 261,
LC)
(d) Those issues which had already been brought to voluntary or
compulsory arbitration

Note 4 - Is a violation of the CBA a case for ULP? It depends.


Check Article 261, LC; See also: Dept. Order No. 9, Rule 22, Sec.
1.
The voluntary arbitrator or panel xxx shall have original
and exclusive jurisdiction to hear and decide all
unresolved grievances arising from the interpretation or
implementation of the CBA, and those arising from the
interpretation of company personnel policies xxx.
Accordingly, VIOLATIONS OF THE CBA, EXCEPT
THOSE WHICH ARE GROSS IN CHARACTER,
SHALL NO LONGER BE TREATED AS ULP AND
SHALL BE RESOLVED AS GRIEVANCES UNDER
THE CBA. For purposes of this Article, gross violations
of the CBA shall mean flagrant and/or malicious refusal
to comply with the economic provisions of the CBA.

2.2

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Lawful means -- Even if the strike is valid because its objective or purpose
is lawful, the strike may still be declared invalid where the means
employed are illegal.
PALS BAR OPS PILIPINAS 2016

2.2.1 Article 264 (b): No person shall obstruct, impede or interfere with by
force, violence, coercion, threats or intimidation any peaceful
picketing by employees during any labor controversy, or in the
exercise of the right of self-orgn., or collective bargaining, or shall aid
or abet such destruction or interference. No employer shall use or
employ any person to commit such acts, nor shall any person be
employed for such purpose (prohibition against strike-breakers was
added under Dept. Order No. 9).
Article 264 [e]: No person engaged in picketing shall commit any act
of violence, coercion or intimidation, or obstruct the free ingress to
and egress from the employers premises for lawful purposes, or to
obstruct public thoroughfares.
2.2.2 What are the consequences if any of the prohibited activities as
mentioned above are committed during the conduct of the strike? The
otherwise valid strike may be converted into an illegal one
Association of Independent Unions in the Philippines (AIUP) vs.
NLRC, March 25, 1999. -- To be valid, a strike must be pursued within
legal bounds. Among such limits are the prohibited activities under
Article 264 of the Labor Code, particularly paragraph (e), which states
that no person engaged in picketing shall:
a. commit any act of violence, coercion, or intimidation or
b. obstruct the free ingress to or egress from the employers premises for
lawful purposes or
c. obstruct public thoroughfares.
2.2.3 What are the liabilities of the workers who participated in the
commission of the prohibited activities as mentioned above are
committed during the conduct of the strike? Loss of employment
status

Union officers may lose employment status if:


(a) he knowingly participates in an illegal strike, viz.: noncompliance with purpose and process; OR
(b) he knowingly participates in the commission of illegal
activities, whether the strike is legal or illegal

2.3

Union members may lose employment status only if he


knowingly commits an illegal act.

Compliance with procedural requirements of the Labor Code


Apart and separate from the lawful purposes and lawful means in the
conduct of a valid strike, the third requisite is compliance with the
procedural requirements of law. Thus:
2.3.1

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Notice of strike or lockout - must be filed prior to the intended


date of strike, taking into consideration the cooling off period
PALS BAR OPS PILIPINAS 2016

Cooling off period (Art. 263, LC; B5 R8 S3, IRR)


If bargaining deadlocks 30 days
If ULP 15 days
If ULP on the ground of union busting: Union may take
action immediately, but note that a strike vote must have
been conducted and results submitted to DOLE (Art. 263
[b]; Dept Order No. 9, Rule 22, Secs. 3 and 7)
2.3.2

Conciliation proceedings NCMB to immediately call parties


involved to a conference within period of 48 hours from receipt of
notice, using the fastest means possible (telephone, telegraph or
messenger)
Note1: Parties obliged to meet promptly and expeditiously
in good faith, as part of their duty to bargain collectively which
covers proceedings before the NCMB. If employer refuses to
attend conference, may be charged with ULP. (Dept. Order No. 9,
R22, S6 [2]).
Note2: During the conciliation and mediation proceedings
before the NCMB, parties are supposed to refrain from doing any
act which will exacerbate the proceedings re: maintenance of
status quo.

2.3.3

Strike vote approved by a majority of the TOTAL UNION


MEMBERSHIP in the bargaining unit (hence: only members of the
majority union may vote), via secret ballot, in a meeting or
referenda specially called for the purpose
Lock-out vote - approved by a majority of the Board of Directors of
the employer company, by secret ballot in a meeting called for
such purpose.

2.3.4

Seven Day Strike ban (Dept. Order No. 9. R22, S7[e]) - after the
strike vote is taken, it is required that the union must file the result
of the strike vote with the NCMB at least 7 days prior to the
intended date of strike.
Note:
Both cooling off period and 7-day strike ban must be
complied with and is mandatory. Otherwise, illegal strike.
(National Federation of Sugar Workers vs. Ovejera, 114 SCRA
354)

3.

Assumption of Jurisdiction by the Secretary of Labor or Certification of the Labor


Dispute to the National Labor Relations Commission for Compulsory Arbitration.
3.1

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Secretary of Labor has discretion to assume jurisdiction or to certify to the


NLRC on the ground that the labor dispute is one "adversely affecting the
national interest", and said exercise of discretion cannot be questioned.
(FEATI University vs. Bautista, 18 SCRA 1191); and even if there is no
notice of strike or a formal complaint. (Saulog Transit vs. Lazaro, 128 SCRA
591.)

PALS BAR OPS PILIPINAS 2016

3.2

3.4

Nature and Effect of Assumption and Certification


a)

Assumption and certification orders are executory in character and are


strictly to be complied with by the parties even during the pendency of
any petition questioning their validity.

b)

It automatically results in a return-to-work of all striking workers (if one


has already taken place), or enjoins the taking place of a strike (Union of
Filipro Employees vs. Nestle Philippines, Inc., 192 SCRA 396.)

c)

While termination by reason of an illegal strike requires hearing,


replacement by reason of violation of a return-to-work order does not.
(Free Telephone Workers Union vs. PLDT, 113 SCRA 663, 678.)

Effect of Defiance of Assumption or Certification Orders.


"A Strike that is undertaken despite the issuance by the Secretary of Labor of
an assumption or certification order becomes a prohibited activity and thus
illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as
amended (Zamboanga Wood Products, Inc. vs. NLRC, G.R. 82088, October
13, 1989; 178 SCRA 482). The Union, officers and members, as a result, are
deemed to have lost their employment status for having knowingly
participated in an illegal act." (Union of Filipino Employees vs. Nestle
Philippines, Inc. [192 SCRA 396])

4. "No Strike No Lockout" Clause in the CBA.


No Strike-No Lockout clause in the CBA applies only to economic strikes; it does
not apply to ULP strikes. Hence, if the strike is founded on an unfair labor practice
of the employer, a strike declared by the union cannot be considered a violation of
the no-strike clause. (Master Iron Labor Union vs. NLRC, 219 SCRA 47.)

5. 2010-2015 CASES
5.1

2015 CASE: Club Filipino, Inc., et al. vs. Benjamin Bautista, et al., G.R. No.
168406, 04 January 2015. -- The law requires knowledge of the illegality of the
strike on the part of the union officer before he can be dismissed; when second
motion for reconsideration may be allowed; illegal dismissal case is not res
judicata to illegal strike case.
a. The law requires knowledge of the illegality of the strike as a condition
sine qua non before a union officer can be dismissed for participating
in an illegal strike.
b. As a general rule, the filing of a second Motion for Reconsideration is
prohibited. (Rule 52, Section 2 of the Rules of Court.) It is only allowed
under extraordinary persuasive reasons and only upon express leave
first obtained. (McBurnie v. Ganzon, 707 SCRA 646 [2013], En Banc.)
The grant of leave to file a second motion will not toll the reglamentary
period for the decision to become final and executory after 15 days. It
only means that the Entry of Judgment issued may be lifted should the
second motion be granted.

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c. The decision on the illegal dismissal case cannot be considered res


judicata on the illegal strike case. The element of identity of cause of
action is absent.

L. LAW ON TERMINATION
BASIC PRINCIPLES IN DISCIPLINARY CASES
1. Code of Conduct vs. security of tenure
Balancing of interests in disciplinary cases

MANAGEMENT

VS.

Management prerogatives

LABOR

Right to discipline employee


in accordance with rules and
regulations

Security of tenure
Right to continuous
employment until
termination for just or
authorized cause

STATE
Police power/social justice
Interpretation in favor of labor
Adas Notes: Thus, in the context of the balancing of interests relative to 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.
HOWEVER, employee must first prove the fact of dismissal.

b) There must exist substantial evidence to prove just or authorized cause of


termination. Proof beyond reasonable doubt not required in
administrative cases.
Note1: 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]).
Note2: IMPORTANT CASE ON SUBSTANTIAL EVIDENCE. (Alilem
Credit Cooperative vs. Bandiola, G.R. No. 173489, 25 February 2013.)
c)

In the imposition of penalty, whether suspension or termination, the same


must be commensurate to the offense committed.
2012 CASE: Negros Slashers vs. Alvin Teng, G.R. No. 187122, 22 Feb
2012.

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d)

Thus: for valid termination, there must both be JUST CAUSE AND
DUE PROCESS. (exception: Agabon ruling, see Section 4 hereunder)

2. GROUNDS FOR TERMINATION


2.1 JUST CAUSES FOR TERMINATION (Art. 282, LC)
2.1.2 SERIOUS MISCONDUCT

Defined as improper or wrong conduct, a transgression of a


definite rule of action, a forbidden act or dereliction of duty
which is willful in character and implies wrongful intent, and
not mere error in judgment.

Elements of serious misconduct:


1. Must be serious, of grave and aggravated character, and
not merely trivial or unimportant
2. Must be related to the performance of the
employees duties; and
3. must show that he has become unfit to continue
working for the employer.

2012-2015 CASES ON SERIOUS MISCONDUCT


a) Roque B. Benitez, et al., vs. Santa Fe Moving and Relocation
Services, et al., G.R. No. 208163, 20 April 2015. -- Serious
misconduct wherein employee went up the stage and confronted
the Managing Director with verbal abuse (putang na mo VK, gago
ka!) during the Companys Christmas party. He even attempted to
throw a beer bottle at said Managing Director but was restrained
by other employees. This caused grave embarrassment for the
audience who witnessed the incident, including company officials,
employees, their families, as wells as company clients and guests.
Benitezs offense constituted a serious misconduct as defined by
law. His display of insolent and disrespectful behavior, in utter
disregard of the time and place of its occurrence, had very much to
do with his work.
b) St. Lukes Medical Center vs. Ma. Theresa Sanchez, G.R. No. 212054, 11
March 2015; on dishonesty viz., theft of medical supplies. Question:
Whether or not employee may validly set up as a defense that there was no
real intention to bring out unused hospital supplies left by patients
(syringe, micropore, cotton balls, gloves, etc), to avoid termination?
Answer:
NO.
Sanchez was validly dismissed by SLMC for
dishonesty, i.e., theft, pilferage of hospital or co-employee property, x x x
or its attempt in any form or manner from the hospital, co-employees,
doctors, visitors, [and] customers (external and internal) with termination
from employment. Such act is obviously connected with Sanchezs work,
who, as a staff nurse, is tasked with the proper stewardship of medical
supplies. Significantly, records show that Sanchez made a categorical
admission in her handwritten letter i.e., [k]ahit alam kong bawal ay
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nagawa kong [makapag-uwi] ng gamit that despite her knowledge of


its express prohibition under the SLMC Code of Discipline, she still
knowingly brought out the subject medical items with her.
c) IMPORTANT DOCTRINAL 2014 CASE: Northwest Airlines vs.
Concepcion Del Rosario, GR. 157633, 10 September 2014. New
clarification of the definition of FIGHTING within company
premises. Two flight stewardesses verbally argued over a wine
bottle opener, while passengers were boarding the flight. They
were both off-loaded as a result.
Question: Whether or not a verbal altercation between two employees falls
within the purview of the infraction fighting as to merit termination?
Supreme Court: NO. Fighting to be interpreted strictly, and must be more
than more than just an exchange of words that usually succeeded the
provocation by either party, to merit termination.
Rationale: In several rulings where the meaning of fight was decisive, the
Court has observed that the term fight was considered to be different
from the term argument. In People v. Asto, for instance, the Court
characterized fight as not just a merely verbal tussle but a physical combat
between two opposing parties. Similarly, in Pilares, Sr. v. People,14 a
fight was held to be more than just an exchange of words that usually
succeeded the provocation by either party. Based on the foregoing, the
incident involving Del Rosario and Gamboa could not be justly considered
as akin to the fight contemplated by Northwest. In the eyes of the NLRC,
Del Rosario and Gamboa were arguing but not fighting. Moreover, even
assuming arguendo that the incident was the kind of fight prohibited by
Northwest's Rules of Conduct, the same could not be considered as of
such seriousness as to warrant Del Rosario's dismissal from the service.
The gravity of the fight, which was not more than a verbal argument
between them, was not enough to tarnish or diminish Northwest's public
image.
d) Colegio de San Juan de Letran vs. Isidra Dela Rosa-Meris, G.R. No.
178837, 01 September 2014. -- Tampering of school records/altering
grades constitute serious misconduct punishable with termination under
the Labor Code and under the Manual of Regulations for Private Schools.

2.1.2 GROSS INSUBORDINATION


Elements:
1. employees assailed conduct must be willful or intentional;
2. willfulness characterized by wrongful or perverse attitude;
3. the order violated must be reasonable, lawful and made
known to the employee; and
4. the order must pertain to the duties which the employee has
been engaged to discharge. (The Coffee Bean and Tea Leaf
Philippines, Inc. vs. Rolly P. Arenas G.R. No. 208908, 11 March
2015)
2012-2015 SC CASES ON GROSS INSUBORDINATION:
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a)

St. Lukes Medical Center vs. Maria Theresa V. Sanchez, G.R. No.
212054, 11 March 2015. - Violation of Company Rules as Wilfull
Disobedience; see discussion above)

b) The Coffee Bean and Tea Leaf Philippines, Inc. vs. Rolly P. Arenas,
G.R. No. 208908, 11 March 2015. -- Willful disobedience Company
official cannot be held liable for the dismissal of an employee unless he
acted with malice or bad faith.
c) Joel N. Montallana vs. La Consolacion College Manila, et al., G.R. No.
208890, 08 December 2014. - What is willfulness in willful
disobedience?
In order for willful disobedience under Art. 296 (a) [formerly Article 282
(a) of the Labor Code] to be properly invoked as a just cause for dismissal,
the conduct must be willful or intentional, willfulness being characterized
by a wrongful and perverse mental attitude. (Nissan Motors Phil., Inc. vs.
Angelo, G.R. No. 164181, 14 September 2011, 657 SCRA 520.)
Moreover, willfulness was described as attended by a wrongful and
perverse mental attitude rendering the employees act inconsistent with
proper subordination. (Dongon v. Rapid Movers and Forewarders Co.,
Inc. G.R. No. 163431, 28 August 2013, 704 SCRA 56)

2.1.3 GROSS AND HABITUAL NEGLECT OF DUTIES


a) gross negligence: connotes want of care in the performance of ones
duties, or absence of even slight care or diligence as to amount to a
reckless disregards of the safety of the person or property
2014 CASE: Dr. Phylis C. Rio vs. Colegio De Sta. Rosa Makati, G.R.
No. 189629, 06 Aug 2014. - Gross inefficiency and incompetence,
and negligence in the keeping of school or student records, or
tampering with or falsification of records.
As we already held, gross inefficiency is closely related to gross
neglect because both involve specific acts of omission resulting in
damage to another (Lim v. NLRC, 328 Phil., 843,858 [1996]). Gross
neglect of duty or gross negligence refers to negligence characterized
by the want of even slight care, acting or omitting to act in a situation
where there is a duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences insofar as
other persons may be affected (Brucal v. Hon. Desierto, 501 Phil.
453,465-466 [2005]).
As borne by the records, petitioners actions fall within the purview of
the above-definitions. Petitioner failed to diligently perform her duties.
It was unrefuted that: (1) there were dates when a medical examination
was supposed to have been conducted and yet the dates fell on
weekends; (2) failure to conduct medical examination on all students
for two (2) to five (5) consecutive years; (3) lack of medical records on
all students; and (4) students having medical records prior to their
enrollment.

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b) habitual neglect: implies repeated failure to perform ones duties over


a period of time
c) willful neglect of duties: imply bad faith on the part of the employee in
failing to perform his job, to the detriment of the employer and the
latters business
d) Totality of infractions ruling: where the employee has been found to
have repeatedly incurred several suspensions or warnings on account
of violations of company rules and regulations, the law warrants their
dismissal as it is akin to habitual delinquency. It is the totality, not
the compartmentalization of company infractions that the employee
had consistently committed, which justified the penalty of dismissal.
(Meralco vs. NLRC, 263 SCRA 531 [24 Oct 1996]).
e) Absences: Habitual absenteeism and excessive tardiness are forms of
neglect of duty on the part of the employee and constitute just and
sufficient cause for termination.
f) Abandonment of work: the deliberate and unjustified refusal of an
employee to resume his employment. It is a form of neglect of duty,
and hence, a just cause for termination by the employer.
For a valid finding of abandonment, two factors must be present:: (a)
the failure to report for work or absence without valid or justifiable
reason; and (b) a clear intention to sever the employer-employee
relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that employee
has no more intention to work. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and
unjustified.
2013-2015 SC CASES ON ABANDONMENT:

Vicente C. Tatel vs. JLFP Investigation Security Agency, Inc., et


al., G.R. No. 206942, 25 Feb 2015; see also: Essencia Q.
Manarpiis vs. Texan Philippines, Inc., et al. G.R. No. 197011, 28
Jan 2015. -- . The filing by an employee of a complaint for illegal
dismissal with a prayer for reinstatement is proof enough of his
desire to return to work; thus, negating the employers charge
of abandonment. An employee who takes steps to protest his
dismissal cannot logically be said to have abandoned his work.

Stanley Fine Furniture, et al. vs. Victor T. Gallano, et al. G.R.


190486, 26 Nov 2014. -- To terminate the employment of
workers simply because they asserted
their
legal rights
is illegal. It violates their right to security of tenure and should
not
be tolerated. To prove abandonment, two elements must
concur: a) Failure to report for work or absence without valid or
justifiable reason; and b) A clear intention to sever the
employer-employee
relationship.
Absence
must
be
accompanied by overt acts unerringly pointing to the fact that
the employee simply does not want to work anymore. The filing
of a complaint for illegal dismissal negates the allegation of
abandonment.

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2.1.4 FRAUD OR WILLFUL BREACH OF TRUST


The right of an employer to dismiss an employee on account of loss of
trust and confidence must not be exercised whimsically and the
employer must clearly and convincingly prove by substantial evidence
the facts and incidents upon which loss of confidence in the employee
may be fairly made to rest; otherwise, the latters dismissal will be
rendered illegal. San Miguel Corporation vs. National Labor Relations
Commission and Wiliam L. Friend Jr., G.R. No. 153983, 26 May 2009.
a)

Fraud: the deliberate and false representation of fact, despite


knowledge of its falsehood, in order to induce another who relied
upon it and benefit therefrom.

b) Elements of willful breach of trust leading to loss of trust and


confidence: (1) the breach must be willful and not ordinary breach
[hence, done knowingly and intentionally]; (2) employee holds a
position of trust and confidence; (3) must be in relation to the work
performed; and (4) there must exist substantial evidence, and should
not be based on mere surmises, speculations and conjectures.
c) IMPORTANT CASE: TWO CLASSES OF POSITIONS OF
TRUST. Abelardo Abel vs. Philex Mining Corporation, G.R. No.
178976, 31 July 2009.
The first class consists of managerial employees. They are defined as
those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees or effectively recommend
such managerial actions.
The second class consists of cashiers, auditors, property custodians,
etc.. They are defined as those who, in the normal and routine
exercise of their functions, regularly handle significant amounts of
money or property.
As a general rule, employers are allowed a wide latitude of
discretion in terminating the employment of managerial personnel or
those who, while not of similar rank, perform functions which by
their nature require the employers full trust and confidence. Higher
standards expected of management vis ordinary rank-and-file.
d) Examples of Position of Trust, Non-Managerial
1. Coca Cola Route Salesman. - A route salesman regularly
handles significant amounts of money and property in the normal
and routine exercise of his functions. Hormillosas act of
tampering sales invoices and issuing one with non-accredited
store could not have been performed without intent and
knowledge on his part; hence the breach of trust was willful.

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(Hormillosa vs. Coca Cola, G.R. No. 198699, 09 September


2013).
2. Dining attendant. - She was tasked to attend to dining
guests, handle their bills and receive their payments for
transmittal to the cashier. Episcope is undeniably
considered an employee occupying a position of trust and
confidence and as such, was expected to act with utmost
honesty and fidelity. In the instant case, it is clear that
Episcope was remiss in her duty to carefully account for
the money she received from the cafe's guests. (Philippine
Plaza Holdings vs. Episcope, G.R. No. 192826, 27 Feb
2013.)
e) Examples of those not considered positions of trust and confidence. -Inventory comptroller or clerk. An inventory clerk who is not
routinely charged with the care and custody of Century Irons money
or property is not occupying a position of trust and confidence. As
such, he could not be held responsible for the shortages of gas
cylinders and therefore, he cannot be terminated on the ground of
loss and trust and confidence. (Century Iron Works Inc. vs. Baas,
G.R. 184116, 19 June 2013.)
3. 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?
(Reynaldo Moya vs. First Solid Rubber, G.R. No. 184011, 18 September
2013)
ANSWER: NO. Where the infraction involves dishonesty and pilferage,
length of service is immaterial.
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. His act of
concealing the truth from the company 2 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 long-time
employee to return such fairness with at least some respect and honesty.

4. IMPORTANT CASES ON TERMINATION OF MANAGERS

Failure to report five tires damaged as a result of undercuring brought about by negligence of another
employee.

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4.1

May a bank validly terminate an assistant bank manager for loss of


trust and confidence arising from gross negligence? (De Leon Cruz
Vs. BPI, G.R. no. 173357, 13 February 2013).
After 13 years of continuous service, BPI terminated the Assistant
Bank Manager on grounds of gross negligence and breach of trust,
for her failure to verify genuineness of a forged Letter of
Instructions allegedly issued by three depositors, resulting in
illegal and spurious withdrawals on their respective bank accounts.
In that regard, petitioner was remiss in the performance of her duty
to approve the pre-termination of certificates of deposits by
legitimate depositors or their duly-authorized representatives,
resulting in prejudice to the bank, which reimbursed the monetary
loss suffered by the affected clients. Hence, respondent was
justified in dismissing petitioner on the ground of breach of trust.
As long as there is some basis for such loss of confidence, such as
when the employer has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct,
and the nature of her participation therein renders her unworthy of
the trust and confidence demanded of his position, a managerial
employee may be dismissed.

4.2 Manager who alleges that he is medically unfit to return to work as


yet, has to prove the same by competent evidence. Failure to do so
may lead to his valid termination. (Wuerth Philippines. vs Ynson,
G.R. No. 175932, 15 Feb 2012).
4.3. Manager validly terminated on account of loss of trust and
confidence arising from huge business losses. Manager was grossly
negligent in allowing 2,130 pcs of chicken joy rejects to be kept
inside freezer with other products, causing food contamination and
threat to food safety. (Cecilia Manese vs. Jollibee Foods, G.R. No.
17-454, 11 October 2012.)

2.1.5 COMMISSION OF CRIME BY EMPLOYEE AGAINST EMPLOYER


Concepcion vs. Minex Import Corporation, etc., G.R. No. 153569, 24
January 2012, En Banc).-- Conviction of an employee in a criminal case
is not indispensable to warrant his dismissal by his employer (Mercury
Drug Corp. vs. NLRC, 177 SCRA 580 [1989], and the fact that a criminal
complaint against the employees has been dropped by the city fiscal is
not binding and conclusive upon a labor tribunal. (See also: Starlight
Plastic Industrial Corporation vs. NLRC, 171 SCRA 315 [1989].)

2.1.6 OTHER ANALOGOUS CAUSES

INCOMPETENCE
International School Manila vs. International School Alliance Of
Educators (ISAE), G.R. No. 167286, 05 February 2014. -- Complainant
taught Spanish classes for 12 years, and took a one year break. Upon
return to school, there was only one class of Spanish available so she

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agreed to teach Filipino subjects. For three consecutive years, her


performance evaluation ranged from poor, to needs improvement, to
mixed (poor and needs improvement), respectively. Thirty evaluations
over three years were made on the teacher, showing unsatisfactory
performance. As such, School terminated her services.
Ruling: In all cases involving termination of employment, the burden of
proving the existence of the just causes rests upon the employer. Far from
being tainted with bad faith, respondents failings appeared to have
resulted from her lack of necessary skills, in-depth knowledge, and
expertise to teach the Filipino language at the standards required of her by
the School. The Court finds that the petitioners had sufficiently proved the
charge of gross inefficiency, which warranted the dismissal of Santos from
the School. 2014 CASE: Dr. Phylis C. Rio vs. Colegio De Sta. Rosa Makati, G.R.
No. 189629, 06 Aug 2014. - Gross inefficiency and incompetence, and
negligence in the keeping of school or student records, or tampering with
or falsification of records. (See discussion on page 107).

Floating status; For defense of abandonment to prosper, the


employer must be able to establish the deliberate and unjustified
refusal of the employee to resume his employment. Vicente C. Tatel
vs. JLFP Investigation Security Agency, Inc., et al., G.R. No. 206942, 25
February 2015.

RESIGNATION -- Voluntary resignation is defined as the act of an


employee, who finds himself in a situation in which he belies that
personal reasons cannot be sacrificed in favor of the exigency of
the service; thus, he has no other choice but to disassociate himself
from his employment. (Alfaro vs. Court of Appeals, 363 SCRA 799
[2001]).
General rule: An employee who voluntarily resigns is not entitled to
separation pay.
Exception:

Unless stipulated in an employment contract or CBA or


sanctioned by established employer practice or policy.
(CJC Trading, Inc. vs. NLRC, 246 SCRA 724 [1995];
Alfaro vs. Court of Appeals, 363 SCRA 799 [2001]).

TERMINATION DUE TO UNION SECURITY CLAUSE: For valid


termination on this ground, the following must be proven by the employer
-a) the union security clause is applicable;
b) the union is requesting for the enforcement of the union
security provision in the CBA; and
c) there is sufficient evidence to support the Unions decision
to expel
the employee from the union or company.
(Inguillo vs. First Philippines Scales, Inc., 588 SCRA 471
[2009]; See also: PICOP Resources, Inc. (PRI) vs.
Anacleto Taneca et. al, G.R. No. 160828, 09 August 2010).

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May a union member be terminated from employment by the company


upon demand by the incumbent union pursuant to a union security clause
for "acts of disloyalty" for having signed an authorization letter to file a
petition for certification election in favor of a rival union during the
freedom period while the CBA is still subsisting? (PICOP Resources,
Inc. vs. Tanega, et al., G.R. No. 160828, 09 August 2010).
Answer: NO. The mere signing of the authorization in support of the
Petition for Certification Election of FFW on March 19, 20 and 21, or
before the "freedom period," is not sufficient ground to terminate the
employment of respondents inasmuch as the petition itself was actually
filed during the freedom period. Nothing in the records would show that
respondents failed to maintain their membership in good standing in the
Union. Respondents did not resign or withdraw their membership from the
Union to which they belong. Respondents continued to pay their union
dues and never joined the FFW.

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3. AUTHORIZED CAUSES FOR TERMINATION


(Art. 283-284, LC)
Memory aid: DIRe2C

DISEASE

1 MO PAY OR
MONTH FOR EVERY
YEAR OF SERVICE
INSTALLATION OF LABOR 1 MO PAY OR 1
SAVING DEVICES
MONTH FOR EVERY
YEAR OF SERVICE
RETRENCHMENT
1 MO PAY OR
MONTH FOR EVERY
YEAR OF SERVICE
REDUNDANCY
1 MO PAY OR 1
MONTH FOR EVERY
YEAR OF SERVICE
CLOSURE NOT DUE TO 1 MO PAY OR
SERIOUS
BUSINESS MONTH FOR EVERY
LOSSES
YEAR OF SERVICE

3.1

DISEASE (separation pay of 1/2 month pay for every year of service)

Employee must be suffering from a disease, and continued


employment is prohibited by law and/or is prejudicial to his health
and/or that of his co-employees;
Disease cannot cannot be cured within a period of six (6) months, and
said fact is certified by a competent public health authority
If curable, then employer cannot terminate but may ask employee to
take a leave; immediately upon restoration of normal health, employer
must reinstate employee to former position.

IMPORTANT NOTE: EMPLOYER MUST FURNISH EMPLOYEE


TWO (2) WRITTEN NOTICES ON TERMINATIONS DUE TO DISEASE
Marlo A. Deoferio v. Intel Technology Philippines, Inc.. And/Or
Mike Wentling, G.R. No. 202996, 18 June 2014. -- The Labor Code and
its IRR are silent on the procedural due process required in terminations
due to disease. Despite the seeming gap in the law, Section 2, Rule 1,
Book VI of the IRR expressly states that the employee should be afforded
procedural due process in ALL CASES OF DISMISSALS. Al

In Sy v. Court of Appeals (446 Phil. 404 [2003]) and Manly


Express, Inc. v. Payong, Jr., (510 Phil. 818 [2005]), the Court
finally pronounced the rule that the employer must furnish the
employee two written notices in terminations due to disease,
namely: (1) the notice to apprise the employee of the ground for
which his dismissal is sought; and (2) the notice informing the
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employee of his dismissal, to be issued after the employee has


been given reasonable opportunity to answer and to be heard on
his defense. These rulings reinforce the State policy of protecting
the workers from being terminated without cause and without
affording them the opportunity to explain their side of the
controversy.

3.2 INSTALLATION OF LABOR SAVING DEVICES (sepn pay: 1 mo/yr of


service)

3.3

Example: computerization of accounting and payroll system;


mechanization of assembly line, etc.
Presumption is that the employer does not have any serious business
losses, as to afford the purchase of labor-saving devices.

RETRENCHMENT (Sepn. Pay: 1/2 month pay for every year of service)
Retrenchment is the termination of employment by the employer through
no fault of the employees, and is usually resorted to by the employer
primarily to avoid or minimize economic or business reverses during
periods of business recession, industrial depression, seasonal fluctuations,
re-organization or automation of the company operations. 3 Where the
employer suffers serious and actual business losses, management has the
final say as to whether it will continue to risk its capital or not.4 However,
the employer bears the burden to prove his allegation of business losses.5
Elements for valid retrenchment:
Under Article 283 of the Labor Code, in conjunction with Section 2,
Rule XXIII of the Implementing Rules of the Labor Code, the
following elements must be strictly complied with in order that the
retrenchment may be considered as valid:
a) The losses expected should be substantial and not merely de
minimis in extent. -b) The substantial losses apprehended must be reasonably imminent;
c) The retrenchment must be reasonable necessary and likely to
effectively prevent the expected losses; and
d) The alleged losses, if already incurred and the expected imminent
losses sought to be forestalled, must be proved by sufficient and
convincing evidence.6

See: Sebuguero vs. NLRC, 248 SCRA 533 [1995].


San Pedro Hospital of Digos, Inc. vs. Secretary of Labor, 263 SCRA 98 [1996].
5
Guerrero vs. NLRC, 261 SCRA 301 [1996]
6
San Miguel Jeepney Services vs. NLRC, 265 SCRA 35 [1996]
4

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3.4 REDUNDANCY (Sepn pay: 1 mo/yr of service)


Redundancy exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the business
operations.
Succinctly stated otherwise, a position may be declared
redundant and the employee terminated where his position has become
superfluous or is a duplication of work, viz., caused by overhiring of
workers, decreased volume of business, dropping of a particular product
line or service activity.
3.5 CESSATION OR CLOSURE OF EMPLOYERS BUSINESS (1/2 month
pay for every year of service)
IMPORTANT CASE ON GUIDELINES IN CLOSURE OF BUSINESS:
The Supreme Court made the following summary of principles and
guidelines in the case of Manila Polo Club Employees Union (MPCEUFUR-TUCP) vs. Manila Polo Club, G.R. No. 172846, 24 July 2013, as
follows:
1. Closure or cessation of operations of establishment or
undertaking may either be partial or total.
2. Closure or cessation of operations of establishment or
undertaking may or may not be due to serious business losses or
financial reverses. However, in both instances, proof must be
shown that: (1) it was done in good faith to advance the
employer's interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid
agreement; and (2) a written notice on the affected employees
and the DOLE is served at least one month before the intended
date of termination of employment.
3. The employer can lawfully close shop even if not due to serious
business losses or financial reverses but separation pay, which is
equivalent to at least one month pay as provided for by Article
283 of the Labor Code, as amended, must be given to all the
affected employees.
4. If the closure or cessation of operations of establishment or
undertaking is due to serious business losses or financial
reverses, the employer must prove such allegation in order to
avoid the payment of separation pay. Otherwise, the affected
employees are entitled to separation pay.
5. The burden of proving compliance with all the above-stated falls
upon the employer.
Guided by the foregoing, the Court shall refuse to dwell on the issue of
whether respondent was in sound financial condition when it resolved to
stop the operations of its F & B Department. As stated, an employer can
lawfully close shop anytime even if not due to serious business losses or
financial reverses. Furthermore, the issue would entail an inquiry into the
factual veracity of the evidence presented by the parties, the determination
of which is not Our statutory function. Indeed, petitioner is asking Us to
sift through the evidence on record and pass upon whether respondent had,
in truth and in fact, suffered from serious business losses or financial
reverses.

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5. PROCEDURE FOR TERMINATION:


5.1

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

NOTICE REQUIREMENT, MUST SUBSTANTIATE INFRACTION,


GENERAL NARRATIVE NOT SUFFICIENT. (IMPORTANT
VELASCO CASE: 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.
EXCEPTION: If no due process but with just cause, then Agabon ruling
to apply.
The denial of the fundamental right to due process being apparent, the
dismissal order in disregard of that right is void for lack of jurisdiction.
The cardinal precept is that where there is a violation of basic
constitutional rights, courts are ousted from their jurisdiction. The
violation of a partys right to due process raises a serious jurisdictional
issue which cannot be glossed over or disregarded at all. It is well settled
that a decision rendered without due process is void ab initio and may be
attacked at any time directly or collaterally be means of a separate action,
or by resisting such decision in any action or proceeding where is it
invoked. (Salva vs. Valle, G.R. No. 193773, 02 April 2013; En Banc,
citations omitted.)

5.2 ILLEGALITY OF THE ACT OF DISMISSAL - DISMISSAL WITHOUT


JUST CAUSE:
Remedies under the Labor Code:
1.

Reinstatement to his former position without loss of seniority rights.


If no longer available nor any equivalent position, then separation pay
to be given in lieu or reinstatement computed 1 month pay for every
year of service.

2.

Payment of FULL backwages corresponding to the period from his


illegal dismissal up to actual reinstatement.

3.

Damages plus attorneys fees.

5.3 ILLEGALITY IN THE MANNER OF DISMISSAL - DISMISSAL


WITHOUT DUE PROCESS: (WENPHIL, SERRANO AND AGABON
RULING)

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In any event, NO REINSTATEMENT. However, as regards penalty for


non-compliance with due process requirements, the newest Supreme Court
ruling circa November 2004 is that the employer shall be sanctioned with
penalty of P30,000.00 in accordance with the Agabon vs. NLRC case,
which now affirms the Wenphil doctrine and abandoning the Serrano
ruling.
Agabon vs. NLRC ruling, G.R. No. 158693, 11/17/2004 - where there was
substantial evidence proving just cause BUT that due process was not
followed, the termination will be UPHELD (considered valid and effective)
but the employee will be penalized the amount of P30,000.00-50,000.00
(see discussion on difference below).
Difference in separation pay.-- (Jaka Food Processing v. Pacot, G.R. No.
151378; 28 March 2005)

If the dismissal is based on a just cause under Article 282 but


the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because
the dismissal process was, in effect, initiated by an act
imputable to the employee. Hence:
P30,000.00 nominal
damages for non-compliance with due process, because
employee has committed an infraction

On the other hand, if the dismissal is based on an authorized


cause under Article 283 but the employer failed to comply with
the notice requirement, the sanction should be stiffer because
the dismissal process was initiated by the employers exercise
of his management prerogative. Hence, P50,000.00 nominal
damages for non-compliance with due process, because
employee did not commit anything wrong but that the
termination was due to an exercise of management
prerogatives.

Should employee seek damages on this account, may file with regular court.
[Governed exclusively by the Civil Code. (Shoemart vs. NLRC, supra.)]

6. ON NOTICE AND HEARING


Dept. Order No. 10, Article V; IRR B5 R14 S1-11
6.1 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
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.
6.2 HEARING:
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The existence of a formal trial-type hearing, ALTHOUGH PREFERRED, is


NOT absolutely necessary to satisfy an employees right to be heard.
(Esguerra vs. Valle Verde Country Club, 672 SCRA 177 [2012]). - a hearing or a conference during which the employee concerned, with
the assistance of counsel if he so desires, is given the opportunity to
respond to the charge, to present his evidence, or to rebut the evidence
presented against him.
note that a formal hearing (as in the manner of regular courts) is not
required; only substantial evidence is necessary.
There is no necessity for a formal hearing where an employee admits
responsibility for the alleged misconduct. It is sufficient that she be
informed of the findings of management and the basis of its decision to
dismiss her.
6.3 Right to counsel on the part of the employee is this mandatory and
indispensable as part of due process?
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.
7. ON REINSTATEMENT:
Where the former position is no longer available, the employee must be
reinstated to an equivalent position.
Where the reinstatement is no longer viable in view of the strained relations
between the employer and employee, or if the employee decides not to be
reinstated, the employer shall pay him separation pay in lieu of reinstatement
Nature of the order of the Labor Arbiter on reinstatement. -The reinstatement order of the Labor Arbiter is immediately executory even
pending appeal. (Article 223 (3), Labor Code; cf Pioneer Texturizing vs.
NLRC (280 SCRA 806 [1997]).
Hence, it is the obligation of the employer to immediately admit the employee
back to work or reinstate him in the payroll at his option. Otherwise, the
employer will be held liable for backwages from the date of notice of the
order (International Container Terminal Services, Inc. vs. NLRC, 360 Phil.
527 [1998]), up to the date of employees actual or payroll reinstatement. Thus,
it was held in Garcia vs. Philippine Airlines, Inc. (531 SCRA 574 [2007]), that
failure on the part of the employer to exercise the options in the alternative,
the employer must pay the employees salaries.
2015 CASE: Smart Communications, Inc., et al. vs. Jose Leni Z. Solidum,
G.R. No. 204646, 15 April 2015. -- In illegal dismissal cases, if the LA
ordered reinstatement, and the employer failed to reinstate the employer either
actually or in the payroll, and the NLRC on appeal reversed the decision of
the LA, the employee is entitled to the accrued salaries and other benefits
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from the date of the LAs decision up to the date the NLRC decision becomes
final and executory
8. ON BACKWAGES
8.1 FULL BACKWAGES For termination effected after effectivity of RA 6715
FULL backwages to be computed from the time of termination to the
time of actual reinstatement.
With the passage of RA 6715 which took effect on 21 March 1989,
Article 2709 of the Labor Code was thus amended to include payment of
full backwages. The Mercury drug rule which limited the award of
backwages of illegally dismissed workers to three (3) years without
deduction or qualification, is no longer applicable. (Ferrer vs. NLRC)
8.2

BASIS FOR COMPUTING BACKWAGES: The workers are to be paid


their backwages fixed as of the time of the dismissal, i.e., unqualified by
any wage increases or other benefits that may have been received by their
co-workers. Awards including salary differentials are not allowed.
(Central Azucarrera de Tarlac vs. Sampang)

8.4

2014-2015
SC
WAGES/BACKWAGES:

CASES

ON

COMPUTATION

OF

Metroguards Security Agency Corporation etc., vs. Alberto N.


Hilongo, G.R. No. 215630, 09 March 2015. -- Separation and
back wages must be computed up to that point of the finality of
the decision.
It is settled that the computation of the monetary awards due
to the illegally dismissed employee must continue to run until
the final termination of the case on appeal. The recomputation
of the monetary awards is a necessary consequence that flows
from the nature of the illegal dismissal. Hence, separation pay
and backwages must be computed up to that point of the finality
of the decision to the account for the time the illegally dismissed
employee should have been paid his salary and benefit
entitlements.

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Concepcion A. Villena vs. Batangas II Electric Cooperative, Inc.


et al., G.R. No. 205735, 04 Feb 2015. -- A decision which calls
for the payment of other benefits should include in the
computation all the fringe benefits that the dismissed employee
are entitled to receive at the time.
PALS BAR OPS PILIPINAS 2016

Monachito R. Ampeloquio vs. Jaka Distribution, Inc., G.R. NO.


196936, 02 July 2014; Scope of wages reinstatement without
loss of seniority rights and other privileges.
The issue in this case is the scope viz-a-viz wages reinstatement
without loss of seniority rights and other privileges. Seniority rights
refer to the creditable years of service in the employment record of the
illegally dismissed employee as if he or she never ceased working for
the employer. In other words, the employees years of service is
deemed continuous and never interrupted. Such is likewise the
rationale for reinstatements twin relief of full backwages. (Labor
Code, Article 279.)

FOR THE 2016 BAR EXAMINEES:


GOOD LUCK AND GOD BLESS YOU ALL!!

ADA D. ABAD, 2016


Dean, Adamson University College of Law
In behalf of Philippine Association of Law Schools (PALS)

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